HQ 562137 - Application for Review and Protest No. 2304-99-100161; Assessment of Marking Duties; Notice to Redeliver (CF 4647); Industrial work gloves; Ultimate Purchaser - United States International Trade Commision Rulings

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HQ 562137

August 7, 2002

MAR 05 RR:CR:SM 562137 KKV

CATEGORY: MARKING

Port Director of Customs
P.O. Box 3130
Laredo, TX 78044-3130

RE: Application for Review and Protest No. 2304-99-100161; Assessment of Marking Duties; Notice to Redeliver (CF 4647); Industrial work gloves; Ultimate Purchaser

Dear Sir or Madam:

The above-referenced protest, filed by counsel on behalf of Bob Fernandez & Sons, was forwarded to this office for further review. We have considered the protest and our decision follows. In reaching our determination, consideration was given to counsel’s supplemental submission dated July 11, 2002.

FACTS:

At issue is the assessment of marking duties in connection with two shipments of industrial work gloves manufactured by Bob Fernandez & Sons in Mexico and imported into the U.S. at the port of Laredo, Texas. The first entry, dated January 17, 1998, consisted of 900 cartons of gloves. The second entry, dated April 9, 1998, consisted of 911 cartons of gloves.

At the time of importation, the gloves were packed in boxes containing 12 dozen pairs of gloves. Each dozen gloves was wrapped with a self-sticking paper band, joined by tape for reinforcement, which was printed with the words, “Made in Mexico of 100% U.S. Components; To Be Sold By Dozen Only.” The outside of the cartons were marked with the words “Made in Mexico of 100% U.S. Components.”

Notices to Mark/Redeliver (CF 4647) were issued for each shipment concurrent with the date of entry, indicating that that the pairs of gloves had to be individually marked with their country of origin. The protestant failed to redeliver the merchandise or otherwise respond to the CF 4647. Accordingly, on June 24, 1998, Customs issued a Notice of Action (CF) 29 stating that liquidated damages and marking duties had been assessed in connection with both shipments. The entries were liquidated on July 24, 1998. The subject protest was timely filed on October 21, 1998.

ISSUE:

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

LAW AND ANAYLSIS:

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 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. 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.

Among the exceptions to the general requirement for country of origin marking is 19 U.S.C. 1304(a)(3)(D), also provided for in section 134.32(d), Customs Regulations (19 CFR 134.32(d)). This section excepts from individual marking those articles for which the marking of their containers will reasonably indicate the country of origin. However, for the exception to apply, Customs must be satisfied that the articles will reach the “ultimate purchaser” in the original, properly marked containers in which the articles were imported. Section 134.1(d), Customs Regulations (19 CFR 134.1(d)), defines the “ultimate purchaser” as generally the last person in the United States who will receive the article in the form in which it was imported.

In support of its claim that the subject merchandise was excepted from individual marking, the protestant asserts that the two shipments at issue were intended for Preston Glove Company and that it (Fernandez) was listed as the importer of record as a result of clerical error. It contends that the gloves it sells to Preston are usually imported with Preston as the importer of record, and that based on Preston’s method of distribution in the U.S, the gloves were not required to be individually marked. Specifically, we are told that gloves imported by Preston are sold either to major automotive companies (i.e., General Motors, Ford Motor, etc.), or to Kaul Glove Company, which in turn sells the gloves to the automobile companies, who give the gloves to their employees for work on the assembly line. The protestant states that the gloves are never sold in any other channel of trade and not sold at retail or used by a non-industrial consumer. As further evidence of this practice, the protestant submits evidence that Preston had previously utilized container marking at another port, having satisfied the Customs officials there that the imported articles would reach the automotive companies in their marked containers, and had been given permission to utilize this manner of marking.

The protestant contends that a similar understanding existed with the port of Laredo, stating that “Preston applied for and received waivers for similar gloves at the Port of Laredo, which were in effect at the time of entries in question” [sic] and directs our attention to attached documents. Upon review, we note that the documents submitted pertain to the port of El Paso, not to Laredo, the port at which the subject gloves were entered. Therefore, we are unable to confirm whether such an understanding as to the distribution and use of the imported merchandise existed between Preston Glove Co. and Customs officials at the port of Laredo. Nor can we confirm the identity of the ultimate purchasers of these particular shipments – information contained within the protest indicates that the broker handling the shipments on behalf of the protestant told Customs that the merchandise was not intended for Preston Glove.

However, notwithstanding the existence of an approved waiver issued either to Bob Fernandez & Sons or to Preston Glove Co., prior to importation, the imported articles would nevertheless have been excepted from individual marking, and thus legally marked upon importation into the U.S. in compliance with 19 U.S.C. 1304(a)(3)(D) and 19 CFR 134.32(d), if the imported gloves were, in fact, sold in the manner described. Customs has previously ruled that a plant or concern which purchases gloves for use by its employees is considered the ultimate purchaser, and that the gloves may be excepted from individual country of origin marking pursuant to 19 U.S.C. 1304(a)(3)(D) and 19 CFR 134.32(d). See Customs Service Decision (C.S.D.) 89-89 (March 18, 1989). See also HRL 732973, dated December 20, 1989, and HRL 734701, dated April 22, 1993.

Therefore, if your office is satisifed that the industrial gloves contained in the two shipments were sold and used only in the manner described above and that the merchandise reached the ultimate purchasers, i.e., the automotive companies, in their original, unopened marked containers, you are instructed to grant the protest in full. If necessary, please afford the protestant an opportunity to establish to your office’s satisfaction that the goods were sold in the manner described above.

HOLDING:

Imported industrial gloves which are purchased by automotive companies and given to their employees may be excepted from individual country of origin marking pursuant to 19 U.S.C. 1304(a)(3)(D) and 19 CFR 134.32(d). Therefore, where you are satisfied that the subject shipments were sold and used only in the manner described above and reached the ultimate purchasers (i.e., the automotive companies) in their original unopened marked containers, the protest may be granted in full.

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 attached to the Form 19, Notice of Action, no later than 60 days from the date of this letter. Any reliquidation of the entries 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 Ruling Module in ACS and the public via the Diskette Subscription Service, Freedom of Information Act and other public access channels.

Sincerely,

Myles B. Harmon

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