HQ 563250 - Country of origin marking requirements applicable to imported dual in-line memory modules (DIMMs); OEMs; distributors; ultimate purchaser, U.S. v. Gibson-Thomsen Co., Inc.; 19 CFR 134.32(d); 19 CFR 134.43(e); “Assembled in” - United States International Trade Commision Rulings

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HQ 563250

July 27, 2005

MAR-05 RR:CR:SM 563250 KKV

CATEGORY: MARKING

Mr. Lars-Erik A. Hjelm
Ms. Lisa M. Palluconi
Akin, Gump
Strauss, Hauer & Feld, LLP
1333 New Hampshire Avenue, N.W.
Washington, D.C. 20036-1564

RE: Country of origin marking requirements applicable to imported dual in-line memory modules (DIMMs); OEMs; distributors; ultimate purchaser, U.S. v. Gibson-Thomsen Co., Inc.; 19 CFR 134.32(d); 19 CFR 134.43(e); “Assembled in”

Dear Mr. Hjelm and Ms. Palluconi:

This is in response to your letter dated March 25, 2004, on behalf of Samsung Semiconductor, Incorporated (“SSI”) which requests a binding ruling regarding the country of origin marking requirements applicable to certain dual in-line memory modules (“DIMMs”) assembled in China.

FACTS:

SSI, an importer of memory products, is a wholly-owned U.S.-subsidiary of Samsung Electronics Co., Ltd. (“SEC”). SEC manufactures and assembles memory products, including die fabrication, DRAM assembly and DIMM assembly. SEC also wholly owns Samsung Electronics (Suzhou) Semiconductor Co., Ltd. (“SESS”), which will assemble and mark the DIMMs that are the subject of this ruling request.

SESS will assemble DIMMs from eight or more Korean-origin DRAMs. The DRAMs are made exclusively by SEC from die fabricated in Korea. Once completed, SESS will wrap the individual DIMMs in vacuum bags and pack the DIMMs in small inner cartons, which are, in turn, packed into larger outer cartons for export to SSI. SESS will mark both the inner and outer cartons with the country of origin.

SSI will sell the DIMMs to Original Equipment Manufacturers (OEMs) and distributors, either in the marked outer cartons or the marked inner cartons. SSI’s OEM customers will not offer the DIMMs for retail sale, but will assemble DIMMs into final products such as computers or other devices that incorporate memory modules. We are informed that SSI’s distributor customers will either sell the DIMMs as packaged in the marked inner cartons, or potentially, will repackage the DIMMs for retail sale in smaller quantities.

SSI proposes to mark the inner and outer cartons with one of the following phrases:

“Die Made in Korea; Assembled in China”; “Assembled in China; Die Made in Korea”; “Assembled in China from Die Made in Korea”; “Assembled in China from Korean Die.”

For purposes of this ruling, we assume that the country of origin of the DIMMs is China.

ISSUE:

Whether the proposed country of origin marking is acceptable for purposes of 19 U.S.C. 1304 and 19 CFR Part 134.

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 its container) will permit, in such a manner as to indicate to the ultimate purchaser in the United States the English name of the country of origin of the article. By enacting 19 U.S.C. 1304, Congress intended to ensure that the ultimate purchaser would be able to know by inspecting the marking on the imported goods the country of which the goods are 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, 302 C.A.D. 104 (1940).

As previously stated, for purposes of this ruling, we will assume that the country of origin of the DIMMs is China. Among the exceptions to country of origin marking is 19 U.S.C. 1304(a)(3)(D), also provided for in section 134.32(d), Customs Regulations (19 CFR 134.32(d)). That section provides that articles for which the marking of their containers will reasonably indicate the country of origin of the articles may be excepted from country of origin marking. However, for the exception to apply Customs must be satisfied that the articles will reach the "ultimate purchaser" in the original, properly marked containers in which the articles were imported.

Section 134.1(d), Customs Regulations (19 CFR 134.1(d)) provides that: The ‘ultimate purchaser’ is generally 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.

Under the principle set forth in U.S. v. Gibson-Thomsen Co., Inc., 27 CCPA 269 (1940), if an imported article will be used in domestic 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. Here, the DIMMS sold to OEMs for incorporation into computers or other articles are likely to undergo a substantial transformation by the U.S. operations. Consequently, if the DIMMs are substantially transformed, the U.S. processor is the “ultimate purchaser,” of the imported DIMMs. Accordingly, upon importation into the U.S., the DIMMs may be excepted from individual marking and only the outermost container of the DIMMs must be marked with the country of origin.

However, not all of the imported DIMMs are sold to OEMs for use in assembly operations. Some DIMMs are sold to distributors who merely resell the components, and perhaps repackage them into smaller quantities. These minimal packaging operations are insufficient to effect a substantial transformation of the imported parts into a new and different article. Consequently, in the absence of a substantial transformation, the “ultimate purchaser” of these articles is not the U.S. distributor, but the subsequent processor or retail purchaser. Accordingly, upon importation into the U.S., these DIMMs must be marked to indicate to the ultimate purchaser their country of origin.

Section 134.41, Customs regulations (19 CFR 134.41) provides that, as a general rule, the marking requirements are best met by marking worked into the article at the time of manufacture. Nonetheless, based on the facts presented, the DIMMs sold to distributors may be excepted from marking pursuant to 19 U.S.C. 1304(a)(3)(D) and 19 CFR 134.32(d) and only the outer container in which the devices are packed may be marked, provided the requirements of 19 CFR 134.26 are satisfied. The requirements of 19 CFR 134.26 will be satisfied if the devices are imported in properly marked containers, and SSI informs the U.S. distributor that if the devices are repackaged, they must be repackaged in properly marked containers.

With regard to the proposed marking statements, section 134.43(e), Customs Regulations (19 CFR 134.43(e)), provides, in pertinent part that:

Where an article is produced as a result of an assembly operation and the country of origin of such article is determined under this chapter to be the country in which the article was finally assembled, such article may be marked, as appropriate, in a manner such as the following:

(1) Assembled in (country of final assembly);

(2) Assembled in (country of final assembly) from components of (name of country or countries of origin of all components); or

(3) Made in, or product of, (country of final assembly).

Therefore, the DIMMs may be marked with the phrase “Assembled in China”, “Made in China”, “Product of China” or simply “China.” We note that once an article has been correctly marked with the country of origin, there is no additional marking requirement for indicating the location of other manufacturing steps or the origin of any components utilized. However, where SSI wishes to reference the country of origin of the die component, the words “Made in” or Product of” may not appear in the same origin statement as the phrase “Assembled in.” See, 61 Fed. Reg. 37678. Accordingly, the first three proposed markings are not acceptable. However, the DIMMs may be marked phrases “Assembled in China from die of Korea” in accordance with 19 CFR 134.43(e). The phrase “Assembled in China from Korean Die” would also be acceptable under 19 U.S.C. 1304 and 19 CFR Part 134.

HOLDING:

On the basis of the information submitted, imported DIMMs that are sold to OEMs and substantially transformed in the U.S. through subsequent manufacturing may be excepted from individual marking where the outermost container is marked with the country of origin. Imported DIMMs that are sold to distributors for resale and/or repackaging may be excepted from individual marking pursuant to 19 U.S.C. 1304(a)(3)(D) and 19 CFR 134.32(d) where the outermost container in which the DIMMs are packed are marked with the country of origin of its contents, and the requirements of 19 CFR 134.26 are satisfied.

The outermost container may be marked with the phrase “Assembled in China”, “Made in China”, “Product of China” or simply “China.” The phrases “Assembled in China from die of Korea” and “Assembled in China from Korean Die” are also acceptable under 19 U.S.C. 1304 and 19 CFR Part 134.

A copy of this ruling letter should be attached to the entry documents filed at the time this merchandise is entered. If the documents have been filed without a copy, this ruling should be brought to the attention of the Customs officer.

Sincerely,

Monika R. Brenner
Chief

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