MAR-05 RR:CR:SM 561301
Port Director
U.S. Customs Service
300 South Ferry Street
Terminal Island, CA 90731
RE: Country of origin marking of PVC cooler bags; 19 CFR 134.32(c) and (o);
19 CFR 134.46; Entry No. 110-1907648-7
Dear Sir:
This is in reference to fax messages dated March 11 and March 16, 1999, on behalf of The Cooltech Corporation ("Cooltech"), requesting an exception from the country of origin marking requirements for certain PVC cooler bags imported from China. A sample of the bag and of the cardboard sleeve in which it is packed has been submitted.
FACTS:
The subject coolers are composed of Taiwanese fabric with a PVC outer surface.
The component materials were cut, sewn and finished in China. The merchandise is marked with a sewn in label with the words "Made in China." The label is found in the interior of the bag on the left side near the top of the opening and is partially covered by the gauze pocket which holds the cold pack. The legend "Made in China" in capital letters and in bold print is also found on the front panel of the cardboard sleeve near the bottom of the sleeve, together with the name of the company and its address in Canada. The back panel of the sleeve contains additional information primarily concerning the features of the cooler. On the right side of this panel on the bottom there is a rectangular box with a blue background. The information contained in this box, in contrasting white lettering, is as follows:
100% SATISFACTION GUARANTEED!
IF YOU ARE NOT 100% SATISFIED WITH YOUR
COOLTECH COLLAPSIBLE COOLER, PLEASE CONTACT:
THE COOLTECH CORPORATION
390 BAY STREET, SUITE 920, TORONTO, ONTARIO, CANADA M5H 2Y2
NORMAL WEAR AND TEAR, IMPROPER USE AND NEGLIGENCE
ARE NOT COVERED BY THIS WARRANTY
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On March 4, 1999, Customs in Los Angeles issued a Notice to Mark/Redeliver (CF 4647) a shipment of 17,088 coolers (Entry No. 110-1907648-7), indicating that the country of origin was Taiwan and not China, as marked.
Cooltech believes that our Los Angeles office has correctly determined that the country of origin of the subject merchandise is Taiwan and not China. However, the company states that to remark the merchandise in this shipment and in shipments to follow which are already marked in this manner would be economically prohibitive. This office has also been advised that the involved Customs officer also referred to a possible problem as a result of the Canadian address shown on the back panel of the cardboard sleeve.
ISSUES:
What are the country of origin marking requirements for the PVC cooler bags?
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 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 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. Part 134, Customs Regulations (19 CFR Part 134), implements the country of origin marking requirements and exceptions of 19 U.S.C. 1304.
Country of Origin - China or Taiwan
On December 8, 1994, the President signed into law the Uruguay Round Agreements Act. Section 334 of that Act (codified at 19 U.S.C. 3592) provides new rules of origin for textiles and apparel entered, or withdrawn from warehouse, for consumption, on and after July 1, 1996. On September 5, 1995, Customs published Section 102.21, Customs Regulations, in the Federal Register, implementing Section
334 (60 FR 46188). Thus, effective July 1, 1996, the country of origin of a textile or
apparel product shall be determined by sequential application of the general rules set forth in paragraphs (c)(1) through (5) of Section 102.21.
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Paragraph (c)(1) states that “The country of origin of a textile or apparel product is the single country, territory, or insular possession in which the good was wholly obtained or produced.” As the subject merchandise is not wholly obtained or produced in a single country, territory or insular possession, paragraph (c)(1) of Section 102.21 is inapplicable.
Paragraph (c)(2) states that “Where the country of origin of a textile or apparel product cannot be determined under paragraph (c)(1) of this section, the country of origin of the good is the single country, territory, or insular possession in which each foreign material incorporated in that good underwent an applicable change in tariff classification, and/or met any other requirement, specified for the good in paragraph (e) of this section”. For purposes of the tariff, the subject insulated cooler bag, which is made of man made textile materials with an outer surface of textile materials, is classified in subheading 6307.90, Harmonized Tariff Schedule of the United States (HTSUS). See Headquarters Ruling Letter (HRL) 961172 (November 12, 1998).
Paragraph (e) states that “The following rules shall apply for purposes of
determining the country of origin of a textile or apparel product under paragraph (c)(2) of this section”:
6307.90... The country of origin of a good classifiable under subheading 6307.90 is the country, territory, or insular possession in which the fabric comprising the good was formed by a fabric making process.
As the fabric making process for the subject merchandise occurs in Taiwan, the country of origin of the subject merchandise is Taiwan and accordingly, the cooler bags are improperly marked with "China" as the country of origin.
19 CFR 134.46
Section 134.46, Customs Regulations (19 CFR 134.46) provides that:
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
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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.
Thus, in this case, 19 CFR 134.46 is triggered only if the marking on the back panel which displays the Canadian address of the vendor may deceive or mislead the ultimate purchaser regarding the country of origin of the cooler bags.
In HRL 559245, dated December 13, 1995, Customs considered proposed country of origin marking for cutlery and an accompanying wood block. Customs held that a reference to a non origin locality geographical reference which is clearly designated as a customer service point of contact which is marked on the retail container of the cutlery and block is not potentially confusing and therefore does not trigger the requirements of 19 CFR 134.46. In HRL 732329 dated July 12, 1989, we considered whether warranty tags attached to imported wearing apparel, which contained a U.S. address in two locations, triggered the requirements of 19 CFR 134.46. In that case, we found that 19 CFR 134.46 was not triggered so long as the U.S. address appeared for the purpose of giving the warranty holder a place to direct questions and problems related to the warranty. See also HRL 732329 dated July 12, 1989, (address on a warranty card did not pose a risk of confusion to ultimate purchasers) and HRL 732816 dated November 24, 1989, (address printed on display ticket was provided to assist customer in the event of questions concerning guarantees) where it was decided that the context in which the names and addresses were used was such that confusion regarding country of origin was not conceivable.
In the instant case, we find that the reference to the Canadian company and its address in Canada provides the consumer with a contact point should there be any questions or complaints about the product or the warranty. We find that this information is not potentially confusing to the ultimate purchaser and will not trigger the requirements of 19 CFR 134.46 provided proper country of origin information is reflected otherwise on the cardboard sleeve in a conspicuous, legible and permanent manner. The words "Made in Taiwan" on the front panel of the sleeve in the same size and format as the present country of origin marking will satisfy the requirements of 19 U.S.C. 1304. In this regard, we also note that as the cooler is sold to the ultimate purchaser wrapped in the cardboard sleeve, the container exception to the individual marking requirements under 19 CFR 134.32(d) applies, and the article need not be marked.
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Exceptions due to Economic Prohibitive Expense
Section 134.32(o), Customs Regulations (19 CFR 134.32(o)), provides that an article may be excepted from marking if it cannot be marked after importation except at an expense that would be economically prohibitive unless the importer, producer, producer, seller, or shipper failed to mark the goods before importation to avoid
meeting the requirements of the law (19 U.S.C. 1304). 19 CFR 134.32(c)) provides an exception from the marking requirements for articles that cannot be marked prior to shipment to the U.S., except at an economically prohibitive expense.
In invoking the exceptions under 19 CFR 134.32(c) and (o), Cooltech estimates that the costs of remarking the cooler, including additional transportation and warehousing, would range from $40,000 to $50,000. In addition, Cooltech states that its customer, Sam’s Club, would suffer delays and shortage of stock if the exception is not granted, and would cause the customer to cancel Cooltech’s account. In a telephonic communication with this office, counsel requested that the exception be granted for a period of 30 days, commencing on March 12, 1999.
The circumstances in this case reflect that the improper marking resulted from a recent change in the classification of textile coolers. As a result of this change, the country of origin of the coolers is now Taiwan (where the fabric used to make the cooler was produced) rather than China (where the cooler was cut, sewn and assembled). Customs issued instructions regarding the classification changes on March 18 and September 10, 1998.
In light of the fact that changing the marking on the imported shipment and on shipments in transit would be economically prohibitive, and in view of the above circumstances, we find that exceptions to the marking requirements under 19 CFR 134.32(c) and 134.32(o) are warranted in this case.
HOLDING:
(1) The country of origin of the PVC cooler bags is Taiwan, the country where the fabric-making process occurred.
(2) The Canadian address on the back panel of the cardboard sleeve is not potentially confusing to the ultimate purchaser as to the country of origin of the cooler. Therefore, the requirements of 19 CFR 134.46 are not triggered.
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(3) Exceptions to the marking requirements under 19 CFR 134.32(c) and 134.32(o) are granted for shipments of textile coolers imported from China for a period of 30 days commencing from the date of this decision.
Sincerely,
John Durant, Director
Commercial Rulings Division