HQ 0733907 - Further Review Protest - Protest 1001-0-003380; Country of Origin Marking Duties; Wearing Apparel; Marking on Back of Label; 19 U.S.C. 1304(f). - United States International Trade Commision Rulings

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HQ 733907

October 15, 1991

MAR-2-05 CO:R:C:V 734181 NL

CATEGORY: MARKING

Area Director, JFK Airport
Building 178
Jamaica, New York 11430

RE: Further Review Protest - Protest 1001-0-003380; Country of Origin Marking Duties; Wearing Apparel; Marking on Back of Label; 19 U.S.C. 1304(f).

Dear Sir:

This is in response to the above-referenced protest, upon which the importer, Hari-Om Fashions, Inc., has requested further review. The importer protests the assessment and liquidation of marking duties on certain women's apparel consisting of dresses, skirts, and blouses which were imported from India.

FACTS:

The importer made entry on August 23, 1989, of 107 cartons of wearing apparel. The Customs inspector found the articles not to be properly marked and issued a marking/redelivery notice (CF 4647). Specifically, the inspector found that the sewn-in labels on the merchandise failed to satisfy the requirements of 19 U.S.C. 1304. As imported, the words, "Made in India" appeared on the back side of the sewn-in labels. This statement of origin was not visible unless the label was turned over. The importer was given permission to remark the merchandise on his premises, and tendered a sample and a certification dated September 15, 1989, that remarking in accordance with 19 U.S.C. 1304 had been accomplished.

On September 27, 1989, a Customs ISET team conducted an on- premises inspection to examine the subject articles. The importer advised Customs officials that some of the merchandise had been sold, and that the remaining merchandise had been placed on shelves and mixed with existing inventory. The Customs inspectors thereupon discontinued their inspection. There ensued a claim by Customs for liquidated damages for the importer's failure to redeliver the goods (the subject of a separate protest), and the instant liquidation of the entry with marking duties assessed.

The importer's protest and accompanying memorandum of counsel disputes the basis for the issuance of the marking notice, denies that there was a failure to redeliver the merchandise, and maintains that the goods as sold in commerce were properly marked.

First, it is noted that the articles were accompanied by a hang tag upon which the country of origin was conspicuously marked. Thus, it is argued, the apparel was marked in conformity with Customs requirements at the time of importation. Second, it is claimed that the importer, after receipt of the marking/redelivery notice, complied with its directive by cutting the sewn-in label in such a way that the the words, "Made in India" became visible on the front of the label. See Exhibit A, supplemental memorandum. Finally, while conceding that due to a misunderstanding of Customs instructions not all of the apparel was retained for verification of marking compliance by Customs, there nevertheless remained sufficient merchandise for Customs to verify compliance. The fact that the apparel had been removed from its shipping cartons should not have inhibited inspection by Customs of the marking, and there is no law or regulation requiring the retention of such cartons until final Customs approval of the remarking, or as a condition of release of the goods to importer's premises for remarking. With his protest the the importer submitted numerous letters from its customers in which they represent that the articles were properly marked when received by them. Accordingly, it is the importer's position that notwithstanding Customs' refusal to comlete its verification of marking at the importer's premises, the goods were properly marked when sold in commerce prior to liquidation, and thus no marking duties should be assessed.

ISSUES:

1) Was there a marking violation at the time of importation?

2) Was Customs justified in assessing marking duties upon this entry?

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.

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

It is the opinion of this office that the inspecting officer correctly identified a violation of the marking requirements and issued a CF 4647 Notice for the correction thereof. While arguably a technical violation, the marking nevertheless failed to satisfy the requirements of 19 U.S.C. 1304 and Part 134, Customs Regulations, as well as the requirements of the Textile Fiber Products Identification Act (15 U.S.C. 70), and its implementing regulations (16 CFR Part 303).

As stated by the officer on the CF 4647, "All items must have the country of origin facing the viewer without having to flip the tag over." The back side of the sewn-in tag is not a conspicuous location for the placement of country of origin marking within the meaning of 19 U.S.C. 1304, and in accordance with T.D. 54640(6) (1958), the sewn-in tag is the only location which is acceptable to Customs for the marking of shirts, blouses, coats, sweaters, and the like. Marking appearing on a hang tag for such garments is not ordinarily considered sufficient to remedy a defect in the marking on a sewn-in label. It is noted that in C.S.D. 84-46 the presence of hang tags indicating country of origin was found to justify a temporary technical deviation from marking requirements when a dying process had rendered the sewn-in labels on apparel partly illegible. Accord, HQ 729495 (April 1, 1986)(district director authorized to allow temporary measures, including hang tags, to be used to bring imported shirts into substantial compliance with marking requirements.)

The applicable regulations under the Textile Fiber Products Identification Act, while stated somewhat differently, are to the same effect. Rule 15(b) provides that each textile fiber product with a neck shall have the label affixed to the inside center of the neck. Rule 16 specifies that a textile article's country of origin is a required item of information which shall be set out on the same side of the label as the other required information, and must be clearly legible and readily accessible to the prospective purchaser. Other items of required information may appear on the reverse side under certain circumstances, but such allowances do not exist under these rules for country of origin marking. Thus these regulations are consistent with Customs requirements in requiring country of origin marking on sewn-in labels to appear on the front side of the label. The form CF 4647 was properly issued to the importer in this instance.

We turn now to the marking duties assessed after inspectors had attempted to conduct a verification of the importer's certification that the marking defect had been corrected, and after the importer had failed to redeliver the imported apparel.

As provided in 19 U.S.C. 1304(f), marking duties shall be levied upon any article which is not legally marked at the time of importation unless the article is exported, destroyed, or re- marked under Customs supervision prior to liquidation of the entry. In lieu of direct Customs supervision a certificate of marking may be submitted by the importer, together with a properly marked sample. 19 CFR 134.51(c). Customs officials are authorized to conduct spot checks (such as the verification conducted in this case), and may require that the identity of the imported article be established to their satisfaction. 19 CFR 134.52(c), 134.51(b). The importer is instructed on the CF 4647 that the article "...must be held until marking is verified or notification received that marking is acceptable".

Here, re-marking was accomplished, but the importer failed to hold the articles on his premises for verification and/or acceptance. This was the basis for the parallel liquidated damages claim for the importer's failure to redeliver the merchandise. Moreover, his failure to identify the re-marked merchandise to the satisfaction of Customs officials frustrated Customs' verification. In consequence, there was not an acceptance of the importer's certification of marking.

These circumstances establish a strong presumption that the merchandise was not properly marked at the time of liquidation, such that marking duties accrued in accordance with 19 U.S.C. 1304(f). In the limited circumstances of this case we find, however, that the importer has overcome the presumption by demonstrating that all the merchandise covered by the entry in question was legally marked when delivered to distributors, which occurred prior to liquidation. We find the letters from the importer's customers, which enumerate the invoice numbers and styles of the merchandise, and describe the manner in which the goods were marked as delivered to them, persuasive on this point. Moreover, because the initial violation was technical and remedied at little expense, i.e., by cutting one side of the sewn-in tag, we are more prepared to accept the importer's representations that re-marking was performed on all the merchandise. Finally, while we do not question the insistence of Customs officials at the verification of marking that the goods be presented in their export cartons, Customs remedy (and the consequence for the importer) was the claim for liquidated damages; the adequacy of the marking was not conclusively resolved, and the importer retained the right pursuant to a protest to demonstrate, as he has here, that the merchandise was legally marked at liquidation.

HOLDING:

The merchandise was re-marked in accordance with Customs requirements prior to liquidation. You are directed to allow 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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