HQ 0733738 - Application for Further Review of Protest 20029000060 concerning the assessment of marking duties on imported decorative candles, alteration of a country of origin marking after release from Customs custody - United States International Trade Commision Rulings

United States International Trade Commision Rulings And Harmonized Tariff Schedule

faqs.org Rulings By Number Rulings By Category Tariff Numbers

faqs.org > Rulings and Tariffs Home > Rulings By Number > 1994 HQ Rulings > HQ 0733738 - HQ 0735139 > HQ 0733738

HQ 733738
December 23, 1993
MAR-0-5 CO:R:C:V 733738

CATEGORY: MARKING

District Director of Customs
423 Canal Street
New Orleans, Louisiana 70130

Attention: Room 200 Protest Office

RE: Application for Further Review of Protest 20029000060 concerning the assessment of marking duties on imported decorative candles, alteration of a country of origin marking after release from Customs custody

Dear Sir:

This is in response to the application for further review of Protest # 20029000060 submitted by counsel for Emperor Art Creations, through the filing of a Customs Form 19, received in your office on January 9, 1990.

FACTS:

The record indicates that the importer, Emperor Art Creations, made two entries of decorative wax candles. The decorative wax candles were made in and imported from Japan. At time the candles were entered into the U.S., they were marked to indicate that their country of origin was Japan. The merchandise was released from Customs custody. Subsequent to the release, Customs learned through a confidential informant that the importer was altering the country of origin marking with the placement of a sticker on the product. This alteration gave the impression that the country of origin of the candles was Austria rather than the Japan. The Advertising and marketing of the candles attempted to convey that they were of Austrian origin.

Customs conducted an investigation and inspected the importer's facilities, which were located in Little Rock, Arkansas. The inspection revealed wooden bins along the walls of the warehouse which contained several thousand candles which had the country of origin marking altered by stickers covering and concealing the marking. These stickers showed the company name but did not have a new country of origin marking on them. One of the importer's employees indicated that the other candles imported from Japan were also going to have their country of origin marking altered like the candles in the wooden bins along the wall. After a further search was conducted with a search warrant, it was also discovered that the contents of several boxes of candles, in the original shipping boxes, which were marked made in Japan, also had their country origin altered. At the conclusion of the warrant, 67,955 candles were seized on the importer's premises.

Surveys of retailers around the U.S. indicated that no company had knowledge of the marking alterations and that they were led to believe that the candles were made in Austria and did not know that they were in fact made in Japan. Interviews with the importer's Customs broker indicated that the practice of altering the country of origin marking had been going on since 1974. The importer's employees also were aware that the candles were from Japan but they were being passed off as Austrian.

The entries were liquidated on October 13, 1989, and October 27, 1989, with the assessment of additional 10 percent marking duties. Customs also initiated a fines and penalty case against the importer.

The importer through his attorney filed a protest against the assessment of the 10 percent marking duties. The protest contends that the merchandise was properly marked at the time of importation so no marking duties can be assessed. Secondly, the importer maintains that Customs ultimately approved a form of marking that included a reference to Austria, (Austria, the country of design).

ISSUE:

Can marking duties be assessed if goods are legally marked to indicate their country of origin at the time they enter the U.S., but the marking is subsequently altered after they are released from Customs custody?

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 upon a finding that an imported good is not properly marked with the country of origin at the time of importation, and such article is not exported, destroyed or remarked in accordance with law. In other words, marking duties equal to 10 percent of the value of the merchandise will be assessed if the merchandise is not legally marked at the time of importation, unless the imported merchandise is exported, destroyed, or remarked under Customs supervision prior to liquidation. In HQ 731775 (November 3, 1988), Customs ruled that two perquisites 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.

In this case, the record indicates that although the merchandise had country of origin markings when it was first entered into the U.S., markings were altered in the importer's facilities after the goods were released from Customs custody. This alteration of the marking concealed information from the ultimate purchasers that the candles were made in Japan. It was also meant to create the impression that the candles were made in Austria.

Customs is now in court on another case on the same issue of assessing marking duties for the removal of a country of origin marking after the merchandise was released from Customs custody. In that case, the goods bore a country of origin marking at the time they were entered into the U.S. and Customs initially inspected the merchandise. Subsequently, before the merchandise reached the ultimate purchaser, the importer removed the country of origin markings. The importer pleaded guilty to a violation of 19 U.S.C. 1304(f) for intentionally removing the country of origin markings. Customs then made a demand for marking duties pursuant to 19 U.S.C. 1592(d) because the removal of the country of origin marking from the imported merchandise constituted a false act which deprived the U.S. of lawful duties.

Similarly, in this matter the evidence establishes that the importer never intended to have the country of origin markings remain on the candles until they reached the ultimate purchasers. Although the goods were legally marked when Customs first inspected them, after the merchandise was released from Customs custody, the importer deliberately altered the country of origin markings that were on the merchandise. This alteration was designed to prevent the ultimate purchasers from knowing that the country of origin of the merchandise was Japan and to create the false impression that the articles were made in Austria. Accordingly, the imported goods did not reach the ultimate purchasers with the proper country of origin markings on them. With litigation on this issue pending in court and in view of Customs' position in this litigation, the protest should be denied.

The importer's second claim that Customs accepted that Austria had a role in the production of the candles is irrelevant because the importer still altered the proper country of origin marking on the products preventing the ultimate purchaser from knowing that they were made in Japan.

HOLDING:

The evidence in the record establishes that the importer intentionally altered the country of origin markings on the imported merchandise after it was released from Customs custody. The proper country of origin markings did not reach the ultimate purchaser. In view of Customs' position in pending litigation that marking duties are due when the country of origin markings are removed from merchandise after its release from Customs custody, you are directed to deny the protest. A copy of this decision, should be attached to the Customs Form 19 to be sent to the protestant.
Sincerely,

John Durant, Director

Previous Ruling Next Ruling