MAR-2-05 CO:R:C:V 734282 ER
Mr. Charles Di Prinzio
Branch Manager
A.N. Deringer, Inc.
1010 Niagara Street
Buffalo, NY 14213
RE: Country of Origin Marking of Cigarettes; Habitual Non-
compliance; 19 U.S.C. 1304; 19 CFR 134.32; 19 CFR 134.33; 19
CFR 134.51; 19 CFR 134.52; C.S.D. 91-16.
Dear Mr. Di Prinzio:
This is in response to your letter of July 24, 1991, on
behalf of your client, JR Attea Wholesale of Ashland City,
Tennessee, in which you request a ruling regarding procedures to
be followed in instances of noncompliance with country of origin
marking requirements.
FACTS:
In your letter you describe the merchandise as shipments of
cigarettes from Canada which on occasion are not marked to
indicate their country of origin. Customs in Buffalo, New York,
requests that the merchandise be put into a bonded warehouse or
a Foreign Trade Zone to complete the marking. You state that as
a U.S. Customs broker and international freight forwarder, you
possess warehouse facilities, not bonded, which are sufficiently
spacious so as to enable the importer to perform the corrective
marking of the nonconforming merchandise. Additionally, you
claim that by performing these remedial operations in your own
facilities, the importer realizes a reduction in costs, while at
the same time facilitating the marking and release of the
merchandise. Accordingly, you request whether the merchandise
can be released to the importer under a Customs Form 4647 for
marking at your warehouse facilities.
ISSUE:
What procedures should Customs follow when a person
habitually imports merchandise which is not legally marked?
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 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 such a
manner as to indicate 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 Part 134) implements the
country of origin marking requirements and exceptions of 19
U.S.C. 1304.
While two regulations concerning exceptions from marking are
potentially applicable to imported cigarettes, each regulation
nonetheless mandates the marking of the containers of the
articles which ordinarily reach the ultimate consumer. The first
exception is set forth in section 134.33, Customs Regulations (19
CFR 134.33), in which a list of articles, including cigarettes,
is specifically designated by the Secretary of Treasury as
exempt from individual country of origin marking. The second
exception provision, section 134.32(a)-(o), Customs Regulations
(19 CFR 134.32(a)-(o)), is general in scope and sets forth a
number of circumstances under which articles may be subject to an
exemption from marking. In any event, and without determining
whether cigarettes are covered only by the former regulation or
whether they are covered by both regulations, subsequent
corrective country of origin marking of the subject merchandise
need only be performed on the containers of the cigarettes and
not on the cigarette itself.
The procedures to be followed when articles are not legally
marked are set forth in 19 CFR 134.51 and 19 CFR 134.52. 19 CFR
134.51(a) provides that the district director shall notify the
importer on Customs Form 4647 to arrange with the district
director's office to properly mark the article or containers, or
to return all released articles to Customs custody for marking,
exportation, or destruction. 19 CFR 134.51(c) provides that
verification of marking shall be at the expense of the importer
and shall be performed under Customs supervision unless the
district director accepts a certificate of marking as provided
for in 19 CFR 134.52 in lieu of marking under Customs
supervision. The procedure you request is the latter
certification procedure outlined in 19 CFR 134.52. After the
importer is notified on Customs Form 4647 that the merchandise is
improperly marked, the importer submits a certificate of marking,
usually supported by samples certifying that the goods have been
legally marked. Customs then performs spot checks to ensure that
the merchandise is marked in accordance with the certification.
In your letter you state your belief that the noncomplying
shipments of cigarettes should be released to the importer under
a Customs Form 4647. However, given the repetitive nature of
these marking violations Customs disagrees with your position.
This issue is the subject of both Headquarters Ruling Letter HQ
733856 (March 8, 1991), published as C.S.D. 91-16, 25 Cust. Bull.
No. 32 (August 7, 1991) and a subsequent memo, HQ 734291 (August
26, 1991), issued to the district director of customs in Miami
(copies enclosed). The ruling discusses what procedures Customs
should follow in cases of repeated noncompliance with marking
requirements. As the ruling points out, the procedure requested
by you, releasing the merchandise to the importer for marking at
your warehouse, is intended for nonhabitual violations. The
following rationale is applied in the ruling:
The primary benefit of the certification procedure is
that it is not too burdensome for the importer. This
procedure enables the importer to correct a marking
problem without expense or inconvenience. The
drawbacks of this procedure are that numerous spot
checks by Customs are required to ensure that the goods
have been marked as certified and the importer is not
given any incentive to import legally marked goods in
the future. In the case of the occasional (emphasis
added) violator, however, the benefits of the procedure
generally outweigh the drawbacks. (C.S.D. 91-16)
The ruling goes on to expressly exclude the habitual violator
and notes that:
[W]ith regard to the person who routinely imports
merchandise which is not legally marked, this procedure
places a drain on Customs limited inspectional and
import specialist resources because for every shipment,
the merchandise must be examined, a CF 4647 issued, and
the certification reviewed and verified. Also, because
this procedure makes it so easy to correct marking
after importation, the importer is given no incentive
to bring in legally marked merchandise at the time of
importation. (C.S.D. 91-16)
Applying the balancing test in C.S.D. 91-16 to the present set
of facts, it is apparent that the benefit to the importer would
be outweighed by the drain on Customs resources if the procedure
you are requesting were applied to an importer who habitually
fails to comply with marking standards. Additionally, the use of
such a procedure in anything other than the most occasional
instance could potentially discourage efforts to comply with
marking requirements and indeed might create perverse incentives
to circumvent the marking regulations.
In accordance with C.S.D. 91-16, Customs maintains that it
is up to the discretion of each district director to determine
whether a violation is occasional and to select which procedures
should be followed when not legally marked merchandise is
imported, including whether or not the merchandise in question
may be marked at a place other than a bonded warehouse or Foreign
Trade Zone. Factors to be considered may include "the previous
history of the importer, the number of CF 4647's the importer has
received, whether previous spot checks have revealed problems of
noncompliance, and whether Customs has the personnel and
resources necessary to perform the spot checks, etc." (C.S.D.
91-16)
HOLDING:
When an importer has a history of importing merchandise into
the United States which is not legally marked, the district
director is not required to utilize the certification procedure
provided for in 19 CFR 134.52. The district director may instead
utilize one or more of the procedures discussed above and at his
discretion may also decide whether or not to require that marking
be performed in a bonded warehouse or Foreign Trade Zone.
Sincerely,
John Durant
Director, Commercial
Rulings Division
Enclosures