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HQ 558777

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January 25, 1995

MAR-2-05 CO:R:C:S 558777 DEC

CATEGORY: MARKING

Mr. John B. Pellegrini
Ross & Hardies
Park Avenue Tower
Sixty-Five East Fifty-Fifth Street
New York, New York 10022-3219

RE: Country of origin marking for footwear samples; 19 CFR 134.32;
19 U.S.C. 1304(a)(3); Marking duties; 19 CFR 134.2; HRL 709199;
HRL 732082 (C.S.D. 89-80)

Dear Mr. Pellegrini:

This is in response to your letter dated September 21, 1994, in which you seek a ruling with respect to the country of origin marking of footwear samples.

FACTS:

Your client, The Topline Corporation (Topline), intends to import footwear samples that are to be manufactured in the People's Republic of China, Taiwan, Korea, Thailand, and other locations throughout the Far East. Topline intends to import solicitation samples and confirmation samples.

Solicitation samples are imported in full pairs that Topline uses to present to clients for demonstration purposes. If the prospective purchaser selects a style, the purchaser will retain one shoe and return the other to Topline. As part of the purchasing decision, you state that the purchaser will ask about sources and factories for its particular order. The purchaser will issue purchase orders and letters of credit to the foreign vendor.

Confirmation samples will be imported in full pairs. The foreign vendor will use the purchaser-selected production molds and patterns. These samples are imported for the purchaser's review and approval after it has issued a purchase order and letter of credit to the foreign vendor, but before production. The purchaser, Topline's client, retains the confirmation sample that is an exact duplicate of what will be produced,
including the country of origin marking. Sometimes, however, the confirmation sample will be made in a country other than the country where mass production will take place. For example, this situation arises when a foreign vendor's sample room is located in Hong Kong and its production facilities are located in the People's Republic of China. The confirmation samples will be marked "Made in China" because Topline's clients insist that these samples duplicate the production merchandise exactly. According to your submission, Topline's clients will not approve a confirmation sample that does not show the origin of the production merchandise.

ISSUE:

1. Whether the solicitation samples or confirmation samples are excepted from country of origin marking requirements.

2. Whether the confirmation samples may be marked to indicate the country of origin where the mass production of the footwear will occur when the sample is produced in a different country.

LAW AND ANALYSIS:

Section 304 of the Tariff Act of 1930, as amended (19 U.S.C. origin imported into the United States shall be marked in a conspicuous place as legibly, indelibly, and permanently as the nature of the article (or container) will permit, in a way that indicates to the ultimate purchaser in the United States 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, 302 (1940).

There are, however, exceptions to the general rule (see 19 U.S.C. 1304(a)(3) and 19 CFR 134.32) that every article of foreign origin shall be marked. Counsel contends that 19 U.S.C. 1304(a)(3)(H) applies to this situation. Section 1304(a)(3)(H) states that an article may be excepted from marking if:

An ultimate purchaser by reason of the character of such article or by reason of the circumstances of its importation must necessarily know the country of origin of such article even though it is not marked to indicate its origin.

In this instance, Topline's clients are aware of the country of origin of the samples because of the circumstances of their importation. According to counsel's submission, Topline's clients know that the solicitation and confirmation samples may be produced in a country other than where the production of the imported shoes will actually occur since the client retains the authority to select the source country and the manufacturer.

The solicitation samples could be excepted from country of origin marking under other statutory provisions (in addition to 19 U.S.C. 1304(a)(3)(H) discussed above). For instance, 19 U.S.C. 1304(a)(3)(D) provides an exception to the marking requirement for articles imported in a container that will reasonably and accurately indicate the origin of the article if the Customs officers at the port of entry are satisfied that the importer will receive the article in its original unopened carton marked to indicate the country of origin of the article. Alternatively, the samples may be excepted from marking under the 19 U.S.C. 1304(a)(3)(F) exception pertaining to articles imported for the use of the importer and not intended for sale. Customs has held that people in sales use samples as "tools of the trade" to solicit orders from prospective customers. See HRL 709199, dated June 28, 1978, in which articles imported for showroom display or for testing purposes were similarly considered for use by the importer within the meaning of 19 U.S.C. 1304(a)(3)(F). Of course, this exception would not apply if the samples themselves were to be sold. See also HRL 732082, dated March 14, 1989 (C.S.D. 89-80).

While pursuant to section 1304 articles may be excepted from the marking requirements, section 1304 certainly does not allow articles of foreign origin intended to reach ultimate purchasers in the U.S. to be intentionally mismarked as a product of a country other than the country of origin regardless of whether the products are solicitation or confirmation samples. Articles not properly marked may be subject to marking duties as set forth in section 134.2, Customs Regulations (19 CFR 134.2), which states that

Articles not marked as required by this part shall be subject to additional duties of 10 percent of the final appraised value unless exported or destroyed . . . The 10 percent additional duty is assessable for failure to mark the article (or container) to indicate the English name of the country of origin of the article or to include words or symbols required to prevent deception or mistake.

In this case, imported solicitation and confirmation samples marked with a country other than the actual country of origin as required under part 134 would be subject to marking duties. Also, you should note that 19 U.S.C. 1595a(c), as amended by the NAFTA Implementation Act, provides for the assessment of penalties and forfeitures of goods in connection with intentional violations of 19 U.S.C. 1304.

HOLDING:

1. Solicitation samples and confirmation samples may be excepted from country of origin marking requirements pursuant to 19 U.S.C. 1304(a)(3)(D), (F), or (H) provided the importer meets the requirements of the particular exception as indicated above.

2. Solicitation and confirmation samples marked to indicate a country of origin other than its actual country of origin are in violation of 19 U.S.C. 1304 and 19 CFR Part 134 and are subject to marking duties.

A copy of this ruling letter should be attached to the entry documents filed at the time this merchandise is entered. If the documents have been filed without a copy, this ruling should be brought to the attention of the Customs officer.

Sincerely,

John Durant

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