Midwood Industries, Inc. v. United States

• Decision Date: 27 May 1970
• Docket Number: C.D. 4026,Protest No. 68/44059-26779-68
• Citation: 313 F. Supp. 951
• Parties: MIDWOOD INDUSTRIES, INC. v. UNITED STATES.
• Court: U.S. Court of Customs and Patent Appeals (CCPA)

313 F. Supp. 951

MIDWOOD INDUSTRIES, INC. v. UNITED STATES.

C.D. 4026; Protest Nos. 68/44059-26779-68, etc.

United States Customs Court, Third Division.

May 27, 1970.

Barnes, Richardson & Colburn, New York City (Joseph Schwartz and James S. O'Kelly, New York City, of counsel), for plaintiff.

William D. Ruckelshaus, Asst. Atty. Gen. (Steven R. Sosnov, New York City, Trial Atty.), for defendant.

Before RICHARDSON, LANDIS, and ROSENSTEIN, Judges.

RICHARDSON, Judge:

The merchandise of these protests, consolidated for trial, consists of steel forgings exported from West Germany, England, and Italy, and entered at the port of New York. Delivery of the merchandise to the plaintiff-importer was refused by the regional commissioner of customs upon entry in accordance with provisions of 19 U.S.C.A., section 1304 (a) relating to markings as to country of origin on the merchandise. Plaintiff protests against the action of the regional commissioner of customs herein, contending:

We contend that said merchandise is clearly and properly marked with the country of origin, in full compliance with Section 304, Tariff Act of 1930 as amended, and should not have been excluded from delivery.

Also, in a brief filed after trial and submission of the case plaintiff claims additionally that marking the country of origin on the imported merchandise was not required perforce of clause (H) of subdivision (3) of subsection (a) of section 304 of the Tariff Act of 1930, as amended (19 U.S.C.A., section 1304(a) (3) (H)).

Section 1304(a) and section 1304(a) (3) (H) read as follows:

(a) Except as hereinafter provided, every article of foreign origin (or its container, as provided in subsection (b) hereof) 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 manner as to indicate to an ultimate purchaser in the United States the English name of the country of origin of the article. The Secretary of the Treasury may by regulations —

* * * * * *

(3) Authorize the exception of any article from the requirements of marking if —

* * * * * *

(H) An ultimate purchaser, by reason of the character of such article or by reason of the circumstances of its importation, must necessarily know the country of origin of such article even though it is not marked to indicate its origin * * *.

And section 11.10 of the Customs Regulations (19 C.F.R. 11.10) reads in relevant part as follows:

(a) Articles within any specification in Section 304(a) (3), Tariff Act of 1930, as amended, are hereby excepted from the requirement of marking. * * *

At the trial the official papers, among other things, were placed in evidence at the instance of the plaintiff. In the handling of each entry in customs it appears that admonition was given by one customs officer to another to the effect that if the forgings were not marked with the country of origin or were marked with the country of origin only on the extreme ends of the article imported that a "not legally marked" notice was to be issued immediately and a sample of the merchandise forwarded to the appropriate customs office. This was apparently done pursuant to the directive of the Commissioner of Customs as set forth in T.D. 68-57, dated February 13, 1968, the text of which reads in part as follows:

The Bureau of Customs has recently reviewed the application of the country of origin marking requirements of section 304, Tariff Act of 1930, as amended (19 U.S.C. 1304), to imported unfinished welding fittings and flanges which are processed into finished fittings and flanges in the United States.

The processes involved in finishing the imported articles include such processes as cleaning to remove mill scale and rust; trimming excess material from the ends of fittings and beveling and machining the ends of the fittings; machining the faces and machining or threading the bore, and drilling bolt holes in the flanges; marking the articles with the name or trademark of the processor; and painting them.

The Bureau has concluded that the processor of such unfinished welding fittings and flanges is not the ultimate purchaser of the articles within the meaning of section 304, since the further processing does not result in the manufacture of a new and different article with a new name, character, or use within the meaning of the principle of the decision in the case of United States v. Gibson-Thomsen Co., Inc. (1940), 27 CCPA 267, C.A.D. 98.

Accordingly, unfinished welding fittings and flanges shall be required to be legibly and conspicuously marked to indicate the country of origin by die stamping or other permanent marking in a location on the articles where the marking will not be obliterated by the processing which is performed to make them into finished articles. Flanges shall be marked elsewhere than on the face or edges and pipe fittings shall be marked elsewhere than on the extreme ends. Fittings which are to be cut apart in processing, such as fittings in the shape of 180-degree returns, shall be marked in such a way as to insure that the marking will appear on each resulting part after the processing is completed.

In the instant case the action taken by the regional commissioner under the marking statute does not appear to have been uniform in connection with all of the entries before the court. In three of the protests at bar it appears either from customs form 4647 as in entry 1132653 of protest 68/44060, or from notations entered on the Summary of Examination and Appraisement sheet as in entry 1111075 of protest 68/49196 and in entry 1124332 of protest 68/47006, that the action taken by the regional commissioner under the marking statute concerned the legality of the markings on the imported forgings. But in entry 1136406 of protest 68/44061, covering five crates of forgings from West Germany, the marking notice given on customs form 4647 under date of June 24, 1968, reads:

#3 case shows no country of origin on steel forgings.

And in entry 1099169 of protest 68/44059, covering four casks of forgings from West Germany, the marking notice given on customs form 4647 under date of June 19, 1968, reads:

Outside container marked with c/o on tag. Forgings, illegible markings or none at all.

Notwithstanding this diversity of action on the part of the regional commissioner as noted herein, the propriety of the commissioner's actions with respect to (1) legality of markings, (2) legibility of markings, and (3) non-existence of markings comes within the purview of the protest claim, and as such, is reviewable by this court. However, we are of opinion that the claim for exemption from marking, belatedly advanced in the brief filed by plaintiff, is not before this court. The protest filed by plaintiff herein does not apprise the regional commissioner of any claim of exemption from marking requirements so as to afford the commissioner an opportunity to review his action and the evidence of record in the light of such claim. Consequently, the claim of exemption from marking cannot be pressed in this court. Geo. S. Bush & Co., Inc. v. United States, 19 Cust.Ct. 37, 42, C.D. 1064 (1947). Accord: Dr. Gemma Barzilai v. United States, 4 Cust.Ct. 25, 26, C.D. 275 (1940); reh. den. 4 Cust.Ct. 419, Abs. 43362 (1940).

Broadly speaking, the evidence in this case deals with what plaintiff does with the forgings at bar after importation, and also what the industry generally does with them. But no specific evidence has been adduced here by plaintiff, and we do not find any of record, to refute the section 1304(a) findings made by the regional commissioner under the entry in protest 68/44061 (i. e., the finding that the forgings in case #3 were not marked with the country of origin) and under the entry in protest 68/44059 (i. e., the finding that the forgings were either illegibly marked or were not marked at all). In view of such failure of proof the presumption of correctness attaching to the commissioner's findings under these entries has not been rebutted. And it follows from this default that protest 68/44061 and 68/44059 must, therefore, be summarily overruled.

With respect to protests 68/44060, 68/49196, and 68/47006, the issue to be resolved by the court is whether the markings of the country of origin on the forgings covered thereby are in accordance with the requirements of section 1304(a), the issue turning, in our opinion, on whether plaintiff is an "ultimate purchaser" of the imported merchandise within the meaning of that statute. The forgings covered by these protests consist of forgings for flanges from Italy covered by entry 1132653 of protest 68/44060, forgings for 90 degree and 180 degree returns and for tees from West Germany covered by entry 1111075 of protest 68/49196, and forgings for reducers from England covered by entry 1124332 of protest 68/47006. The merchandise of these protests is represented in the instant record either by samples received in evidence as plaintiff's exhibits 5, 10, 11, 12 and 13, or by photographs received in evidence as plaintiff's exhibits 5A, 10A, 11A, 13A and 14. Exhibits 5 and 5A depict forgings for flanges such as are contained in the entry of protest 68/44060. Exhibits 11, 11A, 12, 13 and 13A depict forgings for returns and tees such as are contained in the entry of protest 68/49196. And exhibits 10, 10A and 14 depict forgings for reducers (concentric and eccentric) such as are contained in the entry of protest 68/47006. These items, after importation, are converted by plaintiff's manufacturing division, Tube Line Manufacturing Company, into welding flanges and fittings which are then sold by plaintiff under the name "Tube Line" to oil companies, petroleum companies, chemical plants, construction companies, and utilities and other industries for use in high pressure piping systems in connecting and joining sections of pipe.

At the trial plaintiff gave...