HQ 0732943 - Country of Origin Marking of Ready-to-Assemble Furniture - United States International Trade Commision Rulings

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HQ 732943

May 11, 1990

MAR-2-05 CO:R:C:V 732943 NL

CATEGORY: MARKING

District Director
U.S. Customs Service
909 First Avenue
Seattle, Washington, 98174

RE: Country of Origin Marking of Ready-to-Assemble Furniture

Dear Sir:

This is in response to your request dated November 1, 1989 for internal advice (No. 68-89) concerning the country of origin marking requirements applicable to furniture imported in a ready-to-assemble state, also known as "knocked-down" furniture. You have asked for clarification as to the circumstances under which the furniture may be excepted from country of origin marking pursuant to section 304(a)(3)(D) of the Tariff Act of 1930, as amended (19 U.S.C. 1304(a)(3)(D)), and section 134.32(d), Customs Regulations (19 CFR 134.32(d)). Under these provisions (hereinafter, "the container exception") articles may be excepted from country of origin marking if the marking of their containers will reasonably indicate the articles' country of origin.

FACTS:

The furniture in question is imported and generally sold in a disassembled, or ready-to-assemble state. Such furniture is typically sold from display models, with the customer then taking delivery of the disassembled components in their container(s) for home assembly. In most cases the display model is not marked with its country of origin; only the container in which the disassembled furniture is imported and sold is marked. You indicate that several aspects of this pattern of selling cast doubt upon whether the marking of the container alone reasonably indicates the country of origin to the retail buyer, the ultimate purchaser, prior to the time of purchase.

In one retail sales scenario, the buyer selects an item from a display model. The display model is not marked with its country of origin, but the marked container of the ready-to- assemble article is located adjacent to the display model or is delivered to the buyer before he pays for the article.

In a second scenario, the buyer selects from an unmarked display model, and the ready-to-assemble article is delivered to
the buyer on the premises in marked containers after payment. Here, it is presumed that the buyer did not see a country of origin marking (or receive any other indication that the article was of foreign origin) until after the initial decision to purchase and after tender of payment.

Finally, you ask that we consider the situation in which the buyer selects from an unmarked display model, payment is tendered, and the article in its marked container(s) is delivered to the buyer's car or home from a separate warehouse. As in the second example, it is presumed that no country of origin indication was available to the buyer prior to delivery of the article in its marked container. In each of the above examples, the question is presented whether in these circumstances the marking of the container alone would fulfill the statutory purpose of reasonably indicating the country of origin of the article in sufficient time such that the ultimate purchaser could choose to purchase or not on the basis of the article's country of origin.

It is your position that because the ultimate purchaser of the ready-to-assemble furniture may not always receive notice of the country of origin of the article prior to purchase, the display model must be marked. Thus, you have required that every unassembled item in a shipment be marked (notwithstanding the marking on its container), in order to assure that the actual piece used for display will be marked. The National Import Specialists responsible for furniture are of the opinion that if the buyer, after selecting from the display model, is able to view the marked container prior to purchase, the country of origin has been reasonably indicated and marking the display model is not necessary.

ISSUES:

Under what circumstances, if any, is ready-to-assemble furniture eligible for exception from individual country of origin marking pursuant to 19 U.S.C. 1304(a)(3)(D) and 19 CFR

Does the delivery of ready-to-assemble furniture in marked containers after tender of payment offer sufficient notice to the ultimate purchaser of the country of origin of the furniture?

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. Section 304 "reflects the Congressional intent that the public be apprised of the country of origin of merchandise", Globemaster, Inc. v. United States, 68 Cust. Ct. 77, C.D. 4340 (1972), and further, "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, C.A.D. 104 (1940).

Part 134, Customs Regulations (19 CFR Part 134), implements the country of origin marking requirements and exceptions of 19 U.S.C. 1304.

Generally, articles imported in containers are eligible to be excepted from individual country of origin marking pursuant to 19 U.S.C. 1304(a)(3)(D) and 19 CFR 134.32(d), as articles for which marking of their containers will reasonably indicate their country of origin. For the container exception to apply, Customs requires the article to be imported in a properly marked container, and Customs officials at the port of entry must be satisfied that the ultimate purchaser will in all foreseeable circumstances receive the article in its original unopened marked container. These conditions further the purposes of the marking statute by assuring that the ultimate purchaser receives the notice required by 19 U.S.C. 1304 even when the imported article itself is excepted from country of origin marking.

Thus, if it is foreseeable to Customs officials at the port of entry that under any circumstances an article of ready-to- assemble furniture will be removed from its container prior to retail sale to serve as a display model, existing policy would call for denying the container exception for the furniture and requiring that the individual components be marked with the country of origin. See, ORR 72-0468 (November 6, 1972)(removal and assembly of unmarked vanities from their imported containers for display renders the container exception inapplicable, "especially in view of the fact that the floor models themselves may be offered for sale," and for future shipments marking of the article was required.)

In the case of ready-to-assemble furniture there is a clear likelihood that out of an imported shipment at least one article will be removed from its marked container(s), assembled, used for display purposes and later sold. Customs thus has a strong rationale for its present policy of denying the container exception for any knocked-down furniture and requiring individual marking of all components. In addition to assuring that all articles will reach the ultimate purchaser properly marked, this policy assures that when a purchase is made on the basis of a display model, country of origin marking is visible on the display sample even when the article actually purchased might be delivered to the customer after tender of payment or by delivery
from a warehouse.

The question is whether these objectives can be achieved by a more flexible approach which preserves the very real benefits to importers and the public of the container exception.

We have carefully considered the possibility of authorizing an exception in those situations where the marked containers are located in the same sales area as the unmarked display models, or when the ready-to-assemble articles in marked containers are delivered to the customer on the premises either before or just after tender of payment. Such an approach is suggested in HRL 727139 (April 10, 1985), in which we determined that when the marked containers "are on the same floor as the model and will be brought to the customer prior to completion of the purchase" the display model need not be marked. Implicitly, under the specific facts presented, assembly of ready-to-assemble furniture components for display purposes does not violate the conditions under which the exception is granted for an entire shipment of ready-to-assemble furniture, and the container exception remains valid because the customer receives the marked container early enough in the sales process that it still "reasonably indicates the country of origin of the article." Pursuant to a subsequent submission by the same importer, Customs agreed that this ruling would apply even when delivery takes place after tender of payment, since this importer had implemented a "no questions asked" return policy which permitted a buyer to reverse his decision on the basis of the country of origin of the article.

Despite Customs' ruling under those specific circumstances, we do not believe that this approach is practical as a broad policy for ready-to-assemble furniture. Customs' authority over country of origin marking is generally exercised at the time of importation. Among the basic requirements of the marking statute is that the marking, whether of the article or the container, be sufficient to remain on the article or container after importation until they reach the ultimate purchaser. However, Customs enforces this by observing the marking itself at importation or by means of documentary assurances submitted at that time. It is not practical for Customs to supervise in particular cases whether after importation the marked containers are available for viewing in the same sales area of a given store as the unmarked container. Equally, for purposes of enforcing a rule as to when a marked container is made available to the purchaser early enough to advise him properly of the country of origin, it is not possible for Customs to adopt a policy which practically can distinguish between the various circumstances which might constitute the completion of a retail purchase. Such circumstances might include tender of payment after delivery; tender of payment before delivery; delivery of the article to the purchaser's home; or finally, expiration of the period during which a return could be made on the basis of an objection to the
article's country of origin. For these reasons we believe that direct Customs involvement in this matter at the point of retail sale is neither practical nor desirable. Instead, what is needed is a policy which can be enforced at the time of importation.

The starting point for a practical rule is the existing general prerequisite for Customs authorization of the container exception: Customs must be satisfied that in all foreseeable circumstances the article will reach the ultimate purchaser in its original, properly marked container. But for the problem of assembled display models, ready-to-assemble furniture seems to be especially likely to satisfy this prerequisite, since its notable characteristic is its delivery to purchasers in containers for home assembly. In our view, with proper verification that an assembled display model will be marked after removal from its container, ready-to-assemble furniture could retain its container exception.

Such marking would serve to rebut the presumption that an ultimate purchaser who takes delivery of a marked container after tendering payment or after leaving the premises has not been afforded the marking required by 19 U.S.C. 1304. Having seen the marked display article, the ultimate purchaser will have been given conspicuous notice.

Under section 134.25 (repacked J-list articles and articles incapable of being marked), section 134.26 (articles repacked or manipulated), and section 134.34 (repacked articles), the importer is required to provide various assurances in the form of certifications and notices to subsequent purchasers to the effect that after importation articles will reach ultimate purchasers properly marked. We also have required in connection with the exceptions specific undertakings from importers not set forth in the regulations as conditions of approving exceptions. See, HRL 733016 (January 11, 1990), affirmed by HRL 733109 (February 26, 1990) (marking of master cartons in lieu of individual bags of shrimp is acceptable provided processors/repackers of imported shrimp obtain statements from distributors that if removed from master cartons, individual packages of shrimp will be marked with country of origin.) Moreover, as provided in section 134.34, the district director is granted broad discretion in the kinds of requirements he may impose as a condition of approving the container exception for goods which are repacked after importation. Our new policy for the marking of ready-to-assemble furniture will be consistent with these approaches.

Since ready-to-assemble furniture is distributed at various levels of trade it is appropriate, in the interest of assuring that country of origin marking is performed in all foreseeable circumstances, that retail distributors affirmatively undertake to mark assembled ready-to-assemble furniture. Retail sellers,
after all, share in the commercial advantages afforded by the container exception, and are the most likely persons to open and assemble for display containers of ready-to-assemble furniture. Moreover, the retail seller deals directly with the ultimate purchaser of the articles.

Thus we shall require the importer, in order to retain the benefits of the container exception, to present to Customs officials at the time of importation written declarations from the retail distributors of ready-to-assemble furniture that they acknowledge the requirement that imported goods be marked with their country of origin, and that if the ready-to-assemble furniture is removed from its marked container(s), the furniture itself will be marked with its country of origin. We intend that this requirement apply both to articles assembled for use as floor models, whether sold or not, and to articles which for any other reason are sold without their marked container(s). In the event the furniture is not yet consigned to a retailer at the time of importation, or if for any other reason the retail seller's identity is not yet determined, the wholesale distributor, if any, should provide the declaration, and in it undertake to notify the retailer of the marking obligation. In the event that the importer or a party related to the importer is the wholesaler and/or retailer, a declaration from the importer to the same effect as above will satisfy this requirement. The declaration need not be newly-executed for each entry; instead, a blanket statement valid for a period of time specified by the District Director will be acceptable.

Obviously, this requirement imposes an additional burden upon the importers of ready-to-assemble furniture. Having considered the alternatives, such as attempting to approve the container exception for ready-to-assemble furniture only in those situations where the marked containers are adjacent to unmarked floor samples, or attempting to address the various circumstances under which a buyer may or may not be given timely notice, we think this policy is simpler, less costly, more uniformly applicable, and more effectively enforced. Certainly, it is preferable to the other definitively effective method for assuring marking of ready-to-assemble furniture in all foreseeable circumstances, which is to deny the exception for all entries and require that every piece be marked. In sum, after considering the alternatives it is our determination that in order to benefit from the container exception from country of origin for ready-to-assemble furniture importers will be required to supply declarations from retail distributors that they acknowledge the obligations imposed by 19 U.S.C. 1304 to mark imported articles with their country of origin, and that they undertake to do so when they remove articles entered under the exception from their marked containers.

This decision modifies HRL 727139 in several respects. As
previously stated, we have determined that for reasons of practicality and efficiency Customs cannot supervise in particular cases whether the marked, packaged furniture is present on the sales floor, or whether the article is delivered before or after tender of payment. Accordingly, like other importers of ready-to-assemble furniture, the party which requested HRL 727139 will be required to supply a declaration at the time of importation that display models will be marked with their country of origin. It is noted that this importer controls its retail outlets. In any event, this importer has advised Customs that it already voluntarily marks its models. While the marking of the display models does not precisely state a particular country of origin, we are satisfied that in the circumstances presented the marking described below is consistent with the purposes of 19 U.S.C. 1304 and 19 CFR Part 134.

Specifically, this importer has pointed out that in its inventory the same article, or part of an article, may originate in more than one country. Thus, floor samples which are marked with their country of origin may not represent the country of origin of the same article bought from stock. Alternatively, the parts comprising an assembled model of ready-to-assemble furniture often originate in several countries. Therefore, any marking on the assembled display model could be confusing. Thus the policy of this importer is to place a notice on the floor models indicating that the article is imported and that the purchaser should check the outside of the container of the purchased article upon delivery to ascertain the country of origin. It is also the importer's policy to permit returns with no questions asked, which preserves the purchaser's right to refuse a purchase on the basis of the article's country of origin. Finally, this importer is the owner of the retail stores and it has direct control over these procedures.

Importers whose patterns of importation and subsequent retail sales are analogous to the above-referenced circumstances are eligible, of course, to seek rulings approving a similar method of marking for display samples.

Finally, you have asked as to the specific methods of marking which should be used for assembled ready-to-assemble furniture. Given the many types of articles it is not possible to do so in this ruling. However, we direct your attention to 19 CFR 134.41(b), which provides that the marking should be "at least sufficient to insure that in any reasonably foreseeable circumstances the marking shall remain on the article until it reaches the ultimate purchaser unless deliberately removed. The marking must survive normal distribution and store handling. The ultimate purchaser in the U.S. must be able to find the marking easily and read it without strain." Further, 19 CFR 134.44(b) and (c) provide that tags and paper label stickers must be attached in a conspicuous place and so securely that unless
deliberately removed they will remain on the article until delivered to the ultimate purchaser.

HOLDING:

Importers of ready-to-assemble furniture wishing to have the articles excepted from country of origin marking pursuant to 19 U.S.C. 1304(a)(3)(D) and 19 CFR 134.32(d) must submit to Customs officials at the time of importation declarations from the retail distributors of ready-to-assemble furniture. These declarations will contain acknowledgement by the retail distributor of the country of origin marking requirements, and an undertaking to mark with its country of origin any article or component which is removed from its marked container prior to delivery to the ultimate purchaser. If the retail distributor has not been determined, an equivalent statement must be executed by the wholesale distributor or the importer. This declaration is necessary to assure that in the likely circumstance that an article of ready-to-assemble furniture will be removed from its marked container and used as a display model, the ultimate purchaser will in all circumstances receive proper indication of the country of origin of the article or components. Customs will accept blanket declarations from the designated parties, valid for a period of time specified by the District Director.

To give importers adequate time to adjust their practices and obtain declarations from retailers, this requirement will become effective 60 days after the publication of this determination in the Customs Bulletin.

Sincerely,

Jerry Laderberg
Acting Director,

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