HQ 0734103 - Application for Further Review of Protest No. 1001-0- 0071875, concerning the country of origin marking of imported gold chain and bangles; marking duties, liquidation of entries, extension of liquidation, 19 U.S.C. 1304(f) - United States International Trade Commision Rulings

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HQ 734103

April 13, 1992

MAR-2-05 CO:R:C:V 734103 RSD

CATEGORY: MARKING

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

RE: Application for Further Review of Protest No. 1001-0- 0071875, concerning the country of origin marking of imported gold chain and bangles; marking duties, liquidation of entries, extension of liquidation, 19 U.S.C. 1304(f)

Dear Sir:

This is in response to the forwarding the application for further review of protest 1001-0-007185 filed on behalf of N&B Jewelry by the law firm of Soller, Singer and Horn on August 22, 1990, against your decision to assess marking duties in connection with entries of gold chain and bangles. We note that the entries involved in this protest were the subject of a previous protest that was denied by Customs headquarters, and presently is in litigation before the Court of International Trade. In addition, the same entries were the subject of claims for liquidated damages.

FACTS:

On February 24, 1988, Customs issued a CF 4647, a marking/redelivery notice, to the importer for a shipment of gold chains, (entry no. XXXXXXXXXXXXX), which were not marked to indicate their country of origin. Only the shipping carton was marked. The unmarked sample retained by Customs was a gold chain which appeared to be ready for sale in its imported condition. On March 3, 1988, the importer's broker certified that the merchandise in question had been marked to indicate the country as required by 19 U.S.C. 1304. A sample was submitted which showed that the jewelry had been marked with the country of origin by means of a hang tag.

A CF 4647, marking/redelivery notice was issued to the importer on March 4, 1988, for another shipment of jewelry consisting of gold chains and gold bangle bracelets, entry no. XXXXXXXXXXXX, which were also not marked to indicate the country of origin. Again, only the shipping carton was marked. On March 7, 1988, the broker returned the notice to Customs and certified that the merchandise had been marked to indicate the country of origin. Another sample was submitted to Customs which showed that the jewelry had been marked with the country of origin by means of a hang tag.

On March 8, 1988, Customs conducted a marking examination at the importer's premises and found that most of the jewelry in question had already been sold and that the remaining jewelry had not been marked with the country of origin. The record indicates that the importer's vice president told Customs officials that his company was in the process of ordering labels to mark future shipments. The record further indicates that the importer's president and vice president informed Customs officials that they thought that the shipments in question did not have to be marked and could be freely sold in their imported unmarked condition.

By letter dated March 23, 1988, Customs notified the importer that the merchandise had not been marked with the country of origin, and redelivery was ordered as per the CF 4647's 30 days from the date of each notice.

The gold rope chains were made in the Dominican Republic from gold of U.S. origin. According to the importer some of the chains were imported in a blackened condition as a result of oxidation and were cleaned after importation in a solution of hydrogen peroxide and sodium cyanide which removed the oxidation, other dirt and striped off ten percent of the gold. Some of the other chains were not imported in a blackened condition but purportedly were cleaned after importation by soaking them in a solution of ammonia and a special soap to remove dirt and grime which accumulated during the work performed in the Dominican Republic. The bangle bracelets, which were made in the Dominican Republic from U.S. components, were allegedly cleaned after importation in a "special solution" and may have also been polished, buffed and washed. The bangles were then sold to a buyer who chemically cleaned, polished, buffed, and washed the bangles before reselling them.

In a previous protest and application for further review, the importer challenged the marking redelivery notices by claiming that the jewelry was to be processed in a manner set forth in 19 U.S.C. 1304(a)(3)(G) and 19 CFR 134.32(g) and therefore, was excepted from marking at the time of importation. The importer also challenged the issuance of the marking notices on the basis that they were products of the U.S. and not subject to the requirements of the marking law. Customs reviewed the importers claims and in HQ 731484 October 3, 1988, and found that they were without merit and that the marking/redelivery notices were proper because the merchandise was not marked in accordance with the provisions of 19 U.S.C. 1304 and directed that N&B's protest should be denied.

Claims for liquidated damages of $178,998.42 and $302,117.31 were issued on both entries. Customs headquarters reviewed the importer's petition and in HQ 626471, December 19, 1989, mitigated the liquidated damage claims to $30,211 and $17,900, an amount equal to 10 percent of the value of the merchandise. This determination was affirmed in HQ 627894, December 8, 1990.

The two entries were liquidated on May 25, 1990, with an assessment of an additional 10 percent for payment of marking duties. In or its protest for application for review, the importer challenges the assessment of marking duties on the entries because 1) the merchandise had to be cleaned prior to sale and was properly marked on the outside of the container and was excepted from marking under 19 U.S.C. 1304(a)(3)(g) and 19 CFR 134.32(g); 2) the entries were liquidated by operation of law after one year; 3) marking duties were not due on the bangles for entry no. 915-0192775-8; 4) marking duties for entry 915- 61922995-3 should cover only the bangles; 5) only a portion of each shipment was distributed without being remarked.

ISSUE

Was the assessment of marking duties proper in this case?

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. 19 U.S.C. 1304(f) provides that 10 percent marking duties shall be levied, collected, and paid if an imported article is not properly marked with the country of origin at the time of importation, and such article is not exported, destroyed or properly marked under Customs supervision prior to liquidation. Under this provision, such duties shall not be remitted wholly or in part nor shall payment thereof be avoidable for any cause.

Part 134, Customs Regulation (19 CFR 134), implements the country of origin marking requirements and exception of 19 U.S.C. 1304. Section 134.51, Customs Regulations, (19 CFR 134.51), provides that when articles or containers are found upon examination not to be legally marked, the district director shall notify the importer on Customs Form 4647 to arrange with the district director's office to properly mark the article, container or to return all released articles to Customs custody for marking, exportation or destruction. This section further provides that the identity of the imported article shall be established to the satisfaction of the district director. Section 134.52, Customs Regulations (19 C.F.R. 134.52), allows a district director to accept a certification of marking supported by samples from the importer or actual owner in lieu of marking under Customs supervision if specified conditions are satisfied.

In HQ 731775 (November 3, 1988), Customs ruled that two prerequisites must be present in order for it to be proper to assess marking duties under 19 U.S.C. 1304(f). These two prerequisites are:

1. the merchandise was not legally marked at the time of importation

2. the merchandise was not subsequently exported, destroyed or marked under Customs supervision prior to liquidation.

The protestant's first claim that the merchandise had to be chemically cleaned prior to sale and was properly marked on the outside of the container was dealt with in HQ 731484. We see no reason to reiterate our analysis and for reasons set forth in HQ 731484 the claim is without merit.

Similarly, the protestant's second claim is without merit. The protestant claims that the entries were liquidated by operation of law one after year after entry under 15 U.S.C. 1504. To the contrary, the record reveals that according to the information in ACS files both entries in question were properly extended. The last extension was given on December 22, 1989, and notice of the extension was sent to the importer on December 23, 1989. Under 19 U.S.C. 1504, the Secretary may extend the period in which to liquidate an entry by giving notice of such extension to the importer, his consignee or agent. Since the record establishes that notices of the extension of liquidation were given, and the protestant did not establish why such notices were improper, the entries did not liquidate after one year from date of entry. Accordingly, liquidation with marking duties being assessed was proper.

The protestant also claims that the for Entry No. 915- 0192775-8, the marking notice did not mention that the bangles were not marked. However, the issuance of a marking notice is not a prerequisite for the assessment of marking duties on an entry. See A.N. Deringer, Inc. v. United States C.D. 2408, 1963. If the goods are not legally marked at the time of importation and not exported, destroyed or marked under Customs supervision then marking duties can be assessed. There has been no showing that at the time of importation the bangles were legally marked. In fact, protestant in arguing that no marking was required on the bangles because of their alleged cleaning, (a claim which we rejected) admits that the bangles were not marked. The contents of the marking notice does not preclude the assessment of marking duties on the entries.

The protestant's fourth claim is that marking duties should not be assessed on the gold chain because it was unfinished and did not require country of origin marking. In our previous decision, this claim was rejected. We determined that N&B would be entitled to a marking exception on future entries of gold chain if it can establish to Customs satisfaction that the chains were processed in the manner described therein.

Finally, the importer claims that it placed hangtags on all the merchandise at its premises at the time of the Customs inspection, which was attested to by the importer's customers. Although part of the shipment may have been marked with hang tags prior to reaching the importer's customers, there has been no showing that any marking was done under Customs supervision. Accordingly, marking duties can be assessed on this merchandise.

HOLDING:

The assessment of marking duties in this case was proper and the protestant's claims are without merit. Accordingly, you are directed to deny the protest. A copy of this decision should be attached to Customs From 19, to be sent to the protestant.

Sincerely,

John Durant, Director

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