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HQ 561545

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October 20, 2000

MAR 05 RR:CR:SM 561545 KKV

CATEGORY: MARKING

Mr. Thomas Howenstine
Calderon Textiles
6678 Guion Road
Indianapolis, IN 46268

RE: Country of origin marking requirements applicable to shop towels imported in bales

Dear Mr. Howenstine:

This is in response to your letter dated October 7, 1999, and subsequent letter dated December 6, 1999, both of which seek a binding ruling with regard to shop towels imported into the United States in bales.

FACTS:

You indicate that Calderon Textiles intends to import shop towels into the United States from either Turkey or Nepal. In the first scenario, the towels will be imported from Nepal in large bales, each containing 2500 towels. The bales in turn are imported in burlap bags that contain four sticks on each side which are bound with metal bands. The country of origin of the towels is stenciled on each of the burlap bags. Inside each bale are bundles of 50 shop towels held together by a string through a hole in each of the towels. We are informed that the burlap bags are never broken up, but are sold whole to linen supply companies that rent the shop towels to machine shops and other industrial users. Photographs of the burlap bags with the country of origin marking were submitted for our examination.

In the second scenario, the towels will be imported from Turkey in large bales, each of which contains 2500 towels. The bales will be imported in plastic bags that are bound with metal bands. Visible through the plastic bag is a paper insert which is marked with the country of origin. We are informed that, like the towels in the first scenario, the plastic bags will never be broken up for sale, but will be sold, whole, to linen supply companies who, in turn, rent then to machine shops and other industrial users. Photographs of the plastic bags with the country of origin were submitted for our examination. ISSUE:

Whether shop towels which are imported and sold in bales marked with the country of origin of the contents must be individually marked with their country of origin.

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 at 302 (1940).

Part 134, Customs Regulations (19 CFR Part 134), implements the country of origin marking requirements and exceptions of 19 U.S.C. 1304. Section 134.41(b), Customs Regulations (19 CFR 134.41(b)), mandates that the ultimate purchaser in the U.S. must be able to find the marking easily and read it without strain. Pursuant to 19 U.S.C. 1304 (a)(3)(D) and 19 CFR 134.32(d), an imported article is excepted from individual marking if the marking of a container of such article will reasonably indicate the origin of such article. Accordingly, if the ultimate purchaser can tell the country of origin of the shop towels by viewing the container, the individual shop towels themselves would be excepted from marking under this provision.

Customs has previously discussed the identity of the ultimate purchaser where shop towels are imported and sold in marked bales for subsequent rental to customers. In 1990, a ruling was requested on behalf of your firm with regard to the proposed importation of shop towels from Bangladesh and Pakistan. There, as in the first fact scenario you propose here, the shop towels were imported in unbroken bales contained in marked burlap bags. The bales were subsequently sold, unbroken, to linen supply companies who rented them to machine shops and other industrial users. In response to your request, Customs issued Headquarters Ruling Letter (HRL) 733267, dated June 27, 1990, which held that the ultimate purchasers of the imported towels are the linen supply companies and that, consequently, the imported towels are excepted from individual marking pursuant to 19 U.S.C. 1304(a)(3)(D) and 19 CFR 134.32(d), provided that Customs is satisfied that the towels will reach the ultimate purchaser in the unopened, marked burlap bags. Likewise, in HRL 708979, dated May 31, 1978, Customs ruled that the linen supply company which purchases the towels in rolls for rental to its customers is the ultimate purchaser of those imported items.

Similarly in this case, we find that the linen supply companies who buy the shop towels in unbroken bales for rental to machine shops and other industrial users are the ultimate purchasers of the shop towels. Regardless of whether the bales are contained in burlap bags marked with the country of origin or, alternatively, in plastic bags whose visible paper insert is marked with the country of origin, so long as the country of origin marking on the outermost container meets the requirements for legibility, permanence and conspicuousness, the requirements of 19 U.S.C. 1304 will be satisfied, provided that the port director of Customs at the port of entry is satisfied that the imported towels will reach the ultimate purchaser – the linen supply companies – in the marked containers in which the articles were imported.

We note that the language of section 134.1(d) of the Customs (19 CFR 134.1(d)) currently defines “ultimate purchaser” as:

[T]the last person in the United States who will receive the article in the form in which it was imported; however, for a good of a NAFTA country, the ultimate purchaser is the last person in the United States who purchases the good in the form in which it was imported.

However, in the Notice of Proposed Rulemaking, published in the Federal Register on January 26, 2000 (65 FR 4193), Customs proposed to eliminate this disparity by revising 134.1(d) to read “[t]he ‘ultimate purchaser’ is generally the last person in the United States who purchases the good in the form in which it was imported. With regard to the matter under consideration, since the linen supply companies that purchase the unbroken bales of towels for subsequent rental are the both last person who will receive the goods in the form in which it was imported as well as the last person in the United States who purchases the goods in the form in which it was imported, they meet the definition of “ultimate purchaser” under both the current and proposed regulations. Therefore, the adoption of the proposed regulations will have no impact upon the instant case.

HOLDING:

Based on the information provided, where shop towels are imported and sold in unbroken bales to linen supply companies who subsequently rent them to their customers, the ultimate purchaser of shop towels is the linen supply company. Accordingly, where the country of origin marking on the outermost container meets the requirements for legibility, permanence and conspicuousness, the shop towels will be excepted from individual marking pursuant to 19 U.S.C. 1304(a)(3)(D) and 19 CFR 134.32(d), provided that the port director of Customs at the port of entry is satisfied that the imported towels will reach the ultimate purchaser – the linen supply companies – in the marked containers in which the articles were imported.

A copy of this ruling letter should be attached to the entry documents filed at the time the goods are 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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