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HQ 560753





February 10, 1998

MAR-2 RR:TC:SM 560753 KSG

CATEGORY: MARKING

Donald Alford Weadon, Jr.
Weadon & Associates
Suite 550
The Federal Bar Building
1819 Pennsylvania Avenue, N.W.
Washington, D.C. 20006

RE: 19 U.S.C. 1304; semiconductor devices; 19 CFR 134.46; may mislead or deceive

Dear Mr. Weadon:

This is in response to your letter of November 10, 1997, asking if your proposed country of origin marking on semiconductor devices satisfies the country of origin marking requirements set forth in 19 U.S.C. 1304.

FACTS:

Your client imports and produces semiconductor devices. The client imports these devices into the U.S. and other countries. The diffused silicon wafers are made in the U.S. and exported to various Asian nations where the circuits are assembled and encapsulated into finished devices. The finished devices are packaged in plastic carrier trays or in reels. The plastic carrier trays or reels are then packaged inside heat-sealed, opaque, anti-static dry-pack bags which protect the devices from humidity and static electricity. The anti-static bags are affixed with a label containing various information and the country of origin marking.

The anti-static bags with the carrier trays and integrated circuits enclosed are then packaged inside a cardboard carton which is closed with adhesive tape and affixed with another label similar to the one utilized on the anti-static bags.

You state that the other countries to whom your client imports, such as Japan and the countries that are members of the European Union (EU), have different origin rules for marking purposes. You desire to utilize one label that would comply with the marking statutes in the U.S. and in different countries. Specifically, you propose the marking "Country of Origin for U.S.: Japan, For EU: Circuit diffused in the United States" on the anti-static bags and cartons containing the devices to be assembled in Japan and marketed in the U.S. and the EU.

ISSUE:

Whether the proposed marking would satisfy the country of origin marking requirements set forth in 19 U.S.C. 1304.

LAW AND ANALYSIS:

Section 304 of the Tariff Act of 1930 (19 U.S.C. 1304), provides that unless excepted, every article of foreign origin imported into the U.S. shall be marked in a conspicuous place as legibly, indelibly, and permanently as the nature of the article (or its container) will permit, in such a manner as to indicate to the ultimate purchaser in the U.S. the English name of the country of origin of the article.

Part 134, Customs Regulations (19 CFR Part 134), implements the country of origin marking requirements of 19 U.S.C. 1304. Section 134.1(b), Customs Regulations (19 CFR 134.1(b)), provides that : "country of origin" means the country of manufacture, production, or growth of any article of foreign origin entering the U.S. Further work or material added to an article in another country must effect a substantial transformation in order to render such other country the "country of origin" for marking purposes.

A substantial transformation results when a new and different article emerges from the processing having a distinctive name, character or use. U.S. v. Gibson-Thomsen Co., Inc., 27 CCPA 269 (1940). In Headquarters Ruling Letter (HRL) 732357, dated May 21, 1990, Customs held that the processing of silicon wafers into integrated circuits, which includes cutting the wafers into chips, mounting the individual circuit by eutectic or epoxy mechanisms to the leadframe, bonding of gold and aluminum wires to circuit and leadframe and encapsulation of leadframe and circuit constitutes a substantial transformation of the silicon wafers into finished integrated circuits. Customs cited C.S.D. 80-227, dated February 13, 1980, as authority for the finding of a substantial transformation where silicon semiconductor chips were assembled into integrated circuits.

Pursuant to HRL 732357 and C.S.D. 80-227, the assembly and encapsulation of integrated circuits in the instant case to create finished semiconductor devices would constitute a substantial transformation. Therefore, in accordance with 19 CFR 134.1(b), the Asian country where the devices are assembled is the country of origin for marking purposes.

Consequently, the question presented is whether the proposed marking would clearly convey the country of origin of the imported article to the ultimate purchaser in the U.S.

Section 134.46, Customs Regulations (19 CFR 134.46) provides:

In any case in which the words "United States," or "American," the letters "U.S.A.," any variation of such words or letters, or the name of any city or location in the United States, or the name of any foreign country or locality other than the country or locality in which the article was manufactured or produced appear on an imported article or its container, and those words, letters or names may mislead or deceive the ultimate purchase as to the actual country of origin of the article, there shall appear legibly and permanently in close proximity to such words, letters or name, and in at least a comparable size, the name of the country of origin preceded by "Made in," "Product of," or other words of similar meaning.

Therefore, we must determine whether the proposed marking may mislead or deceive the ultimate purchaser as to the actual country of origin of the imported article. Customs stated in Treasury Decision (T.D.) 97-72, dated September 19, 1997, in response to a comment, that "references to the U.S. made in the context of a statement relating to any aspect of the production or distribution of the products... are misleading to the ultimate purchaser..." We find that the phrase "For EU: Circuit Diffused in the United States" in the proposed marking is a reference to the U.S. made in the context of a statement relating to an aspect of the production of the imported article and therefore, this reference may mislead or deceive the ultimate purchaser in the U.S. as to the article's actual origin. Therefore, the special marking requirements of 19 CFR 134.46 are triggered. The words "Made in (country of origin,)" "Product of (country of origin) or a similar phrase must appear in close proximity and in at least a comparable size to the U.S. reference . Your proposed marking would not be acceptable under 19 U.S.C. 1304. We note that if you marked the article with the words "Country of origin for U.S.: Made in Japan, FOR EU: Circuit diffused in the United States", the marking would comply with the requirements of 19 U.S.C. 1304 and 19 CFR 134.46.

The second question is whether marking the anti-static bags and cartons and not the article itself would satisfy 19 U.S.C. 1304.

Section 134.32(d), Customs Regulations (19 CFR 134.32(d)), provides an exception from marking for articles for which the marking of the containers will reasonably indicate the origin of the articles. In HRL 734443, dated June 3, 1992, Customs held that semiconductor devices which reach the ultimate purchaser in the marked containers are excepted from marking. In the instant case, the ultimate purchaser receives the imported article in the marked sealed anti-static bags and cartons. Therefore, pursuant to 19 CFR 134.32(d), the imported semi-conductor devices in this case are excepted from marking.

HOLDING:

The reference to the U.S. in the proposed marking may mislead or deceive the ultimate purchaser as to the actual country of origin of the article. Therefore, pursuant to 19 CFR 134.46, the actual country of origin must appear in close proximity and in at least a comparable size, to the U.S. reference, preceded by the words "Made in," "Product of," or a similar phrase.

Pursuant to 19 CFR 134.32(d), the imported articles are excepted from marking as long as the marking on the anti-static bags and cartons satisfies the requirements of 19 U.S.C. 1304.

A copy of this ruling letter should be attached to the entry documents filed at the time this merchandise is entered. If the documents have been filed without a copy, this ruling should be brought to the attention of the Customs officer handling the transaction.

Sincerely,

John Durant, Director
Commercial Rulings Division

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