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HQ 115669





August 7, 2002

ENT-1-RR:IT:EC 115669 GG

CATEGORY: ENTRY

George R. Tuttle, Esq.
Law Offices of George R. Tuttle
Three Embarcadero Center, Suite 1160
San Francisco, CA 94111

RE: Ruling Request on Marking and Country of Origin Invoicing Requirements for Marked, Tape-Mounted Semiconductors

Dear Mr. Tuttle:

This is in response to your ruling request dated March 13, 2002, made on behalf of your client, Pericom Semiconductor Corporation (“Pericom”).

FACTS:

Pericom places orders for semiconductors with various unrelated overseas subcontractors. The assembly process consists in part of the mounting of the die on the frame or substrate, attaching gold lead wires where required, and encapsulating the resulting devices. The country of origin of the semiconductors is the country of assembly. Each semiconductor is marked with its respective country of origin.

The assembler places the semiconductors in tubes holding between 20 and 100 units, depending upon the package type. The tubes are then shipped to Pericom Technology in Shanghai for testing and packing on reels. Each reel accommodates 1,000, 1,500, 2,000 or 3,000 semiconductors. The semiconductors contained on each reel are sourced from various countries. Each reel is then placed in its own box. These boxes are marked in a manner similar to that described in HQ 558755, dated January 18, 1995, with the appropriate countries being inserted for Pericom’s situation. The marking statement approved by Customs in that ruling reads as follows:

ARTICLES CONTAINED IN THIS CARTON ARE MARKED WITH THEIR ACTUAL COUNTRY OF ORIGIN, WHICH MAY BE ONE OR MORE OF THE FOLLOWING COUNTRIES: TAIWAN, KOREA, HONG KONG, MALAYSIA, PEOPLE’S REPUBLIC OF CHINA, INDONESIA, PHILIPINES, OR THAILAND.

Pericom places the marked individual boxes into larger cartons, which also are marked in the same manner. It then imports the semiconductors in this condition and sells them, in their outmost cartons, to end users or distributors. The distributors extract the individual boxes containing reels from the outer cartons and sell the boxes of semiconductors to end users.

The commercial invoices accompanying the shipments sent to Pericom from the Shanghai facility contain the same disjunctive multiple country origin statement as the one appearing on the boxes and outer cartons.

ISSUE:

Whether Pericom’s proposed method of marking the individual semiconductors together with a disjunctive multiple country of origin marking on the boxes and cartons is acceptable pursuant to 19 U.S.C. §1304 and Part 134 of the Customs Regulations (19 CFR Part 134)? Whether the same disjunctive multiple country of origin statement may be placed on the commercial invoices to satisfy the origin requirements of 19 CFR §141.86? Whether the countries of origin on the Customs Form (CF) 7501 for Block 15 may be identified as “multi”, and Block 28 with the letter “O”?

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 United States shall be marked in a conspicuous place as legibly, indelibly, and permanently as the nature of the article (or container) will permit, in such manner as to indicate to the ultimate purchaser in the United States 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. Friedlander & Co., 27 C.C.P.A. 297, 302 (1940). Part 134 of the Customs Regulations implements the country of origin marking requirements and exceptions of 19 U.S.C. §1304. Section 134.41(b) of the Customs Regulations (19 CFR §134.41(b)), mandates that the ultimate purchaser in the United States must be able to find the marking easily and read it without strain.

In Headquarters ruling letter (HQ) 734101, dated July 9, 1991, Customs allowed toys which were individually marked with the actual country of origin to be sold inside unmarked plastic eggs in a vending machine, provided a conspicuous sign was posted on the vending machine stating: “The Toys Contained In This Machine Are Marked With The Country Of Origin, And May Be Made In One Or More Of The Following Countries: Hong Kong, Taiwan, China.” Citing to HQ 734101, Customs in HQ 558755, supra, made a similar determination concerning integrated circuits which were individually marked, placed in tubes or on reels, and then packaged in inner and outer cartons. The tubes and reels each contained circuits from only one country. Similarly, the inner cartons held tubes or reels all with a particular country of origin. However, the outer shipping cartons could contain several inner cartons holding circuits from different countries. The circuits typically reached the intended customers either in their inner or outer shipping cartons. Customs allowed the manufacturer to discontinue marking the tubes and reels when the outermost container which reached the ultimate purchaser was marked with the disjunctive country of origin statement appearing in the “Facts” section of this ruling. Based on these cases, Pericom may adopt a similar country of origin marking arrangement for its individually marked semiconductors.

Customs recently addressed the issue of the use of a disjunctive multicountry statement to satisfy country of origin invoicing requirements in HQ 562223, dated May 21, 2002. There it was determined that such a practice would not be allowed. The same analysis as that made in HQ 562223 is presented below.

With respect to invoicing requirements, Section 481(a)(10) of the Tariff Act of 1930, as amended (19 U.S.C. §1481(a)(10)) provides that invoices shall set forth “[a]ny other fact that the Secretary may by regulation require as being necessary to a proper appraisement, examination and classification of the merchandise.” An implementing regulation, section 141.86(a)(10) of the Customs Regulations, requires each invoice of imported merchandise to set forth information on the country of origin of the merchandise. In Treasury Decision (T.D.) 85-79, in response to a comment that the country of origin statement on the commercial invoice was not practical “inasmuch as many exporters do not know the country of origin and few problems have arisen on this matter”, Customs explained that:

The country of origin statement is extremely important considering the fact that much imported merchandise is subject to quota limitations and visa requirements. The statement would assist importers in determining the country of origin of goods, thereby alleviating possible liability on domestic importers’ parts if a false country of origin were shown on the invoice prepared by the exporter. Therefore, we are retaining this provision in §141.86(a).

In addition to being a factor in admissibility decisions, accurate origin information can be crucial when determining whether imported merchandise qualifies for a special trade program or is subject to a temporary modification established pursuant to trade legislation. It can also be a component of appraisement, such as when a transaction value of identical or similar merchandise is being considered.

We further note that the invoice origin requirement serves a very different and distinct function from the country of origin marking requirements set forth in 19 U.S.C. §1304. The section 1304 requirement informs an ultimate purchaser in the United States of the origin of the imported goods. The invoice requirement informs both the purchaser and the U.S. government of the country of origin of the goods and has an impact on trade statistics collected by the government as well as selectivity criteria and other uses by different government agencies.

It is clear that for invoicing purposes there is a valid need for precise country of origin information. To this end, a marking statement which indicates that the merchandise may originate in one of several listed nations may fulfill marking requirements but may not be used to satisfy the invoicing requirement of 19 CFR §141.86(a)(10). An invoice of a shipment containing merchandise from more than one country must reflect the quantities and values attributable to each country.

The next issue concerns the manner in which origin information is to be recorded on the Customs Form (CF) 7501. Pericom wants to know whether the countries of origin may be identified as “multi” in Block 15, with an “O” being placed in Block 28. Guidance on this issue is found in Customs Directive 3550-061, Instructions for Preparation of CF 7501, issued September 18, 1992. Country of origin information is provided in Block 15 of the CF 7501. The instructions for filling out that block are as follows with respect to the presence of merchandise from multiple countries of origin:

When a single entry summary covers merchandise from more than one country of origin, record the word “MULTI” in this block and in column 28, directly below the line number, and prefixed with the letter “O”, indicate a separate ISO code for the country of origin corresponding to each line number. It is clear that while the general origin designation of “MULTI” may appear in Block 15, a country-specific origin breakdown is required for each line of merchandise appearing in column 28 of the CF 7501.

HOLDING:

To satisfy the requirements of the marking statute and regulations, Pericom may mark the individual semiconductors with their actual country of origin, and then mark the inner and outer shipping cartons with the proposed disjunctive country of origin marking statement. The same disjunctive country of origin marking statement may not be used on the commercial invoices; rather, specific origin information will be required. The countries of origin shall be identified as “MULTI” in Block 15 of the CF 7501; separate ISO codes for the countries of origin corresponding to each line number prefixed with the letter “O” must appear in column 28.

Sincerely,

Jeremy Baskin
Acting Chief

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