United States International Trade Commision Rulings And Harmonized Tariff Schedule
faqs.org  Rulings By Number  Rulings By Category  Tariff Numbers
faqs.org > Rulings and Tariffs Home > Rulings By Number > 2003 HQ Rulings > HQ 562109 - HQ 562536 > HQ 562304

Previous Ruling Next Ruling
HQ 562304

May 14, 2002

MAR-2-05 RR:CR:SM 562304 MLR


Port Director
21 3rd Street North
Great Falls, MT 59401

RE: Application for Further Review of Protest No. 3304-01-100005; marking duties; pallet kits

Dear Sir:

This is in reference to an application for further review of Protest No. 3304-01-100005 forwarded by your office, filed by the protestant, Buchanan Distribution Inc. (hereinafter “Buchanan”), concerning the assessment of marking duties on certain unassembled pallet kits.


The articles at issue are unassembled pallet kits consisting of 6174 pieces of 2” x 4” x 6’ SPF board imported on January 8, 2001, by Buchanan. The ultimate consignee listed on the entry summary dated January 22, 2001, is Stillwater Forest Products (hereinafter “Stillwater”) in the U.S. The protestant states that it sold the shipment to Swensen Lumber Company in the U.S., who, in turn, sold it to Stillwater. The entry was liquidated on March 2, 2001 and the protest was timely filed on April 16, 2001. The pro forma invoice indicates that 1,372 pieces (or 5 bundles) consist of stringers and 4,802 pieces (or 16 bundles) consist of deckboards. The invoice also indicates that this material is to be assembled into 343 finished pallets, with each pallet consisting of 14 pieces of 2” x 4” x 6’ deckboards and 4 pieces of 2” x 4” x 6’ stringers. Photos of the unassembled pallet kits (held together with straps) and assembled pallets are included in the record.

A Notice to Mark/Redeliver (CF 4647) dated January 8, 2001, was issued at the port of Roosville, Montana to Stillwater indicating that “Completed/Assembled Pallets must be marked ‘Made in Canada’ and must be inspected by a U.S. Customs Service inspector.” On February 14, 2001, an inspector visited Stillwater and found 10 assembled pallets that were properly marked as a product of Canada, but the remaining pallets were not assembled and marked. Protestant states that Stillwater only assembled the pallets as needed. A Notice of Action dated February 16, 2001, indicates that the Notice of Marking/Redeliver was not signed and returned to Customs and that marking duties of 10 percent were assessed. The Notice of Action also indicates that Stillwater admitted to having used (shipped away) some of the assembled pallets before being inspected and released by Customs. The Notice of Action indicates that “unassembled pallets must have every stringer (if the stringer is easily identifiable from the deck boards) marked with the country of origin. If it is not possible to tell the stringer from the deck board (as in this shipment) all boards must be marked.”

A facsimile dated March 20, 2001 from Norman G. Jensen, Inc., the Customs broker, to your office referenced the attached CF 4647 signed March 20, 2001, by Stillwater verifying that the pallet material had been marked, and asking when an inspector will be visiting the facility to verify the marking. The bottom portion of the CF 4647 was signed March 21, 2001 and states: “inspected on 3/21/2001 and found to be marked ‘Made in Canada.’” An email (with photographs attached) from your office dated March 21, 2001, indicates that an inspection was conducted at the Stillwater Forest Products and that 9 bundles of unassembled pallet parts and 10 assembled pallets were found to be marked.

The protestant states that when the shipment arrived in the U.S. from Canada, and it was found not to be properly marked, there was some confusion as to the actual method of marking that would be acceptable. The protestant states that it believed that it only had to provide a statement advising the customer was aware of the marking requirements and a statement from the customer acknowledging it was aware the pallets had to be marked as a product of Canada once assembled. It is stated that this procedure is used in the Blaine area per instructions contained in Blaine Information Trade Notice No. 172.

A copy of Blaine Information Trade Notice No. 172 dated April 30, 1999, was provided in the record. The notice indicates that unassembled pallets being imported pursuant to a sale to a pallet manufacturer who assembles them and sells them to an end user are not exempt from marking under any provision of 19 CFR 134.32, and that the use of an exempt from marking statement citing 19 CFR 134.32(f) or (h) on invoices where the consignee is not an end user is materially false. The notice states that in lieu of having the components marked with the country of origin at the time of importation, importers may furnish Customs with blanket certificates of marking in accordance with 19 CFR 134.25 and 134.26.

The record contains an undated statement on Buchanan Lumber Sales Inc. letterhead to Customs stating that:

As the importer of record, Buchanan Lumber Sales Inc. certifies that our U.S. customers have been advised of the requirement 19 U.S.C. 1304 and 19 CFR 134 regarding assembly of pallets.

The record also contains an undated statement on Stillwater letterhead stating:

Stillwater Forest Products, Inc. has purchased 2x 4x 6’ material. We are aware that the material’s origin is Canada and we will stamp it accordingly.

Protestant states that these two statements were forwarded to Customs, but that because the pallet stock consisted of 2” x 4” x 6’ stock with deckboards that were indistinguishable from strings, Customs wanted the option of inspecting the pallets to ensure that this material was used as such and marked properly. According to the protestant, the shipment was released with a marking notice.


Whether marking duties were properly assessed against the subject merchandise.


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 United States shall be marked in a conspicuous place as legibly, indelibly, and permanently as the nature of the article (or container) will permit, in a way that indicates to the ultimate purchaser in the United States the English name of the country of origin of the article. Part 134, Customs Regulations (19 CFR 134), implements the country of origin marking requirements and exceptions of 19 U.S.C. 1304.

The Blaine Information Trade Notice No. 172 does not allow the use of the section 134.32(f) or (h) marking exceptions where the consignee is not an end user. Section 134.32(f) provides for a marking exception for articles imported for use by the importer and not intended for sale in their imported or any other form, and section 134.32(h) provides for a marking exception for articles for which the ultimate purchaser must necessarily 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. The “ultimate purchaser” is generally the last person in the U.S. who will receive the article in the form in which it was imported. 19 CFR 134.1. In this case, Buchanan as the importer is not using the pallets and the ultimate purchaser is the user of the pallets; therefore, the marking exceptions of section 134.32(f) and (h) are not available.

The Blaine Information Trade Notice further states that in lieu of having the components marked with the country of origin at the time of importation, importers may furnish Customs with blanket certificates of marking in accordance with 19 CFR 134.25 and 134.26.

The certification procedures of 19 CFR 134.25 apply to repacked “J-list” articles. Section 134.33 excepts certain articles from individual country of origin marking in accordance with 19 U.S.C. 1304(a)(3)(J) and only requires that the outermost container in which the article ordinarily reaches the ultimate purchaser be marked with the country of origin. Sawed lumber is one of the articles entitled to this exception. However, the articles at issue are unassembled pallet kits, classified under subheading 4415.20.80, HTSUS, which are not on the “J-list.” Therefore, 19 CFR 134.25 is not applicable, so 19 CFR 134.26 must be examined. Section 134.26 provides, in pertinent part, that the importer shall certify to the port director that:

(2) if the article is intended to be sold or transferred to a subsequent purchaser or repacker, the importer shall notify such purchaser or transferee, in writing, at the time of sale or transfer, that any repacking of the article must conform to these requirements.

The notice to be provided by the importer to Customs is found in 19 CFR 134.26(a), and the notice to the subsequent purchaser or repacker is found at 19 CFR 134.26(d). Failure to comply with the certification requirements may subject the importer to a demand for liquidated damages or marking duties. 19 CFR 134.26(e).

In this case, Buchanan provided a statement to Customs stating that its customers have been advised of the marking requirements for the assembled pallets, and Stillwater provided a statement that it is aware that the origin of the 2 x 4 x 6’ material is Canada and that it will stamp it accordingly. The protestant states that these statements were provided before release of the shipment. As noted in 19 CFR 134.26(a), the importer is required to notify the subsequent purchaser of the marking requirements. It is not clear whether Buchanan provided such notification to Swensen Lumber Company, and we note that the statements provided do not exactly follow the statements shown in 19 CFR 134.26(a) and (d). We also note that, based on the photographs submitted, the imported unassembled pallet kits appear to be held together with straps. Therefore, in order to utilize the procedures of 19 CFR 134.26, the straps, which are considered to constitute a “container,” should have been marked with the country of origin at the time of importation.

For unmarked articles not included within the scope of 19 CFR 134.26, a separate procedure under 19 CFR 134.34 is available to importers. Under that provision, an exception from individual country of origin marking may be authorized in the discretion of the port director pursuant to 19 CFR 134.32(d), provided that the articles are repacked after importation under the supervision of the port director such that the marking on the new containers will indicate the articles' country of origin to their ultimate purchasers. Thus, although the requirements for exception from marking are not satisfied at importation, they are met after repacking under Customs supervision in the U.S. The port director retains broad discretion concerning whether the exception should be granted, and to specify the types of supervision required, which may include direct inspection, the submission of verifications or samples, or such other demonstration of compliance as the port director may require. It is noted that the port director may, under the authority of 19 CFR 134.34, require an importer to provide certification that new containers will be marked in accordance with Part 134; such certification may contain the same language as that set forth at 19 CFR 134.26. In cases in which the importer is not the repacker, the port director may require such assurances as he deems necessary to ensure that others will repack the articles in such a manner as to satisfy all the requirements of 19 USC 1304 and Part 134, Customs Regulations.

In general, an importer wishing to proceed under 19 CFR 134.34 should secure the approval of the port director in advance of importation. Absent such advance approval, Customs' usual procedure for articles imported without markings is to issue a Notice of Mark/Redeliver. Accordingly, an importer who plans to import articles in bulk for retail packaging would be well-advised to proceed in one of two ways with respect to country of origin marking: 1) make certain that at importation all the articles are marked so as to indicate their country of origin to the ultimate purchaser in the U.S., or are otherwise eligible to be excepted from country of origin marking; or 2) secure the approval of the port director to repack and mark after importation pursuant to 19 CFR 134.34.

The discretion of the port director is quite broad under 19 CFR 134.34, allowing the port director to determine whether port supervision, certification, verification, or review of a sample is necessary to accomplish the purposes of 19 U.S.C. 1304. An important element in the exercise of the port director's discretion is his/her assessment of whether the company requesting the exception can be relied upon to carry through on its undertakings. Another factor to be considered is whether the port has adequate resources to provide the continuing supervision necessary to ensure proper country of origin marking after importation. Additional factors that the port director may consider are the importer's history of violations and record in complying with Customs procedures and regulations, whether the importer is doing the repacking or having another party do the repacking, and whether the repacking is done on the importer's premises within the Customs port in which the merchandise was imported. See HRL 559812 dated July 30, 1996; and HRL 561269 dated February 29, 2000.

As provided in 19 CFR 134.34(b), the liquidation of such entries may be deferred for a period of not more than 60 days from the date that a request for repacking is granted. Extensions of the 60-day deferral period may be granted by the port director in his discretion upon written application by the importer.

Merchandise which is not legally marked at the time of importation is subject to a 10 percent ad valorem marking duty. Specifically, 19 U.S.C. 1304(h) provides that if at the time of importation any article is not properly marked, and if such article is not exported, destroyed or marked after importation (such exportation, destruction or marking to be accomplished under Customs supervision prior to the liquidation of the entry covering the article, and to be allowed whether or not the article has remained in continuous Customs custody), there is to be assessed upon the article a duty of 10 per centum ad valorem, which is deemed to have accrued at the time of importation. The statute further provides that such duty is not subject to remission for any reason. See also 19 CFR 134.2.

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. Section 134.51 further provides that the identity of such imported articles shall be established to the satisfaction of the port director.

In this case, although statements were filed by Buchanan and Stillwater, the protestant does not claim that it requested the advance approval from the port director to use the marking certification procedures of 19 CFR 134.34. As noted in 19 CFR 134.34, the procedure for unmarked articles is to issue a Notice to Mark/Redeliver. The Notice to Mark/Redeliver was directed to Stillwater and while the description of the imported merchandise is described as unassembled pallet kits, the “remarks/instructions” area of the form indicates that the “completed/assembled pallets” are to be marked and that they must be inspected by a Customs inspector. However, in the “action required of importer” area of the form, the block checked indicates that Customs supervision is not necessary. We note that ultimately the assembled pallets must be marked with their country of origin and that marking must reach the ultimate purchaser in the U.S. However, as noted by the protestant, Stillwater assembled the pallets as needed, and, therefore, the unassembled pallet kits may not have been planned for assembly until after the 30 day period required under the Notice to Mark/Redeliver. By stating in the remarks area of the form that the completed pallets must be marked, the Notice to Mark/Redeliver, in essence, followed the procedures allowed by section 134.34 whereby Customs oversees the ultimate marking of the imported article.

Rather, it is our opinion that the Notice to Mark/Redeliver should have addressed the imported merchandise, requiring each stringer and deckboard to be marked (as was noted in the Notice of Action if the stringers cannot be readily identifiable from the deckboards), or in the alternative the Notice to Mark/Redeliver should have required the marking of the straps holding the stringers and deckboards together and the certification in 19 CFR 134.26 for later verification of the marking, as deemed necessary by the port director.

Therefore, in light of the fact that the two areas of the form address conflicting requirements, it is not clear whether a certification provided by the protestant would have satisfied the Notice to Mark/Redeliver. In any event, an inspection of Stillwater’s facility occurred on February 14, 2002, where the inspector found a few pallets assembled and properly marked. At this time, Stillwater had also shipped away some of the assembled pallets which may or may not have been marked. While we note that the issuance of a Notice to Mark/Redeliver is not a prerequisite for the assessment of marking duties, in this case the conflicting requirements on the form did not clearly indicate to the importer how to rectify the marking. On March 2, 2001, the entry was liquidated and on March 21, 2001, another inspection occurred. Nine bundles of unassembled pallet parts were found to be marked and ten assembled pallets were marked. Therefore, it is our opinion that as liquidation occurred on March 2, 2001, and a certain number of assembled pallets had already been shipped away by Stillwater prior to Customs inspection, the assessment of marking duties is warranted as to these shipped, assembled pallets. Accordingly, it is our opinion that to the extent Stillwater can establish how many assembled pallets and stringers and deckboards remained in its possession prior to liquidation, this protest should be denied and granted in part, with the assessment of marking duties on those assembled pallets shipped away prior to liquidation and without evaluation of their marking under Customs supervision.


The assessment of marking duties on the number of assembled pallets shipped by Stillwater prior to liquidation is proper due to the fact that the merchandise was not legally marked at the time of importation nor was it subsequently marked under Customs supervision prior to liquidation. Therefore, you are instructed to deny and grant the protest in part.

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.


John Durant, Director

Previous Ruling Next Ruling

See also: