MAR-2-05 CO:R:C:V 732943 NL
District Director
U.S. Customs Service
909 First Avenue
Seattle, Washington, 98174
RE: Country of Origin Marking of Ready-to-Assemble Furniture
Dear Sir:
This is in response to your request dated November 1, 1989
for internal advice (No. 68-89) concerning the country of origin
marking requirements applicable to furniture imported in a
ready-to-assemble state, also known as "knocked-down" furniture.
You have asked for clarification as to the circumstances under
which the furniture may be excepted from country of origin
marking pursuant to section 304(a)(3)(D) of the Tariff Act of
1930, as amended (19 U.S.C. 1304(a)(3)(D)), and section
134.32(d), Customs Regulations (19 CFR 134.32(d)). Under these
provisions (hereinafter, "the container exception") articles may
be excepted from country of origin marking if the marking of
their containers will reasonably indicate the articles' country
of origin.
FACTS:
The furniture in question is imported and generally sold in
a disassembled, or ready-to-assemble state. Such furniture is
typically sold from display models, with the customer then taking
delivery of the disassembled components in their container(s) for
home assembly. In most cases the display model is not marked
with its country of origin; only the container in which the
disassembled furniture is imported and sold is marked. You
indicate that several aspects of this pattern of selling cast
doubt upon whether the marking of the container alone reasonably
indicates the country of origin to the retail buyer, the ultimate
purchaser, prior to the time of purchase.
In one retail sales scenario, the buyer selects an item from
a display model. The display model is not marked with its
country of origin, but the marked container of the ready-to-
assemble article is located adjacent to the display model or is
delivered to the buyer before he pays for the article.
In a second scenario, the buyer selects from an unmarked
display model, and the ready-to-assemble article is delivered to
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the buyer on the premises in marked containers after payment.
Here, it is presumed that the buyer did not see a country of
origin marking (or receive any other indication that the article
was of foreign origin) until after the initial decision to
purchase and after tender of payment.
Finally, you ask that we consider the situation in which the
buyer selects from an unmarked display model, payment is
tendered, and the article in its marked container(s) is delivered
to the buyer's car or home from a separate warehouse. As in the
second example, it is presumed that no country of origin
indication was available to the buyer prior to delivery of the
article in its marked container. In each of the above examples,
the question is presented whether in these circumstances the
marking of the container alone would fulfill the statutory
purpose of reasonably indicating the country of origin of the
article in sufficient time such that the ultimate purchaser could
choose to purchase or not on the basis of the article's country
of origin.
It is your position that because the ultimate purchaser of
the ready-to-assemble furniture may not always receive notice of
the country of origin of the article prior to purchase, the
display model must be marked. Thus, you have required that every
unassembled item in a shipment be marked (notwithstanding the
marking on its container), in order to assure that the actual
piece used for display will be marked. The National Import
Specialists responsible for furniture are of the opinion that if
the buyer, after selecting from the display model, is able to
view the marked container prior to purchase, the country of
origin has been reasonably indicated and marking the display
model is not necessary.
ISSUES:
Under what circumstances, if any, is ready-to-assemble
furniture eligible for exception from individual country of
origin marking pursuant to 19 U.S.C. 1304(a)(3)(D) and 19 CFR
134.32(d)?
Does the delivery of ready-to-assemble furniture in marked
containers after tender of payment offer sufficient notice to the
ultimate purchaser of the country of origin of the furniture?
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
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of the country of origin of the article. Section 304 "reflects
the Congressional intent that the public be apprised of the
country of origin of merchandise", Globemaster, Inc. v. United
States, 68 Cust. Ct. 77, C.D. 4340 (1972), and further, "that at
the time of purchase the ultimate purchaser may, by knowing where
the goods were produced, be able to buy or refuse to buy them, if
such marking should influence his will." United States v.
Friedlaender & Co., 27 C.C.P.A. 297, C.A.D. 104 (1940).
Part 134, Customs Regulations (19 CFR Part 134), implements
the country of origin marking requirements and exceptions of 19
U.S.C. 1304.
Generally, articles imported in containers are eligible to
be excepted from individual country of origin marking pursuant to
19 U.S.C. 1304(a)(3)(D) and 19 CFR 134.32(d), as articles for
which marking of their containers will reasonably indicate their
country of origin. For the container exception to apply, Customs
requires the article to be imported in a properly marked
container, and Customs officials at the port of entry must be
satisfied that the ultimate purchaser will in all foreseeable
circumstances receive the article in its original unopened marked
container. These conditions further the purposes of the marking
statute by assuring that the ultimate purchaser receives the
notice required by 19 U.S.C. 1304 even when the imported article
itself is excepted from country of origin marking.
Thus, if it is foreseeable to Customs officials at the port
of entry that under any circumstances an article of ready-to-
assemble furniture will be removed from its container prior to
retail sale to serve as a display model, existing policy would
call for denying the container exception for the furniture and
requiring that the individual components be marked with the
country of origin. See, ORR 72-0468 (November 6, 1972)(removal
and assembly of unmarked vanities from their imported containers
for display renders the container exception inapplicable,
"especially in view of the fact that the floor models themselves
may be offered for sale," and for future shipments marking of the
article was required.)
In the case of ready-to-assemble furniture there is a clear
likelihood that out of an imported shipment at least one article
will be removed from its marked container(s), assembled, used for
display purposes and later sold. Customs thus has a strong
rationale for its present policy of denying the container
exception for any knocked-down furniture and requiring individual
marking of all components. In addition to assuring that all
articles will reach the ultimate purchaser properly marked, this
policy assures that when a purchase is made on the basis of a
display model, country of origin marking is visible on the
display sample even when the article actually purchased might be
delivered to the customer after tender of payment or by delivery
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from a warehouse.
The question is whether these objectives can be achieved by
a more flexible approach which preserves the very real benefits
to importers and the public of the container exception.
We have carefully considered the possibility of authorizing
an exception in those situations where the marked containers are
located in the same sales area as the unmarked display models, or
when the ready-to-assemble articles in marked containers are
delivered to the customer on the premises either before or just
after tender of payment. Such an approach is suggested in HRL
727139 (April 10, 1985), in which we determined that when the
marked containers "are on the same floor as the model and will be
brought to the customer prior to completion of the purchase" the
display model need not be marked. Implicitly, under the specific
facts presented, assembly of ready-to-assemble furniture
components for display purposes does not violate the conditions
under which the exception is granted for an entire shipment of
ready-to-assemble furniture, and the container exception remains
valid because the customer receives the marked container early
enough in the sales process that it still "reasonably indicates
the country of origin of the article." Pursuant to a subsequent
submission by the same importer, Customs agreed that this ruling
would apply even when delivery takes place after tender of
payment, since this importer had implemented a "no questions
asked" return policy which permitted a buyer to reverse his
decision on the basis of the country of origin of the article.
Despite Customs' ruling under those specific circumstances,
we do not believe that this approach is practical as a broad
policy for ready-to-assemble furniture. Customs' authority over
country of origin marking is generally exercised at the time of
importation. Among the basic requirements of the marking
statute is that the marking, whether of the article or the
container, be sufficient to remain on the article or container
after importation until they reach the ultimate purchaser.
However, Customs enforces this by observing the marking itself at
importation or by means of documentary assurances submitted at
that time. It is not practical for Customs to supervise in
particular cases whether after importation the marked containers
are available for viewing in the same sales area of a given store
as the unmarked container. Equally, for purposes of enforcing a
rule as to when a marked container is made available to the
purchaser early enough to advise him properly of the country of
origin, it is not possible for Customs to adopt a policy which
practically can distinguish between the various circumstances
which might constitute the completion of a retail purchase. Such
circumstances might include tender of payment after delivery;
tender of payment before delivery; delivery of the article to the
purchaser's home; or finally, expiration of the period during
which a return could be made on the basis of an objection to the
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article's country of origin. For these reasons we believe that
direct Customs involvement in this matter at the point of retail
sale is neither practical nor desirable. Instead, what is
needed is a policy which can be enforced at the time of
importation.
The starting point for a practical rule is the existing
general prerequisite for Customs authorization of the container
exception: Customs must be satisfied that in all foreseeable
circumstances the article will reach the ultimate purchaser in
its original, properly marked container. But for the problem of
assembled display models, ready-to-assemble furniture seems to be
especially likely to satisfy this prerequisite, since its notable
characteristic is its delivery to purchasers in containers for
home assembly. In our view, with proper verification that an
assembled display model will be marked after removal from its
container, ready-to-assemble furniture could retain its container
exception.
Such marking would serve to rebut the presumption that an
ultimate purchaser who takes delivery of a marked container after
tendering payment or after leaving the premises has not been
afforded the marking required by 19 U.S.C. 1304. Having seen the
marked display article, the ultimate purchaser will have been
given conspicuous notice.
Under section 134.25 (repacked J-list articles and articles
incapable of being marked), section 134.26 (articles repacked or
manipulated), and section 134.34 (repacked articles), the
importer is required to provide various assurances in the form of
certifications and notices to subsequent purchasers to the effect
that after importation articles will reach ultimate purchasers
properly marked. We also have required in connection with the
exceptions specific undertakings from importers not set forth in
the regulations as conditions of approving exceptions. See, HRL
733016 (January 11, 1990), affirmed by HRL 733109 (February 26,
1990) (marking of master cartons in lieu of individual bags of
shrimp is acceptable provided processors/repackers of imported
shrimp obtain statements from distributors that if removed from
master cartons, individual packages of shrimp will be marked with
country of origin.) Moreover, as provided in section 134.34, the
district director is granted broad discretion in the kinds of
requirements he may impose as a condition of approving the
container exception for goods which are repacked after
importation. Our new policy for the marking of ready-to-assemble
furniture will be consistent with these approaches.
Since ready-to-assemble furniture is distributed at various
levels of trade it is appropriate, in the interest of assuring
that country of origin marking is performed in all foreseeable
circumstances, that retail distributors affirmatively undertake
to mark assembled ready-to-assemble furniture. Retail sellers,
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after all, share in the commercial advantages afforded by the
container exception, and are the most likely persons to open and
assemble for display containers of ready-to-assemble furniture.
Moreover, the retail seller deals directly with the ultimate
purchaser of the articles.
Thus we shall require the importer, in order to retain the
benefits of the container exception, to present to Customs
officials at the time of importation written declarations from
the retail distributors of ready-to-assemble furniture that they
acknowledge the requirement that imported goods be marked with
their country of origin, and that if the ready-to-assemble
furniture is removed from its marked container(s), the furniture
itself will be marked with its country of origin. We intend that
this requirement apply both to articles assembled for use as
floor models, whether sold or not, and to articles which for any
other reason are sold without their marked container(s). In the
event the furniture is not yet consigned to a retailer at the
time of importation, or if for any other reason the retail
seller's identity is not yet determined, the wholesale
distributor, if any, should provide the declaration, and in it
undertake to notify the retailer of the marking obligation. In
the event that the importer or a party related to the importer is
the wholesaler and/or retailer, a declaration from the importer
to the same effect as above will satisfy this requirement. The
declaration need not be newly-executed for each entry; instead, a
blanket statement valid for a period of time specified by the
District Director will be acceptable.
Obviously, this requirement imposes an additional burden
upon the importers of ready-to-assemble furniture. Having
considered the alternatives, such as attempting to approve the
container exception for ready-to-assemble furniture only in those
situations where the marked containers are adjacent to unmarked
floor samples, or attempting to address the various circumstances
under which a buyer may or may not be given timely notice, we
think this policy is simpler, less costly, more uniformly
applicable, and more effectively enforced. Certainly, it is
preferable to the other definitively effective method for
assuring marking of ready-to-assemble furniture in all
foreseeable circumstances, which is to deny the exception for all
entries and require that every piece be marked. In sum, after
considering the alternatives it is our determination that in
order to benefit from the container exception from country of
origin for ready-to-assemble furniture importers will be required
to supply declarations from retail distributors that they
acknowledge the obligations imposed by 19 U.S.C. 1304 to mark
imported articles with their country of origin, and that they
undertake to do so when they remove articles entered under the
exception from their marked containers.
This decision modifies HRL 727139 in several respects. As
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previously stated, we have determined that for reasons of
practicality and efficiency Customs cannot supervise in
particular cases whether the marked, packaged furniture is
present on the sales floor, or whether the article is delivered
before or after tender of payment. Accordingly, like other
importers of ready-to-assemble furniture, the party which
requested HRL 727139 will be required to supply a declaration at
the time of importation that display models will be marked with
their country of origin. It is noted that this importer controls
its retail outlets. In any event, this importer has advised
Customs that it already voluntarily marks its models. While the
marking of the display models does not precisely state a
particular country of origin, we are satisfied that in the
circumstances presented the marking described below is consistent
with the purposes of 19 U.S.C. 1304 and 19 CFR Part 134.
Specifically, this importer has pointed out that in its
inventory the same article, or part of an article, may originate
in more than one country. Thus, floor samples which are marked
with their country of origin may not represent the country of
origin of the same article bought from stock. Alternatively, the
parts comprising an assembled model of ready-to-assemble
furniture often originate in several countries. Therefore, any
marking on the assembled display model could be confusing. Thus
the policy of this importer is to place a notice on the floor
models indicating that the article is imported and that the
purchaser should check the outside of the container of the
purchased article upon delivery to ascertain the country of
origin. It is also the importer's policy to permit returns with
no questions asked, which preserves the purchaser's right to
refuse a purchase on the basis of the article's country of
origin. Finally, this importer is the owner of the retail stores
and it has direct control over these procedures.
Importers whose patterns of importation and subsequent
retail sales are analogous to the above-referenced circumstances
are eligible, of course, to seek rulings approving a similar
method of marking for display samples.
Finally, you have asked as to the specific methods of
marking which should be used for assembled ready-to-assemble
furniture. Given the many types of articles it is not possible
to do so in this ruling. However, we direct your attention to 19
CFR 134.41(b), which provides that the marking should be "at
least sufficient to insure that in any reasonably foreseeable
circumstances the marking shall remain on the article until it
reaches the ultimate purchaser unless deliberately removed. The
marking must survive normal distribution and store handling. The
ultimate purchaser in the U.S. must be able to find the marking
easily and read it without strain." Further, 19 CFR 134.44(b)
and (c) provide that tags and paper label stickers must be
attached in a conspicuous place and so securely that unless
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deliberately removed they will remain on the article until
delivered to the ultimate purchaser.
HOLDING:
Importers of ready-to-assemble furniture wishing to have the
articles excepted from country of origin marking pursuant to 19
U.S.C. 1304(a)(3)(D) and 19 CFR 134.32(d) must submit to Customs
officials at the time of importation declarations from the
retail distributors of ready-to-assemble furniture. These
declarations will contain acknowledgement by the retail
distributor of the country of origin marking requirements, and an
undertaking to mark with its country of origin any article or
component which is removed from its marked container prior to
delivery to the ultimate purchaser. If the retail distributor
has not been determined, an equivalent statement must be executed
by the wholesale distributor or the importer. This declaration
is necessary to assure that in the likely circumstance that an
article of ready-to-assemble furniture will be removed from its
marked container and used as a display model, the ultimate
purchaser will in all circumstances receive proper indication of
the country of origin of the article or components. Customs will
accept blanket declarations from the designated parties, valid
for a period of time specified by the District Director.
To give importers adequate time to adjust their practices
and obtain declarations from retailers, this requirement will
become effective 60 days after the publication of this
determination in the Customs Bulletin.
Sincerely,
Jerry Laderberg
Acting Director,
Commercial Rulings Division
cc: Assistant Area Director, NIS
(IA 68/89)