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HQ 962748




April 24, 2000

CLA-2 RR:CR:TE 962748 SS

CATEGORY: COUNTRY OF ORIGIN

TARIFF NO.: 6205.20.2065

Port Director New York/Newark
C/O Chief, Residual Liquidation and Protest Branch 6 World Trade Center, Room 761
New York, NY 10048-0945

RE: Application for Further Review of Protest No. 1001-99-100861; Country of Origin; 19 C.F.R. §141.113; Recall of Merchandise Released from Customs Custody; 180-Day Conditional Release Period for Textile Products; Notice to Redeliver; 19 C.F.R. §12.130; Textile Products Country of Origin; Authority of Port Director to Request Additional Information to Establish Country of Origin

Dear Sir:

This is in response to the Application for Further Review of Protest Number 1001-99-100861, timely filed by Ross & Hardies, on behalf of the importer Gaeltaryn Ltd. (“Protestant”), on February 19, 1999, contesting the demand for redelivery of merchandise.

FACTS:

On October 9, 1998, the Protestant entered into the United States 280 dozen men’s shirts claimed to be country of origin Hong Kong. The merchandise was released from Customs custody on the same day. Approximately one month later, the factory which allegedly manufactured the subject merchandise was placed on Customs’ list of manufacturers determined to have transshipped textile articles and wearing apparel to the United States. On December 14, 1998, Customs requested samples and additional information pertaining to the claimed country of origin. The Protestant attempted to obtain the requested documentation from the factory in Hong Kong. However, by letter dated January 7, 1999, the factory refused to provide the documentation to the Protestant. Accordingly, the Protestant was unable to provide the requested documents. On January 15, 1999, Customs issued a Notice to Redeliver based on the failure to
submit the requested information.

We note that on February 18, 1999, a Notice of Penalty or Liquidated Damages Incurred and Demand for Payment was issued for failure to redeliver the merchandise. The instant Protest was filed on February 19, 1999, protesting the demand for redelivery.

ISSUE:

Whether the issuance of the redelivery notice was proper?

LAW AND ANALYSIS:

Initially, we note that the subject Protest was timely filed pursuant to 19 U.S.C. §1514(c)(3). The date of the decision as to which the protest is made was January 15, 1999, and the date of this Protest is February 19, 1999. We also note that a demand for redelivery is protestable pursuant to 19 U.S.C. §1514(a)(4).

The Customs Regulations governing the recall of textiles and textile products released from Customs custody are found in 19 C.F.R. §141.113. Paragraph (b) of section 141.113 provides as follows:

For purposes of determining whether the country of origin of textiles and textile products subject to the provisions of §12.130 of this chapter has been accurately represented to Customs, the release from Customs custody of any such textile or textile product shall be deemed conditional during the 180-day period following the date of release. If the port director finds during the conditional release period that a textile or textile product is not entitled to admission into the commerce of the United States because the country of origin of the textile or textile product was not accurately represented to Customs, he shall promptly demand its return to Customs custody. Notwithstanding the provision of paragraph (h) of this section and §113.62(k)(1) of this chapter, a failure to comply with a demand for return to Customs custody made under this paragraph shall result in the assessment of liquidated damages equal to the value of the merchandise involved.

The background information on section 141.113(b), published in T.D. 94-95, Customs Bulletin, Vol. 28, No. 50, December 14, 1994, makes clear that the regulation was adopted because of a significant enforcement problem regarding textiles and textile products that are imported into the United States in violation of quota restrictions or without the appropriate visa from the country of origin. Prior to the enactment of section 141.113, Customs was required to issue a Notice of Redelivery within 30 days of the release of the merchandise from Customs custody. See HQ 226089, dated February 9, 1996. However, most violations were not discovered until after the close of the time period for issuance of a Notice of Redelivery. See HQ 226089 (cited above) and T.D. 94-95 (cited above). Accordingly, the 180-day conditional release period was specifically implemented to provide Customs with an opportunity to verify that country of origin claims are “accurately” represented to Customs.

The instant case falls squarely within the purview of 19 C.F.R. §141.113(b). The importer claimed Hong Kong as the country of origin but, after release of the merchandise, Customs had reason to believe that the claimed country of origin was incorrect and requested documentation to establish country of origin. When the importer could not submit information to establish Hong Kong as the country of origin, the port director found that the merchandise was not entitled to admission and demanded redelivery. The 180-day regulatory conditional release period commenced on October 9, 1998, the date the merchandise was released from Customs custody. Customs issued the Notice to Redeliver on January 15, 1999, well within the 180-day conditional release period. Accordingly, Customs’ demand for redelivery of the merchandise was proper.

In HQ 960409, dated October 24, 1997, Customs dealt with a similar protest against demands for redelivery of shipments of women’s wearing apparel. The Notice to Redeliver was made within the 180 day conditional release period. The ruling sternly cited 19 C.F.R. §114.113 and stated:

The plain language of the above referenced regulation is clear on its face. The issue at hand addresses the country of origin of the subject merchandise and the manufacturing processes which occur in the claimed country of origin. In the case of the subject wearing apparel Customs had reason to believe that the claimed country of origin was incorrect. Thus, as explicitly stated in the regulation, Customs was well within its legal right to act upon the conditional release period mandated by the regulation.

Similarly, in the instant case, Customs was well within its legal right to act upon the conditional release period and demand redelivery.

The Protestant argues that the request for additional documents made after the merchandise was released was unfair. We understand Protestant’s contention that requesting the documents after the release of merchandise put them in a difficult situation. However, 19 C.F.R. §141.113 puts an importer of textile products on notice that any release of merchandise is conditional and that the merchandise may be subject to additional scrutiny and possible redelivery for 180 days after release. 19 C.F.R. §12.130, states that a port director may request additional information if he is unable to determine the country of origin. Thus, 19 C.F.R. §12.130, read in conjunction with 19 C.F.R. §141.113, puts an importer on notice that the port director can request additional information to establish country of origin within the 180-day conditional release period. We note that Customs has routinely requested additional information to support country of origin after the release of merchandise. See Headquarters Ruling Letter (HQ) 959871, dated May 10, 1999; HQ 960043, dated October 28, 1998; and HQ 960565, dated October 28, 1998. Furthermore, the Headquarters’ Office of Field Operations advises that requests for additional information routinely occur after the release of merchandise since Customs usually does not see the entry until after the goods have been released.

The Protestant argues that the request for additional documentation was unfair because the factory was not placed on the list of companies determined to have transhipped at the time of entry. The Protestant submits that it took ordinary precautions since the factory was not on the list and was not on notice to expect a request for additional documents. However, the regulations clearly put an importer on notice that additional information could be requested within 180 days of the release of merchandise. The regulations do not discriminate; Customs may request documents from any importer of textiles or textile products within 180-days of the release of merchandise. Customs considers the fact that the manufacturer has been convicted for transshipping to be indicative that other shipments may have been shipped under the same circumstances. Thus, the port director had a doubt as to the actual country of origin and had the right under 19 C.F.R. §12.130 and 19 C.F.R. §141.113 to require additional proof of country of origin. Again, we note that the regulations were amended specifically to allow additional time for investigating country of origin claims.

The Protestant argues that it should not be held to the same standard as an importer involved with a factory that has been placed on the list of companies
determined to have transhipped to the United States. The Protestant refers to TBT 97-49, a Customs bulletin relating to additional documentation required for entries involving certain factories in Hong Kong. The bulletin directs that such entries are not to be released without the listed additional information. The Protestant argues that it is unfair to apply the same requirements to a released shipment as to a detained shipment. However, Customs believes that all imports suspected of transhipment, should be held to the same standard in terms of submitting documentation to establish country of origin. The same standard applies to any shipment in which a question is raised as to the proper country of origin.

Lastly, Protestant cleverly argues that it is being treated more harshly than if it had been on the list of Hong Kong companies at the time of entry or if the merchandise had been detained. Protestant states that if the merchandise had been detained, the factory would have had more of an incentive to provide the documents by virtue of the fact it would have wanted to receive payment and future business. If the factory had failed to provide the documents, the shipment would have been rejected and returned to the shipper. The importer would not have had to pay for the goods. The worst scenario the importer would have faced was the forfeiture of a sale. In this situation, however, the importer now faces a liquidated damages claim. Customs understands the Protestant’s claim that the failure to produce the documents was through no fault of its own. However, it does not affect whether or not the Notice to Redeliver was properly issued. The Demand for Redelivery was proper pursuant to 19 C.F.R. §141.113. We recommend the Protestant be advised that the same arguments submitted in the Protest be presented in the liquidated damages phase of this case as the factors may favor mitigation. However, any decision in regard to mitigation is within the discretion of the Port Director.

HOLDING:

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, you are to mail this decision, together with the Customs Form 19, to the Protestant no later than 60 days from the date of this letter. Any reliquidation of the entry or entries in accordance with the decision must be accomplished prior to mailing the decision.

Sixty days from the date of the decision, the Office of Regulations and Rulings will make the decision available to Customs personnel, and to the public on the Customs Home Page on the World Wide Web at www.customs.gov, by means of the Freedom of Information Act, and other methods of public distribution.

Sincerely,


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