Request for Internal Advice; Country of origin marking requirements for bearings from China

HQ H266051 April 5, 2017 CLA-2 OT:RR:CTF:TCM H266051 APP CATEGORY: MARKING Service Port Director U.S. Customs and Border Protection Port of Houston, Field Office 2323 S. Shepherd #1300 Houston, TX 77019 Attn.: Dawn Blake, Supervisory Import Specialist RE: Request for Internal Advice; Country of origin marking requirements for bearings from China Dear Port Director: This is in response to a referral from the Port of Houston dated May 20, 2015, forwarding a Request for Internal Advice, initiated by counsel for Tex Star Bearings (“Tex Star” or “requester”), concerning the country of origin marking requirements for bearings from China. FACTS: On August 11, 2014, the Port of Houston issued a Notice to Mark and/or Notice to Redeliver instructing Tex Star that its bearings entered on July 10, 2014, “must be permanently and indelibly marked to indicate the country of origin” pursuant to Title 19, U.S. Code (“U.S.C.”), Section 1304 and Title 19, Code of Federal Regulations (“C.F.R.”), Part 134, and that “[m]arking or other corrective action must be done under [U.S. Customs and Border Protection (“CBP”)] supervision.” Tex Star submitted a blanket repackaging certification dated August 13, 2014, certifying that if the articles were repackaged in retail containers (e.g., blister packs), they will comply with the marking requirements of 19 U.S.C. § 1304 and 19 C.F.R. Part 134. The Port of Houston did not accept Tex Star’s repackaging certification. The Port determined that the bearings needed to be marked by way of etching, die stamping, engraving, or a similar marking method. The subject bearings are of Chinese origin and consist of thrust bearings, ball bearings, and needle roller bearings. They are packed in the following manner: (1) in plastic bags inside a retail box containing a sticker marked with the country of origin; (2) in a plastic wrapper marked with the country of origin; (3) in a plastic tube marked with a sticker showing the country of origin; or (4) in poly bags labeled with the country of origin. All of the bearings are coated in a brown lubricant to prevent oxidation and other damage. Tex Star advises that the ultimate purchaser, the Original Equipment Manufacturer, does not normally open the containers until the time of installation of the bearings. Tex Star asserts that marking of the bearings through stamping, etching, engraving, or the like is neither legally required nor commercially feasible. Tex Star argues that there is no legal requirement that the bearings themselves, instead of their containers, be marked or that the bearings be marked in a particular manner or method, such as etching or engraving, pursuant to 19 C.F.R. §§ 134.11, 134.24(d)(2), 134.24(d)(3), and 134.43(a). According to Tex Star, marking the containers, instead of the subject bearings, will reasonably indicate the origin of the bearings because the lubricant is colored and would allegedly obscure the marking. Tex Star argues that the cost of marking would be “prohibitively expensive” and as a result the bearings are excluded from the marking requirements. Tex Star claims that the only way CBP may impose a specific method of marking, such as die stamping, cast-in-the-mold lettering, etching, engraving, or cloth labels, is via publication in the Federal Register and Customs Bulletin and Decisions. ISSUE: Whether the bearings are exempt from individual country of origin marking. 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 (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 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. Title 19 C.F.R. Part 134 implements the country of origin marking requirements and exceptions of 19 U.S.C. § 1304. An article may be excepted from the country of origin marking requirements of 19 U.S.C. § 1304 if it falls within one of the exceptions to marking. An article of foreign origin is excepted from individual marking if the marking of its container will reasonably indicate the origin of the article to the ultimate purchaser. See 19 U.S.C. § 1304(a)(3)(D); 19 C.F.R. § 134.32(d). This container exception applies if the article is imported in a properly marked container and Customs officials at the port of entry are satisfied that it will reach the ultimate purchaser in the original marked unopened container in which it was imported. A certificate of marking by the importer is required under 19 C.F.R. § 134.26 if an article is intended to be repacked in retail containers such as blister packs after release from CBP custody or if the port director having custody of the article has reason to believe that it will be repackaged after its release. Relevant factors regarding whether an article is likely to remain in its original container include the chain of distribution, the type of container, and the nature of the article. The instant containers did not contain retail information or characteristics indicating that they could solely be used for the bearings. As is apparent from your office’s decline to accept Tex Star’s blanket repackaging certification filed pursuant to 19 C.F.R. § 134.26, your office was not certain that the bearings would be delivered to the ultimate purchaser in the marked containers. Mandating individual marking in this case is not akin to the specific marking methods of 19 C.F.R. §§ 134.41 and 134.42, but is based on the port’s discretion to enforce the marking law relying on the information it has regarding the particular circumstances of the transaction and is consistent with the suggestion of marking metal articles set forth in 19 C.F.R. § 134.41(a). As a result, your office determined that a marking exception under 19 C.F.R. § 134.32(d) was not warranted. According to Tex Star, marking the bearings directly would not satisfy the requirement that foreign country of origin markings be “conspicuous” because the brown lubricant allegedly obscures anything on the imported bearings, including markings. Even though the bearings are coated in lubricant that has a brown tint, CBP has determined that the lubricant appears clear and the part/item numbers could still be seen as permanent markings on the bearings. Tex Star further argues that 19 C.F.R. § 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. The Court of International Trade (“CIT”) has held that an importer is entitled to this marking exception “if the importer can show (1) that the cost of marking the subject merchandise after importation would be economically prohibitive; and (2) that the importer, producer, seller, or shipper did not fail to mark the articles before importation in order to avoid meeting the requirements of law.” Stemcor USA, Inc. v. United States, 26 CIT 1373, 1377 (2002). In Stemcor USA, the CIT denied the importer’s request for a marking exception under 19 C.F.R. § 134.32(o) for failing to submit sufficient proof in the form of cost estimates or invoices showing that the cost of marking would be “economically prohibitive.” In the instant matter, Tex Star has not submitted any estimates or invoices to support its remarking cost figures, nor has Tex Star provided cost figures for the alternative marking methods proposed. Therefore, a marking exception under 19 C.F.R. § 134.32(o) is also not warranted. Based on the above, the individual articles need to be individually marked. HOLDING: The imported bearings are not exempt from individual country of origin marking and must be marked as directed by the Port of Houston in accordance with the marking requirements in 19 U.S.C. § 1304(a)(1)-(2) and 19 C.F.R. Part 134. You are to mail this decision to counsel for the internal advice requester no later than 60 days from the date of the decision. At that time, the Office of Trade, Regulations and Rulings, will make the decision available to CBP personnel, and to the public, on the CBP Home Page at www.cbp.gov, by means of the Freedom of Information Act, and other methods of publication. Sincerely, Ieva O’Rourke, Chief Tariff Classification and Marking Branch