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NY K84845





April 30, 2004

MAR-2 RR:NC:TA:349 K84845

CATEGORY: MARKING

Ms. Joy Bradley
Standard Textile Co. Inc.
P.O. Box 371805
Cincinnati, OH 45222-1805

RE: COUNTRY OF ORIGIN MARKING OF TOWELS

Dear Ms. Bradley:

This is in response to your letter dated March 31, 2004 requesting a ruling on whether imported towels are required to be individually marked with the country of origin if they are to be processed in the U.S. by a U.S. manufacturer. A marked sample was not submitted with your letter for review.

You intend to import unfinished cotton terry bath towels, referred to as towel blanks, from Israel. The terry fabric will be woven in Israel and cut to bath towel size. The towels will have selvedge on two sides and will be unfinished on the two ends. After importation the unfinished edges will be hemmed, a country of origin label will be sewn in one of the hemmed ends and the towels will be repackaged. The towels will be imported in cartons that are marked with the phrase “Made in Israel.” Your company will sell the towels in full carton lots to Unicor, Federal Prison Industries, Inc. Federal prisoners will finish the towel by hemming the ends and adding a sewn in label. The label will include the fiber content, RN number and one of the following phrases: “Made in Israel, Sewn in USA by Unicor,” “Made in Israel, Hemmed in USA by Unicor” or “Made in Israel, Finished in USA by Unicor.” The finished towels will be packed in Unicor cartons and sold to government agencies.

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 134.41(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. Section 134.1(d), defines the ultimate purchaser as generally the last person in the U.S. who will receive the article in the form in which it was imported. 19 CFR 134.1(d)(1) states that if an imported article will be used in manufacture, the manufacturer may be the ultimate purchaser if he subjects the imported article to a process which results in a substantial transformation of the article. The case of U.S. v. Gibson-Thomsen Co., Inc., 27 C.C.P.A. 267 (C.A.D. 98) (1940), provides that an article used in manufacture which results in an article having a name, character or use differing from that of the constituent article will be considered substantially transformed and that the manufacturer or processor will be considered the ultimate purchaser of the constituent materials. In such circumstances, the imported article is excepted from marking and only the outermost container is required to be marked. See, 19 CFR 134.35.

In this case, the imported towels are not substantially transformed as a result of the U.S. processing, and therefore the U.S. manufacturer is not the ultimate purchaser of the imported towels. The individual towels are not excepted from marking under 19 CFR 134.35.

However, Pursuant to 19 CFR 134.34, a marking exception under 19 CFR 134.32(d) may be authorized in the discretion of the district director for imported articles which are repacked after release from Customs and Border Protection (CBP) custody under the following conditions: (1) The containers in which the articles are repacked will indicate the origin of the articles to an ultimate purchaser in the United States (2) The importer arranges for supervision of the marking of the containers by CBP officers at the importer's expense or secures such verification, as may be necessary, by certification and the submission of a sample or otherwise, of the marking prior to the liquidation of the entry.

Although the above provision sets forth the procedures to be followed when unmarked imported articles are to be repacked into marked containers after importation, these procedures are also appropriate in other circumstances, i.e. where articles cannot be marked prior to importation due to practical problems. If the importer can demonstrate to CBP that there are significant practical problems involved in affixing the country of origin label prior to the U.S. processing, the procedures set forth in 19 CFR 134.34 could be utilized; subject to approval by the district director, to allow the importer to affix the country of origin label to the finished bath towels after importation. The country of origin of both the unfinished and finished towel is Israel. Each of the proposed country of origin phrases that will be used on the labels would be acceptable marking for the finished towels. We also note that the usual location for origin marking on a bath towel is on a sewn in label in the hem. The containers in which the unfinished towels are imported should be marked "Made in Israel."

The district director retains broad discretion concerning whether the exception should be granted, and, if so, the type of supervision required, which may include direct inspection, the submission of verifications or samples, or such other demonstration of compliance as the district director may require. It is noted that the district director may, under the authority of 19 CFR 134.34, require an importer to provide certification that new containers will be marked in accordance with Part 134; such certification may contain the same language as that set forth at 19 CFR 134.25 and 19 CFR 134.26. In cases in which the importer is not the repacker, the district director may require such assurances as he/she deems necessary to assure that others will repack the articles in such a manner as to satisfy all the requirements of 19 U.S.C. 1304 and Part 134, Customs Regulations. The towels must be marked at the time of importation with the country of origin unless there are practical problems where the articles cannot be marked prior to importation. If this is the case, subject to the approval of the district director, the procedures set forth in 19 CFR 134.34 could be utilized.

This ruling is being issued under the provisions of Part 177 of the Customs Regulations (19 CFR Part 177).

A copy of the ruling or the control number indicated above should be provided with the entry documents filed at the time this merchandise is imported. If you have any questions regarding the ruling, contact National Import Specialist John Hansen at 646-733-3043.

Sincerely,

Robert B. Swierupski
Director,

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