HQ 967982 - Application for Further Review, Protest No. 5201-05-100045; Country of Origin Marking Duties; Certification of Proper Marking; CBP Form 4647 - United States International Trade Commision Rulings

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HQ 967982

February 7, 2006

CLA-2: RR:CTF:TCM 967982 KSH

CATEGORY: MARKING

Port Director
U.S. Customs and Border Protection
6601 N.W. 25th Street
Miami, FL 33159

RE: Application for Further Review, Protest No. 5201-05-100045; Country of Origin Marking Duties; Certification of Proper Marking; CBP Form 4647

Dear Port Director:

This is in response to your memorandum of October 27, 2005, forwarding Protest No. 5201-05-100045, with an approved application for review, to this office for our response. The protest is against Customs and Border Protection’s (CBP) assessment of marking duties and interest for protestant’s failure to mark one entry of slippers, laundry and newspaper bags imported from China.

We note that AFR was granted as the protestant argued questions of fact and law which have not been ruled upon by Customs and Border Protection (CBP) or by the courts. See 19 CFR 174.24(b).

FACTS:

On June 16, 2004, protestant entered the merchandise subject to the protest. On June 21, 2004, a Notice to Mark and/or Notice to Redeliver (CF 4647) was issued requiring each pair of slippers and bag to be permanently, legibly and conspicuously marked with “Made in China” within thirty days. Two extensions were granted to allow more time to comply with the CF 4647. On August 2, 2004, the second extension was revoked and protestant was advised that the CF 4647 was due that same day. On August 3, 2004, protestant signed and provided the CF 4647 to CBP and indicated that samples were included. By letter of the same date, protestant further advised that it had inadvertently shipped into the stream of U.S. commerce 11,500 slippers

Upon inspection of protestant’s facilities, CBP officers determined that 15,180 pairs of slippers had actually been shipped out without the appropriate country of origin marking. and 6,200 bags and that it was in the process of marking 21,100 pairs of slippers and 13, 600 bags but 9,400 pairs of slippers and 200 bags had been marked.

At some later date, CBP visited the facility and is alleged to have confirmed that the remainder of the merchandise was properly marked. However, the CF 4647 has not been signed by a CBP official to date. On September 30, 2004, a Notice of Action assessing a 10% marking duty was issued for selling the merchandise prior to release by CBP. The entry was liquidated on November 12, 2004. Protestant filed a protest and application for further review on February 9, 2005. The protest and application for further review was initially denied on July 6, 2005. The protest was timely filed pursuant to 19 USC 1514(c)(3) and 19 CFR 174.12(e)(1).

On September 7, 2005, protestant’s counsel filed a request to set aside that denial citing to 19 USC 1515(d) and claiming that the protest and application for further review satisfies the criteria of Section §174.24(b) or (c) as “Customs has not rendered a decision involving the same set of facts or legal arguments as the instant claim.” The request to set aside the denial was received by this office on October 28, 2005. This office approved the request to set aside the denial of AFR on November 7, 2005.

ISSUE:

Whether the assessment of marking duties plus interest is proper?

LAW AND ANALYSIS:

Section 304 of the Tariff Act of 1930, as amended (19 USC 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 USC 1304(i) 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 CBP’s 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.

Part 134 of the CBP Regulations (19 CFR Part 134), implements the country of origin marking requirements and exceptions of 19 USC 1304. Section 134.51 of the CBP Regulations, (19 CFR 134.51), provides in relevant part:

(a) Notice to mark or redeliver. 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 containers, or to return all released articles to Customs custody for marking, exportation, or destruction.

(c) Supervision. Verification of marking, exportation, or destruction of articles found not to be legally marked shall be at the expense of the importer and shall be performed under Customs supervision unless the port director accepts a certificate of marking as provided for in Sec. 134.52 in lieu of marking under Customs supervision.

Section 134.52 of the CBP Regulations (19 CFR 134.52) allows a district director to accept a certification of marking supported by samples from the importer or actual owner in lieu of marking under CBP supervision if specified conditions are satisfied. In HQ 731775 (November 3, 1988), CBP ruled that two prerequisites must be present in order for it to be proper to assess marking duties under 19 USC 1304(i). 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.

Section 134.52 (c) further provides:

(c) Notice of acceptance. The port director shall notify the importer or actual owner when the certificate of marking is accepted. Such notice of acceptance may be granted on the duplicate copy of the certificate of marking by use of a stamped notation of acceptance. The port director is authorized to spot check the marking of articles on which a certificate has been filed. If a spot check is performed, the approved copy of the certificate, if approval is granted, shall be returned to the importer or actual owner after the spot check is completed.

In this case, the protestant does not dispute the assessment of marking duties on the 15,180 pairs of slippers and 6200 bags shipped into the stream of U.S. commerce without proper marking. However, protestant alleges that CBP recognized that the remainder of the merchandise was properly marked, or in the process of being marked, but beyond the extent necessary to comply with the regulations. Thus, protestant argues that CBP could not assess marking duties on the additional slippers and bags. Protestant has not provided evidence to support its claim that the remainder of the merchandise was properly marked.

After the merchandise was found not legally marked, the importer filed the certificate of marking on the CBP Form 4647 on August 3, 2004, certifying that the merchandise had been properly marked. By letter of the same date, protestant advised CBP that 11,500 pairs of slippers and 6,200 bags were shipped out to customers, 9,400 pairs of slippers and 200 bags had been marked and 21,000 pairs of slippers and 13,600 bags unmarked but in the process of being marked. When CBP later visited protestant ‘s facilities, CBP confirmed that 15,180 pairs of slippers and 6,200 had been shipped without proper country of origin marking. The protestant alleges that at that time, CBP also noted that the remainder of the merchandise was properly marked or in the process of being marked.

In Frontier Insurance Co. v. United States, 185 F. Supp. 2d 1375 (2002), a surety contested marking duties owed on imported scanners. There was no dispute that the scanners were not marked at the time of importation. Thus the court was required to determine whether the importer had complied with the requirements for remarking the scanners. The Court of International Trade held that:

Frontier’s position would allow the importer to “self-regulate” because the importer would then determine if the merchandise was properly re-marked. This clearly contradicts the meaning and purpose of 19 USC § 1304 by removing the final authority for country of origin marking compliance from the agency charged with that responsibility. Although there is a disputed issue of fact regarding whether Frontier did send the certification to Customs, it is undisputed that the importer failed to obtain authorization from Customs to release the merchandise into the commerce of the United States. Frontier’s claims that (1) the importer sent the certification and (2) Customs failed to act on the Notice to Mark for 10 months, does not allow it to avoid its obligation under the import bond that its client would hold the merchandise and receive approval from Customs prior to releasing the scanners for delivery to its customers. The burden was on the importer to ensure that it undertook the clearly communicated, mandated corrective action to properly re-mark the retail packages of the scanners. Similarly, if the importer was concerned with undue delay during this process, it should have initiated contact with Customs. It could not unilaterally determine, contrary to the clear terms of the Notice to Mark, that it did not need notification from Customs that its certificate of marking was accepted.

Assuming arguendo that CBP recognized that the remainder of the merchandise was marked or was in the process of being marked, the clear mandates of the statute require protestant to receive notification that CBP was accepting its certificate of marking. In accordance with 19 CFR 134.52, if approval was granted, the approved copy of the certificate should have been returned to the protestant after the spot check was completed. Thus we conclude, the copy of the certificate has not been approved and therefore has not been returned to protestant. The protestant cannot claim approval based on statements allegedly made by CBP officials during the spot check. It was protestant’s responsibility to obtain a copy of the approved certificate. Accordingly, the assessment of marking duties on the entire entry was appropriate.

HOLDING:

The assessment of marking duties was in accordance with provisions of 19 USC 1304 and Part 134 of the CBP Regulations.

The protest and application for further review should be denied in full.

In accordance with the Protest/Petition Processing Handbook, (CIS HB, January 2002, pp 18 and 21), 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 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 CBP personnel, and to the public on the CBP Home Page on the World Wide Web at www.cbp.gov, by means of the Freedom of Information Act, and other methods of public distribution.

Sincerely,

Myles B. Harmon, Director
Commercial and Trade Facilitation Division

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