HQ H011169 - Internal Advice Request; Clarification of 19 CFR § 134.32(f) and 19 CFR § 134.32(g) - United States International Trade Commision Rulings

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HQ H011169

June 15, 2007

CLA-2 OT:RR:CTF:TCM

CATEGORY: MARKING

TARIFF NOs.:

Port Director
U.S. Customs and Border Protection
112 W. Stutsman
Pembina, North Dakota 58271

RE: Internal Advice Request; Clarification of 19 CFR § 134.32(f) and 19 CFR § 134.32(g)

Dear Port Director:

This is in response to your request of May 10, 2007 for clarification regarding the general marking exceptions, specifically 19 CFR § 134.32(f) which provides for “[a]rticles imported for use by the importer and not intended for sale in their imported or any other form,” and 19 CFR § 134.32(g) which provides for “[a]rticles to be processed in the United States by the importer or for his account otherwise than for the purpose of concealing the origin of such articles and in such manner that any mark contemplated by this part would necessarily be obliterated, destroyed, or permanently concealed.”

FACTS:

Your request involves one entry of embossed wood moldings entered on April 16, 2007, from Canada. The outer container, a box, was marked “MADE IN CANADA”, however, the moldings within the box were each marked “MADE IN MALAYSIA.” A marking notice (CBP 4647) was issued and the shipment was exported back to Canada. Subsequently, it was determined that the moldings were for the consignees use only and not for resale and therefore exempt from marking under 19 CFR § 134.32(f) and 19 CFR § 134.32(g). The moldings were then reimported.

In response to a request for information (CBP-28), the manufacturer of the wood moldings, Sauder Industries Limited, indicated that the moldings in question were manufactured in Malaysia and shipped to Canada. In Canada, the moldings are printed and embossed through use of a specialized machine. “The product has 2 coats of paint applied [to it] and then goes through a machine that will indent the molding with a wood grain pattern and then put [an] ink grain pattern on the surface. . . . [A] clear top coat [is put] on it and [it is] package[d] at the end of the line. No further work is done by [the manufacturer] prior to [their] customers receiving it.” See Facsimile dated May 7, 2007 from Sauder Industries Limited. The Malaysian moldings are marked “MADE IN MALAYSIA” at the time the moldings enter Canada. The processing in Canada does not obliterate the marking. You have been informed that the “MADE IN MALAYSIA” marking is not removed as it would be cost prohibitive.

ISSUE:

Are the wood moldings processed in Canada products of Canada or of Malaysia?

If the Canadian processing causes the wood moldings to be products of Canada and the goods fall within exemptions to marking in 19 CFR § 134.32, must the marking “MADE IN MALAYSIA” be removed? In other words, if a marking exemption applies but the good is marked, must that marking be accurate?

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 a manner as to indicate to an 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 markings on the imported goods the country of which the good is the product. "The evident purpose is to mark the goods so 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 and Border Protection (CBP) Regulations (19 C.F.R. 134), implements the country of origin marking requirements and exceptions of 19 U.S.C. 1304. Section 134.1(b), CBP Regulations (19 C.F.R. 134.1(b)), defines "country of origin" as “the country of manufacture, production, or growth of any article of foreign origin entering the United States. 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" within the meaning of this part; however, for a good of a NAFTA country, the NAFTA Marking Rules determine the country of origin.”

Section 134.1(j), CBP Regulations (19 C.F.R. 134.1(j)), provides that the "NAFTA Marking Rules" are “the rules promulgated for purposes of determining whether a good is a good of a NAFTA country.” Section 134.1(g), CBP Regulations (19 C.F.R. 134.1(g)), defines a "good of a NAFTA country" as “an article for which the country of origin is Canada, Mexico or the United States as determined under the NAFTA Marking Rules.” As the wood moldings are processed in Canada prior to importation into the United States, we must consider whether the processing in Canada establishes the origin of the wood moldings to be Canada. Therefore, we must refer to the NAFTA Marking Rules which are set forth at 19 C.F.R. Part 102.

Section 102.11(a), CBP Regulations (19 C.F.R. 102.11(a)), sets forth the hierarchy under the NAFTA Marking Rules for determining country of origin for marking purposes of imported goods other than textile or apparel products within the scope of § 102.21. This section provides that the country of origin of a good is the country in which: The good is wholly obtained or produced;
The good is produced exclusively from domestic materials; or Each foreign material incorporated in that good undergoes an applicable change in tariff classification set out in § 102.20 and satisfies any other applicable requirements of that section, and all other applicable requirements of these rules are satisfied.

The wood moldings at issue are not “wholly obtained or produced” in Canada nor are they produced exclusively from domestic materials as the wood moldings are made into wood moldings in Malaysia prior to importation into Canada. See 19 CFR § 102.1(d) and 19 CFR § 102.21(g) defining “domestic material” and “wholly obtained or produced,” respectively. The foreign material entered into Canada is the wood moldings and we must refer to § 102.20 to determine if the processing in Canada causes the wood moldings to undergo a change in classification in Canada.

The subject wood moldings are classified in heading 4409, Harmonized Tariff Schedule of the United States (HTSUS), which provides for “[w]ood (including strips and friezes for parquet flooring, not assembled) continuously shaped (tongued, grooved, rebated, chamfered, V-jointed, beaded, molded, rounded or the like) along any of its edges, ends or faces, whether or not planed, sanded or end-jointed.” Section 102.20 provides, in pertinent part:

A change to heading 4401 through 4411 from any other heading, including another heading within that group; or

A change to strips continuously shaped along the ends and also continuously shaped along the edges or faces of heading 4409 from strips continuously shaped only along the edges or faces of heading 4409.

The wood moldings are classified in heading 4409, HTSUS, when they enter Canada from Malaysia and the processing in Canada does not effect a change in classification. Nor does the processing in Canada cause a change from strips continuously shaped only along the edges or faces to strips continuously shaped along the ends and edges or faces. Therefore, the origin of the wood moldings cannot be determined by application of § 102.11(a)(3).

Since application of § 102.11(a) does not result in an origin determination, we apply § 102.11(b) which provides:

Except for a good that is specifically described in the Harmonized System as a set, or is classified as a set pursuant to General Rule of Interpretation 3, where the country of origin cannot be determined under paragraph (a) of this section:

The country of origin of the good is the country or countries of origin of the single material that imparts the essential character to the good. . . .

The wood molding is the single material that imparts the essential character to the good and the wood molding is a good of Malaysia. Therefore, under § 102.11(b), the country of origin of the wood moldings is Malaysia. As such, the “MADE IN MALAYSIA” marking on the wood moldings is accurate.

As the wood moldings are products of Malaysia and are so marked, we need not address the second issue presented in this request for internal advice. However, we will address it for purposes of clarification. If a marking exemption applies but a good is nevertheless marked, that marking must be accurate. To allow an inaccurate marking would mislead or deceive the ultimate purchaser. See 19 CFR § 134.46.

We note that you indicate that the outermost container (i.e. box) in which the wood moldings were imported was marked “MADE IN CANADA.” As the wood moldings are products of Malaysia, the marking of the container is inaccurate. See 19 CFR § 134.22(a).

HOLDING:

The country of origin of the wood moldings is Malaysia. Although the wood moldings need not be marked pursuant to 19 CFR § 134.32(f) and 19 CFR § 134.32(g), the containers in which the wood moldings are imported need to be marked so as to indicate the origin their contents is Malaysia.

Sixty days from the date of this letter, Regulations and Rulings of the Office of International Trade will take steps to make this decision available to Customs and

Border Protection ("CBP") personnel and to the public on the CBP Home Page on the World Wide Web at www.cbp.gov, by means of the Freedom of Information Act, and other methods of public distribution.

Sincerely,

Myles B. Harmon, Director
Commercial and Trade Facilitation Division

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