CLA-2 OT:RR:CTF:TCM H077355 CKG
Category: Marking
Port Director
U.S. Customs and Border Protection
3600 East Paisano El Paso, TX 79905
Re: Application for Further Review of Protest No. 2402-2009-100019; marking duties
Dear Port Director,
This is in response to the Application for Further Review of Protest Number 2402-2009-100019, filed on behalf of the importer, PHD Sales, LLC (‘Protestant”), contesting Customs and Border Protection’s (CBP) assessment of a 10% marking duty on one entry of Rattan Bundles.
FACTS:
On July 8, 2008, a shipment of 100,000 Rattan Bundles (100 boxes) arrived at the Port of El Paso Texas. CBP found that neither the articles nor the outer containers were marked pursuant to 19 U.S.C. 1304. A Notice to Mark (CBP Form 4647) was issued to the importer on July 17, 2008, then presented to and signed by a representative from the importer’s Customs Broker. The Protestant states that the Notice was incorrectly addressed, which caused its receipt by the Protestant to be delayed. No further action with regard to the marking violation was taken by the Protestant at that time. The Protestant proceeded to sell the items to Group Dekko Global Enterprises, LLC (the consignee), which then exported the merchandise to Mexico for further processing/assembly. On October 15, 2008, a Notice of Action was issued to the Protestant, imposing a 10% marking duty on the noncomplying items pursuant to 19 CFR 134.2.
ISSUE:
Whether marking duties were properly assessed in this instance.
LAW AND ANALYSIS:
The matter is protested under 19 U.S.C. §1514(a)(2) as a decision on classification. The protest was timely filed within 180 days of liquidation of the first entry for entries made on or after December 18, 2004. (Miscellaneous Trade and Technical Corrections Act of 2004, Pub.L. 108-429, § 2103(2)(B)(ii), (iii) (codified as amended at 19 U.S.C. § 1514(c)(3) (2006)).
Further Review of Protest No. 2402-2009-100019 was properly accorded to Protestant pursuant to 19 C.F.R. § 174.24 because the decision against which the protest was filed is alleged to involve questions of law or fact which have not been ruled upon by the Commissioner of Customs or his designee or by the Customs courts.
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. 19 U.S.C. 1304(f) 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.
Part 134, Customs Regulations (19 CFR 134), implements the country of origin marking requirements and exceptions of 19 U.S.C. 1304. 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. This section further provides that the identity of the imported article shall be established to the satisfaction of the port director. Section 134.52, Customs Regulations (19 CFR 134.52), allows a port director to accept a certification of marking supported by samples from the importer or actual owner in lieu of marking under Customs supervision if specified conditions are satisfied.
In Headquarters Ruling Letter (HQ) 731775 (November 3, 1988), Customs ruled that the following two prerequisites must be present in order for marking duties to be properly assessed under 19 U.S.C. 1304(f):
1. the merchandise was not legally marked at the time of importation, and
2. the merchandise was not subsequently exported, destroyed or marked under
Customs supervision prior to liquidation.
In the instant case, the merchandise was not legally marked at the time of importation. The Protestant and the ultimate purchaser, Dekko, both certified in an affidavit that the outer containers were in fact marked “Made in China,” which put Dekko on notice that the merchandise was of Chinese origin. As a result, protestant argues that the exception under sections 134.32(d) and (h) (19 CFR 134.32(d), (h)), should be taken into account and marking duties should not be assessed. 19 CFR 134.32(d) exempts from the marking requirements “articles for which the marking of the containers will reasonably indicate the origin of the articles.” 19 CFR 134.32(h) in turn excepts “articles for which the ultimate purchaser must necessarily know, or in the case of a good of a NAFTA country, must reasonably 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.” However, the CBP officer who inspected the merchandise did not observe any such markings on the articles or their containers. The protestant failed to provide satisfactory evidence of this claim either by submitting samples for inspection pursuant to 19 CFR 134.52, or marking the goods under the supervision of CBP pursuant to 19 U.S.C. 1304. The affidavit alone is not sufficient evidence, and the requirements of 19 CFR 134.32(d) and (h) are not met..
The Protestant further claims that no violation occurred because the merchandise underwent further processing by the ultimate purchaser, Dekko, pursuant to 19 CFR 134.32(g), which exempts from the marking requirement “articles to be processed in the United States by the importer or for his account otherwise than for the purpose of concealing the origin of such articles and in such manner that any mark contemplated by this part would necessarily be obliterated, destroyed, or permanently concealed.” The protestant presents an affidavit from Dekko to this effect, stating that the Rattan bundles were cut to length by Dekko after purchase. However, the protestant does not offer any evidence that such processing would necessarily obliterate, destroy, or permanently conceal a country of origin marking. Nor did the protestant submit a Marking Waiver, either before importation or in response to the Notice to Mark, pursuant to port procedure.
The Notice to Mark was issued to the protestant in order to allow the protestant to correct the violation by either exporting, destroying or marking the noncomplying merchandise under Customs supervision prior to liquidation. The protestant claims that the Notice was incorrectly addressed, delaying the protestant’s receipt of the Notice and thus preventing the protestant from timely responding to the Notice. However, the Notice was not mailed out to the protestant. It was presented to the importer’s Broker Representative, who signed the Notice on behalf of the protestant. It was the duty of the Broker Representative to deliver the Notice to the importer. Moreover, 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." 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 Notice itself. 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) (“Plaintiff may not ignore the clear requirement of a statute by pleading that notice pursuant to an administrative regulation was not received, telling it what the statute required it to do”). Therefore, the timeliness of the issuance or receipt of a Notice to Mark/Redeliver does not affect the underlying obligation to pay marking duties. See also, HQ 562084, dated July 16, 2002.
The Protestant further argues that marking duties were improperly imposed because the merchandise was subsequently exported prior to liquidation, thus failing to satisfy the second prerequisite of 19 U.S.C. 1304(f). 19 U.S.C. 1304(f) 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. The subject merchandise was not exported under the supervision of CBP prior to liquidation. Evidence presented after the fact that the exportation took place is not sufficient to satisfy this requirement.
In light of the above, the protestant's claim of exception from the marking requirements cannot be accepted. As the merchandise was not legally marked prior to liquidation and the merchandise was not subsequently exported, destroyed or marked under CBP supervision prior to liquidation, marking duties were properly assessed.
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