HQ 0734585 - Application for Further Review of Protest No.1001-90-000964 concerning country of origin marking placement on sports jackets; marking duties; false certification; 19 U.S.C. 1304(f). - United States International Trade Commision Rulings

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HQ 734585

October 31, 1992

MAR-2-05 CO:R:C:V 734585 KR

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.1001-90-000964 concerning country of origin marking placement on sports jackets; marking duties; false certification; 19 U.S.C. 1304(f).

Dear Sir:

This is in response to Protest No. 1001-90-000964 and the application for Further Review dated January 29, 1990, submitted by Follick & Bessick, P.C. (counsel), on behalf of Starter Sportswear, Inc., ("protestant") against your decision to assess marking duties in connection with an entry of imported sports jackets.

FACTS:

Entry for 110 cartons containing 6017 nylon sports jackets which protestant purchased from J.D Manufacturing in Jamaica was made on March 20, 1989. On March 30, 1989, a notice of marking/redelivery (CF 4647) was issued because the country of origin marking was not placed at the neck of the jacket but at the bottom left front of the jacket body. Two days after the merchandise was released from entry and prior to receipt of the CF 4647, the jackets were shipped to approximately 100 different retail establishments. Starter Sportswear, Inc., claims that after being shipped to retail establishments, the jackets could not be recalled for redelivery without an expense that would be "economically prohibitive". The entry was liquidated November 3, 1989, with marking duties being assessed at the rate of 10 percent.

Protestant claims that the country of origin marking was placed on the jacket in good faith and in the belief that the placement was acceptable. It claims that it discussed the placement of the marking in the front left bottom of the jacket with Customs officials at a New York Seaport conference held in 1988. It also claims that in discussing this conversation with the import specialist in conjunction with filing this protest, the import specialist recalls discussing the propriety of the language used on the country of origin marking, but not the location of the marking on the jacket. Protestant claims that because of the conversation with the import specialist, even though not a binding ruling and even if there was miscommunication between them, that it acted in good faith believing that the marking was acceptable and, therefore, the marking duty should be cancelled.

ISSUE:

Whether the assessment of marking duties is 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 Regulations (19 CFR Part 134), implements the country of origin marking requirements and exceptions 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 or 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 CFR 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.

Here, Starter Sportswear, Inc., argues that the marking of the jackets was proper, or if not, that they should not have to pay marking duties because a Customs employee said that the marking location was acceptable. We find that the country of origin marking was not properly placed on the jacket and that the marking duty was properly assessed.

Customs has long held that the appropriate place for a garment for the torso to be marked is in the nape of the neck. In T.D. 4640(6) (1958), Customs ruled that the country of origin marking must be placed on the "inside center of the neck midway between the shoulder seams or in that immediate area". HQ 734105 (October 18, 1991); see, HQ 734107 (May 15, 1991). In certain circumstances Customs has allowed an exception to this rule. In HQ 733890 (December 31, 1990), Customs allowed a marking to be placed on a lower seam because the item was reversible. In another case, C.S.D. 80-109 (September 21, 1979), Customs ruled that because the linings at the neck of the coats were not conducive to the sewing of a label that the label could be placed on the inner facing near the button holes. That case also cites ORR ruling 638-69 (January 2, 1979) which held that suit jackets, overcoats, and sport coats may be marked with a label affixed over or below the inside pocket if such marking is included on or is in close proximity to the brand name label affixed to the coat in that area.

The jackets in question from protestant do not qualify under the exceptions to the neck placement requirements. Protestant has not supplied any reason why the country of origin marking could not be placed at the nape of the neck. Further, the manufacturer's label is sewn at that location, thereby demonstrating the ability to place a country of origin marking there. Because the manufacturer's label has been sewn into the nape of the neck, and there is no inside pocket, the jacket doesn't qualify under the exception in ORR ruling 638-69.

Protestant also states that the assessment of marking duties was not proper because it discussed the marking with a Customs official prior to importation who said the placement at the bottom front of the jacket was acceptable. First, we find that protestant has not substantiated this claim. In fact, protestant indicates that in a later discussion with the same Customs official, the Customs official did not recall discussing the placement of the marking, only the wording of the marking. Further, pursuant to 19 CFR 177.1(b) oral advice given by Customs personnel is not binding. This regulation is meant to avoid just this type of situation where a mistake due to lack of information, lack of time to fully research the situation, misunderstanding of intent, misunderstanding of a statement, or misunderstanding of some other nature, can easily be made.

Second, marking duties should not be construed as penal and are not avoidable. This is shown by the supplementary language enacted when Congress amended section 304(b) of the Tariff Act of 1930: "[marking duties] which shall be deemed to have accrued at the time of importation, shall not be construed to be penal, and shall not be remitted wholly or in part nor shall payment thereof be avoidable for any cause". Section 304(c) of the Customs Administrative Act of 1938. See, C.S.D. 92-32 (April 6, 1992); HQ 734151 (April 6, 1992). The United States Customs Court stated in A.N. Deringer, Inc. v. United States, 51 Cust. Ct. 21, C.D. 2408 (1963), that "those who import goods into the United States accept certain responsibilities that have been laid on them by Congress. One such responsibility, and an important one, is to see that imported merchandise of foreign origin is properly marked to show the country of origin, before it enters into the commerce of the United States." Therefore, the prior record of protestant and its actions concerning the subsequent shipment of jackets has no relevance to the determination of the propriety of marking duties assessed on the jackets in this case.

The next issue concerns the interpretation of 19 U.S.C. 1304(a)(3)(K), which allows an exception from marking if an article cannot be marked after importation except at an expense which is economically prohibitive, and the failure to mark the article before importation was not intentional. Protestant states that the cost of retrieving the merchandise is the reason the marking would be economically prohibitive. However, this is not consistent with the obligations under protestant's entry bond. The importer's obligations, which are specified in 19 CFR 113.62, include an agreement to redeliver merchandise if the merchandise must be marked with the country of origin. 19 CFR 113.62(d) specifies that any demand for redelivery will be made no later than 30 days after the date that the merchandise was released or 30 days after the end of the conditional release period (whichever is later).

Considering the importer's agreement to redeliver not legally marked merchandise within 30 days after the date that the merchandise was released, we believe that an importer who disposes of the merchandise during that period does so at his peril. If the cost of retrieving articles disposed of during the 30 day period was considered relevant in determining whether such articles are entitled to an exception from marking under 19 U.S.C. 1304(a)(3)(K), importers would have an incentive to dispose of imported goods as soon as possible and to violate one of the bond conditions. Since the marking notice was issued within the time frame specified in 19 CFR 113.62(d), we conclude that it would be inappropriate to consider the cost of retrieving merchandise disposed of during this period in determining whether such merchandise is excepted from marking.

HOLDING:

The notice of marking/redelivery was properly issued and the assessment of marking duties were properly assessed in this case. The importer failed to properly mark the jackets under Customs supervision prior to liquidation. Accordingly, the protest should be denied. A copy of this decision should be attached to the Customs Form 19, to be sent to the protestant.

Sincerely,

John Durant, Director
Commercial Rulings Division

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