Country of Origin Marking Requirements for Used Graphite Electrodes; 19 U.S.C. § 1304(a)(2)(G); 19 C.F.R. § 134.32(g)

HQ H011029 February 12, 2008 CLA-2 OT:RR:CTF:TCM H011029 EMS CATEGORY: MARKING Tom Schulz, General Manager Peninsula Graphite Inc. 2 Pelham Town Square, Box 669 Fonthill, Ontario L0S 1E0 Canada RE: Country of Origin Marking Requirements for Used Graphite Electrodes; 19 U.S.C. § 1304(a)(2)(G); 19 C.F.R. § 134.32(g) Dear Mr. Schulz: This letter is in response to your correspondence received on May 10, 2007, on behalf of Peninsula Graphite Inc. (PGI), requesting a binding ruling from the Bureau of Customs and Border Protection (CBP) on the country of origin marking requirements for certain "scrap" graphite electrodes to be imported from Canada. On August 9, 2007, you provided additional information regarding this transaction. Our decision follows. FACTS: PGI is a trading company located in Ontario, Canada, that anticipates purchasing a collection of graphite electrode "scrap" from AltaSteel Ltd., a Division of SCAW Metal Group, located in Alberta, Canada. PGI will then resell the merchandise to Weaver Industries, located in Denver, Pennsylvania, in the United States. Weaver Industries will be the importer of record for this transaction. The collection of graphite electrode "scrap" consists of used graphite electrodes of Chinese, Indian, Mexican, and Canadian origin that are commingled in a "scrap pile" at the AltaSteel manufacturing site. The graphite electrodes, composed of artificial graphite, were purchased in new condition from the aforementioned countries and subsequently used in the operation of an electric arc furnace at the AltaSteel manufacturing site. The graphite electrodes were damaged in collisions with each other or other materials while in use in an electric arc furnace. Once damaged, the used graphite electrodes were no longer fit for use in an arc furnace. AltaSteel stores the damaged goods in a "scrap" pile on its manufacturing site. According to PGI, the "individual electrodes in a scrap electrode collection have differing countries of origin, and being very similar in appearance, determining the origin of a particular piece is not possible." PGI will purchase the used graphite electrodes from AltaSteel, and these goods will be loaded by crane into open-top railcars at the AltaSteel manufacturing site. There is no packaging or bundling of the graphite electrodes. Upon arrival in the United States, Weaver Industries will purchase and unload the goods from the railcars. Weaver Industries will recycle the goods in the United States, and it has provided a letter dated April 26, 2007, which describes its processing of the used graphite electrodes imported from Canada. This letter certifies that "[a]ny identity of the original material is [to be] removed in the recycling process. All the material will be turned to a smaller diameter, sawed into different shapes, or ground to small particle sizes." According to PGI, the different shapes into which the graphite electrodes will be machined are crucibles, molds, ingots, gaskets, tubes, rods, and plates. All of the recycled products processed by Weaver Industries will be sold to its customers. ISSUE: Whether the used graphite electrodes must be marked with their country(s) of origin prior to importation from Canada? 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 (1940). Subsection 1304(a)(3)(G) (19 U.S.C. § 1304(a)(3)(G)), provides an exception to the marking requirements when an "article is 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 article and in such manner that any mark contemplated by this section would necessarily be obliterated, destroyed, or permanently concealed." The regulations implementing the requirements and exceptions to 19 U.S.C. § 1304 are set forth in Part 134 of the CBP Regulations (19 C.F.R. Part 134). CBP has limited the applicability of this exception to precise circumstances. As provided in subpart 134.36 of the CBP Regulations (19 C.F.R. § 134.36), an article that is to be processed in the United States by the importer or for his account "shall not be considered to be within [the "G" exception] ... if there is a reasonable method of marking which will not be obliterated, destroyed, or permanently concealed by such processing." In this regard, Weaver Industries, the importer and the United States processor, has represented that the used graphite electrodes will be turned to a different diameter, sawed into different shapes, or ground into small particle sizes. Each of these processes would result in the obliteration or destruction of any marking as to the country of origin. These processes are performed for the purpose of recycling of the graphite electrodes and do not manifest any intent to conceal their origins. The nature of these processes is also such that there appears to be no reasonable method of marking the used graphite electrodes prior to importation that would not be obliterated or destroyed. Therefore, the imported graphite anodes are excepted from the country of origin marking requirements in their condition as imported into the United States. 19 C.F.R. § 134.32(g). The outermost import containers for the used graphite electrodes will also be excepted from marking at the time of importation pursuant to section 134.22(e)(1), CBP Regulations (19 C.F.R. § 134.22(e)(1)) (excepting containers of articles within the exception set forth in, inter alia, 19 C.F.R. § 134.32(g), from the general rule requiring the marking of containers). Upon importation, the invoice, or other pertinent document, for each entry, should reference 19 C.F.R. § 134.32(g). Weaver Industries should also provide supporting statements of intended processing to be performed in order to demonstrate entitlement to the marking exception under 19 C.F.R. § 134.32(g). See C.S.D. 89-6, dated October 3, 1988 (731484); HRL 729434, dated May 23, 1986. We note that while the used graphite electrodes may be excepted from country of origin marking requirements in their condition upon importation, this exception does not relieve Weaver Industries from the obligation to mark these goods after importation. We direct your attention to another condition of entitlement to the exception set forth in 19 C.F.R. § 134.32(g) - the port director must be satisfied that the processed articles will be marked in a manner to indicate the country of origin to the ultimate purchaser in the United States. See, e.g., HQ 561939, dated December 20, 2000. "This [condition] would require the U.S. processor to mark the processed article[s] unless the U.S. processor is the ultimate purchaser." See id. HOLDING: The used graphite electrodes are excepted from the marking requirements per 19 C.F.R. § 134.32(g) in their condition as imported by Weaver Industries. The outermost containers in which the graphite electrodes are imported will also be excepted from marking at the time of importation pursuant to 19 C.F.R. § 134.22(e)(1). However, the port director must be satisfied that Weaver Industries will mark its "recycled" products in a manner to indicate the country of origin to the ultimate purchaser in the United States (unless Weaver Industries is the ultimate purchaser). Certain marking requirements may also apply to any retail packaging of the "recycled" products, consistent with 19 C.F.R. § 134.26. A copy of this ruling letter should be attached to the entry documents filed at the time the goods are entered. If the documents have been filed without a copy, this ruling should be brought to the attention of the CBP officer handling the transaction. Sincerely, Gail A. Hamill, Chief Tariff Classification and Marking Branch