Application for Further Review of Protest No. 1401-10-100132 Country of origin marking requirements for rubber sandals from Brazil

HQ H122240 March 23, 2011 CLA-2 RR:CTF:TCM H122240 EG CATEGORY: MARKING Port Director U.S. Customs and Border Protection 101 East Main Street Norfolk, VA 23510 Attn: Renee Caesar, Import Specialist Re: Application for Further Review of Protest No. 1401-10-100132: Country of origin marking requirements for rubber sandals from Brazil Dear Port Director: This ruling letter responds to the Application for Further Review (AFR) of Protest No. 1401-10-100132, dated April 30, 2010, filed by counsel on behalf of Alpargatas USA, Inc. (Alpargatas USA). Alpargatas USA filed this AFR in response to your Notice of Action regarding the country of origin marking of rubber sandals from Brazil. Alpargatas USA submitted three sample pairs of rubber sandals for our consideration: one adult size pair, one child size pair and one baby size pair. On February 24, 2011, counsel for Alpargatas USA met with CBP Headquarters to discuss the subject Protest and AFR. After the meeting, counsel for Alpargatas USA supplemented the Protest with the remarking certification that Alpargatas submitted to the Port of Norfolk, Virginia (the Port) on June 18, 2010. In the certification, Alpargatas USA demonstrated that all of the sandals remaining in the warehouse on June 18, 2010, were marked with country of origin stickers on the sole. Counsel for Alpargatas also confirmed that the sample sandals submitted to CBP were pulled from the entry that is the subject of the Protest. FACTS: The sample rubber sandals are open-toe thong sandals with strap ends that penetrate the sole and are secured into the sole’s bottom by plugs. The adult size pair and the child size pair are open-heel, while the baby size pair has an elastic strap across the heel to secure the sandal on the baby’s foot. The letters “USA,” “EUR,” the size designation and the brand name are printed on the foot bed. The samples are marked “Made in Brazil” in close proximity to Spanish and Portuguese translations on the underside of one sandal strap on each sandal. The country of origin marking is stamped and indented into the underside of the strap in legible font. In order to read the country of origin marking, the consumer must flip the strap completely over. The declaration “Made in Brazil” also appears on one plug in each of the child size pair’s soles. The plug lettering measures three-tenths centimeter high (0.12 inch) and is permanently marked in raised rubber on the plug. The Protest states that all the sandals formerly included this country of origin marking on the plugs. Now, Alpargatas claims that they will phase out this country of origin marking and only include the marking which appears on the underside of the strap. Alpargatas did not assert that all of the children’s size sandals are marked on the plug. CBP only knows that the sample child size pair is marked on the plug. Each pair of sandals is bound together with plastic string. A card stock hang tag with the cost, size and brand name hangs from the plastic string. A holographic sticker on the hang tag states “Made in Brazil” in three languages when the hang tag is adjusted under a light. The lettering in the holographic sticker measures one-tenth centimeter high (0.04 inch). Additionally, the sandals come with a small plastic hanger which indicates that the sandals will ultimately be hung from racks for retail display. On January 6, 2010, Alpargatas USA entered the subject merchandise (Entry No. 279-96682442) at the Port. The entered value of the entry was $75,587. On January 11, 2010, the Port issued a Notice to Mark and/or Notice to Redeliver to Alpargatas USA which stated that the “merchandise must be clearly marked with country of origin in English.” The Notice stated that the “merchandise must be brought into compliance as specified … or returned to CBP custody within 30 days…” According to the Protest, Alpargatas USA relied upon its customs broker to determine why the merchandise was not properly marked and to resolve the issue with CBP. Alpargatas USA noted that its customs broker failed to make this determination or communicate with CBP on the matter. On March 12, 2010, the Port issued a Notice of Action to Alpargatas USA which assessed a 10% marking duty on the entered value of the merchandise ($7,558.70). The subject entry liquidated on April 2, 2010 and included the 10% marking duty. Alpargatas USA maintains inventory of its imported sandals at a U.S. warehouse operated by Exel, a third-party logistics operator. On April 14 - 15, 2010, the General Manager of Exel, at the direction of Alpargatas USA, conducted an audit of the country of origin marking of the subject merchandise. Of the 3,171 cartons of sandals covered by Entry No. 279-96682442, the audit was conducted on approximately five percent (170 cartons) of the subject merchandise. The audit revealed that 100% of the sandals audited had the country of origin marking underneath of the sandal strap. Additionally, 114 of the 170 audited cases contained sandals with country of origin marking on the sandal plug (67% of the audited cases). On April 30, 2010, Alpargatas USA submitted the subject Protest and AFR to the Port. ISSUES: 1. Does marking the country of origin on the underside of a rubber thong sandal strap so that the consumer must flip the strap over to read it comply with the country of origin marking requirements set forth in Section 304 of the Tariff Act of 1930, as amended (19 U.S.C. § 1304)? 2. Does the country of origin marking on the holographic sticker or on the sandal plug comply with country of origin marking requirements? LAW AND ANALYSIS: Initially we note that the matter protested is protestable under 19 U.S.C. §1514(a)(2) as a decision on country of origin marking duties. We also note that the Protest was timely filed, within 180 days of the liquidation of the entry. Alpargatas USA’s AFR satisfies application for further review criteria because CBP has not previously ruled upon whether a country of origin marking underneath a rubber thong sandal strap complies with marking requirements. 19 C.F.R. § 174.24(b). Under 19 U.S.C. § 1304, every article of foreign origin imported into the U.S. must be marked in a conspicuous place as legibly, indelibly, and permanently as the nature of the article will permit. The marking must provide the English name of the article’s country of origin. Congressional intent in enacting 19 U.S.C. § 1304 was that the ultimate purchaser in the U.S. should know the article’s country of origin after an inspection of the article. We note that the protestant’s arguments are largely based upon the fact that the sandals had country of origin markings at the time of entry. This fact is not in dispute. Rather, CBP disputes that the sandals were conspicuously marked upon entry as required by 19 U.S.C. § 1304. Part 134, Customs Regulations (19 CFR Part 134), implements the country of origin marking requirements and exceptions of 19 U.S.C. § 1304. As provided in 19 CFR § 134.41(b), the country of origin marking is considered conspicuous if the ultimate purchaser in the U.S. is able to find the marking easily and read it without strain. The country of origin marking should appear in a location where the ultimate purchaser would expect to find it or in a location where the ultimate purchaser would be able to notice it from a casual inspection of the merchandise. With regard to footwear, CBP expects that a consumer will perform a casual inspection of the footwear to search for shoe size. See Headquarters Ruling Letter (HQ) 732468, dated September 18, 1989. Such an inspection should similarly disclose the footwear’s country of origin. Id. However, the country of origin marking does not have to appear in the most conspicuous location on the article. See Headquarters Ruling Letter (HQ) 734530, dated June 29, 1992. Several CBP rulings provide analysis which is applicable in this case. In HQ 735440, dated April 21, 1994, CBP evaluated a country of origin marking which appeared underneath the velcro strap of a sandal. The sandal manufacturer affixed a sewn-in label to the inside of the velcro strap that went across the top of the consumer’s foot. The foot size and registered trademark also appeared on the sewn-in label. The label could not be seen, however, when the velcro strap was closed. The label could only be seen when the strap was opened, such as to try the sandal on for size. No other markings appeared on the sandal. Although CBP found that the country of origin marking appeared in close proximity to the shoe size marking, CBP determined that the label was not easy to find and read without strain because it was hidden by the velcro strap. The consumer could only see the label after opening the velcro strap. CBP decided that this country of origin marking was not conspicuous. Therefore, the marking under the strap did not satisfy the country of origin marking requirements of 19 U.S.C. § 1304. However, CBP posited that this marking would comply with marking requirements if the manufacturer added a country of origin marking to the sandals’ hang tag to supplement the existing marking under the strap (emphasis added). Similarly, the subject rubber sandals have a country of origin marking hidden by the strap. In order to read the country of origin marking, the consumer must completely flip over the strap. Moreover, the shoe size marking does not appear in close proximity to the country of origin marking. The shoe size marking conspicuously appears on the foot bed of the rubber sandal. If the rubber sandals are hanging from a rack or sitting on a shelf, the consumer can quickly locate the shoe size without any manipulation of the sandal. This casual inspection does not, however, reveal the country of origin marking. Applying CBP’s analysis in HQ 735440, we find that the subject country of origin marking does not satisfy the conspicuousness requirement of 19 U.S.C. § 1304. This decision is consistent with other CBP footwear rulings. In HQ 732468, dated September 18, 1989, we found that marking the footwear by means of a fabric tag stitched to the underside of the tongue at approximately the top 1/3 portion of the tongue was acceptable. It was our opinion that the consumer would inspect a shoe for the shoe size before buying it and that a casual inspection would readily reveal the tag stitched onto the underside of the tongue. However, we also found that a country of origin marking midway between the top and the bottom of the tongue was not conspicuous. We noted that if the shoes were partially laced, the country of origin marking would be totally obscured. Since the shoes were likely laced for retail display, we concluded that the marking was not conspicuous and, therefore, not acceptable for country of origin marking purposes. The subject merchandise is not marked in a location comparable to the top 1/3 portion of the shoe’s tongue. Unlike the minimal movement required to view the top underside of the shoe’s tongue, the entire rubber sandal strap must be flipped over to locate the sandal’s country of origin marking. Therefore, the country of origin marking on the subject merchandise fails to comply with the conspicuousness requirement of 19 U.S.C. § 1304. However, this country of origin marking would comply with marking requirements if the manufacturer added a supplemental country of origin declaration to the hang tag. The existing country of origin declaration in the hang tag’s holographic sticker is not sufficiently conspicuous because the lettering is only one-tenth centimeter high and is only visible in certain light. Moreover, we failed to notice this country of origin marking until after several inspections of the submitted sample sandals. Therefore, this holographic marking is not sufficiently legible to meet country of origin marking requirements. However, the country of origin marking on the sandal plug is legible (three-tenth centimeter high), permanent (raised rubber) and conspicuous (on the sandal plug). The ultimate purchaser would find this marking during a casual inspection of the sandal. As such, the sandals marked with the country of origin on the plug comply with country of origin marking requirements. HOLDING: The country of origin marking on the underside of the sandal strap, as described above, does not satisfy the marking requirements of 19 U.S.C. § 1304 and 19 CFR Part 134. However, the country of origin marking on the sandal plug, as described above, does satisfy the requirements of 19 U.S.C. § 1304 and 19 CFR Part 134. The Protest should be DENIED in part and GRANTED in part CBP assessed 10% in marking duties ($7,558.70) against the entered value of the merchandise. According to the warehouse audit conducted by Exist, 114 of the 3,171 cartons had a country of origin marking on the sandal plug. Thus, four percent of the cartons complied with country of origin marking requirements. The total entered value of the subject merchandise was $75,587. The total value of 4% of the entry is $3,023.48, which means that the marking duty should only be assessed against the remaining entered value of $72,563.52. Therefore, the 10% marking duty must be reduced from $7,558.70 to 10% of $72,563.52, or to $7,256.35. You are to mail this letter, together with CBP 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 of the decision. Sixty days from the date of this letter, the Office of International Trade 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