MAR-02 RR:CR:SM 563278 DCC
Michael D. Sandler
Sandler Ahern & McConaughy PLLC
1200 Fifth Avenue, Suite 1900
Seattle, WA 98101-3135
RE: Country of origin marking for ready-to-assemble patio furniture; container marking; 19 C.F.R. 134.32(d)
Dear Mr. Sandler:
This is in reference to your letter of April 7, 2005, requesting a ruling on behalf of Costco Wholesale Corp. (“Costco”), concerning the country of origin marking requirements applicable to unassembled patio furniture imported from China. In addition to your letter, you provided a signed declaration from the Costco Vice-President for Imports and photocopies of the packaging. Your request was forwarded to this office under a memorandum from the Customs and Border Protection (“CBP”) National Commodity Specialist Division, dated May 6, 2005.
FACTS:
The goods at issue are 10-piece patio furniture sets. Each set includes six chairs, two ottomans, one dining table, and one café table. The sets are imported and sold in ready-to-assemble condition. The furniture sets are manufactured in China. The chairs and ottomans have fabric panels which are made in the United States.
In China, the furniture sets are packaged into four cardboard cartons for shipment to the United States. The cartons are designed to protect the merchandise from damage during shipment and storage. The furniture remains in these cartons from the time of shipment until after the point of sale at a Costco warehouse. The marking “Made in China” is located on the bottom panel of cartons 1 and 2, and a side panel of cartons 3 and 4. Attached to the fabric panels are labels containing product information, including fabric care and country of origin. These labels read in part:
Elbertex®
By GLEN RAVEN, INC.
Made in the U.S.A.
Elbertex is a Registered Trademark
of Glen Raven, Inc.
Elbertex, a patented PVC
coated polyester / solution
dyed acrylic blend fabric,
should be cleaned regularly
to remove dirt. Most spills
can be cleaned with a
solution of cold water and
mild detergent. For stubborn
stains and mildew, chlorine
bleach can be used without
affecting the fabric color.
Rinse thoroughly with cold
water. Air dry.
On the exterior of each carton is a list and a diagram of the contents. One carton in each set has a color photo of the entire 10-piece set with a list of the ten items in the set. Each box within a particular set has a wide color band that encircles four sides of the box. Costco uses a different color band for each of its furniture models. This color-coded system ensures that customers receive one complete set. The packaging also includes information regarding the number of cartons required to form a complete furniture set.
Counsel proposes to mark the exterior of each carton “Made in China” to indicate the country of origin. At its warehouse outlets where the patio furniture is sold, Costco will set up an assembled display of the patio furniture in an area adjacent to the sets of unassembled furniture. Costco has agreed to attach a conspicuous label to each article on display that will read “ALL TEN PIECES – MADE IN CHINA.” In addition, a sign next to the sealed cartons will list the price of the 10-piece set. This sign will also include the statement “Made in China.” Costco also proposes to black out the “Made in USA” statement on each of the fabric labels.
ISSUE:
Whether marking the container is acceptable for purposes of 19 U.S.C. 1304.
LAW AND ANALYSIS:
The marking statute, section 304, 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 its 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. Part 134, CBP Regulations (19 C.F.R. Part 134) implements the country of origin marking requirements and exceptions of 19 U.S.C. 1304.
Articles for which the marking of the containers will reasonably indicate the origin are excepted from the marking requirement pursuant to 19 U.S.C. 1304(a)(3)(D) and 19 C.F.R. 134.32(d). This exception applies in cases when the article is imported in a properly marked container and the reviewing CBP official is satisfied that the ultimate purchaser will receive the article in its original unopened container. Relevant factors in determining 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. See Headquarters Ruling Letter 560561, dated July 24, 1997 (marking of container sufficient for medical devices packaged in sterile convenience kit).
In this case, we find that an exception from marking the individual components should be allowed pursuant to 19 C.F.R. 134.32(d). Based on the channel of distribution, the type of container, and the nature of the merchandise, we find it highly unlikely that the patio furniture will be removed from their containers before they reach the ultimate purchaser.
According to counsel, the subject merchandise is sold only at Costco’s warehouse outlets. Because Costco sells the patio furniture directly to consumers at the retail level we believe it is unlikely the cartons will be removed by an intermediate retailer before the sale of the furniture to the ultimate purchaser.
Furthermore, the exterior of each carton provides important product information—including the country of origin of the furniture. For example, the cartons include a color-coded band printed on four sides of each carton to indicate the particular models of furniture, with each model having a different color. In addition, each carton in the four-carton set is marked to indicate the number of cartons in a set (i.e., 1 of 4, 2 of 4, etc.). The color-coded bands and numbering system help ensure that customers will receive a complete set of furniture. One carton within each set also includes a label that contains a color photo of an assembled set, a listing of each of the ten pieces within a set, information regarding the materials, and the dimensions of the dining and café tables.
We find it significant that the cardboard packing materials protect the furniture from damage during shipment to, and storage at, the warehouse outlet. The frames of the furniture will be wrapped in brown paper and foam material in order to protect the merchandise. In addition, the table tops will be coated with expanded polyethylene cushioning. Because the cartons protect the merchandise until the point of sale and provide important product information to the ultimate purchaser, it is unlikely that the furniture will be sold without its container.
We further note that the patio furniture will be imported and sold in unassembled form for home assembly by the ultimate purchaser. The packing cartons for the furniture will consequently facilitate handling of the merchandise until the components are ready for assembly. We therefore find that the unassembled nature of the imported merchandise makes it unlikely that the carton will be removed before the furniture reaches the ultimate purchaser.
With regard to the display model, Costco will ensure that each piece of furniture within the display includes the country of origin marking label “Made in China.” We are satisfied that such marking will ensure that the ultimate purchaser is aware of the country of origin of the imported furniture.
Furthermore, the fabric panels of the chairs and ottoman, which are made in the United States, do not require marking for CBP purposes. We do not object to the inclusion of additional U.S. origin information for the fabric provided the containers, articles on display, and sign with the price information are marked to indicate “Made in China.”
HOLDING:
Based on the facts and sample presented, we find that an exception from individual marking of the patio furniture may be granted as the retail packaging will indicate the origin of the merchandise, and provided the CBP officials at the time and port of entry are satisfied that the ultimate purchaser will receive it in the original unopened marked container.
A copy of this ruling letter should be attached to the entry documents filed at the time the merchandise is entered. If the documents have been filed without a copy, this ruling should be brought to the attention of the CBP officer handling the transaction.
Sincerely,
Monika R. Brenner, Chief
Valuation and Special Programs Branch