OT:RR:CTF:FTM H313455 MD
Assistant Center Director
U.S. Customs and Border Protection
Consumer Products and Mass Merchandising Center
101 East Main Street
Norfolk, Virginia 23510
RE: Internal Advice Request; Country of Origin Marking of Various Bulk Toiletry Products from Canada
Dear Assistant Center Director:
This is in response to your correspondence, dated August 28, 2020, forwarding an internal advice request of May 12, 2020, initiated by counsel for Lush Manufacturing, Ltd. (“Lush” or “Importer”), concerning the country of origin marking of various bulk toiletry products from Canada.
FACTS:
Lush, headquartered in Vancouver, Canada, and with stores throughout the United States, sells various bulk toiletry products. As described by Importer, the subject various bulk toiletry products are of Canadian origin and consist of “creams, soaps, shampoos, shower gels, lotions, moisturizers, scrubs, masks and other cosmetics for the face, hair and body.” Due to Importer’s “mission and effort to support environmental conservation,” Importer retails many of its toiletry products under the “[N]aked” line (including bath bombs, bubble bars, soaps, shampoos, conditioners, etc.), as solid bard or balls sold in open containers (i.e. baskets, bins, boxes), with no individual wrapping or packaging.” These products are entered by Importer in marked containers, which include a certificate of marking noting that Importer’s goods are exclusively destined for its storefronts, where they will be repackaged.
In 2019, the Consumer Products and Mass Merchandizing (“CPMM”) Center conducted a verification of the Importer’s marking procedures, ultimately informing Importer that multiple shipments of their products had been determined to be in violation of Section 304, Tariff Act of 1930 (19 U.S.C. § 1304). On January 14, 2020, the Importer requested a binding ruling, with respect to a proposed marking plan for their various bulk toiletry products, to the National Commodity Specialist Division (“NCSD”). Specifically, Importer sought to confirm that their proposed marking plan was compliant with 19 U.S.C. § 1304 requirements. On February 14, 2020, NCSD responded to Importer, stating that they were “precluded from ruling on an issue which is the subject of a current or completed Customs transaction,” instead recommending that Importer seek advice from the Office of Trade, Regulations and Rulings (Headquarters) via the Internal Advice procedure.
On March 9, 2020, Importer filed a Certificate of Marking with the CPMM Center certifying that its entries in calendar year 2020 would be marked in accordance with their proposed marking plan. The certificate noted the proposed marking plan’s compliance with 19 U.S.C. § 1304 and Importer’s commitment to ensure that its employees abided by the marking plan’s provisions. On March 11, 2020, the CPMM Center granted approval of Importer’s proposed marking plan for a period of six months, with the potential for further certification at the expiration of that time period. Within its approval, the CPMM Center noted its understanding that Importer would be requesting an internal advice, stating that it would forward such a request to the Office of Trade, Regulations and Rulings. As stated, the CPMM Center received Importer’s internal advice ruling request, dated May 12, 2020, which it forwarded to Headquarters on August 28, 2020.
To satisfy 19 U.S.C. § 1304 country of origin marking requirements, Importer developed a “comprehensive Marking Plan and country of origin marking policy”, which requires country of origin markings to be clearly affixed to signs at all containers of “Naked” products at retail stores. Importer notes that “[a]ll retail staff has been notified and trained on [Importer’s] Marking Plan.” Importer asserts that their marking plan ensures that the country of origin of its “Naked” products are displayed “in a conspicuous place in a legible, indelible, and permanent manner” as required by the marking requirements of 19 U.S.C. § 1304. Furthermore, Importer claims that their marking plan is “exempt from the marking requirements pursuant to 19 C.F.R. §§ 134.32(a)-(b) and 134.34” because the subject various bulk toiletry products are “incapable of being individually marked and any individual marking would cause injury to the products.”
ISSUE:
Whether the Importer’s proposed marking plan satisfies the country of origin marking requirements and whether the various bulk toiletry products 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 United States 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. Section 134.41(b), Customs Regulations (19 C.F.R. § 134.41(b)), mandates that the ultimate purchaser in the United States must be able to find the marking easily and read it without strain. Section 134.1(d), defines the ultimate purchaser as generally the last person in the United States who will receive the article in the form in which it was imported.
An article may be exempt from the country of origin marking requirements of 19 U.S.C. § 1304 if it falls within one of the exceptions to marking. With regard to the marking of containers, 19 C.F.R. § 134.32(d) implements the statutory exception by providing that an article may be excepted from marking if the marking on its container will reasonably indicate the article’s country of origin. Accordingly, the marking of a container in lieu of the article itself is acceptable if the article is imported in a properly marked box and U.S. Customs and Border Protection (“CBP”) is satisfied that in all foreseeable circumstances the article will reach the ultimate purchaser in a properly marked container. A related exception is provided under 19 C.F.R. § 134.34 and is applicable to articles which are to be packed after importation in retail containers qualifying for the former exception set forth at 19 C.F.R. § 134.32(d). The applicable portion of 19 C.F.R. § 134.34 states as follows:
Exception for repacked articles. An exception under §134.32(d) may be authorized in the discretion of the Center Director for imported articles which are to be repacked after release from Customs custody under the following conditions:
The containers in which the articles are repacked will indicate the origin of the articles to an ultimate purchaser in the United States.
The importer arranges for supervision of the marking of the marking of the containers by Customs officers at the importer’s expense or secures such verification, as may be necessary, by certification and the submission of a sample or otherwise, of the marking prior to the liquidation of the entry.
In such cases, the Center Director must be satisfied that the repacking will be done in accordance with all marking requirements, and in his discretion he may require the importer/repacker to give undertakings that this will be done. 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 after release from CBP custody or if the Center 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.
Importer’s proposed marking plan operates as follows. First, Importer enters its various bulk toiletry products within marked containers. These containers include a certificate of marking, noting that Importer’s goods are exclusively destined for its storefronts, where they will be repackaged. As described by Importer, this repackaging results in products being “sold in open containers (i.e. baskets, bins, boxes), with no individual wrapping or packaging.” Alongside these open containers are “[c]learly visible signs” detailing the specifications of each product – including an approximately nickel-coin-sized, black-on-white disc reading “Made in Canada” printed onto each.
At the outset, Importer noted that their transition into fully-printed marking signs is ongoing. As part of their proposed marking plan, Importer notes that stickers, in the same shape, size, and manner as the black-on-white disc described above, are to be affixed by their staff to existing signs until they can be replaced. Importer posits that digitally-logged “checklist[s]”, mandatory “marking quiz[es]”, and “[a]n internal audit program” will act as an enforcement mechanism against non-compliance within their storefronts.
In support of their contention that their proposed marking plan satisfies customs requirements, Importer cites four CBP rulings. See Headquarters Ruling Letter (“HQ”) 731084, dated March 4, 1988; New York Ruling Letter (“NY”) A82911, dated May 10, 1996; NY C85687, dated April 1, 1998; and NY B85452, dated May 22, 1997. Specifically, Importer contends that their proposed marking plan is exempt from specific and individual marking requirements enumerated in 19 C.F.R. §§ 134.32(a)-(b) and 134.34. We are of the view that the exception under 19 C.F.R. § 134.34, pertaining to “[c]ertain repacked articles,” is applicable to the Importer’s proposed marking plan.
In HQ 731084, CBP found that imported fishing flies were properly marked so long as “the outermost container or holder in which the flies reach[ed] the ultimate purchaser” was properly marked to indicate the country of origin of the flies. In the case of specialty shops selling these imported fishing flies, CBP held that a sign, “posted in a conspicuous location… indicating the origin of the flies” was sufficient. Traditionally, specialty shops selling imported fishing flies do so out of a set of display bins. As such, CBP did not “require separate country of origin marking on each bin”, rather, that each “display area [] contain at least one such sign and large areas [] post additional signs every 10 feet along the display area.”
In NY C85687, CBP discussed the proposed marking plan for imported hematine rings sold at wholesale and retail. In the latter scenario, the rings were to be placed and displayed in a container, with a label similar to “Hematine Rings (made in China) Assorted Sizes 5-10.” CBP ultimately found that the proposed marking plan would not meet the country of origin requirements. Specifically, CBP noted that “the placing of signs with the country of origin could be an acceptable method of marking where the importer had direct control” over the placement of these signs. CBP reasoned that the importer’s lack of direct control over the placement of these signs meant that it could not “be assured that the signs will actually be placed on the baskets.” As a result, CBP found that the proposed marking did not satisfy customs marking requirements.
In light of Importer’s proposed marking plan, we find both HQ 731084 and NY C85687 to be instructive. Similar to the situation in the former, Importer intends to separate their products for display and individual sale. Specifically, Importer’s proposed marking plan calls for the sale of their products in open trays, with no individual wrapping or packaging, to achieve their stated environmental goals. While there is one noticeable difference between the circumstances discussed in HQ 731084 and those discussed here, we find that this difference does not impact our analysis.
The difference between the circumstances in HQ 731084 and those here pertains to specifics of the respective marking plans. Where HQ 731084 dealt with marking signs placed at intervals or a specific set of bins, here, Importer asks us to opine on a marking plan where each tray will have an adjacent marking sign delineating country of origin. As Importer’s proposed marking plan goes beyond what was deemed suitable in HQ 731084, we find that its proposal to mark each tray meets such a standard.
Precedent for such marking has its basis in NY C85687, where CBP noted that the labeling of bins containing hematine rings from China could be considered properly marked. While CBP ultimately ruled against importer in NY C85687, it was not due to the marking itself, rather, the understanding that importer did not have “direct control” over the goods at the time of marking for sale and could not ensure that the signs were placed at the bins. Here, Importer sells its various bulk toiletry goods at its own storefronts, maintaining “direct control” over the products from their entry into the United States up until their purchase by the ultimate purchaser. As a result, the placement of signs, displaying country of origin marking, adjacent to trays of products under Importer’s direct control would satisfy the marking requirements.
Based on the above, where it has been demonstrated that Importer meets the requirements of section 134.34 for repacked articles for the exception provided in section 134.32(d), we are of the view that the Importer’s proposed marking plan meets the marking requirements and the individual articles of various bulk toiletry products need not be individually marked.
HOLDING:
Accordingly, provided the Center Director is presented with such assurances of compliance as he or she may require, we are of the opinion that the imported various bulk toiletry products are excepted from individual country of origin marking requirements under 19 U.S.C. § 1304(d) 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,
For Craig T. Clark, Director
Commercial and Trade Facilitation Division