HQ 561093 - Application for Further Review of Protest No. 3701-98-100019; KCS Industries, - United States International Trade Commision Rulings

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HQ
561093

November 3,
1998

MAR-05 RR:TC:SM 561093 BLS

CATEGORY: MARKING

Port Director
U.S. Customs Service
P.O. Box 37260
Milwaukee, WI 53237-0260

RE: Application for Further Review of Protest No. 3701-98-100019; KCS Industries,
Inc.; marking duties

Dear Sir:

This is in reference to your memorandum dated July 23, 1998, concerning the above-captioned protest, timely filed on behalf of KCS Industries, Inc. The protest was filed against the assessment of marking duties for failure to redeliver neon signs which had not been marked with their country of origin prior to liquidation.

FACTS:

The goods were entered on December 12, 1997, and on the same date, the CF 4647 (Notice to Redeliver) was issued to the importer, as it was determined that 838 signs were found to have no country of origin markings. The importer signed the CF 4647 on December 17, certifying that the merchandise had been properly marked. However, the notice was not returned to Customs until January 23, 1998, with a sample, at which time the Customs officer conducted an examination and discovered that only 36 of the 838 signs remained in the importer's possession. These signs had been properly marked. Therefore, 802 signs had entered into the commerce of the U.S. without Customs verification as to proper country of origin marking. As a result, upon liquidation (February 13, 1998), 10% marking duties were assessed on the 802 signs which could not be redelivered.

ISSUE:

Whether marking duties were properly assessed in this instance.

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. 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 the imported article 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 the following two prerequisites must be present in order for marking duties to be properly assessed under 19 U.S.C. 1304(f):

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.

In this case, the the subject merchandise was not legally marked at the time of importation. Further, as the merchandise was not marked under Customs supervision prior to liquidation, nor exported or destoyed, marking duties were properly assessed.

Protestant claims that upon receiving the CF 4647, all of the neon signs were properly marked with appropriate labels with the designation "Made in China." However, protestant states that the delay in returning the CF 4647 to Customs was due to confusion and miscommunication within the company. Protestant further claims that its customer was aware that the merchandise was of foreign origin due to the price, and that the origin could be (or was) China, as the imprinted label was so marked. As a result, protestant argues that the exception under section 134.32(h) (19 CFR

134.32(h)), should be taken into account and marking duties should not be assessed.
(19 CFR 134.32(h) excepts from the marking requirements articles for which the uiltimate purchaser must necessarily know, or in the case of a good of a NAFTA country, must reasonably know, the country of origin by reason of the circumstances of their importation or by reason of the character of the articles even though they are not marked to indicate their origin.)

Although that part of the shipment remaining at its premises was marked, protestant has not established that the neon signs which were released into the commerce of the U.S. were properly marked prior to liquidation. Certainly, there was no showing that these articles were marked under Customs supervision. Furthermore, protestant has not established that the articles in question qualified for the exception from marking under 19 CFR 134.32(h). It is our opinion that the importer has not demonstrated that the ultimate purchaser necessarily knew the country of origin of the signs. The letter from Barton Beers, protestant's customer, merely states that the importer had indicated to the company that certain goods it purchased were manufactured, in whole or in part, of components sourced from foreign countries, including China. This evidence is insufficient to establish that the customer "necessarily knew" the country of origin of the neon signs.

We also note that the importer did not raise this claim after receipt of the marking notice, but only upon protest after the goods were no longer available and the claim difficult of verification. If the claim is raised in a protest for the first time, particularly under circumstances where the merchandise is not available, it is incumbent on the importer to provide the necessary proof. In this protest the importer presented insufficient support for his claim of exception from marking.

Under the circumstances, as the merchandise was not legally marked at the time of importation, and was not subsequently exported, destroyed or marked under Customs supervision prior to liquidation, the assessment of marking duties on the entry was proper.

HOLDING:

The protestant's claim of exception from the marking requirements may not be allowed. As the merchandise was not legally marked prior to liquidation, marking duties were properly assessed. Accordingly, the protest should be denied. A copy of this decision should be attached to Form 19, Notice of Action, to be sent to the protestant.

Sincerely,

John Durant,
Director
Commercial

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