NY K89781 - THE COUNTRY OF ORIGIN MARKING OF REMANUFACTURED DIESEL ENGINES - United States International Trade Commision Rulings

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NY K89781

October 15, 2004

MAR-2 RR:NC:MM:106 K89781

CATEGORY: MARKING

Mr. Paul Ostrem
Thermo King Corporation
314 West 90th Street
Minneapolis, MN 55420-3693

RE: THE COUNTRY OF ORIGIN MARKING OF REMANUFACTURED DIESEL ENGINES

Dear Ostrem:

This is in response to your letter dated September 16, 2004 requesting a ruling on whether the proposed labeling "Remanufactured in Mexico" is acceptable under the country of origin marking statute for imported diesel engines of Japanese origin which have been rebuilt in Mexico. A copy of a sample label was submitted with your letter for review.

You state that you are importers of diesel engines from various Japanese manufacturers that are placed in your refrigerating units and that are sold to individual dealers and other interested parties. As these Japanese origin engines break down they are returned to you for repair. You contemplate sending these engines to Mexico for various remanufacturing processes, including the following: complete stripping of each engine; complete bead blasting and cleaning; reworking of each engine according to its needs, that is, non-working parts are either replaced with new parts purchased and supplied by you, stripped from other engines or refinished in a machining operation. The engine block, head, cam and crank are machined on site. Each engine is reassembled, tested and repainted. The original serial number will not be removed during the remanufacturing. Replacement parts supplied by you will most likely be from Japan. The remanufactured engines will be returned to your Texas-based warehouse for future sale.

You propose to label each remanufactured engine with an adhesive label stating, among other information, “Remanufactured in Mexico”.

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. The ultimate purchaser should be able to know by an inspection of the marking on the imported goods the country of which the goods are the product.

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(b), Customs Regulations (19 CFR 134.1(b)), defines the country of origin of an article 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 for country of origin marking purposes.

A substantial transformation occurs when articles lose their identity and become new articles having a new name, character or use. In this instance, there is no new article; the diesel engines are rebuilt so that they can function in their intended use. The rebuilt engines do not have a new name, character or use; they are merely made functional again. The rebuilding of the engines in Mexico is not a substantial transformation.

Since the engines are not substantially transformed in Mexico, pursuant to 19 CFR 134.1(b), Mexico is not the country of origin for these articles. The country of origin of these remanufactured engines would be the country where the engines were originally built, that is, Japan. Therefore, for country of origin marking purposes, each engine must be permanently marked “Made in Japan”. However, to accurately advise the ultimate purchaser as to these articles, there is no objection to the label "Remanufactured in Mexico" appearing in close proximity to the country of origin marking.

As provided in section 134.41(b), Customs Regulations (19 CFR 134.41(b)), the country of origin marking is considered conspicuous if the ultimate purchaser in the U.S. is able to find the marking easily and read it without strain.

With regard to the permanency of a marking, section 134.41(a), Customs Regulations (19 CFR 134.41(a)), provides that as a general rule marking requirements are best met by marking worked into the article at the time of manufacture. For example, it is suggested that the country of origin on metal articles be die sunk, molded in, or etched. However, section 134.44, Customs Regulations (19 CFR 134.44), generally provides that any marking that is sufficiently permanent so that it will remain on the article until it reaches the ultimate purchaser unless deliberately removed is acceptable.

Since the remanufactured engines are of Japanese origin and not products of Mexico, these products do not qualify for NAFTA consideration and therefore your question about declaring under NAFTA using a Regional Value content approach under the Transaction Value method would not apply.

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 Patrick Wholey at 646-733-3013.

Sincerely,

Robert B. Swierupski
Director,

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