HQ 561001 - Application for Further Review of Protest No. 1001-98-100424; country of origin marking of spectacle frames; Aristar Inc., USA; marking duties; failure to mark. - United States International Trade Commision Rulings

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HQ 561001

August
11, 1998
MAR-05 RR:TC:SM 561001 BLS

CATEGORY: MARKING

Area Director
U.S. Customs Service
JFK International Airport, Building #77
Jamaica, New York 11430

RE: Application for Further Review of Protest No. 1001-98-100424; country of origin marking of spectacle frames; Aristar Inc., USA; marking duties; failure to mark.

Dear Sir:

This is in response to an Application for Further Review of the above protest dated January 2, 1998, timely filed and submitted on behalf of Aristar Inc. USA ("Aristar"), against your decision to assess marking duties in connection with an entry of imported spectacle frames. Samples have been submitted.

FACTS:

October 23, 1997 - Customs inspected samples of a shipment of spectacle frames from Hong Kong and determined that the country of origin markings located on the temple tips were not legible. A Notice to Mark and/or Notice to Redeliver (CF4647) was issued directing that the merchandise be brought into compliance or returned to Customs' custody within 30 days. The notice advised that "Commodity must be marked with country of origin. Pipe line # 2142 attached."

October 24, 1997 - The shipment was released to the importer for marking. The CF4647 was returned to Customs, signed by R. Douglas Tanguy, Director of Product Management, Aristar, certifying that the merchandise was marked. A sample of the frames was also included.

On or about that same date, and after receipt of the returned CF4647, Customs informed the importer by telephone that the marking was not legible and that the articles must be marked with contrasting colors (pursuant to Treasury Decision (T.D.) 74-38) so the ultimate consumer could be aware of the country of origin. A copy of
T. D. 74-38 was faxed to the importer describing the proper marking of spectacle frames.

November 10, 1997 - Customs inspectors visited the premises of Aristar to verify the country of origin markings. Employees at the warehouse were unable to find the shipment and told the inspectors that it had been released into stock. As a result, it was determined that the shipment had been released without Custom's authorization.

January 22, 1998 - New York FP&F requested a re-examination of the 44 carton shipment.

January 23, 1998 - The entry was liquidated with 10 percent marking duties of $21,392.

February 3, 1998 - Customs conducted a marking verification at the premises of Aristar. The importer's representatives stated that an ink pen was drawn across the existing engraving to create a marking in contrasting color. A letter by counsel on behalf of Aristar was submitted which provided that the shipment was re-marked by adding a gold contrast. However, Customs examination disclosed that the shipment had not been re-marked as stated in the letter. Rather, the articles were marked against a non-contrasting background which had been rejected by Customs upon importation as not being legible. Customs also found upon examination that the spectacle frames were packed in cartons bearing airway bill numbers differing from the airway bill number assigned to the original shipment. As a result, Customs was unable to determine whether these spectacle frames were those imported in the original shipment.

During this examination Aristar's representative stated that the CF4647 was signed and samples were sent to Customs with the intention of marking the spectacle frames once Customs informed Aristar that the country of origin markings on the samples were acceptable. Customs advised Aristar's representative that by signing the CF4647 and marking the box certifying that all merchandise was marked Aristar was certifying that in fact all of the merchandise had been marked.

In connection with a second entry not the subject of this case, Customs did verify that the spectacle frames were properly marked, as the foreign manufacturer replaced the temple tips bearing the unacceptable markings with new temple tips bearing proper country of origin markings. As a result, Aristar was given the right to enter this merchandise.

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 in to 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 manner as to indicate to the ultimate purchaser in the
U.S. the English name of the country of origin of the article. Section 304(f) (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 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 port director shall notify the importer on Customs Form 4647 to arrange with the port 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 such imported articles shall be established to the satisfaction of the port director.

Section 134.52, Customs Regulations (19 CFR 134.52), allows a port 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 Headquarters Ruling Letter (HRL) 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, and

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

Protestant states the following regarding the sequence of events:

There was an initial misunderstanding with Customs as to how the spectacle frames should be marked, and that until informed by telephone, Aristar believed that Customs
had merely failed to observe the existing marking on the eyeglass frames. Aristar asserts that its representative executed the certification on the CF4647 and submitted samples reflecting the original marking in accordance with this belief. Subsequently, Customs advised the representative by telephone that the existing marking was not sufficiently legible, as they were not in a contrasting color. Corrective marking was then performed on sample frames, and submitted to Customs on or about November 7. Aristar claims that it continued to retain the goods in its warehouse, pending Customs approval, and that all of the corrective marking was completed in its warehouse by December 15, 1997. Protestant asserts that Customs failure to locate the shipment during its initial visit on November 10 was due to the fact that Customs did not advise the concerned representatives of its intended visit and thus spoke with other Aristar officials unfamiliar with the situation. The merchandise was retained separately from Aristar's regular inventory.

Protestant further states that the original boxes in which the imported frames had been packed at the time of importation were recycled or used to pack other frames, and that upon re-inspection by Customs on February 3, the company reassembled all of the merchandise from the shipment in different containers, using inventory records to identify the goods. However, frames valued at $13,661.15 were inadvertently released from the warehouse, although protestant claims that these frames were also properly marked before delivery to its customers. See affidavit of R. Douglas Tanguy dated April 2, 1998.

The Customs report of the marking verification conducted on February 3, 1998, provides in part as follows:

There was no evidence present to support the importers [sic] claim of remarking the spectacle frames. There were no machines of the type used to mark merchandise of this nature on the premises and no receipts were produced by Aristar when asked if another company had performed the marking. Customs was informed by Mr. Tanguy and Mr. Verniero that an ink pen was drawn across the existing engraved markings to create a marking in contrasting color. ... While examining the spectacle frames Customs uncovered no evidence of an ink pen utilized. In fact, the original markings, blurred dye and incomplete engraving was still present on the spectacle frames examined. The representatives from Aristar were shown the spectacle frames from the shipment in question with the original markings.

The marking verification included three Customs officers, two of whom initiated the report. The fact that the spectacle frames had not been re-marked was confirmed by telephone with one of the Customs officials involved, who advised that all three officials had examined the merchandise and came to the same conclusion, i.e., that the goods had not been re-marked.

Under the circumstances, assuming arguendo that the examined merchandise was the merchandise which is the subject of this protest, the evidence establishes that the shipment was not properly marked at the time of Customs verification. The record also establishes that protestant was aware at or about the time of its certification of the CF4647 that the frames were not properly marked and was advised by Customs as to the appropriate method of marking. Protestant had ample opportunity to properly mark the goods but failed to do so prior to liquidation and Customs verification.

Therefore, as the merchandise was not legally marked at the time of importation, and the merchandise was not subsequently exported, destroyed or marked under Customs supervision prior to liquidation, we find that marking duties were properly assessed in accordance with 19 U.S.C. 1304. Pursuant to your request, the samples are returned herewith.

HOLDING:

The assessment of marking duties was proper due to the fact that the merchandise was not legally marked at the time of importation nor was it subsequently marked under Customs supervision prior to liquidation. Accordingly, the protest should be denied.

In accordance with Section 3A (11) (b) of Customs Directive 099 3550-065, dated August 4, 1993, Subject: Revised Protest Directive, this decision should be mailed by your office to the protestant no later than 60 days from the date of this letter. Any reliquidation of the entry in accordance with the decision must be accomplished prior to mailing of the decision. Sixty days from the date of the decision the Office of Regulations and Rulings will take steps to make the decision available to Customs personnel via the Customs Module in ACS and the public via the Diskette Subscription Service, Freedom of Information Act and other public access channels.

Sincerely,

John

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