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HQ 560383





August 15, 1997

MAR-2-05 RR:TC:SM 560383 MLR

CATEGORY: MARKING

Port Director
U.S. Customs Service
P.O. Box 3130
(Juarez-Lincoln Bridge)
Laredo, TX 78044

RE: Internal Advice; Country of origin marking for auto parts (springs); container marking; 19 CFR 134.32(d); 19 CFR 134.26; 19 CFR 134.32(g); 19 CFR 134.32(h); Mexico

Dear Director:

This is in reference to your memorandum of March 24, 1997, requesting Internal Advice on the country of origin marking requirements for auto parts (springs) imported by Chrysler Corporation from Mexico.

FACTS:

Chrysler states that the auto parts at issue are made in Mexico. Some of the parts are shipped to various Chrysler assembly plants in the U.S., which Chrysler claims are fully aware of the origin of the parts. Most of the imported parts are used in the service of motor vehicles. Chrysler also states that some of the imported auto parts may be removed from their bulk containers and shipped to other users who service motor vehicles (hereinafter Aservice centers@) or to retail stores who sell the parts to retail customers.

Chrysler states that any packaging surrounding the parts indicates that the parts were made in Mexico. However, Chrysler also states that there may be instances where the auto parts are imported in a marked master container, but Chrysler will remove the parts and repack them in properly marked containers before forwarding them to retail stores. Chrysler claims that they have stringent guidelines (both on-line instructions in their systems and printed materials) for repacking and marking the imported auto parts. Chrysler seeks an exception from marking for one year pursuant to 19 CFR 132.32(g) and (h).

ISSUE:

Whether the auto parts may be excepted from country of origin marking pursuant to 19 CFR 134.32(g) and (h).

LAW AND ANALYSIS:

The marking statute, section 304, Tariff Act of 1930, as amended (19 U.S.C. 1304), provides that, unless excepted, every article of foreign origin (or its container) 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 and exceptions of 19 U.S.C. 1304.

Section 134.1(d), Customs Regulations, defines Aultimate purchaser@ as generally the last person in the U.S. who will receive the article in the form in which it was imported. Chrysler states that when the parts are shipped to its assembly plants, the assembly plants are the ultimate purchasers. But, Chrysler also acknowledges that it is not the ultimate purchaser when the parts are shipped to service centers and retail stores. Pursuant to 19 CFR 134.35, a U.S. processor is considered to be the ultimate purchaser if the processing constitutes a substantial transformation, i.e., results in a new name, character or use. Accordingly, if Chrysler=s assembly plants or the other service centers use the auto parts in servicing motor vehicles which results in a substantial transformation of the auto parts, then Chrysler (or the service centers) will be the ultimate purchaser. However, if the imported parts are sold to retail stores in their imported form, we find that the purchaser at retail is the ultimate purchaser.

Chrysler wishes to receive an exception from marking under 19 U.S.C. 1304 (a)(3)(G) and (H). Section 1304(a)(3)(G), implemented in 19 CFR 134.32(g), provides that articles to be processed in the U.S. by the importer or for his account otherwise than for the purpose of concealing the origin of such articles and in such manner that any mark contemplated by this section would necessarily be obliterated, destroyed, or permanently concealed are excepted from marking. Customs has ruled that a condition to this exception is that the port director is satisfied that the processed article will be marked in a manner to indicate the country of origin to the ultimate purchaser in the U.S. See Headquarters Ruling Letter (HRL) 729434 dated May 23, 1986. This requires the U.S. processor to mark the processed article unless the U.S. processor is the ultimate purchaser. In this case, some of the parts will not be processed by Chrysler before they are shipped to the service centers or retail stores; accordingly, at the time of importation, we find that 19 U.S.C. 1304(a)(3)(G) is not applicable.

Section 1304(a)(3)(H), implemented in 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. In general, this requires the importer to be the ultimate purchaser of the imported article and have direct contact with the foreign supplier. In this case, Chrysler acknowledges that it is not the only ultimate purchaser of the imported parts. Accordingly, an exception from marking pursuant to 19 U.S.C. 1304(a)(3)(H) is not applicable.

Rather, pursuant to 19 U.S.C. 1304(a)(3)(D) and 19 CFR 134.32(d), an exception from individual marking is applicable where the marking of the container of such article will reasonably indicate the origin of the article. This exception is normally applied in cases where the article is imported in a properly marked container and Customs officials at the port of entry are satisfied that the ultimate purchaser will receive it in the original unopened marked container. Relevant factors regarding whether an article is likely to remain in its original container include the chain of distribution, the type of container, and the nature of the article.

In the instances where Chrysler will sell the parts to service centers or to retail stores, Chrysler states that the package which contains the parts will be marked with the parts= country of origin. However, in these instances, the requirements of 19 CFR 134.26 must be satisfied.

Section 134.26(a), Customs Regulations {19 CFR 134.26(a)}, provides in pertinent part that:

If an imported article subject to these requirements is intended to be repacked in retail containers (e.g. blister packs) after its release from Customs custody, or if the port director having custody of the article, has reason to believe that such article will be repacked after its release, the importer shall certify to the port director that: (1) If the importer does the repacking, he shall not obscure or conceal the country of origin marking appearing on the article, or else the new container shall be marked to indicate the country of origin of the article in accordance with the requirements of this part; or (2) if the article is intended to be sold or transferred to a subsequent purchaser or repacker, the importer shall notify such purchaser or transferee, in writing, at the time of sale or transfer, that any repacking of the article must conform to these requirements.

The certificate of marking to be provided by the importer to Customs is set forth at 19 CFR 134.26(a), and this paragraph indicates that it may be submitted in blanket form to cover all importations of a particular product for a given period, but that the certificate must be filed at each port where the article(s) is entered. As 19 CFR 134.26(a) indicates that the certificate of marking may cover all importations of a particular product, Chrysler must identify that product, whether by name or by part number.

The notice that shall be given to the subsequent purchaser or repacker is set forth at 19 CFR 134.26(d). Accordingly, as Chrysler supplies the parts to service centers and to retail stores, Chrysler, as the importer, must file a certification with the port director as indicated in 19 CFR 134.26(a), and must provide notice to the service centers (who may resell the parts) and retail stores, as indicated in 19 CFR 134.26(d).

Therefore, with regard to your question as to whether Chrysler must provide Customs with a list of the service centers or retail stores to which the parts are sold, this is not a requirement to receive the marking exception under section 134.32(d). However, your office is only required to except the parts from individual marking pursuant to section 134.32(d) if the outer containers are properly marked with the parts= country of origin, and you are satisfied that the ultimate purchasers (Chrysler, the service centers, or retail customers who purchase the parts from retail stores) will receive the parts in properly marked containers. Therefore, in addition to Chrysler=s executing the certificates required under section 134.26, your office may request additional evidence on an as needed basis to ensure that the articles reach the ultimate purchasers in properly marked containers. The outer containers should be marked AMade in Mexico@ or just AMexico@, provided there are no other locality names other than the country of origin of the parts.

HOLDING:

Based on the facts presented and depending upon the particular circumstances described, either Chrysler, the service centers, or the retail stores could be the ultimate purchasers of the imported parts. Therefore, the marking exceptions under 19 U.S.C. 1304(a)(3)(G) and (H) are not applicable. However, the parts may be excepted from individual country of origin marking pursuant to 19 CFR 134.32(d) as long as Customs officials at the port of entry are satisfied that the ultimate purchasers will receive the parts in properly marked containers. If Chrysler sells the parts to service centers or to retail stores, the requirements of 19 CFR 134.26(a) and (d) must be satisfied.

This decision should be mailed by your office to the internal advice requester no later than 60 days from the date of this letter. On that date the Office of Regulations and Rulings will take steps to make the decision available to Customs personnel via the Customs Rulings Module in ACS and the public via the Diskette Subscription Service, Freedom of Information Act and other public access channels.

Sincerely,

John Durant, Director

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