Country of origin of marking for imported hiking poles, trekking poles, ski poles, and related products; stickers; comparable size; close proximity; economically prohibitive; 19 CFR 134.41; 19 CFR 134.46; 19 CFR 134.32(c); 19 CFR 134.32(o)

HQ 561384 June 21, 1999 MAR-05 RR:CR:SM 561384 RSD CATEGORY: MARKING Mark J. Schlant, Esq. Zdarsky, Sawicki & Agostinelli 404 Cathedral Place 298 Main Street Buffalo, New York 14202 RE: Country of origin of marking for imported hiking poles, trekking poles, ski poles, and related products; stickers; comparable size; close proximity; economically prohibitive; 19 CFR 134.41; 19 CFR 134.46; 19 CFR 134.32(c); 19 CFR 134.32(o) Dear Mr. Schlant: This is in response to your letter dated May 6, 1999, on behalf of Leki U.S.A., Inc. (Leki), regarding the country of origin marking requirements for hiking poles, trekking poles, ski poles, and similar products. You submitted a copy of Leki’s catalogue as well as samples of the poles for our consideration. FACTS: Leki is a domestic corporation which sells imported hiking poles, trekking poles, ski poles, and other related poles. The submitted sample poles were all made in the Czech Republic. Customs at the Port of Buffalo detained a recent shipment of trekking poles because it was determined that the poles were not properly marked with their country of origin. Customs officials determined that the country of origin marking on some of the poles was not sufficiently conspicuous to satisfy the country of origin marking law. Additionally, Customs found that the country of origin marking on most of the poles was not in close proximity or in a comparable size to a statement on the poles which indicates that the poles were designed and engineered in Germany. It is stated in counsel’s submission that the graphics appearing on these poles, including the country of origin markings, are applied during the manufacture of the poles and are permanent. Therefore, it is stated that the markings cannot be changed after the poles are manufactured. It is also claimed that it is not possible for Leki’s supplier to manufacture poles with revised country of origin markings of a permanent nature until new pole models are available in January 2000.  In order to satisfy the objections of Buffalo Customs to the country of origin markings on the poles, Leki has placed adhesive stickers on the poles which indicate their country of origin in large letters. Leki has already marked two shipments of poles by using adhesive stickers. Buffalo Customs found that the country of origin marking of the poles through the use of the adhesive stickers was acceptable. Leki maintains that marking the poles with stickers has proven to be very expensive. The expenses involved in using stickers to mark the poles include the cost of moving the goods, paying for space in a bonded warehouse where the stickers are applied, paying its own employees and hiring temporary employees to perform the labor-intensive work of affixing the stickers, the cost of the stickers and packaging materials, and the cost of additional transportation and customs broker fees. Based on the two shipments that have already been marked in this fashion, Leki estimates that the cost of using stickers is approximately $3,000 per twenty-foot container-load of poles. Leki anticipates that it will receive about twelve more shipments of poles during 1999, some of which will be in twenty-foot containers and some of which will be in forty-foot containers. All of the costs associated with marking vary proportionately with the volume of the shipment, so that the cost of affixing stickers to the poles in a forty-foot container can be expected to equal about $6,000. If half the remaining shipments are in twenty-foot containers and half are in forty-foot containers, we are informed that Leki will incur costs of about $54,000 for marking the poles in those containers, in addition to the $6,000 it has already incurred to mark the two shipments it has received. Leki maintains that these costs cannot be recouped from its customers because the prices for the goods are firmly established based on the orders which have been already placed. Leki also points out that these costs do not take into account the business it will lose because its employees are diverted from their normal responsibilities to the task of marking the poles. We are told that it took about two days to mark the poles in a twenty-foot container. Leki has assigned about ten people at a time to the job of marking the poles. It is also claimed that due to the need for precision in this marking process, Leki cannot simply hire temporary employees and train them anew each time. Consequently, seven of the ten workers assigned to mark the poles are Leki’s regular employees, meaning that more than two-thirds of the company’s work force of eleven is not doing their normal jobs. It is contended that marking the poles with stickers will delay the shipment of poles to customers and increase shipping costs when more expensive shipping services are required as delivery deadlines approach. The shipping delays may also result in lost sales from canceled orders when merchandise is not shipped on time. Leki’s German supplier, Leki Lenhart GmbH, claims that it would be prohibitively expensive to modify its internal procedures to put the stickers on the poles before shipping them. In the Czech Republic, the poles are manufactured, packaged and then stored awaiting shipment without regard to their ultimate destination. At the time the poles are manufactured, packaged, and stored, their destination is unknown and is only determined later when orders are placed.  Less than 20 percent of the poles manufactured by Leki Lenhart GmbH are sold to the U.S. Leki claims that it would be impractical and cost-prohibitive to mark all the poles that are manufactured for the sake of the small percentage of them which will be sold in the U.S. Counsel contends that the permanent marking, “Made in the Czech Republic” is only slightly smaller than the notation to German design and engineering on the poles. On all but one of the pole models, the country of origin marking appears at the same height on the poles as the German design legend and is separated from it by only a few degrees around the circumference of the poles. Because the circumference of the poles is approximately 2¼ inches, the country of origin markings are always l_ or less inches apart from the reference to “German Design and Engineering”. ISSUES: I. Whether the sample hiking, and trekking poles are conspicuously and legibly marked with their country of origin. II. Whether the country of origin marking on the poles satisfies the requirements of 19 CFR 134.46. III. Whether a temporary exception may be granted for the present inventory of poles as it is economically prohibitive to comply with the requirements of 19 CFR 134.46. 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 of the Customs Regulations implements the country of origin marking requirements and exceptions of 19 U.S.C. §1304. Section 134.41(b), mandates that the ultimate purchaser in the U.S. must be able to find the marking easily and read it without strain. That section further provides that the degree of permanence should be at least sufficient to insure that in any reasonably foreseeable circumstance the marking shall remain on the article until it reaches the ultimate purchaser unless it is deliberately removed. I. Conspicuousness The first issue that we must consider is whether the permanent country of origin marking without the adhesive stickers on the poles is sufficiently conspicuous and legible to meet the requirements of the 19 CFR 134.41(b). In Headquarters Ruling Letter (HRL) 733940, dated October 24, 1991, Customs considered certain factors in determining if the country of origin marking on an article, such as a pen, was conspicuous within the meaning of 19 CFR 134.41 and 19 U.S.C. §1304. Among the factors considered was the size of the marking, the location of the marking, whether the marking stood out, and the legibility of the marking. Customs stated that the marking must be large enough so that the ultimate purchaser may read the marking without strain. We also stated that the marking must be in a place where the ultimate purchaser would expect to find the marking or where it could be easily noticed from a casual inspection. Whether the marking stood out was dependent on where it appeared in relation to other print on the article and whether it was in contrasting color to the background. The legibility of the marking concerned the clarity of the letters. No single factor was stated to be conclusive by itself in determining whether a marking was conspicuous. Instead, it was the combination of these factors which determined whether the marking was acceptable. In reviewing the permanent country of origin markings on the sample poles, we believe that with certain exceptions, the markings on the poles can be found from a casual inspection and can be easily read without strain. As such, we conclude that the permanent marking on these poles would satisfy the requirements for conspicuousness and legibility as set forth in 19 CFR 134.41(b). However, there are three sample poles, models 992166 Adventure, 992162 Walking Co. Wanderfreund, and 992024 Tour Anti-shock, on which the country of origin marking is printed in the same color as the background color of the pole. It takes a great deal of effort to find the markings on these particular poles because they are difficult to see against the background color of the pole. Once found, the markings are also very difficult to read. Therefore, the permanent country of origin markings on these particular pole models do not satisfy the conspicuous and legibility requirements of 19 CFR 134.41(b) and 19 U.S.C. 1304. Accordingly, these three models will need to be marked with a sticker so that the ultimate purchaser can know the correct country of origin of the poles. II. 19 CFR 134.46 The next issue is whether the special marking requirements of 19 CFR 134.46 are triggered by the statement “German Design and Engineering” on the poles. Section 134.46, Customs Regulations (19 CFR §134.46) contains more restrictive marking requirements designed to alleviate the possibility of misleading an ultimate purchaser with regard to the country of origin of an imported article. 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 of origin preceded by “Made in,” “Product of,” or other words of similar meaning. Therefore, under 19 CFR 134.46, the threshold determination in ascertaining the applicability of the stricter requirements is whether the non-origin reference on the poles may deceive or mislead the ultimate purchaser regarding the country of origin of the poles. In this instance, we believe that the prominent reference to “German Design and Engineering” appearing on the poles could mislead ultimate purchasers into believing that the country of origin of the poles is Germany. Accordingly, we find that the special marking requirements of 19 CFR 134.46 are triggered by this reference. To comply with 19 CFR 134.46, the country of origin marking must be in close proximity and must be in a comparable size to the non-origin geographical reference. Customs has previously ruled that in order to satisfy the close proximity requirement, the country of origin marking must appear on the same side(s) or surface(s) in which the name of the locality other than the country of origin appears. HRL 708994 (April 24, 1978). See also HRL 559872 dated February 20, 1997. Generally this means that the country of origin marking and the non-origin geographical reference should be able to be observed together without having to turn or manipulate the article. With respect to the comparable size requirement of 19 CFR 134.46, the permanent country of origin marking is significantly smaller than the “German Design and Engineering” notation on the poles. In addition, the country of origin marking and the German reference cannot be seen in the same viewing without rotating the poles. Accordingly, we find that the permanent country of origin marking on the poles is not in close proximity or in a comparable size to the non-origin reference and thus does not satisfy the requirements of 19 CFR 134.46. III. Economically Prohibitive Leki indicates that, even if the permanent markings on the poles are not in compliance with the requirements of 19 CFR 134.46, it wishes to avoid having to use the stickers to mark the country of origin of the poles for the remainder of 1999. Leki claims that it is very costly and burdensome to mark the poles with stickers. It points out that it is expensive to transport a shipment to a bonded warehouse, unpack it, apply the stickers, repack it, and transport it back. We are informed that the process of applying the stickers delays the delivery of shipments and diverts Leki’s employees and resources from other vital tasks. Leki requests an exception from having to use stickers to mark the poles until its present inventory of poles is exhausted. It is claimed that poles imported in 2000 will not have any reference to Germany on them and will be in full compliance with the country of origin marking law. Section 134.32(c), Customs Regulations (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. Section 134.32(o) provides an exception for marking articles which cannot be marked after importation except at an expense that would be economically prohibitive unless the importer, producer, seller, or shipper failed to mark the article before importation to avoid meeting the requirements of the law. We are satisfied that based on the facts presented in this case, a temporary exception to strict compliance with the marking requirements of 19 CFR 134.46 may be allowed pursuant to 19 CFR 134.32(o). This exception will only be applicable until the present inventory of poles is exhausted, which is estimated to be the remainder of the 1999 model year. After the present inventory of poles is exhausted, counsel has indicated that the references to German design and engineering will not appear on the poles. Accordingly, a temporary exception from the requirements of 19 CFR 134.46 may be granted until the present inventory of poles is exhausted or until the end of 1999, whichever occurs first. However, this exception does not apply to the models noted above as the marking on these samples is not visible. The country of origin markings on all poles entered on or after January 1, 2000 must be conspicuous and legible, and if a non-origin geographical reference appears on the poles, the special marking requirements of 19 CFR 134.46 must be fully met as well. HOLDING: With certain exceptions, the country of origin marking on the sample poles is sufficiently legible and conspicuous to satisfy the statutory and regulatory requirements of 19 U.S.C. 1304 and 19 CFR 134.41. The country of origin markings on the pole models 992166 Adventure, 992162 Walking Co. Wanderfreund, and 992024 Tour Anti-shock are not conspicuous and legible and do not satisfy the legibility and conspicuousness requirements of 19 U.S.C. 1304 and 19 CFR 134.41. These particular pole models will not be allowed entry into the U.S. unless they are marked with their country of origin by a sticker. The reference to “German Design and Engineering” on the poles triggers the special marking requirements of 19 CFR 134.46. The permanent markings on the poles are not in close proximity and in a comparable size to the German reference on the poles and thus do not meet the special marking requirements of 19 CFR 134.46. Due to the increased costs and burdens resulting from putting stickers with the country of origin on the poles, a temporary exception from strictly complying with the requirements of 19 CFR 134.46 will be permitted until the present inventory of poles is exhausted or until the end of 1999 whichever occurs first. During this time period, except for the pole models cited above, affixing additional stickers with the country of origin marking on the poles will be unnecessary. All poles entered on or after January 1, 2000 must be marked in full compliance with all statutory and regulatory requirements of the country of origin marking law, including 19 CFR 134.46. A copy of this ruling letter should be attached to the entry documents filed at the time the goods are entered. If the documents have been filed without a copy, this ruling should be brought to the attention of the Customs officer handling the transaction. Sincerely,  John Durant, Director Commercial Rulings Division