Country of origin marking requirements for imported feathersto be sold or used in the manufacture of feather filled finishedproducts; substantial transformation; repackaging; 19 CFR 134.35;19 CFR 134.33; J-List; 19 CFR 134.32(g); 19 CFR 134.32(h)

HQ 734438 July 28, 1992 MAR-2-05 CO:R:V:C 734438 AT CATEGORY: Marking Area Director of Customs New York Seaport Six World Trade Center New York, New York 10048 RE: Country of origin marking requirements for imported feathers to be sold or used in the manufacture of feather filled finished products; substantial transformation; repackaging; 19 CFR 134.35; 19 CFR 134.33; J-List; 19 CFR 134.32(g); 19 CFR 134.32(h) Dear Sir: This is in response to your memorandum requesting internal advice on the country of origin marking requirements for feathers exported from China into the U.S. by James C. England & Associates to U.S. manufacturers for further processing. We have received a memorandum on this matter from the National Import Specialist. FACTS: According to Mr. England's submission, James C. England & Associates is an agent for a Hong Kong trading company known as Trade Forward Development, Ltd. which exports Chinese raw feathers into the U.S. The feathers are imported by U.S. companies for further processing. The feathers are further processed by separating, grading and washing them to meet Federal Trade Commission's standards. The U.S. processor will then either use the feathers in the manufacture of feather filled products or will sell them to U.S. manufacturers of feather filled products. The imported feathers consist of duck and/or goose feathers. The feathers are used in the manufacture of pillows, comforters, garments and sleeping bags. Mr. England states that the feathers are obtained from various small feather collectors in China which do not have stencils to mark the bales (burlap bags) with the country of origin "Made in China" in which the feathers are imported. Mr. England contends that to mark the bales of feathers "Made in China" would require stripping the container at the point of export, stenciling the bags and repacking the container. This would not be impossible, he says, but it would be burdensome. Mr. England states that the imported feathers are excepted from country of origin marking under section 134.32(h), Customs Regulations (19 CFR 134.32(h)) due to the fact that the U.S. processors who import feathers know that the feathers are only of Chinese origin and that a "Country of Origin Certificate" endorsed by the Chinese government is provided with each shipment of feathers. Mr. England also states that the original burlap covering to the bales of feather on which the required country of origin marking "Made in China" would be stenciled are thrown away before the feathers are further processed and that following processing the feathers are put into new clean bags. Accordingly, Mr. England asserts that the imported feathers are excepted from country of origin marking under 19 CFR 134.32(g) since the required country of origin marking placed on the burlap bags containing the feathers will be destroyed or obliterated after the feathers are further processed and placed into new bags. ISSUE: What are the country of origin marking requirements for imported feathers imported by U.S. processors to be sold and/or used in the manufacturing of feather filled products? 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 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. Congressional intent in enacting 19 U.S.C. 1304 was that the ultimate purchaser should be able to know by an inspection of the marking on the imported goods the country of which the goods is 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 at 302 (1940). Are The Feathers Excepted From Marking? Part 134, Customs Regulations (19 CFR Part 134), implements the country of origin marking requirements and exceptions of 19 U.S.C. 1304. Section 134.33, Customs Regulations (19 CFR 134.33), lists particular articles excepted from individual country of origin marking in accordance with 19 U.S.C. 1304(a)(3)(J). Pursuant to 19 U.S.C. 1304(a)(3)(J) the Secretary of the Treasury is authorized to exempt by regulation any article from individual country of origin marking if the article is of a class or kind that were imported in substantial quantities during the five year period immediately preceding January 1, 1937, and were not required during such period to be marked to indicate their origin. Feathers is one of the articles of a class or kind included in the list set forth in 19 CFR 134.33 (J-List). However, the outermost container in which the article ordinarily reaches the ultimate purchaser must be marked with the country of origin. Who Is The Ultimate Purchaser Of The Feathers The critical issue in this case for determining the appropriate country of origin marking requirements is who is the ultimate purchaser of the imported feathers. Section 134.1(d), Customs Regulations (19 CFR 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. Section 134.35, Customs Regulations (19 CFR 134.35), states that the manufacturer or processor in the U.S. who converts or combines the imported article into a different article having a new name character or use will be considered the ultimate purchaser of the imported article within the contemplation of 19 U.S.C. 1304 and the article shall be excepted from marking. The outermost containers of the imported articles shall be marked. A substantial transformation occurs when articles lose their identity and become new articles having a new name, character or use. United States v. Gibson-Thomsen Co., 27 C.C.P.A. 267 at 270 (1940), National Juice Products Association v. United States, 10 CIT 48, 628 F.Supp. 978 (CIT 1986), Koru North America v. United States, 701 F.Supp. 229 (CIT 1988). In this case the feathers are first imported by U.S. companies for further processing including separating, grading and washing the feathers. This processing does not substantially transform the feathers. After being further processed, the imported feathers do not lose their identity since they still remain feathers, although they are now separated, graded and washed. Accordingly, we find that the U.S. processor who further processes the feathers in the manner described above is not the ultimate purchaser of the feathers. However, after these operations, the processor will then either use the feathers in the manufacture of feather filled articles or sell the feathers to other U.S. manufacturers of feather filled products. The manufacturing of feather filled products such as pillows, comforters, garments and sleeping bags from feathers is a substantial transformation of the imported article. Once manufactured the feathers lose their separate identity and become an integral part of a new and different article of commerce namely, a pillow, comforter or other feather filled products. Therefore, we find that the processor who uses the feathers in the manufacture of feather filled products is the ultimate purchaser of the feathers under 19 CFR 134.35. Marking Requirements For Repacked Feathers Where the feathers are repacked prior to receipt by the ultimate purchaser the requirements of 19 CFR 134.25 apply. That section provides in part that: If an article subject to these requirements is intended to be repacked in new containers for sale to an ultimate purchaser after its release from Custom custody, or if the district director having custody of the article, has reason to believe such article will be repacked after its release, the importer shall certify to the district director that: (1) If the importer does the repackaging, the new container shall be marked to indicate the country of origin of the article in accordance with the requirements of this Part: or (2) If the article is intended to be sold or transferred to a subsequent purchaser or repacker, the importer shall notify such purchaser or transferee,in writing, at the time of sale or transfer, that any repacking of the article must conform to these requirements. Based on the facts presented, the feathers will in some instances be repacked prior to receipt by the ultimate purchaser and the requirements of 19 CFR 134.25 are applicable. Applicability of 19 CFR 134.32(g) and (h) Mr. England states that the imported feathers are excepted from country of origin marking pursuant to 19 CFR 134.32(g) because the required country of origin marking placed on the burlap bags containing the feathers will be destroyed or obliterated after the feathers are further processed and placed into the new bags. An exception from marking is authorized pursuant to 19 U.S.C. 1304(a)(3)(G) and 19 CFR 134.32(g) where articles to be processed in the U.S. 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 are excepted from marking. However, Customs has ruled that unless the processing is a substantial transformation, the processed article (or its container) must be marked with the country of origin. In this case, as Mr. England contends, the imported feathers are processed in the U.S. by the importer which further processes the feathers so they can be used in the manufacture of feather filled products. This means that the feathers must be removed from their burlap bags for processing. According to Mr. England, the bags are destroyed during the process. Being that the feathers are processed by the importer in a manner which "necessarily obliterates any marking on the article" (in this case the article's container), the marking exception set forth in 19 CFR 134.32(g) is applicable. Requiring the burlap bags to be marked with the country of origin is not practical since these same bags are destroyed after the feathers are further processed by the importer. Accordingly, the burlap bags are excepted from country of origin marking under the provisions of 19 CFR 134.32(g). However, after processing the importer must mark the new bags with the country of origin of the feathers prior to sale to the ultimate purchaser. Following the certification procedures set forth above will ensure that the new packages will be marked. Mr. England argues that the imported feather are excepted from marking pursuant to section 134.32(h), Customs Regulations (19 CFR 134.32(h)). An exception from the marking requirement is authorized pursuant to 19 U.S.C. 1304(a)(3)(H) and 19 CFR 134.32(h) where an ultimate purchaser, by reason of the character of the article or by reason of the circumstances of its importation, must necessarily know the country of origin of the article even though it is not marked to indicate its origin. If an article is excepted form country of origin marking under 19 CFR 134.32(h), then the containers of the articles do not have to be marked under 19 CFR 134.23(d)(1). Mr. England believes that the 19 CFR 134.32(h) is applicable because a country of origin certificate endorsed by the Chinese government is provided with each shipment of feathers. In HQ 730243 (March 5, 1987), Customs ruled that the importer must be the ultimate purchaser of the imported article and have direct contact with the foreign supplier to qualify for the 19 U.S.C. 1304(a)(3)(H) and 19 CFR 134.32(h) exemption. In this case, the ultimate purchasers of the feathers are not always the importers because in some instances the feathers are sold to other U.S. processors after they have been further processed by the importer. Also, there is no evidence to show that the U.S. processors (importers) have direct contact with the foreign suppliers of the feathers. The existence of a certificate of origin does not justify the "H" exception. See, HQ 733781 (April 11, 1991), Customs ruled that imported curtain rods were not excepted from country of origin marking under 19 CFR 134.32(h) where the order catalogue indicated the country of origin of the curtain rods. HOLDING: Feathers imported from China to be further processed in the manner described above are excepted from marking under 19 U.S.C. 1304 (a)(3)(J) and 19 CFR 134.33 as a "J-list" article. The bales in which the feathers are imported are also excepted from country of origin marking under 19 U.S.C. 1304 (a)(3)(G) and 19 CFR 134.32(g). However, any feathers which are repacked after processing and prior to receipt by the ultimate purchaser must be marked to indicate the country of origin of the feathers on the new package. The ultimate purchasers of the imported feathers are the U.S. manufacturers of feather filled products who use the feathers in the manufacture of their goods. Because the feathers may be repacked after importation prior to receipt by the ultimate purchaser, the certification requirements of 19 CFR 134.25 apply. Sincerely, John Durant, Director Commercial Rulings Division