Country of origin marking of PVC cooler bags; 19 CFR 134.32(c) and (o); Entry No. 441-3267016-1

HQ 561319 March 31, 1999 MAR-05 RR:CR:SM 561319 CATEGORY: Marking Port Director U.S. Customs Service 300 South Ferry Street Terminal Island, CA 90731 RE: Country of origin marking of PVC cooler bags; 19 CFR 134.32(c) and (o); Entry No. 441-3267016-1 Dear Sir: This is in reference to a letter dated March 22, 1999, and a fax of March 24, 1999, on behalf of Rugged Equipment, A Division Of SA&E Int’l Bags And Accessories, LLC, requesting a temporary exception from the country of origin marking requirements for certain PVC cooler bags imported from China. Samples of the bags have been submitted. FACTS: The subject coolers are composed of Taiwanese fabric with a PVC outer surface. The component materials were cut, sewn and finished in China. The merchandise is marked with a sewn in label with the words "MADE IN CHINA" in English and in Spanish. Immediately above this marking in the same size print and font are the words "RUGGED EQUIPMENT NEW YORK USA." The entry was rejected on March 2, 1999, for the reason that the textile declaration was unclear and that the country of origin may have been Taiwan, where the textile material was made, and not China, where the bags were assembled. Counsel believes that your office has correctly determined that the country of origin of the subject merchandise is Taiwan and not China. However, counsel states that to remark the merchandise in this shipment and in shipments to follow which are already marked in this manner would be economically prohibitive. ISSUE: What are the country of origin marking requirements for the PVC cooler bags?  - 2 - 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. Congressional intent in enacting 19 U.S.C. 1304 was that the ultimate purchaser should be able to know by an inspection of the marking on the imported goods the country of which the goods is the product. Part 134, Customs Regulations (19 CFR Part 134), implements the country of origin marking requirements and exceptions of 19 U.S.C. 1304. Country of Origin - China or Taiwan On December 8, 1994, the President signed into law the Uruguay Round Agreements Act. Section 334 of that Act (codified at 19 U.S.C. 3592) provides new rules of origin for textiles and apparel entered, or withdrawn from warehouse, for consumption, on and after July 1, 1996. On September 5, 1995, Customs published Section 102.21, Customs Regulations, in the Federal Register, implementing Section 334 (60 FR 46188). Thus, effective July 1, 1996, the country of origin of a textile or apparel product shall be determined by sequential application of the general rules set forth in paragraphs (c)(1) through (5) of Section 102.21. Paragraph (c)(1) states that “The country of origin of a textile or apparel product is the single country, territory, or insular possession in which the good was wholly obtained or produced.” As the subject merchandise is not wholly obtained or produced in a single country, territory or insular possession, paragraph (c)(1) of Section 102.21 is inapplicable. Paragraph (c)(2) states that “Where the country of origin of a textile or apparel product cannot be determined under paragraph (c)(1) of this section, the country of origin of the good is the single country, territory, or insular possession in which each foreign material incorporated in that good underwent an applicable change in tariff classification, and/or met any other requirement, specified for the good in paragraph (e) of this section”. For purposes of the tariff, the subject insulated cooler bag, which is made of manmade textile materials with an outer surface of textile materials, is classified in subheading 6307.90, Harmonized Tariff Schedule of the United States (HTSUS). See Headquarters Ruling Letter (HRL) 961172 (November 12, 1998).  Paragraph (e) states that “The following rules shall apply for purposes of - 3 - determining the country of origin of a textile or apparel product under paragraph (c)(2) of this section”: 6307.90... The country of origin of a good classifiable under subheading 6307.90 is the country, territory, or insular possession in which the fabric comprising the good was formed by a fabricmaking process. As the fabricmaking process for the subject merchandise occurs in Taiwan, the country of origin of the subject merchandise is Taiwan and accordingly, the cooler bags are improperly marked with "China" as the country of origin. 19 CFR 134.46 Section 134.46, Customs Regulations (19 CFR 134.46) provides that: In any case in which the words “United States,” or “American,” the letters “U.S.A.,” any variation of such words or letters, or the name of any city or location in the United States, or the name of any foreign country or locality other than the country or locality in which the article was manufactured or produced appear on an imported article or its container, and those words, letters or names may mislead or deceive the ultimate purchaser as to the actual country of origin of the article, there shall appear legibly and permanently in close proximity to such words, letters or name, and in at least a comparable size, the name of the country or origin preceded by “Made in,” “Product of,” or other words of similar meaning. The words "RUGGED EQUIPMENT NEW YORK USA," are words which may mislead the ultimate purchaser to believe that the country of origin is the U.S. Therefore, 19 CFR 134.46 is triggered. However, as the country of origin marking (although incorrect, in this case) preceded by the words “Made in” appears legibly and permanently in close proximity to the U.S. location, and in a comparable size, the requirements of 19 CFR 134.46 and 19 U.S.C. 1304 will be satisfied provided the marking indicates "Taiwan" as the country of origin and not "China." Exceptions due to Economic Prohibitive Expense  Section 134.32(o), Customs Regulations (19 CFR 134.32(o)), provides that an article may be excepted from marking if it cannot be marked after importation except at an expense that would be economically prohibitive unless the importer, producer, - 4 - seller, or shipper failed to mark the goods before importation to avoid meeting the requirements of the law (19 U.S.C. 1304). 19 CFR 134.32(c)) provides an exception from the marking requirements for articles that cannot be marked prior to shipment to the U.S., except at an economically prohibitive expense. In invoking the exceptions under 19 CFR 134.32(c) and (o), counsel submits a letter from its client to Target Stores, its customer, and other correspondence, reflecting that the estimated costs of remarking the merchandise in the instant shipment would be $72,780.80, which would cover the remarking and warehouse fees. In addition, counsel points out that any delay in this type of seasonal merchandise may cause Target to cancel the client’s account. Counsel has also orally advised that comparable costs will apply to merchandise in transit. Therefore, In a fax dated March 24, 1999, counsel requests that the exception be granted for a period of 30 days, which would cover the instant shipment and merchandise in transit, commencing on the date of Customs decision. The circumstances in this case reflect that the improper marking resulted from a recent change in the classification of textile coolers. As a result of this change, the country of origin of the coolers is now Taiwan (where the fabric used to make the cooler was produced) rather than China (where the cooler was cut, sewn and assembled). Customs issued instructions regarding the classification changes on March 18 and September 10, 1998. In light of the fact that changing the marking on the imported shipment and on shipments in transit would be economically prohibitive, and in view of the above circumstances, we find that exceptions to the marking requirements under 19 CFR 134.32(c) and 134.32(o) are warranted in this case. HOLDING: 1) The country of origin of the PVC cooler bags is Taiwan, the country where the fabric-making process occurred. 2) Section 134.46, Customs Regulations (19 CFR 134.46) is triggered by the words "RUGGED EQUIPMENT NEW YORK USA." However, as the country of origin marking (although incorrect, in this case) preceded by the words “Made in” appears legibly and permanently in close proximity to the U.S. location, and in a comparable size, the requirements of 19 CFR 134.46 and 19 U.S.C. 1304 will be satisfied provided the marking indicates "Taiwan" as the country of origin and not "China." - 5 - 3) Exceptions to the marking requirements under 19 CFR 134.32(c) and 134.32(o) are granted for shipments of textile coolers imported from China for a period of 30 days commencing from the date of this decision. Sincerely, John Durant, Director Commercial Rulings Division