HQ 561032 - Country of origin marking of cigarettes; 19 CFR 134.32(c) and 134.32(o) - United States International Trade Commision Rulings

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HQ 561032

June
22, 1998

MAR-05 RR:TC:SM 561032 BLS

CATEGORY: MARKING

Port Director
526 Water Street
Port Huron, Michigan 48060

RE: Country of origin marking of cigarettes; 19 CFR 134.32(c) and 134.32(o)

Dear Sir:

This is in reference to a letter dated June 4, 1998, from Imperial Tobacco Limited ("Imperial"), requesting that we review its proposed country of origin marking on packaged cigarettes to determine whether the marking is in compliance with section 304, Tariff Act of 1930, as amended (19 U.S.C. 1304) and the regulations thereunder. Imperial also asks for an exception to these requirements for a shipment that has been denied entry as a result of improper marking.

FACTS:

A marking notice was issued on May 27, 1998, to the importer of record for the reason that packaged cigarettes imported from Canada were not properly marked. The marking on the individual packages and cartons of cigarettes reads as follows:

Mercer 100's, by Imperial Tobacco, Montreal, Canada
Quality tobacco products since
1912
Distributed under license by: ITL (USA)
Limited
Boston, Massachusetts
02116
1-888-8-MERCER

The cigarettes were denied entry into the commerce of the U.S. as marked and were returned to Canada.

Imperial requests that we rule on the sufficiency of the marking proposed for future shipments. A sample of the cigarette package and the proposed marking has been submitted. This marking will appear on the carton and on the individual package side panel. (It is noted that the product is sold either by the pack or by the case.) Imperial
also requests an exception to the marking requirements for the 339 cases of cigarettes comprising this shipment, based on economic prohibitiveness to mark.

ISSUES:

(1) Whether the proposed marking on the cigarette packs complies with the requirements of 19 CFR 134.46.

(2) Whether a marking exception may be granted for the 339 cases of cigarettes found to be improperly marked.

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 article 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 CCPA 297 at 302; C.A.D. 104 (1940). Part 134, Customs Regulations (19 CFR Part 134) implements the requirements of section 304.

Section 134.46, Customs Regulations (19 CFR 134.46) provides as follows:

In any case in which the words "United States," or "American," the letters "U.S.A.," any variation of such words or letters, or the name of any city or location in the United States, or the name of any foreign country or locality in which the article was manufactured or produced appear on an imported article or its container and those words, letters or names may mislead or deceive the ultimate purchaser as to the actual country of origin of the article, there shall appear legibly and permanently in close proximity to such words, letters or name, and in at least a comparable size, the name of the country or origin preceded by "Made in," "Product of," or other words of similar meaning.

In the instant case, 19 CFR 134.46 was triggered by the appearance of a U.S. location for the cigarette distributor, as an ultimate purchaser may be misled as to the actual country of origin of the cigarettes. The marking "Mercer 100's, by Imperial Tobacco, Montreal, Canada," is not equivalent to "Made in" or "Produced in," and thus does not satisfy the special marking requirements of this regulation. Therefore, the marking notice was properly issued.

Proposed Marking

The proposed marking reads as follows:

Mercer 100's, by Imperial Tobacco, Montreal, Canada
Made in Canada
Distributed under license by: ITL (USA)
Limited
Boston, Massachusetts, 02116
1-888-8-MERCER

This marking on the cigarette packages is located on one side of the cigarette pack, on gold lettering against a red background for the "regular" cigarettes, and in a dark blue lettering against a gold background for the "lights." We find that this marking is sufficiently legible and conspicuous and will otherwise satisfy the requirements of 19 U.S.C. 1304. Further, the marking satisfies the requirements of 19 CFR 134.46, as the name of the country of origin is preceded by the words "made in" and it appears in close proximity to, and in the same size lettering as the U.S. address. As a sample carton was not submitted with the request, we cannot rule on its compliance with section 134.46. However, Imperial has orally advised that it will request a ruling as to the sufficiency of the proposed marking on the carton at a later date, and submit a sample at that time. Accordingly, our determination in this case covers the individual packages of cigarettes only.

Marking Exception Requested

With regard to the shipment that was the subject of the May 28, 1998 marking notice, Imperial believes that removal of the seal from each individual pack in order to apply a country of origin sticker will result in moisture loss and thus alter the taste of the product. In any event, Imperial estimates the cost of this task and resealing each pack (96,000 packages) at $.36 per pack or $35,000. The cost of labeling the packs over the cellophane (assuming permanence of the label and compliance with 19 U.S.C. 1304) is estimated at $.29 per pack, or approximately $29,000. Imperial also estimates the cost of writing off the 339 cases and re-manufacturing with new packaging
materials at $150,000. The concerned Customs officer has advised that the appraised value of the shipment is approximately $90,000.

Section 134.32(c), Customs Regulations (19 CFR 134.32(c)) provides an exception from the marking requirements for articles that cannot be marked prior to shipment to the U.S., except at an economically prohibitive expense.

In this regard, we note that it is Customs policy not to allow a permanent marking exception based upon this prohibitive economic expense provision. See Headquarters
Ruling Letter (HRL) 559453 dated July 16, 1996. Based on the facts in this case, we find that pursuant to 19 CFR 134.32(c), a temporary exception to the marking requirements is warranted under 19 CFR 134.32(c) for the 339 cases of cigarettes that were denied entry due to failure to comply with the requirements of 19 CFR 134.46. Subsequent shipments of the product must be marked in accordance with the proposed marking and must otherwise satisfy the requirements of 19 U.S.C. 1304 and the special marking requirements of 19 CFR 134.46.

HOLDING:

1) The proposed marking "Made in Canada," on packages of cigarettes, which appears in close proximity to the marking indicating the U.S. location of the manufacturer's distributor, satisfies the requirements of 19 U.S.C. 1304 and the special marking requirements of 19 CFR 134.46.

2) Pursuant to 19 CFR 134.32(c), a temporary exception to the marking requirements is granted for the 339 cases of cigarettes for which a marking notice was issued. The exception covers only this shipment. Subsequent shipments of cigarettes must be marked conspicuously, legibly and permanently with the country of origin of their contents.

Please provide a copy of this decision to Imperial Tobacco Limited, 3810, rue St. Antoine Street, Montreal, P.Q. H4C 1B5.

Sincerely,

John

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