HQ 0734711 - Country of origin marking requirements for inexpensive imported rings, bracelets, and necklaces sold through vending machines; repacking; bulk importations; 19 CFR 134.34; 19 CFR 134.26 - United States International Trade Commision Rulings

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HQ 734711

January 11, 1993

MAR-2-05 CO:R:C:V 734711 RSD

CATEGORY: MARKING

District Director
U.S. Customs Service
P.O. Box 619050
1205 Royal Lane
Dallas/Fort Worth, Texas 75261

RE: Country of origin marking requirements for inexpensive imported rings, bracelets, and necklaces sold through vending machines; repacking; bulk importations; 19 CFR 134.34; 19 CFR 134.26

Dear Sir:

This is in response to your memorandum dated June 15, 1992, forwarding an internal advice request dated June 2, 1992, submitted by the law firm Baker & Hostetler, on behalf of their client the Diamond Vending & Supply Company.

FACTS:

Diamond Vending & Supply Co. (DVS) imports and distributes low value jewelry and toys which are sold in vending machines throughout the United States. The imported articles are imported in bulk and repackaged in plastic capsules prior to shipping to its customers. The merchandise is sold to consumers at the vending machines in the plastic capsules. DVS usually imports its merchandise from Taiwan and Hong Kong. However, the merchandise involved in this case was purchased from an Indian supplier.

The merchandise imported consisted of plastic necklaces, bracelets, and rings. The rings were shipped in plastic bags containing 12 pieces each. The necklaces and bracelets were shipped by having 12 pieces held together by a label marked "Made in India". The "12 packs" are then placed in plastic bags which contain 12 "12 packs" (144 pieces). The plastic bags were also marked "Made in India". However, the individual pieces were not marked. The total number of items in the first shipment amounted to 1,231,200 pieces.

On March 19, 1992, Customs issued a marking notice of redelivery advising DVS that each item must be separately marked to indicate its country of origin. Subsequently, a second shipment consisting of similar merchandise was purchased from the same Indian supplier. The shipment contained 2,430,00 pieces and was marked in the same manner as the first shipment.

DVS requested that the imported merchandise be excepted from individual country of origin marking on the grounds that it would be economically prohibitive to mark each piece of jewelry. The importer through its attorneys furnished information on the cost of marking each piece of jewelry. DVS attempted to establish that it would lose money if it had to individually mark each piece of jewelry. Upon review, your office rejected DVS' claim for an exception from marking. DVS then requested internal advice from Customs Headquarters on this matter.

DVS' has indicated through its attorney that it would place a strip of paper with the country of origin of the jewelry written on it in each jewelry capsule. This will be done at the time that the jewelry is repacked from the bulk containers into the plastic capsules. They have also agreed to furnish the distributors and the vendors who sell their merchandise with a sign which indicates the country of origin of the jewelry. This sign is intended to be displayed in all the vending machines where the jewelry is sold. In addition, DVS has agreed to file all the repacking certificates necessary with your office.

ISSUE:

Can the imported low cost jewelry be marked to indicate its country of origin by means of paper strip labels which will be inserted in each capsule in which the jewelry is sold?

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 its 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. Congressional intent in enacting 19 U.S.C. 1304 was "that the ultimate purchaser should be able to know by an inspection of the marking on the imported goods the country of which the goods is the product. The evident purpose is to mark the goods so that at the time of purchase the ultimate purchaser may, by knowing where the goods were produced, be able to buy or refuse to buy them, if such marking should influence his will." United States v. Friedlaender & Co. 27 C.C.P.A. 297 at 302; C.A.D. 104 (1940).

Articles for which the marking of the containers will reasonably indicate the origin of the article are excepted from marking under 19 U.S.C. 1304(a)(3)(D). For an exception to be granted under 19 U.S.C. 1304(a)(3)(D), the article must be imported in the container and that container must reach the ultimate purchaser unopened. See also 19 CFR 134.32(d).

Section 134.34 Customs Regulations (19 CFR 134.34), provides that an exception may be authorized in the discretion of the district director under 19 CFR 134.32(d) for imported articles which are to be repacked after release from Customs custody under following conditions: (1) The containers in which the articles are repacked will indicate the origin of the articles to an ultimate purchaser in the U.S.; (2) The importer arranges for supervision of the marking of the containers by Customs officers at the importer's expense or to secure such verification, as may be necessary by certification and the submission of a sample or otherwise, of the marking prior to liquidation of the entry.

In HQ 732808 (December 12, 1989), we indicated that the discretion of the district director under 19 CFR 134.34 is quite broad. He may determine whether the marking of the repacked containers will comply with 19 U.S.C. 1304. He may determine whether direct supervision, certification, verification, or review of a sample is necessary to accomplish the purposes of 19 U.S.C. 1304 and to extend the 60-day liquidation period.

In that same ruling, we also indicated that the district director would be acting within the scope of his discretion in determining that the 19 U.S.C. 1304(a)(3)(D) exception may be approved for all entries made over an extended or indefinite period time, rather than on an entry-by-entry basis. An important element in the exercise of the district director's discretion is his assessment of whether the company requesting the exception can be relied upon to carry through on its undertakings. Another factor to be considered is whether the district has adequate resources to provide the continuing supervision necessary to ensure proper country of origin making after importation.

Additional factors that the district director could consider are the importer's history of violations and record in complying with Customs procedures and regulations, whether the importer is doing the repacking himself, or having another party do the repacking, and whether the repacking is done on the importer's premises within the Customs district in which the merchandise was imported. Where the district director determines that the importer may not utilize the certification procedure of 19 CFR 134.34, he/she must able to articulate a specific reason for this decision.

In this case, the individual pieces of jewelry were not marked at the time they were entered. The importer is requesting an exception from marking the individual pieces of jewelry. Instead, it has agreed to place a strip of paper with the country of origin of the jewelry written on it in each of the capsules in which the jewelry is sold at time the jewelry is repacked into the capsules. We note that marking the individual pieces of jewelry will not inform the ultimate purchaser of their country of origin prior to their purchase because they will be sold through vending machines, and the ultimate purchaser will not have an opportunity to examine the jewelry prior to purchase. Under such circumstances, the proposed method of marking will be as effective as marking each piece of jewelry. In addition, the importer has indicated that it will furnish each of its distributors and vendors with signs to be displayed on the vending machines which will indicate the country of origin of the jewelry. In 734101 (July 9, 1991), Customs ruled that the placing of signs with the country of origin for toys sold in vending machines on the outside of the vending machines was an acceptable method of marking where the importer had direct control over the vending machines. In this case, relying on the placement of signs with the country of origin of jewelry on the vending machines as the only method of marking the jewelry would be inadequate because DVS has no direct control on the vendors and the distributors of the jewelry, and thus Customs cannot be assured that the signs will actually be placed on the vending machines. However, we believe that the combination of the display signs and the insertion of the slips of paper in the capsules should be sufficient to inform the ultimate purchaser of the country of origin of the jewelry.

We also believe that because the merchandise has already been entered and the ultimate purchaser will not have an opportunity to examine it prior to purchase, requiring each piece of jewelry to be individually marked would serve no purpose. In addition, because of they are very low cost items, marking each piece of jewelry could impose a high expense on the importer without informing the ultimate purchaser of the country of origin prior to purchase. Therefore, in our judgment if the country of origin marking on the strips of paper inside the jewelry capsules is conspicuous and legible in accordance with 19 CFR 134.41, then it would be an acceptable method of marking of the jewelry.

Accordingly, if the importer files the proper certification in accordance with 19 CFR 134.34, and your office is satisfied that the importer can be relied on to carry out its proposed method of marking by placing the strips of paper in the jewelry capsules, then the individual pieces of jewelry may be excepted from marking.

HOLDING:

The proposed method of marking the low cost jewelry, sold through the vending machines, by putting strips of paper with the country of origin of the jewelry in the jewelry capsules at time the jewelry is repacked is acceptable. The imported jewelry may be excepted from country of origin marking, if the district director is satisfied that they will repackaged as described in this ruling, and in accordance with the requirements of 19 CFR 134.34.
Sincerely,

John Durant, Director,

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