NY N007032 - The country of origin for marking purposes of transistors and diodes and their inner cartons and outer shipping cartons - United States International Trade Commision Rulings

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NY N007032

February 23, 2007

MAR-2 RR:NC:1:109

CATEGORY: MARKING

Ms. Amy J. Johannesen
Cerny Associates, P.C.
Attorneys at Law
24 Smith Street
Building 2, Suite 102
Pawling, New York 12564

RE: The country of origin for marking purposes of transistors and diodes and their inner cartons and outer shipping cartons

Dear Ms. Johannesen:

This is in response to your letter dated February 8, 2007 requesting a ruling, on behalf of your client NEC Electronics America, Inc. (“the Company”), on the acceptable country of origin marking for semiconductor devices, namely transistors and diodes, and their inner cartons and outer shipping containers, when imported into the United States. A marked sample of the inner cartons, outer carton shipping labels, and photocopies of country of origin labels was submitted with your letter for review and these samples are being returned to you as per your request.

According to your letter, NEC Electronics America, Inc. intends to import transistors and diodes (semiconductor devices) from a number of countries, including Japan, Korea, Singapore, and Malaysia. These articles are very small, ranging in size from approximately 1.62mm x 1.62mm to, at most 10mm x 13mm. In most instances, the transistors and diodes are too small to be marked with their country of origin. The diodes are imported on tapes and reels. The transistors are also imported on tape and reels, or in some instances loose in a sealed plastic “bulk” bag. The tape and reels or “bulk” bags are contained in sealed cardboard inner cartons featuring a label setting forth country of origin marking. One or more sealed inner cartons are placed within an outer shipping container, which also is labeled with country of origin.

With respect to the transistors, you have elaborated as to how their inner cartons, outer shipping cartons, and shipping labels will be marked upon importation into the United States. However, you did not address the same for the diodes. Therefore, assuming that the same type of labeling will be applied to the diodes, as that of the transistors, the country of origin ruling determined within this letter will apply to both the transistors and the diodes.

Approximately 90% of the transistors and diodes semiconductor devices are sold to Original Equipment Manufacturers (OEMs), either directly or through one of NEC Electronics America’s sales agents. The OEMs use the transistors and diodes to manufacture a variety of products. Sales agent orders specifically identify the end-customer OEM such that it is clear from the time of order placement who the end user will be. In addition, these OEMs generally know the country of origin of the transistors and diodes that they purchase from NEC Electronics America, Inc. because, in most instances, they work directly with the NEC Electronics America, Inc.’s design team in Japan concerning the design and function of the product, and they will often review and approve specific production plants for their internal quality control purposes.

The transistors and diodes will either be sold in their sealed shipping containers as imported or, for some smaller quantity orders, they will be sold in their sealed inner shipping cartons. Generally, NEC Electronics America, Inc. does not sell in smaller quantities than the inner shipping cartons; however, in those instances where a quantity smaller than that may be required, NEC Electronics America, Inc. may split the shipment into smaller shipping cartons, which feature labels identical to the original regarding all information with the exception of quantity. Therefore, these products reach the ultimate purchaser OEMs in their sealed inner cartons or, in any instance when repacking occurs, in properly labeled sealed repacked cartons. Prior to leaving NEC Electronics America Inc.’s warehouse, each outer shipping carton is also labeled with a repacking label that clearly instructs their customers that they must preserve the country of origin should they repack any of the articles purchased from them. (The repacking label was furnished as Enclosure A and reads as follows: “NOTICE TO SUBSEQUENT PURCHASER OR REPACKER: These articles may be imported. The requirements of 19 U.S.C. 1304 and 19 CFR part 134 provide that the articles in their containers must 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. NEC50080-LBL”.)

In a small percentage of instances (under 10% of sales), transistors or diodes may be sold to distributors, some of which may not sell primarily to OEMs. As with products sold directly to OEMs by NEC Electronics America, Inc., each inner carton or bag, and each outer shipping container sent to a distributor is sealed and properly marked with country of origin. Each outer shipping carton sent to a distributor is also marked with a repacking statement, which requires that should the transistors or diodes be repacked in any way, the new packaging must include clear labeling that indicates the country of origin of the products as in Enclosure A.

Samples of inner cartons, outer carton shipping labels, and photocopies of country of origin labels were furnished. Each sample was marked as an Enclosure. The Enclosures range from A through E and are described below, with the exception of Enclosure A, which was described above.

Enclosure B is a sample of a square inner carton of the type, in which either transistors or diodes would be packed, marked with a standard shipping label. The country of origin is clearly marked on the shipping label as “Assembled in Malaysia from wafers of Japan” (in this case, the carton label contemplates transistors that were encapsulated in Malaysia from wafers that were diffused in Japan).

Enclosure C is a sample of a “pizza box” inner carton and a sample of a rectangular inner carton, in which transistors would be packed, marked with a standard label, which, likewise, clearly states that the transistors were “Assembled in Malaysia from wafers of Japan.”

Enclosure D are photocopies of outer carton shipping labels, used on shipments into the United States, which clearly state the country of origin as “Assembled in Malaysia from wafers of Japan.”

Enclosure E consists of copies of 5 labels (2 small and 3 large) used by NEC Electronics America Inc.’s U.S. warehouse when shipping products out of the warehouse. The smaller labels are used to mark inner cartons in instances where less than a full outer shipping carton is sent to a customer, and the larger labels are used to mark the outer shipping cartons. These labels clearly state the country of origin of the products (examples submitted are for products made entirely in Japan, products made in Korea, and products assembled in Singapore from wafers of China), and this country of origin statement is in a more prominent font than NEC Electronics America, Inc.’s address on the shipping label.

You have not provided an explanation of the assembly process. However, for purposes of this ruling, as stated in part in Headquarters Ruling Letter (HRL) HQ 562115, dated July, 6, 2001, this office will assume that the assembly process performed abroad resulted in a substantial transformation and that accordingly, the country of origin will be the country where the wafers underwent an assembly process that produced transistors and diodes.

This office notes that in C.S.D. 80-227, dated February 13, 1980, and in Headquarters Ruling Letter (HRL) 732357, dated May 21, 1990, United States Customs found that the assembly of integrated circuit (semiconductor) wafers into integrated circuit packages result in a substantial transformation. Thus, the finished integrated circuits were considered to be a product of the country in which such processing occurred. Based upon the assumption that the substantial transformation of the semiconductor devices subject to this ruling, from wafer to transistor or diode, occurred in Japan, Korea, Singapore, or Malaysia, the country of origin for the transistors and diodes is Japan, Korea, Singapore, or Malaysia, depending on where the assembly occurred.

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 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 U.S. the English name of the country of origin of the article.

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 United States 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.

You state in your letter that approximately 90% of these transistor and diode semiconductor devices are sold to Original Equipment Manufacturers (OEMs), which would receive them directly from NEC Electronics America Inc. in their marked inner and outer cartons. The OEMs generally would know the country of origin of these semiconductor devices do to their need to track them for quality control purposes. In any instances where semiconductors, transistors and diodes, are sold to distributors for further sale, NEC Electronics America, Inc.’s inner and outer cartons are not only marked with country of origin, but the outer carton also contains a strict warning to each distributor that, in accordance with 19 C.F.R. 134.26, any repacking must prominently feature the country of origin statement in a permanent and conspicuous location as stated in Enclosure A above. And, in instances where less than a full outer shipping carton is sent to a customer the smaller labels are used to mark the inner cartons to indicate the country of origin, as it applies to each particular shipment, in a manner such as “Made in Japan from wafers of Japan”, “Made in Singapore from wafers of China”, etc.

With respect to marking just the inner cartons and the outer shipping cartons and not the semiconductors themselves, your letter explains that the transistors and diodes are too small to mark individually with their country of origin because they range in size from approximately 1.62mm x 1.62mm to, at most 10mm x 13mm. For that reason, you are requesting that the individual semiconductors be exempt from marking.

While the semiconductors (transistors and diodes) themselves, at the time of importation, will not be marked with their country of origin, the diodes will be on tape and reels and the transistors on tape and reels, or, in some instances, loose in a sealed plastic “bulk” bag, which are contained in sealed cardboard inner cartons with an affixed label bearing a legible, indelible, and permanent country of origin marking. One or more sealed inner cartons are placed within an outer shipping container, which also is labeled legibly, indelibly, and permanently with a country of origin marking.

Section 134.32(d) of the Customs Federal Regulations’ general exceptions to marking requirements provides for:

“Articles for which the marking of the containers will reasonably indicate the origin of the articles.”

In Headquarters Ruling Letter (HRL) HQ 734443, dated June 3, 1992, Customs held that semiconductor devices which reach the ultimate purchaser in their marked containers are excepted from marking. Based on the facts presented, the transistors and diodes (semiconductor devices) may be excepted from marking pursuant to 19 CFR 134.32(d) and only the inner and outer shipping container in which the devices are packed must be marked legibly, indelibly, and permanently at the time of importation so as to identify the country of origin of its contents to the ultimate purchaser. Your letter demonstrated that at the time of importation into the United States the inner cartons and outer shipping cartons would be properly marked with the country of origin and any carton into which the articles might be repackaged would bear a label satisfying the marking requirements (Reference is made to Enclosure A.)

Enclosures B, C, D, & E reveal that the proposes that the outer shipping cartons and some of the inner cartons would bear a label stating “Assembled in Malaysia from wafers of Japan”, “Made in Singapore”, “Made in Japan”, or “Made in Korea”, depending on where the substantial transformation took place. In accordance with CFR 134.32(d) marking requirements, these are acceptable country of origin markings. In other instances, some of the inner cartons will bear a label stating “Made in Japan in from wafers of Japan”, or “Made in Singapore from wafers of China” depending on where the wafers originated and where the substantial transformation took place. In accordance with CFR 134.43(e) these are also acceptable country of origin markings. (Reference is made to Headquarters Ruling Letter (HRL) HQ 968034.) Therefore, either method of marking would be acceptable.

Enclosure E refers to samples of small and larger labels used by NEC Electronics America, Inc.’s U.S. warehouse when shipping products out to their U.S. customers. The larger labels bear the address of the U.S warehouse in Rancho Dominguez, CA, the smaller labels do not. The country of origin is in close proximity and in a larger font size than the U.S. address. In accordance with CR 134.46 this method of marking meets the country of origin marking requirements because the country of origin is in close proximity and in a comparable size to the U.S. address so as to not deceive the ultimate purchaser as to the country of origin. In this instance, the country of origin is not only in close proximity to the U.S. address, but it is also more prominent because of the larger font size. In accordance with CFR 134.46 this method of marking is acceptable. (Reference is made to Headquarters Ruling Letter (HRL) HQ 560753.)

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 Linda M. Hackett at 646-733-3015.

Sincerely,

Robert B. Swierupski
Director,

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