HQ 0734020 - Further Review Protest - Country of Origin Marking; False Certification; Forfeiture; Liability for Marking Duties. - United States International Trade Commision Rulings

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HQ 734020

September 10, 1991

MAR-2-05 CO:R:C:V 734020 NL

CATEGORY: MARKING

Area Director
U.S. Customs Service
J.F.K. Airport
Building 178
Jamaica, NY 11430

RE: Further Review Protest - Country of Origin Marking; False Certification; Forfeiture; Liability for Marking Duties.

Dear Sir:

This is in response to the request of the importer, Campri International, for further review by Headquarters of issues raised in his protest seeking refund of all duties (including marking duties) paid on imported apparel (District Protest No 1001-9-006077, November 13, 1989). The substantive marking violation has not been contested.

FACTS:

A CF 4647 was issued to the importer to require remarking or redelivery of certain womens' apparel. The merchandise was released to the importer for marking on his premises. Within the 30 day period specified in 19 CFR 134.3 and 19 CFR 134.54 the importer returned a certification that the marking was complete; a notation was appended to the form that this would "take a few days...". Eight days later during an inspection of the merchandise at the importer's premises Customs officials found that 588 pieces of apparel were still in their original boxes, unmarked, while 4,152 pieces were, according to the importer, commingled with other merchandise after having been properly marked. Customs officials deemed this a failure to redeliver, and claimed liquidated damages, later mitigated, as to the commingled pieces.

The 588 pieces were constructively seized under authority of 19 U.S.C. 1595a(c) as having been introduced contrary to law (by means of the false certification) and subsequently forfeited.

The importer's protest seeks refund of duties, marking duties, and the merchandise processing fee as to the 588 pieces, arguing that relief is warranted pursuant to 19 U.S.C. 1520(a) for an exaction excessively collected. The importer argues: 1) The seizure and forfeiture prevented the goods from being entered into commerce. Therefore, they had the status of a non-import and should not have been liquidated. (19 CFR 159.1.); 2) Marking duties were not legally assessable because the seizure and forfeiture was equivalent to exportation or destruction and took place prior to liquidation. (19 CFR 134.2.); 3) The merchandise processing fee should not have been assessed because the merchandise "legally, never landed".

ISSUE:

Is the importer entitled to relief on these points?

LAW AND ANALYSIS:

These claims may be disposed of largely by reference to the marking statute, section 304 of the Tariff Act of 1930, as amended (19 U.S.C. 1304). The importer whose goods are found not to be legally marked is afforded three choices under the procedures set forth at 19 U.S.C. 1304(f). If he chooses not to correct marking deficiencies he must under Customs supervision export or destroy the goods. Otherwise, the goods must be marked in accordance with the requirements of section 304 and Part 134, Customs regulations (19 CFR Part 134), such marking to be accomplished under Customs supervision prior to liquidation of the entry.

Here, by executing the certificate on the CF 4647 that the goods had been marked, the importer indicated to Customs that his choice was to mark. While the choice between exportation, destruction, and marking after importation is not in all cases irrevocable, section 1304(f) provides that if one of these three is not accomplished "under Customs supervision prior to the liquidation of the entry covering the article...[the marking duty]...shall be deemed to have accrued at the time of importation...and shall not be remitted in whole or in part nor shall payment thereof be avoidable for any cause." Thus, as applied here, section 1304(f) would require Customs to collect marking duties upon the failure of the importer to mark the goods under Customs supervision, such duties having accrued when the importer made entry and secured their release from Customs custody.

Customs' subsequent seizure and forfeiture, precluding the importer from exporting or destroying the goods, does not affect this obligation, since the marking duties had already accrued when the importer failed to mark in accordance with Customs requirements. We cannot agree that the consequence of importer's non-performance - the forfeiture - is legally equivalent to exportation or destruction. There is no authority in the Tariff Act for this proposition. The forfeiture occurred after the importer had completed the formalities for a consumption entry. To allow an importer on this basis to avoid liability for duties which previously had accrued would contradict the plain meaning of 19 U.S.C. 1304(f), which specifies that marking duties are not to be avoidable for any cause. The mandatory nature of marking duties is illustrated by contrast with liability for liquidated damages for failure to redeliver improperly marked goods. As provided in 19 CFR 134.54, upon deposit of the mandatory marking duties an importer may petition for relief from liquidated damages. No such relief is available for marking duties.

There is also no basis for a refund of other duties. Campri International was the importer of record on a consumption entry dated January 12, 1989. Accordingly, Campri International's liability for duty accrued, pursuant to 19 CFR 141.1(a), on the date of importation, January 5, 1989. The fact that the imported articles thereafter were released under bond for remarking on the importer's premises in no way negated the existence of a consumption entry. Clearly, under 19 U.S.C. 1304(f), if the importer had availed himself of the opportunity to export or destroy the merchandise under Customs supervision, liability for marking duties would have been extinguished. Here, however, the goods were conditionally released, and could have been sold in commerce upon compliance with marking requirements. It was not, as suggested, prohibited merchandise eligible for refund of duties upon exportation or destruction within the meaning of 19 U.S.C. 1558(a)(2) and 19 CFR 158.45(c). The customs transaction remained an importation and consumption entry in which the sale of the articles in commerce was conditional upon correction of the marking violation. See, A.N. Deringer, Inc. v. United States, 84 Cust. Ct. 196(1980)(foodstuffs which were mislabeled within the meaning of Food and Drug Administration regulations were restricted articles, not prohibited ones; their exportation did not make the importer eligible for duty refund).

As to the effect of Customs post-release seizure and forfeiture on duty liability, it remains only to point out that under 19 U.S.C. 1558, the post-release exportation or destruction of articles which violate marking requirements does not exempt such merchandise from the payment of duties, other than marking duties. Thus, although the importer here suggests that the seizure foreclosed his opportunity to export or destroy, neither would have excused liability for duties. Finally, we note that the importer has not offered any authority for the proposition that a forfeiture is equivalent to exportation or destruction, that it results in a non-importation, or that it creates any excuse from liability for duties.

The merchandise processing fee is also not refundable in this case, because relief is not provided for under by 19 CFR 24.23.

HOLDING:

The entries in question were properly liquidated as consumption entries, notwithstanding the marking violation, false statement, and subsequent seizure and forfeiture. You are directed to deny the protest. A copy of this decision should be attached to Form 19, Notice of Action, to be sent to the protestant.

Sincerely,

John Durant
Director, Commercial

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