Abady Law Firm, P.C. – Customs and Import/Export Attorney Blog
Learn the Basics of Customs and International Trade Policy and Procedure
Archive for the "Country of Origin" Category
Goods that are imported are released based on the filing of the entry and/or entry summary with Customs but before Customs may have determined whether or not the goods are admissible into the U.S. “Release” refers to Customs relinquishing physical control over the goods. However, Customs will not release the goods without evidence of an entry bond being filed. The bond offers protection to Customs in that the importer guarantees return of the goods to Customs custody if requested. Customs will order the return of goods for 1) failure to abide by the customs laws and regulations; 2) a need for examination or appraisal of the goods; 3) issues regarding country of origin marking.
As mentioned goods that are released may be subject to redelivery.
Customs may make the demand for redelivery
1. 30 days after release; or
2. 30 days after the end of a “conditional release period;”
3. or via conditional release periods pursuant to regulations for certain products.
Customs cannot make a demand for redelivery after liquidation is finalized.
Examples that create a conditional release period include: 1) Customs demand for a sample of the goods; 2) Customs request for information (CF28). The consequences for failure to comply with Customs conditional release may include substantial delays and a claim for liquidated damages.
As discussed in the last marking post the requirements for marking must be:
1. in a conspicuous place
4. English name as to the country of origin
Let us explain these even further shall we.
Legible and Conspicuous
The person who ends up with the product the “Ultimate Purchaser,” must be able to find the marking easily without straining him or her self. Some uses I have seen include, tags and stickers depending on the type of good.
What size font should I use? Depends on the type of product. For example, CBP found that lettering which was 1.7mm was the smallest font acceptable as a country of origin marking on a pen barrel according to HQ ruling 733940.
Who is the ultimate purchaser?…that depends:
Article imported for retail – the end consumer will be the ultimate purchaser
Article imported as gift – the recipient will be the ultimate purchaser
Article imported for manufacturing – the manufacturer will be the ultimate purchaser if the article is going to be substantially transformed.
The marking should be as permanent as the article permits it to be. It should should be sufficiently permanent so as to handle shipping and distribution until it finally reaches the ultimate purchaser.
Only the English name of the country of origin may be used unless Customs approves otherwise. Common forms for marking include “Made in…” “Product of…”
Generally, every imported or exported good is subject to marking regulations from at least one of the federal agencies. Marking requirements are enforced by physical inspection of the goods and also after release of the goods via a notice of redelivery and marking (CF4647). If Customs finds that marking is incorrect, they will delay the release of the goods until the marking is corrected.
Incorrect markings can result in delays and high expenses for remarking goods or may result in a liquidated damages claim against the importer for failing to redeliver the goods (example: when the goods were sold and shipped to buyers). Further, marking which is fraudulent may result in seizure and/or penalties.
Marking laws are not only U.S. Customs based. Customs enforces marking requirements for other agencies as well. For example the Federal Trade Commission requires clothing to have certain labels and information relating to fiber content, dry cleaning information, etc.
U.S. Customs marking requirements are as follows, the marking must be:
in a conspicuous place
have English name of the country of origin.
A quick explanation of substantial transformation:
As mentioned in the earlier post – Country of Origin – substantial transformation is the degree to which processing of an article leads to a new article, with a different name, character, and use. In addition, Customs uses a second method known as the “tariff shift” i.e. change in tariff classification, which is also used to determine substantial transformation. As of now, there are no uniform rules that settle country of origin questions.
As a result, substantial transformation can be highly subjective and tend to be based on political considerations. There has been much litigation in this area and have case-specific interpretations. Further, determinations as to what is considered a substantial transformation change periodically. Thus, it would be wise to discuss the nature of the product with Customs prior to importation because you are not excused from exercising reasonable care when determining the proper country of origin for your goods.
What is the “Country of Origin?”
Generally, the country of origin refers to the country where the product was grown, produced, or manufactured. This is easily applied when the product is produced in one country using domestic materials. For example, a bicycle that is manufactured in India using components all made in India has the country of origin “Made in India.”
However, today it is unrealistic to think that all materials, components, and labor all stem from the same country. Using the bicycle example, the wheels may be from USA, the bicycle frame from India, but the labor was done in China. In this example, it is not always clear as to where the country of origin is. In these situations the law created the concept of substantial transformation – it is a degree of processing requiring to change the country of origin (more on substantial transformation to be discussed next post).
An incorrect determination as to an imported product may lead to incorrect marking, incorrect duty, and incorrect documentation upon attempted entry. The consequences for these errors can be delays, additional costs, or seizures.
Happy Importing and Happy Holidays 🙂