HQ 0733957 - Application for Further Review of Protest 2002-90-000615 concerning the assessment of marking duties on imported tape products, removal of marking after importation; 19 U.S.C. 1304(f) - United States International Trade Commision Rulings

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HQ 733957
December 23, 1993

MAR-2-05 CO:R:C:V 733957

CATEGORY: MARKING

District Director of Customs
423 Canal Street
New Orleans, Louisiana 70130

Attention: Room 200 Protest Office

RE: Application for Further Review of Protest 2002-90-000615 concerning the assessment of marking duties on imported tape products, removal of marking after importation; 19 U.S.C. 1304(f)

Dear Sir:

This is in response to the application for further review of Protest # 2002-90-000615 submitted by the President of Tac Tape Company, Inc. in a letter dated April 26, 1990.

FACTS:

The record indicates that the importer, Tac Tape Company, Inc. made three entries for PVC Tape. Although at the time of entry the tape bore a country of origin marking, after release from Customs custody, the importer had the country of origin markings removed from the merchandise, and in some cases placed a marking "Made in the U.S.A." on the goods. Customs agents conducted a full investigation and interviewed a number of the importer's employees, who admitted removing the markings from the tape. The importer eventually entered into an agreement with the U.S. Attorney's office to plead guilty to one count of Section 542, Title 18, United States Code. Customs assessed an additional 10 percent marking duties on the entries involved. Subsequently, the importer filed a formal protest against the assessment of these duties.

ISSUE:

Can marking duties be assessed if goods are legally marked to indicate their country of origin at the time they enter the U.S., but the marking is subsequently removed after they are released from Customs custody?

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 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. 19 U.S.C. 1304(f) provides that 10 percent marking duties shall be levied, collected and paid upon a finding that an imported good is not properly marked with the country of origin at the time of importation, and such article is not exported, destroyed or remarked in accordance with law.

In other words, marking duties equal to 10 percent of the value of the merchandise will be assessed if the merchandise is not legally marked at the time of importation, unless the imported merchandise is exported, destroyed, or remarked under Customs supervision prior to liquidation. In HQ 731775 (November 3, 1988), Customs ruled that two prerequisites must be present in order for it to be proper to assess marking duties under 19 U.S.C. 1304(f). These two prerequisites are:

1. the merchandise was not legally marked at the time of importation

2. the merchandise was not subsequently exported, destroyed or marked under Customs supervision prior to liquidation.

In this case, the record indicates that although the merchandise had country of origin markings when it was first entered into the U.S., the country of origin markings were removed after the goods were released from Customs custody.

In similar situations, Customs is pursuing judicial collection of marking duties pursuant to 19 U.S.C. 1592(d) because the removal of the country of origin markings from imported merchandise constituted a false act which deprived the U.S. of lawful duties.

The decision in U.S. Wolfson Bros. Corp. v. United States, 52 CCPA 46 supports the position that marking duties are due under such circumstances. In that case, the court stated that whether an article is properly marked upon importation depends on whether that marking reached or was such as to reach the ultimate purchaser. The Court further added that

The marking at the time of importation was in compliance with the statute only if it was such that, under normal conditions in the trade in which this merchandise moved, it would reach substantially all ultimate purchasers, not just some of them. The evidence conclusively shows that in large part it would not and did not do that. Therefore, at the time it was imported it was not so marked as to comply with the statute. (emphasis added in original.)
Similarly, in this matter the evidence establishes that the importer never intended to have the country of origin markings remain on the tape until it reached the ultimate purchasers. Although the goods bore a country of origin marking when Customs first inspected them, after the merchandise was released from Customs custody, the importer deliberately had the markings removed from the merchandise and replaced them, in some cases, with markings which indicated that the goods were made in the U.S. Accordingly, the country of origin markings on the imported goods would not and did not reach the ultimate purchaser.

HOLDING:

The evidence in the record establishes that the importer intentionally removed the country of origin markings from the imported merchandise after it was released from Customs custody and the merchandise was not as required under 19 USC 1304(f), marked, exported, or destroyed under Customs supervision prior to liquidation. Therefore, the articles did not have a country of origin marking when it reached the ultimate purchaser. In view of Customs' position in pending litigation that marking duties are due when the country of origin markings are removed from merchandise after its release from Customs custody, you are directed to deny the protest. A copy of this decision, should be attached to the Customs Form 19 to be sent to the protestant.

Sincerely,

John Durant, Director

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