HQ 561622 - Country of origin marking of automotive headlamp housings; 19 CFR 134.35(a); - United States International Trade Commision Rulings

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HQ 561622

April 4, 2000

MAR-05 RR:CR:SM 561537 BLS

CATEGORY: MARKING

Jeremy Ross Page
Sandler, Travis & Rosenberg LLC
200 South Wacker Drive
Chicago, IL 60606

RE: Country of origin marking of automotive headlamp housings; 19 CFR 134.35(a);

19 CFR 134.32(h); 19 CFR 134.46

Dear Sir:

This is in response to your letter dated October 7, 1999, on behalf of Guide Corp. (“Guide”), requesting a prospective ruling concerning the country of origin marking requirements for certain automotive headlamp housings. In a letter dated November 18, 1999, Customs granted a limited marking exception under 19 CFR 134.32(c) and (o) for two shipments of headlamp housings imported by Guide pursuant to the marking exceptions under 19 U.S.C. 1304(a)(3)(C) and (K). Samples of the housing and of the completed headlamp were submitted with the ruling request.

FACTS:

Guide imports automotive headlight housings from Korea, for further manufacture into complete headlamp assemblies. Guide states that the housing is one of 42 parts required to produce a completed headlamp assembly. The finished products are then shipped to various U.S.-based automobile manufacturing facilities of General Motors (“GM”), where they are assembled into finished automobiles. These vehicles are thereafter exported for sale to Japan, Korea and Israel.

In their condition as imported, the housings are marked “Made in Korea.” In addition, the housings also contain a separate country of use designation that is larger in size than the “Made in Korea” marking and is in close proximity to such country of origin
marking. The sample housing has the following marking:

KOREA &

ISRAEL

LENS >PC<

HSG >UP<

MADE IN KOREA

This additional “country of use” marking is used by GM for purposes of determining which headlamp (produced with these housings) should be installed in which finished vehicle. Guide states that this determination is crucial as each country has its own photometric lighting requirements.

ISSUE:

What are the country of origin marking requirements for the imported headlight housings?

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 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. 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 purchased, 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 at 302; C.A.D. 104 (1940).

Part 134, Customs Regulations (19 CFR Part 134), implements the country of origin marking requirements and the exceptions of 19 U.S.C. 1304. Section 134.1(b) (19 CFR 134.1(b)), defines “country of origin” as 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” within the meaning of the marking laws and regulations. However, for a good of a NAFTA country, the NAFTA Marking Rules will determine the country of origin.

Pursuant to 19 CFR 134.35(a), articles other than goods of a NAFTA country used in the U.S. in manufacture which results in an article having a name, character, or use differing from that of the imported article will be within the principle of the decision in the case of U.S. v. GibsonThomsen Co., Inc., 27 CCPA 269 (1940). Under this principle, the manufacturer or processor in the U.S. who converts or combines the imported article will be considered the “ultimate purchaser” of the imported article and the article shall be excepted from marking. Under this provision, the outermost containers of the imported articles are required to be marked.

Section 134.46, Customs Regulations (19 CFR 134.46), provides in part that when the name of a city or locality 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, appears on an imported article or its container, and those words, letters, or names may mislead or deceive the ultimate purchaser 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.

Guide contends that 19 CFR 134.46 is not triggered in this instance for the following reasons:

1) Guide is the ultimate purchaser of the housings as the operations performed in the U.S. in assembling the housings and other components into finished automotive headlamps results in a substantial transformation of these imported parts. Therefore, pursuant to 19 CFR 134.35(a), the housings are not required to be marked.

Assuming for these purposes that Guide is the ultimate purchaser of the housings, the articles are excepted from the marking requirements pursuant to 19 CFR 134.32(h), as Guide “must necessarily know, ... the country of origin by reason of the circumstances or their importation or by reason of the character of the articles even though they are not marked to indicate their country of origin.” Provided this exception applies, the containers are also excepted from the marking requirements pursuant to 19 CFR 134.22(e).

3) Section 134.46 is not triggered whether Guide or GM is determined to be the ultimate purchaser, as neither party was misled or deceived as to the actual country of origin of the headlamp housing.

The initial question we must resolve is whether the assembly of the headlamp housing with the other headlamp components in the U.S. results in a substantial transformation of the imported article. If so, Guide will be the ultimate purchaser of the housing.

In Headquarters Ruling Letter (HRL) 734097, November 25, 1991, Customs ruled that imported terminal video shells (computer terminal housings that contain video electronics, but no logic boards), were substantially transformed in the U.S. when they were processed by the installation of certain key components, such as terminal logic boards, to make them into dumb terminals for certain computer systems. Customs indicated that the addition of the logic boards created a new article. In HRL 732170 dated January 5, 1990, Customs held that a television chassis, containing a tuner, speaker, and circuit board, was substantially transformed into a new and different article of commerce, namely a TV receiver, when a television picture tube, deflection yoke, electron beam bender, degousser coil, and remote control unit were assembled into the chassis. Accordingly, the manufacturer of the TV receiver was the ultimate purchaser of the imported chassis. See also HRL 559253 dated October 5, 1995 (German-origin tachometer housing substantially transformed by insertion of tachometer assembly of Swiss origin, which provided the essential character to the article).

In the instant case, the headlamp housing is one of 42 parts and components which Guide assembles to produce the finished headlamp assembly, which also includes the lens, a component critical to the function of the headlamp and which also helps form the final shape of the headlamp when it is assembled to the housing. Based on these facts, we find that the headlamp housing loses its identity and is substantially transformed into a new and different article of commerce, an automotive headlamp, when assembled with the other components. Therefore, pursuant to 19 CFR 134.35(a), Guide will be considered the “ultimate purchaser” of the imported housing and the article will be excepted from the marking requirements. However, under this exception, the outermost containers are required to be marked.

Section 1304(a)(3)(H) (19 U.S.C. 1304(a)(3)(H)), implemented by 19 CFR 134.32(h), provides that an article is excepted from marking where the ultimate purchaser, by reason of the circumstances of the importation, must necessarily know the country of origin of such article even though it is not marked to indicate its country of origin or in case of a NAFTA country, must reasonably know, the country of origin by
reason of the circumstances of its importation. Provided this exception applies, neither the article nor the import container are required to be marked. See 19 U.S.C. 1304(b) and 19 CFR 134.22(e).

Generally speaking, Customs has required that the importer be the ultimate purchaser of the imported article and have direct contact with the foreign supplier for 19 CFR 134.32(h) to apply. See HRL 733781 (April 11, 1991). For example, in C.S.D. 80-114 (HRL 711081, September 26, 1979), Customs found that where the ultimate purchaser was the importer that owned an interest in the company from which it purchased the articles, and ordered the articles directly from that company, the exception under 19 U.S.C. 1304(a)(3)(H) applied. In HRL 733096 (February 8, 1990), Customs applied this exception where the ultimate purchaser was the importer and also the parent corporation of its wholly owned subsidiary, from which the parent corporation ordered the foreign articles. See also HRL 730243 (March 5, 1987) HRL 731583 (May 31, 1989).

In U.S. Wolfson Bros. Corp. v. United States, 52 Cust. Ct. 86, 91 (1964), the court cited with approval the following statement from "Exporting to the United States":

The clearest application of this [19 CFR 134.32(h)] exemption is when the contract between the ultimate purchaser in the [U.S.] and the supplier abroad insures that the order will be filled only with articles grown, manufactured, or produced in a named country.

In HRL 731967 (May 11, 1990), Customs granted exceptions from marking under 19 CFR 134.32(h) and 134.22(d)(1) where the contract between the importer and the ultimate purchaser specifically required article labeling that identified the name and country of the manufacturer from whom the goods were ordered. In that case, the ultimate purchaser was a discrete entity, namely an agency of the U.S. government, and the disclosure of the origin of the articles supplied was mandated by requirements other than Customs laws.

In this case, because Guide is the importer and the ultimate purchaser, the exception from marking under 19 CFR 134.32(h) would be appropriate if Guide directly contracts with the Korean manufacturer of the housings, who is producing them in Korea, and Guide is given written assurance that the housings will only be made in Korea. You state that Guide directly contracts with the Korean manufacturer and that Guide also is a part owner of the Korean company. Assuming the contract provides that the housings will be produced only in Korea, this exception will apply and the outermost container will also be excepted from marking.

Guide also states that it knows at the time of entry that the additional reference (or references) to countries other than Korea on the housing is being provided solely to identify the part for reexport purposes as part of a finished vehicle and does not reflect the country of origin of the housing. Accordingly, we find that as Guide will not be misled or deceived by the reference to countries other than Korea, 19 CFR 134.46 will not be triggered.

HOLDING:

1) The headlamp housings undergo a substantial transformation in the U.S. as a result of assembly into the completed headlamps. Therefore, Guide is the ultimate purchaser of the imported housings and, pursuant to 19 CFR 134.35(a), the housings are excepted from the marking requirements.

2) Pursuant to 19 CFR 134.32(h), the outermost containers in addition to the imported articles will be excepted from the marking requirements provided that Guide establishes that it necessarily knows that the housings are made in Korea. Assuming the contract between Guide and the Korean manufacturer provides that the housings will be produced only in Korea, this exception will apply and the outermost container will also be excepted from marking.

3) Guide knows that the additional reference (or references) to countries other than Korea on the housing is being provided solely to identify the part for reexport purposes as part of a finished vehicle and does not reflect the country of origin of the housing. Therefore, as Guide will not be misled or deceived by the reference (or references) to countries other than Korea, 19 CFR 134.46 will not be triggered.

Sincerely,

John Durant, Director
Commercial Rulings Division

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