Application for Further Review of Protest 2506-06-100101; circuit breakers; country of origin marking; subheading 9801.00.10; NAFTA

HQ H013450 March 21, 2008 MAR-2 OT:RR:CTF:VS H013450 KSG Port Director U.S. Customs & Border Protection 9777 Via De La Amistad San Diego CA 92154 Re: Application for Further Review of Protest 2506-06-100101; circuit breakers; country of origin marking; subheading 9801.00.10; NAFTA Dear Port Director: This is in response to your correspondence forwarding the Application for Further Review of Protest (AFR) 2506-06-0100101 timely filed by counsel on behalf of Claudia Garcia dba Circuit Breaker Technology Inc. FACTS: This case involves seven entries of imported circuit breakers. The Protest is against the imposition of marking duties and the denial of claims under subheading 9801.00.10 of the Harmonized Tariff Schedule of the United States (“HTSUS”) and the North American Free Trade Agreement (“NAFTA”). I. Country of origin marking The circuit breakers were purchased in Mexico by Circuit Breaker S.A. de C.V. The protestant states that most of the circuit breakers were made in the U.S. Counsel prepared a spreadsheet showing the invoice quantity, model of circuit breaker, alleged origin, unit price, total invoice price, marking duties imposed, and duties owed for each model of circuit breaker. Although counsel indicated that more documentation would be submitted, no additional supporting documentation to demonstrate U.S. origin was received by CBP. The protestant concedes that a portion of the circuit breakers involved in this case were manufactured in the Dominican Republic. The importer states that it purchased the circuit breakers in Mexico from “two primary sources, both of which are distributors of legitimate Cutler-Hammer product.” Counsel states that these “suppliers do not repackage or handle the product, they ship full cases of circuit breakers from one point to another, often divided by an international border.” The importer states that it received the goods in their original packaging. Counsel contends that Cutler-Hammer requests the outer packaging be left intact until the product reaches the ultimate purchaser. Therefore, the importer claims that it relied on Cutler-Hammer to accurately mark the circuit breakers as to country of origin. Counsel concedes that “some of units had been marked for international sale and so did not exactly meet the U.S. requirements.” Counsel states that “Customs found some [of the goods] to be marked correctly and others not.” There is no evidence in the file showing that CBP found any of the imported goods were correctly marked with their country of origin. Eaton Corporation, the manufacturer and trademark holder of the Cutler-Hammer circuit breakers, stated in a letter dated March 15, 2006, that G frame breakers, specifically GHB and GHC circuit breakers are manufactured in the Dominican Republic. Eaton also stated that it does not build or manufacture circuit breakers in Mexico but that they do have a component assembly center in Mexico City where name plates and labels are attached to the parent breakers. The retail containers and the circuit breakers were marked in various ways. We have reviewed samples of the improperly marked goods. Some of the imported circuit breakers were marked both “Assembled in Dominican Republic” as well as “Hecho en E.U.A.” (English translation is “Made in U.S.A.”). There was also other information on the retail packaging in Spanish, including Mexican addresses. Other circuit breakers or their retail containers were marked “Hecho en E.U.A.” There was also other information in Spanish on the retail boxes, including Mexican addresses. Marking duties were assessed on the imported goods. II. Subheading 9801.00.10 The goods were entered claiming either subheading 9801.00.10, HTSUS, treatment or claiming that the goods were originating under the North American Free Trade Agreement (“NAFTA”). CBP issued a CF 28 to the importer on March 14, 2006, asking for the required declaration for subheading 9801.00.10 claims. CBP received no response from the importer. On May 11, 2006, CBP issued three CF-29’s rate advancing the subheading 9801.00.10 claims as dutiable. The protestant failed to submit the required declaration under 19 CFR 10.1 that is required for goods entered under subheading 9801.00.10, HTSUS. NAFTA On February 8, 2006, CBP sent a CF 28 to the exporter asking for the NAFTA certificates of origin to support the NAFTA claims. CBP received no response from the exporter. A second CF 28 was issued to the exporter on February 27, 2006, asking for verification of the Mexican country of origin of certain circuit breakers. CBP received no response from the exporter with regard to the second CF 28. On May 11, 2006, three CF-29s were issued rate advancing the claims for NAFTA treatment for certain circuit breakers. No NAFTA certificates of origin or supporting documentation were furnished to verify the Mexican origin of the goods. Upon request, the protestant failed to submit NAFTA certificates of origin to support the NAFTA claims. The goods entered under subheading 9801.00.10, HTSUS, or as originating goods under the NAFTA were rate advanced as dutiable. ISSUES: I. Whether certain goods were properly denied preferential tariff treatment under subheading 9801.00.10, HTSUS? II. Whether certain goods were properly denied preferential tariff treatment under the NAFTA? III. Whether marking duties were properly assessed in this case? LAW AND ANALYSIS: Subheading 9801.00.10 Subheading 9801.00.10, HTSUS, provides that products of the United States when returned after having been exported, without having been advanced in value or improved in condition by any process of manufacture or other means while abroad can be entered duty free provided the documentary requirements of 19 CFR 10.1 are satisfied. The regulatory language in 19 CFR 10.1(a) requires that for goods in a shipment valued over $2000 and claimed to be free of duty under subheading 9801.00.10, a declaration from a foreign shipper is required. Further, 19 CFR 10.1(b) states that the port director “may require, in addition to the declarations required in paragraph (a) of this section, such other documentation or evidence as may be necessary to substantiate the claim for duty-free treatment. Such other documentation or evidence may include a statement from the U.S. manufacturer verifying that the articles were made in the United States, or a U.S. export invoice, bill of lading or airway bill evidencing the U.S. origin of the articles and/or the reason for the exportation of the articles.” Counsel states that CBP did not dispute that some of the goods were made in the U.S. and that “the problem was one of documentation.” Further, counsel stated that the required declarations would be submitted to CBP within 30 days, which did not occur. As discussed in greater detail later in this Protest decision, CBP disputes that the importer has shown that any of the goods involved in this case were made in the U.S. The protestant has failed to supply the required declaration required by 19 CFR 10.1. This is not a mere technical violation; this documentation is required by regulation. Accordingly, CBP properly denied subheading 9801.00.10, HTSUS, treatment for the imported goods. NAFTA General Note 12(a)(ii),HTSUS, provides that: Goods that originate in the territory of a NAFTA party under the terms of subdivision (b) of this note and that qualify to be marked as goods of Mexico under the terms of the marking rules set forth in regulations issued by the Secretary of the Treasury (whether or not the goods are marked), when such goods are imported into the customs territory of the United States and are entered under a subheading for which a rate of duty appears in the “Special” subcolumn followed by the symbol “MX” in parentheses, are eligible for such duty rate, in accordance with section 201 of the North American Free Trade Agreement Implementation Act. Part 181, Customs Regulations (19 CFR Part 181) implements the duty preference provisions of NAFTA. Section 181.21(a), Customs Regulations (19 CFR 181.21(a)) states, in pertinent part, that: [i]n connection with a claim for preferential tariff treatment for a good under NAFTA, the U.S. importer shall make a written declaration that the good qualifies for such treatment.... [t]he declaration shall be based on a complete and properly executed original Certificate of Origin, or copy thereof, which is in the possession of the importer and which covers the good being imported. Section 181.22(b) states that “an importer who claims preferential tariff treatment …shall provide, at the request of the Port Director, a copy of each Certificate of Origin pertaining to the good….” Section 181.23(a) provides that the port director may deny preferential tariff treatment to the imported good if the importer fails to submit a Certificate of Origin. Customs Directive 3810-014A, dated July 26, 2005, which provides guidelines for use of the NAFTA Certificate of Origin, states, in pertinent part, that “Customs shall give importers a reasonable amount of time to submit a copy of the Certificate, generally 30 days.” The Directive further states that the certificate must be in the possession of the importer on the date the claim was made. An import specialist shall request copies of Certificates and translations thereof, as necessary to substantiate claims for preferential NAFTA treatment. In this case, the importer has not provided the requested NAFTA Certificate of Origin for the imported goods for which it claimed NAFTA preferential treatment. Therefore, the imported goods are not eligible for NAFTA tariff treatment preference, which includes an exemption for the merchandise processing fee (“MPF”), and CBP properly rate advanced these entries as dutiable and charged the importer for the MPF . Country of Origin Marking Section 304 of the Tariff Act of 1930, as amended, 19 U.S.C. 1304, provides that, unless excepted, every article of foreign origin (or its container) imported into the U.S. shall be marked in a conspicuous place as legibly, indelibly and permanently as the nature of the article (or its 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. The evident purpose is to mark the goods so that at the time of purchase the ultimate purchaser may, by knowing where the goods were produced, be able to buy or refuse to buy them, if such marking should influence his will.” United States v. Friedlaender & Co., 27 C.C.P.A. 297 at 302; C.A.D. 104 (1940). Part 134, Customs Regulations (19 CFR Part 134), implements the country of origin marking requirements and exceptions of 19 U.S.C. 1304. Pursuant to 19 CFR 134.1(b), the term “country of origin” is defined as the country of manufacture, production, or growth of any article of foreign origin entering the U.S. Counsel contends that a portion of the imported goods were of U.S. origin and that marking duties should not have been assessed for such goods. Counsel also stated that Customs found that some of the goods were properly marked. We have reviewed the file and find no evidence that U.S. Customs & Border Protection found that any of the imported goods involved in these entries were properly marked. Further, we find that the spreadsheet prepared by counsel, which is the only evidence in the file regarding the U.S.-origin of the goods, is not sufficient evidence to establish that any of the goods involved in this case were in fact made in the U.S. Counsel has conceded that a portion of the goods were manufactured in the Dominican Republic and improperly marked and that marking duties were properly assessed for such goods. Further, the manufacturer has stated in a letter that the GHB and GHC circuit breakers were made in the Dominican Republic. The goods made in the Dominican Republic were marked “Assembled in the Dominican Republic” and “Hecho en E.U.A.” These two markings are contradictory. Since it has been established that these goods were in fact made in the Dominican Republic, the marking “Hecho in E.U.A.” is false and misleading. These markings violate 19 U.S.C. 1304. With regard to the other goods, counsel contends that they were of U.S.-origin. As stated above, the protestant has not submitted compelling evidence to demonstrate that any of the imported goods in the instant case were manufactured in the U.S. CBP reasonably concluded that goods imported from Mexico with markings in Spanish, with insufficient evidence of U.S. manufacture, are foreign. Since CBP concluded that these goods were foreign, 19 U.S.C. 1304 would require that they must be marked with their country of origin in the English language. The imported goods were not marked with a foreign country of origin. Therefore, these goods are in violation of 19 U.S.C. 1304. Moreover, section 134.46, Customs Regulations (19 CFR 134.46), as revised by T.D. 97-72, dated August 20, 1997, provides: 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. Section 134.46 provides that its special marking requirements are triggered only when the non-origin reference may mislead or deceive the ultimate purchaser as to the actual country of origin of the article. Both the goods marked with contradictory markings and the goods marked “Hecho en E.U.A.” or “Made in U.S.A.” also contain markings and other product information in Spanish, and Mexican addresses. Accordingly, we find that the heightened requirements of 19 CFR 134.46 are triggered in this case. There is no marking preceded by “Made in,” “Product of” or words of similar meaning in the English language on the imported goods as required by 19 CFR 134.46. We find that the imported goods do not satisfy the requirements of 19 CFR 134.46 and are in violation of 19 U.S.C. 1304. Accordingly, marking duties were properly assessed in this case. Accordingly, this protest should be denied. HOLDING: Based on the facts presented above, the protest should be denied. In accordance with Section 3A(11)(b) of Customs Directive 099 3550-065, dated August 4, 1993, Subject: Revised Protest Directive, 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 or entries in accordance with the decision should be accomplished prior to mailing of this decision. Sixty days from the date of this decision, the Office of Regulations and Rulings will make the decision available to Customs personnel, and to the public on the Customs Home Page on the World Wide Web at www.customs.gov, by means of the Freedom of Information Act, and other methods of public distribution. Sincerely, Myles B. Harmon, Director Commercial & Trade Facilitation Division