HQ 0734218 - Further Review Protest No. 1401-91-100076; Country of Origin Marking; Redelivery Notice; Agricultural Hand Tools (Forks and Hooks); Substantial Transformation; Attachment of Handles After Importation; Economically Prohibitive; 19 U.S.C. 1304(a)(3)(K); 19 CFR 134.32(o); Immediate Delivery; HRL's 723857 & 734246. - United States International Trade Commision Rulings

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HQ 734218

January 21, 1992

MAR-2-05 CO:R:C:V 734218 NL

CATEGORY: MARKING

District Director
U.S. Customs Service
Norfolk, VA 23510

RE: Further Review Protest No. 1401-91-100076; Country of Origin Marking; Redelivery Notice; Agricultural Hand Tools (Forks and Hooks); Substantial Transformation; Attachment of Handles After Importation; Economically Prohibitive; 19 U.S.C. 1304(a)(3)(K); 19 CFR 134.32(o); Immediate Delivery; HRL's 723857 & 734246.

Dear Sir:

This is in response to the request of the importer, True Temper Hardware, for further review by Headquarters of the issues raised in his protest against the issuance of a Notice of Marking/Redelivery (CF 4647) for failure to mark certain agricultural fork heads with their country of origin. We have received a post-conference submission from counsel for the importer dated December 27, 1991.

FACTS:

On February 26, 1991, entry was made at Norfolk for 32 crates of agricultural fork heads, manure hooks, and ensilage forks, all products of Austria and having an entered value of $182,500. The entry documents included a request on Customs Form 3461 for entry/immediate delivery in which the ultimate consignee was designated as True Temper. This request was approved by Customs on March 5, 1991. Also on March 5, 1991, the Norfolk District issued a Notice of Marking/Redelivery to True Temper stating that the articles were to be marked with their country of origin. This notice was transmitted the same day to True Temper's Customs broker in Norfolk and Baltimore. True Temper was advised the same day of the Notice, although the date on which the Notice was received by it may have been later.

On March 29, 1991, counsel for the importer advised the Norfolk District that the merchandise had been delivered directly to True Temper's customer, Ames Lawn & Garden Tools, and that by the time True Temper received the Notice and contacted Ames the goods were no longer in Ames' possession. Counsel advised that accordingly, True Temper would be unable to comply with the Notice of Marking/Redelivery.

Counsel submitted a second letter to the Norfolk District dated April 10, 1991, elaborating on the previous letter and requesting a waiver of the marking requirements in this case. Counsel represented that: 1) The importer had taken immediate action to assure that the Austrian manufacturer would not ship unmarked merchandise; 2) Once it learned of the marking violation it attempted to have the articles redelivered; 3) In six years of shipments of these implements this was the first marking violation; and 4) There were several grounds upon which to grant an exception from marking.

Specifically, counsel claimed there was authority under previous Customs rulings and court determinations for a finding that the attachment of handles to the fork heads effects a substantial transformation of the latter, such that the assembler is the ultimate purchaser of the fork heads and they may be excepted from country of origin marking pursuant to 19 CFR 134.32(h). The protest records do not indicate whether all the fork heads were to have been sold with handles attached, but as discussed below, this factor does not affect the ultimate determination. Second, counsel contended that the practical difficulties of retrieving the fork heads after they had been distributed by Ames made them eligible for exception from marking pursuant to 19 CFR 134.32(o) as "articles which cannot be marked after importation except at an expense that would be economically prohibitive".

The Norfolk District denied the importer's request for exception from marking duties, stating that Ames was not the ultimate purchaser of the fork heads. It issued a claim for liquidated damages for failure to redeliver the forks on April 17, 1991, and the entry was liquidated with the addition of ten percent marking duties on April 19, 1991. Pending resolution of the instant protest against issuance of the CF 4647, action on the claim for liquidated damages and a related protest against liquidation of the marking duties have been held in abeyance.

ISSUE:

Is the protestant entitled to relief?

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.

Protestant has conceded that the agricultural fork heads were not marked with their country of origin at the time of importation, and that they had not been so marked at the time they were sold in commerce after early release from Customs custody. In protesting the issuance of the Notice of Marking/Redelivery (CF 4647) the protestant asks that we consider whether any exceptions from marking may have been applicable, and to give weight to any equitable considerations thought relevant.

A presumption of correctness attaches generally to the decisions of Customs officials. With respect to country of origin marking, post-importation claims for exception are disfavored. However, if the importer is unaware until it is brought to his attention by Customs that, for example, his foreign supplier has failed to satisfy U.S. requirements, it is appropriate to consider such claims. We are unable in this case, however, to agree that these articles were eligible to be excepted. The CF 4647 was properly issued, and we find no basis for its cancellation.

With regard to the claim that the articles are substantially transformed after importation, such that Ames was the ultimate purchaser of the articles, Customs has long since decided the issue. In T.D. 55033(5)(January 14, 1960) it was held that "Tools such as ensilage forks, hay forks, manure forks, rakes, hoes, trowels, shovels, spades and scoops imported without handles affixed ... must be legibly and conspicuously marked 'head made in (country of origin)' or 'blade made in (country of origin)' as the case may be." Plainly, it is intended that the marking remain on the implement after its handle has been attached, such that the ultimate purchaser, the user of the finished tool, may be apprised of the country of origin of its essential component, its head, fork, or blade. See also HRL's 734246 (October 21, 1991); 732857 (December 1, 1988); 950005 (January 9, 1992) (attachment of wooden handles in the U.S. to imported finished hammer heads is not a substantial transformation).

In this case the fact that Ames Lawn and Garden Tools may have been aware of the Austrian origin of the implements is of no importance, since it was not, under prior Customs authority, the ultimate purchaser of the articles under 19 CFR 134.32(h). We are unable to agree that several Customs determinations cited by the importer are on point. Specifically, we find that T.D. 67- 173 (July 24, 1967)(party who attaches domestic-origin handles to imported fishing rods is the ultimate purchaser of the imported articles) and various rulings on the assembly of golf club heads and grips (ORR 824-70 (August 24 1970); HQ 732213 (July 3, 1985); HQ 734136 (June 17, 1991); and HQ 724901 (April 9, 1984)) cannot be regarded as compelling authority in light of a prior Treasury Decision addressing the precise point.

We agree that the cost to the importer of retrieving the articles from retail distributors for marking after importation would have been high, and that retrieval likely was a practical impossibility. We do not agree however, that an exception from marking under 19 CFR 134.32(o) is warranted. The key factor which made retrieval for marking impossible was that the importer's broker applied, in accordance with Subpart C, Part 142, Customs Regulations (19 CFR 142.21 et seq.), for immediate delivery of the articles at the time of importation. It apparently suited the importer's convenience to secure immediate delivery, but under the Basic Importation and Entry Bond Conditions of 19 CFR 113.61 et seq. the importer had agreed to pay duties, including marking duties, and specifically, to redeliver merchandise which must be marked with its country of origin. Customs issued its demand for redelivery within the 30- day period specified at 19 CFR 113.62(d), and the importer was obligated under the bond to hold the merchandise available for redelivery and remarking during that period. We find here that the risk that the articles were unmarked at importation, and that their immediate delivery to their consignee would make redelivery and marking a practical impossibility, was assumed by the importer.

The applicable exception from marking, 19 U.S.C. 1304(a)(3)(K), which is found in the Customs Regulations at 19 CFR 134.32(o), provides that an article may be excepted from marking if it cannot be marked after importation except at an expense that would be economically prohibitive unless the importer, producer, producer, seller, or shipper failed to mark the goods before importation to avoid meeting the requirements of the law (19 U.S.C. 1304). While we recognize that there was no intent to avoid meeting the marking requirements, and appreciate that the importer has taken steps to avoid a recurrence, in our opinion this exception under the circumstances cannot be approved. To do otherwise would provide an incentive for importers to dispose of goods as quickly as possible, and then to claim that redelivery and re-marking are economically prohibitive within the meaning of 19 U.S.C. 1304(a)(3)(K) and 19 CFR 134.32(o). If Customs has timely issued a notice of redelivery, the expense of securing redelivery of articles released under a permit for immediate delivery may not be considered in determining whether marking articles after importation is economically prohibitive under this exception.

HOLDING:

You are directed to deny this protest. Neither the importer or its customer is the ultimate purchaser of the imported articles, and the fork heads and other implements were subject to country of origin marking both at the time of importation and after processing in the U.S. We cannot find that marking after importation is economically prohibitive when the importer has chosen to take immediate delivery and is then unable to redeliver the articles for marking. The decision of Customs officials at Norfolk to deny exceptions from marking and demand redelivery is fully supported by the record and is in accordance with applicable law and Customs Regulations.

A copy of this decision should be attached to the Customs Form 19 and mailed to the protestant as part of the notice of action on the protest.

Sincerely,

John Durant
Director, Commercial

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