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HQ 561046

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October 27, 1998

MAR2- 05 RR:CR:SM 561046 MFC

CATEGORY: MARKING

James L. Sawyer
Katten, Muchin & Zavis
525 West Monroe Street, Suite 1600
Chicago, Illinois 60661-3693

RE: Country of origin marking of fasteners

Dear Mr. Sawyer:

This is in response to your letter of June 17, 1998, requesting a ruling on the country of origin marking of fasteners.

FACTS:

Orchard Supply Hardware Corporation ("OSHC") is a U.S. distributor of fastener type products, including anchors, screws, washers, fittings, nuts, bolts, and similar products which it purchases from two U.S. vendors who source the fasteners from manufacturers in Taiwan, the United States, China, Japan, and Canada with de minimis portions from India, Korea, Malaysia, Switzerland and Italy. For both vendors, Taiwan and the United States account for more than 90% of the fasteners. The approximate percentage of fasteners purchased from all source countries for each vendor is as follows:

Vendor #1: Taiwan (63%), United States (30%), China (6%), and Japan (1%).
Vendor #2: United States (55%), Taiwan (38%), China (4%), Canada (2.4%), and de minimis portions from India, Japan, Korea, Malaysia, Switzerland, and Italy.

OSHC receives the fasteners from its vendors in bulk containers, sorted by part number or by style, but not by country of origin. Following the receipt of the fasteners from the vendors, OSHC repackages the fasteners for retail sale. The fasteners distributed by OSHC conform with the standards of at least one of the following: the American National Standards Institute (ANSI), the Industrial Fastener Institute (IFI), the American Society for Testing and Materials (ASTM), or the Society of Auto Engineers (SAE).

OSHC asserts that strict compliance with Customs marking requirements will require that its vendors significantly alter their inventory systems and is economically unfeasible.

OSHC proposes to label its repackaged fasteners with the following or comparable country of origin label: "Contains product of multiple countries, including: Taiwan, China, and Canada, and may also contain domestic product."

ISSUE:

What is the proper country of origin marking of a mixture of imported and domestic fasteners?

LAW AND ANALYSIS:

Section 304 of the Tariff Act of 1930, as amended (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 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. Congressional intent in enacting 19 U.S.C. 1304 was "that the ultimate purchaser should be able to know by an inspection of the marking on the imported goods the country of which the goods is the product. The evident purpose is to mark the goods so that at the time of purchase the ultimate purchaser may, by knowing where the goods were produced, be able to buy or refuse to buy them, if such marking should influence his will." United States v. Friedlaender & Co., 27 C.C.P.A. 297, 302 (1940).

Part 134 of the Customs Regulations (19 CFR Part 134) implements the country of origin marking requirements and exceptions of 19 U.S.C. 1304. Section 134.33, Customs Regulations (19 CFR 134.33), excepts certain "J-list" articles from individual country of origin marking in accordance with 19 U.S.C. 1304(a)(3)(J) and only requires that the outermost container in which the article is imported to be marked with the country of origin. Among the J-list items are screws and bolts, nuts and washers. While the fasteners need not be individually marked, the regulations require that for any J-list item, the outermost container in which the article normally reaches the ultimate purchaser is required to be marked to indicate the origin of its contents. 19 CFR 134.22(a), 134.25, and 134.33.

Screws, bolts, nuts and washers are different types of industrial fasteners. Headquarters Ruling ("HQ") 723668 (December 12, 1983), published as C.S.D. 84-56, modified the country of origin marking requirements applicable to distributors of industrial fasteners to permit a country of origin label of repackaged fasteners to list only the major source countries from which a particular repackager acquired its stock. The ruling held that the list should begin with the country from which a distributor obtains the greatest percentage (by weight or by piece) of its stock and that the countries are to be listed in order of percentage of contribution. Countries from which a particular repackager obtains only relatively small quantities of fasteners need not be listed. Customs allowed this partial exemption in order to "eliminate the economic prohibitions of strict compliance but preserve the repackager's obligation to advise the ultimate purchaser of the foreign origin of the repackaged fasteners."

While the fasteners in HQ 723668 (December 12, 1983), published as C.S.D. 84-56, did not include domestic products, the ruling indicated that where a distributor consistently adds a substantial amount of American-made fasteners to its packages, making the United States a major source country, the label may read: "This package contains a mixture of domestic articles and articles from one or more foreign countries, including the following (list)."

Another Customs ruling addressed the question of how to mark the containers of industrial fasteners when the company commingles foreign and domestic fasteners. HQ 724388 (January 31, 1984). In that case, 25% of the volume of fasteners shipped by the company for the year was domestic but the company did not consistently add a substantial amount of domestic fasteners to their packages. As much as 60 or 70% of the repackaged containers would contain no domestic product at all. Customs ruled that the U.S. was a major source country but that a proposed label reading "This package contains articles from one or more countries, including the following: Japan, Taiwan, U.S.A., Korea, Canada, China" was not appropriate. In that case, Customs recommended that the label read:

This package contains articles from one or more foreign countries, including the following: (list without reference to U.S.A.), and may also contain domestic articles.

Customs recommended this wording on the label because it would accurately describe the repackaging operation without misleading the ultimate purchaser.

In this case, OSHC's vendors mix between 30% to 55% of domestic fasteners with foreign fasteners on a regular basis. Given these facts, it would not be misleading to include the U.S. in the list of major source countries (in the order of the percentage of fasteners each source contributes to the total package) and OSHC may do so if it chooses. However, there is no requirement under 19 U.S.C. ?1304 that the label indicate that certain of the fasteners are of U.S. origin.

The label proposed by OSHC, which would read:"Contains product of multiple countries, including: Taiwan, China, and Canada, and may also contain domestic product", is acceptable. It would also be acceptable for OSHC to use a label that says, "Contains articles from one or more countries, including (major source countries, including the U.S., listed in order of percentage of contribution)."

HOLDING:

Consistent with C.S.D. 84-56, the distributor in this case, who mixes a stock of foreign and domestic fasteners on a regular basis, may list on its country of origin label only the major source countries (including the U.S.) from which it acquired its stock.

A copy of this ruling 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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