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HQ 560347





April 24,
1997

MAR-O5 RR:TC:SM 560347 BLS

CATEGORY: MARKING

Port Director
P.O. Box 3130
Laredo, Texas 78044-3130

RE: Internal Advice 5/97; country of origin marking of automotive storage batteries; 19 CFR 134.46

Dear Madame:

This is in reference to the above-captioned internal advice request filed on behalf of Johnson Controls, Inc. ("Johnson"), concerning the country of origin marking requirements for certain wet filled lead-acid storage batteries imported from Mexico. Samples of the product have been submitted.

FACTS:

Automotive battery casings are shipped to Mexico from the U.S. where they are filled with lead-acid electrolyte and become complete, finished batteries. When the casings are shipped to Mexico, they bear the marking "Made in USA" molded into the bottom of the casing. At the time of importation into the U.S., a round sticker with the marking "Made in Mexico" is affixed to the side of the casing, and a warranty/UPC label on the top of the casing includes the words "Distributed by AutoZone, Inc. Memphis, TN 38111".

ISSUE:

Whether, as imported, the automotive battery complies with the country of origin marking requirements.

LAW AND ANALYSIS:

1) Country of Origin

Section 304 of the Tariff Act of 1930, as amended (19 U.S.C. 1304), requires that, unless excepted, every article of foreign origin (or its container) imported into the U.S. 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 manner as to indicate to the ultimate purchaser the English name of the country of origin of the article. The regulations implementing the requirements and exceptions to 19 U.S.C. 1304 are set forth in Part 134, Customs Regulations (19 CFR 134).

The country of origin marking requirements for goods of a NAFTA country are determined in accordance with Annex 311 of the North American Free Trade Agreement, as implemented under the North American Free Trade Agreement Implementation Act ("NAFTA") (Pub. L. 103-182, 107 Stat. 437 (December 8, 1993)). The marking rules used for determining whether a good is a good of a NAFTA country are contained in regulations set forth in 19 CFR Part 102. The marking requirements for these goods are set forth as amendments to various provisions of Part 134, Customs Regulations.

Section 134.1(b) of the Customs Regulations (19 CFR. 134.1(b)), defines "country of origin" as:

The country of manufacture, production, or growth of any article of foreign origin entering the U.S. 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 this part; however, for a good of a NAFTA country, the
NAFTA Marking Rules will determine the country of origin.

Section 134.1(j) of the regulations 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) of the regulations 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. Section 134.45(a)(2) of the regulations provides that a "good of a NAFTA country" may be marked with the name of the country of origin in English, French or Spanish.

In this case, automotive battery casings produced in the U.S. are exported to Mexico for processing, and then returned to the U.S. Thus, in order to determine the appropriate marking requirements for the imported merchandise, we must determine under the NAFTA Marking Rules the country of origin of the completed lead-acid storage batteries.

Part 102 of the Customs Regulations (19 CFR Part 102) sets forth the "NAFTA Marking Rules" for purposes of determining whether a good is a good of a NAFTA country for marking purposes. Section 102.11(a) of the regulations provides that "[t]he country of origin of a good is the country in which:

(1) The good is wholly obtained or produced;
(2) The good is produced exclusively from domestic materials; or
(3) Each foreign material incorporated in that good undergoes an applicable change in tariff classification set out in section 102.20 and satisfies any other applicable requirements of that section, and all other requirements of these rules are satisfied."

"Foreign material" is defined in section 102.1(e) of the regulations as "a material whose country of origin as determined under these rules is not the same country as the country in which the good is produced."

The imported storage batteries are neither "wholly obtained or produced," nor "produced exclusively from domestic (Mexican) materials." Therefore, for purposes of determining the origin of the imported good, section 102.11(a)(3) is the applicable rule that first must be applied. Under this rule, the country of origin of a good is the country in which each foreign material incorporated in that good undergoes an applicable change in tariff classification set out in section 102.20. Section 102.20 of the rules sets forth the specific tariff classification changes and/or other operations
which are specifically required in order for country of origin to be determined on the basis of operations performed on the foreign materials contained in a good. The completed storage batteries imported from Mexico are classifiable under subheading 8507.10, Harmonized Tariff Schedule of the United States (HTSUS), which provides for "Lead-acid storage batteries, of a kind used for starting piston engines." The battery casings imported into Mexico are classified under subheading 8507.90, "Parts: Of lead-acid storage batteries..." The applicable change in tariff classification set out in section 102.20(o), Section XVI, Chapters 84 through 85, 8507.10-8507.80 of the regulations provides:

8507.10-8507.80 .... A change to subheading 8507.10 through 8507.80 from any other subheading, including another subheading within that group.

Therefore, for a tariff shift to occur, the materials imported into Mexico must come from a subheading other than subheading 8507.10, HTSUS. As previously stated, the battery casings are classifiable under subheading 8507.90, HTSUS, as parts of lead-acid storage batteries. Accordingly, a tariff shift does occur, and the country of origin of the imported lead-acid batteries is Mexico.

2) Applicability of 19 CFR 134.46

Customs has recognized that the presence of a geographic location other than the country in which the article was produced on an imported article or its container may mislead the ultimate purchaser as to the true country of origin. Therefore, in cases where the name of a location in the U.S. or the name of any foreign country or locality other than the country or locality in which the article was manufactured or produced appears on an imported article or its container, 19 CFR 134.46 provides that there shall appear, legibly and permanently, in close proximity to such words, letters, or name, and in at least a comparable size, the name of the country of origin preceded by "Made in", "Product of", or other words of similar meaning. Customs has ruled that in order to satisfy the close proximity requirement, the country of origin marking must appear on the same side(s) or surface(s) in which the name of the locality other than the country of origin appears. See Headquarters Ruling Letter (HRL) 734232 (November 20, 1991) citing to HRL 733618 (July 26, 1990) concerning soccer balls; HRL 732191 (April 27, 1990) concerning paint brush sets; and HRL 733084 (March 19, 1990) concerning keywound alarm clocks. The
purpose of this section is to prevent the possibility of misleading or deceiving the ultimate purchaser as to the actual origin of the imported good.

The importer believes that the method of marking complies with the requirements of 19 CFR 134.46 for the following reasons:

1) The batteries are marked "in close proximity" to and in larger letters than "Memphis, TN."

2) The marking "Made in USA" is not readily visible to the ultimate purchaser as it is on the underside of the battery and lacks contrast. In this regard, Johnson points out that the marking is in black letters against a black background and in addition may be dusty from handling. Further, Johnson argues that an ultimate purchaser is unlikely to view the underside due to the battery's weight, and the conspicuous warning against tipping (tilting) a lead-acid battery. Therefore, it is the importer's opinion that this marking is not misleading and 19 CFR 134.46 is not triggered by such marking.

As noted above, it is Customs position that in order to satisfy the close proximity requirement under 19 CFR 134.46, the country of origin marking must appear on the same side(s) or surface(s) in which the name of the locality other than the country of origin appears. Since in this case country of origin marking is affixed to the side of the casing, and the marking "Distributed by AutoZone, Inc. Memphis, TN 38111", is located at the top of the casing, the requirements of 19 CFR 134.46 have not been met. Furthermore, we concur that the marking on the bottom of the casing, "Made in USA", is confusing to the ultimate purchaser, since this marking and the marking "Made in Mexico" appear to be inconsistent as to the actual origin of the battery. The actual conspicuousness of the "Made in USA" marking is not relevant, as it is readable and upon observation is clearly deceptive. Therefore, this marking must be either removed or permanently concealed. As you also point out, the importer's statement that the marking does not violate 19 CFR 134.36(b) is not relevant to the facts of this case, as that provision applies only in a situation which involves an exception to marking.

HOLDING:

1) Under the NAFTA Marking Rules, the country of origin of the imported automotive lead-acid storage battery is Mexico.

2) The marking "Made In USA" on the bottom of the battery casing is deceptive, and must be removed entirely, or permanently concealed.

3) In order to satisfy the requirements of 19 CFR 134.46, the marking "Made in Mexico", or words with similar meaning, must appear on the top of the battery casing, legibly, permanently, and in at least a comparable size, as the U.S. geographical location.

In accordance with Section 3A (11)(b) of Customs Directive 099 3550-065, dated August 4, 1993, Subject: Revised Protest Directive, this decision should be mailed by your office to the protestant no later than 60 days from the date of this letter. Any reliquidation of the entry in accordance with the decision must be accomplished prior to mailing of the decision. Sixty days from the date of the decision the Office of Regulations and Rulings will take steps to make the decision available to Customs personnel via the Customs Module in ACS and the public via the Diskette Subscription Service, Freedom of Information Act and other public access channels.

Sincerely,

John
Durant, Director

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