HQ 562084 - Application for Further Review of Protest 0712-01-100105; Assessment of Marking Duties; Notice to Redeliver (CF 4647) Alleged As Untimely; Request for Sample (CF28) - United States International Trade Commision Rulings

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HQ 562084

July 16, 2002

MAR-05 RR:CR:SM 562084 KKV

CATEGORY: MARKING

Port Director of Customs
198 West Service Road
Champlain, NY 12919

RE: Application for Further Review of Protest 0712-01-100105; Assessment of Marking Duties; Notice to Redeliver (CF 4647) Alleged As Untimely; Request for Sample (CF28)

Dear Sir or Madam:

The above reference protest was forwarded to this office for further review. We have considered the protest and our decision follows. We regret the delay in responding.

FACTS:

At issue is approximately $165.00 in marking duties assessed in connection with a shipment of juice entered at the port of Champlain, New York by Coastlog Industries (protestant). The shipment, imported on September 7, 2000, was comprised of 975 cases of orange juice made from US-origin concentrate, 225 cases of tomato juice made from U.S-origin concentrate and 300 cases of apple juice made from concentrate from New Zealand.

The entry was a stratified compliance entry; the cases of tomato juice were subject to an intensive exam, while the cases of apple juice were subject to a general exam. Coastlog has submitted a copy of an electronic release, dated September 7, 2000, which has printed notations stating “Intensive Exam Release Complete” and “FDA May Proceed.”

On September 25, 2000, Customs issued a Request for Information (CF 28), seeking additional documentation and samples of the entered merchandise. Included on the CF 28 is the statement: “The merchandise in this shipment remains conditionally released pending receipt of your response to this request. A reply is due within 30 days.”

Following receipt of the requested samples, Customs determined that the apple juice was incorrectly marked with its country of origin. Specifically, although the apple juice was made from concentrate from New Zealand (and declared/entered as a product of New Zealand) the juice was marked to indicate that the concentrate was from Argentina, Chile, Hungary, Poland, China and New Zealand.

Accordingly, on October 20, 2000, Customs issued a Notice to Mark/Redeliver (CF 4647), requesting the return of the merchandise within 30 days. In the absence of compliance, the entry was liquidated by Customs on January 26, 2001 and marking duties were assessed. On March 13, 2001, Coastlog filed the subject timely protest contesting the assessment of marking duties. In support of its position, Coastlog asserts that the Notice to Mark/Redeliver (CF 4647) was untimely issued by Customs.

ISSUE:

Whether the assessment of marking duties was proper in this case.

LAW AND ANALYSIS:

Initially, we note that the protest, with application for further review, was timely filed under the statutory and regulatory provisions for protests. See 19 U.S.C. 1514 and 19 CFR Part 174. We also note that the assessment of marking duties and the decision to issue a Notice of Redelivery are protestable under the Customs protest statute. See 19 U.S.C. 1514(a)(2) and (4). It is asserted that the release of the merchandise on September 7, 2000, with the FDA “may proceed” notice constituted an unconditional release, and that the issuance of a Notice to Mark/Redeliver on October 20, 2000 - more than 30 days after the concurrent intensive examination and release – was untimely pursuant to 19 CFR 113.62(d) and 19 CFR 141.113(a). Consequently, it is the position of the protestant that the assessment of marking duties was improper.

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.

Further, 19 U.S.C. 1304(h) 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.

In Headquarters Ruling Letter (HRL) 731775, dated November 3, 1988), Customs ruled that two prerequisites must be present in order for marking duties to be properly assessed under 19 U.S.C. 1304(h). These two prerequisites are:
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.

In this case, both prerequisites for the assessment of marking duties have been met. Customs determined that at the time of importation, the apple juice made from concentrate from New Zealand was incorrectly marked as it indicated that the concentrate was from Argentina, Chile, Hungary, Poland, China and New Zealand. Coastlog does not dispute this finding, nor has it presented evidence that the merchandise was subsequently exported, destroyed or marked under Customs supervision. Although the protestant claims that the assessment of marking duties was improper because Customs did not issue a Notice to Mark/Redeliver until more than 30 days after the merchandise was initially released, the language of 19 U.S.C. 1304(h) mandates that marking duties “shall not be remitted wholly or in part nor shall payment be avoidable for any cause” (emphasis added). Once a violation of 19 U.S.C. 1304 has been established, the obligation to pay marking duties is absolute; it exists independently of the regulatory requirements of other agencies (e.g., the Food and Drug Administration) or other Customs procedures arising from the importation of merchandise. The courts have held that the fact that a redelivery/marking notice was not issued pursuant to a regulatory prerequisite for the assessment of a claim for liquidated damages does not void the original statutory basis for the assessment of marking duties. See, A.N. Deringer, Inc. V. United States, C.D. 2408, 51 Cust. Ct. 21 (1963). Therefore, while the timeliness of the issuance of a Notice to Mark/Redeliver may impact the viability of a claim for liquidated damages, it does not affect the underlying obligation to pay marking duties. Accordingly, the protest should be denied.

Having thus rendered our decision on the merits of the protest, we nevertheless offer the following clarification regarding the timeliness of the Notice to Mark/Redeliver (CF 4647). Section 113.62, Customs Regulations (19 CFR 113.62), contains the basic importation and entry bond conditions. Paragraph (d) of this provision sets forth the two periods during which a Notice to Redeliver may be issued and enforced by a Customs bond:

If merchandise is released conditionally from Customs custody to the principal before all required evidence is produced, before its quantity and value or determined,or before its right of admission in the United States is determined, the principal agrees to redeliver timely, on demand by Customs, the merchandise released if it:

Fails to comply with the laws or regulations governing admission into the United States; Must be examined, inspected, or appraised as required by 19 U.S.C. 1499; or Must be marked with the country of origin as required by law or regulation.

It is understood that any demand for redelivery will be made no later than 30 days after the date that the merchandise was released or 30 days after the end of the conditional release period (whichever is later).

Therefore, in the absence of a validly noticed conditional release period, Customs has 30 days from the date of release to issue a notice of redelivery. However, “[i]n many Customs cases, a CF 28, Request for Information, or other appropriate form indicates that a conditional release period has begun.” See, U.S. v. So’s USA, 23 C.I.T. 605 (1999), citing Customs Service Decision (C.S.D.) 90-99, 24 Cust.Bull. 574, 577 (1990).

In discussing the establishment of a conditional release period, in C.S.D. 90-99, dated June 28, 1990, Customs stated:

For purposes of 19 CFR 113.62(d), we consider a request for a sample on a Customs Form (CF) 28, Request for Information, or other appropriate form issued by Customs no later than 30 days after the date the merchandise is released, to establish a conditional release period. The beginning of the conditional release period is the date the CF 28 is issued; the end of the conditional release period is the date Customs receives the sample. If it is determined that the sample is not legally marked, a demand for redelivery must be made no later than 30 days after the end of the conditional release period, i.e., 30 days after the receipt of the sample by Customs. (emphasis original)

With regard to the content of the CF 28, Customs indicated that the CF 28 should specify that the merchandise covered by the entry is conditionally released until the sample is submitted and that the sample must be submitted within 30 days of the issuance of the notice. If a sample is not provided within the 30-day period, a demand for redelivery may be made pursuant to 19 CFR 141.113(c). See, C.S.D. 90-99, supra.

Alternatively, Customs stated that “the issuance of a CF 28 requesting a sample issued over 30 days after the date the merchandise is released will not establish a conditional release period.” In such instances, even though the sample provided is not legally marked or a sample is not provided at all, the entry bond will not be available to enforce a demand for redelivery. Nevertheless, if the entry has not yet been liquidated, marking duties shall be assessed. See, C.S.D. 90-99, supra.

The facts in the case at issue are not contested: the merchandise was initially released on September 7, 2000. Therefore, Customs had 30 days in which to establish an alternate conditional release period by issuing a CF 28 requesting samples, which the record indicates that it did. As required, the CF 28 issued by Customs specifically informed the importer that the shipment was conditionally released and advised the importer that it had 30 days from the date of issuance to submit the samples.

Therefore, with regard to the subject shipment, the beginning of the conditional release period was September 25, 2000; the end of the conditional release period was the date the samples were submitted, at which time Customs had 30 days in which to issue a Notice to Mark/Redeliver (CF 4647). Neither the protest submitted by the importer nor the documentation submitted by the port record the precise date the juice samples were submitted, but the issuance of the CF 4647 on October 20, 2000, a mere 25 days from the issuance of the CF 28 establishing the beginning of conditional release period is well within the 30-day period. Accordingly, the Notice to Mark/Redeliver issued in connection with the subject merchandise was timely, pursuant to 19 CFR 113.62(d).

HOLDING:

The protestant does not deny that the subject apple juice was not legally marked with the country of origin of its content, nor has evidence been presented that the merchandise was subsequently exported, destroyed or marked under Customs supervision prior to liquidation. Accordingly, the assessment of marking duties was proper and the protest should be denied in full.

In accordance with Section 3A(ll)(b) of Customs Directive 099 3550-065, dated August 4, 1993, Subject: Revised Protest Directive, this decision should be mailed by your office, with the Customs Form 19, 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 the mailing of this 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, 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,

Myles B. Harmon

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