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HQ 083050


March 23, 1989

CLA-2 CO:R:C:G 083050 SM

CATEGORY: CLASSIFICATION

TARIFF NO.:

Area Director of Customs
JFK Airport Area
JFK Airport, Bldg. 178
Jamaica, NY 11430

RE: Application for Further Review of Protest 1001-7-011000 of August 6, 1987

Dear Sir:

This protest and application for further review was filed by Serko, Simon, and Abbey on behalf of Profile Mens- wear, Ltd. (PMI). It concerns your decision that a shipment of 1,411 men's suits covered by entry 336-0248090-8 of March 16, 1987, required textile visas for category 443 and cate- gory 643.

FACTS:

The merchandise covered by the entry was claimed as a product of Italy with Yugoslavia indicated as the country of exportation. A Request for Information, Customs Form (CF) 28, sent on April 10, 1987, asked for details of each operation performed in Italy and in Yugoslavia. The importer's response was dated April 27. On May 8, a notice was issued on CF 4647 indicating that the country of assembly and tailoring, Yugo- slavia, was the country of origin of the suits, and that visas for categories 443 and 643 were required. The visas were not presented, and a claim for liquidated damages was issued on June 25. JFK Area Case 87-4701-24167. This protest was timely filed on August 6, the ninetieth day after the date of the notice.

Counsel for the importer protests, first, that the merchandise was properly marked as to country of origin and, second, that there was no breach of the entry bond since Customs failed to make a timely demand under that bond. With regard to the first point, he claims reliance on a ruling letter, 726826 of November 20, 1984, that stated, in response to the importer's inquiry of October 30, that suits assembled in Yugoslavia from components cut in Italy could be marked to indicate Italy as the country of origin for marking purposes.

With regard to the second point, he claims that 19 C.F.R. { 113.62(d) required Customs to issue the notice within 30 days of the date of release of the merchandise. Since the notice was sent 53 days after release, he claims that Customs cannot collect liquidated damages.

ISSUE:

Is Italy or Yugoslavia the country of origin of the suits? Is Customs precluded from making a claim under the bond because an untimely demand was made?

LAW AND ANALYSIS:

The textile country of origin regulations, 19 C.F.R. { 12.130 (1988), set out criteria for determining the country of origin of textile products processed in more than one foreign country. Section 12.130(e)(1)(v) provides specifically that a textile article will usually be the product of a country where it has undergone "[s]ubstantial assembly by sewing and/or tailoring of all cut pieces of apparel articles which have been cut in another foreign . . . country . . . into a completed garment (e.g., the complete assembly and tailoring of all cut pieces of . . . suits . . . .)"

The information supplied by the importer in response to the CF 28 of April 10, 1987, as well as his original letter of October 30, 1984, indicate that in Italy fabric was cut into pieces for suits. The pieces were then transported to Yugo- slavia, where they were assembled and tailored into men's suits. The operations in Yugoslavia thus fall squarely with- in the description in 19 C.F.R. { 12.130(e)(1)(v), and we agree with your determination that Yugoslavia is the country of origin.

Counsel for the importer does not maintain that Italy, and not Yugoslavia, is the country of origin of the suits under the regulations. Rather, he claims that Italy was correctly claimed to be the country of origin because the marking ruling issued to PMI in November of 1984 has never been revoked.

We cannot agree. The ruling was issued before the April 4, 1985, effective date of the textile country of origin regulations, and also before the March 15, 1986, effective date of category 443 or category 643 restrictions on merchan- dise from Yugoslavia. The merchandise was entered on March 16, 1987, nearly two years after the effective date of the regulations. The new regulations went into effect only after
several notices in the Federal Register and an extensive comment period. Numerous outstanding rulings would have been effectively revoked by this major regulatory change, which was promulgated pursuant to Executive Order 12475 of May 9, 1984.

Thus the suits were properly determined to be products of Yugoslavia under the regulations. Such merchandise is sub- ject to quantitative restrictions in accordance with the terms of the U.S.-Yugoslav bilateral textile agreement negotiated pursuant to Congressional delegation of authority in section 204 of the Agricultural Act of 1956, as amended, 7 U.S.C. { 1854 (1982). The suits could not be admitted into the United States unless the proper original visa stamps were presented.

Counsel for the importer further argues that the notice was not timely and that Customs has therefore failed to meet the condition precedent of a timely demand under the import- er's bond. He claims that language in 19 C.F.R. { 113.62 (1988), incorporated by reference into the bond, would have required Customs to issue the notice within 30 days of the date of release of the merchandise (since no later "condi- tional release period" applies in this case).

Section 113.62(d) is the bond principal's agreement to redeliver merchandise released conditionally before all required evidence is produced or before quantity, value, or admissibility is determined if the merchandise:

(1) Fails to comply with the laws or regulations governing admission into the United States;

(2) Must be examined, inspected, or appraised as required by 19 U.S.C. 499;

(3) Must be marked with the country of origin as required by law or regulation.

It concludes with the statement that "demand for redelivery will be made no later than 30 days after the date that the merchandise was released or 30 days after the end of the conditional release period . . . ."

Counsel for the protestant assumes that Customs relies on section 113.62(d) to secure the importer's performance. However, section 113.62(e) contains the agreement to rectify any noncompliance with the law and regulations governing the admission of the merchandise into the United States. It pro- vides that "if merchandise is released conditionally to the principal before its right of admission into the United States
is determined, the principal, after notification, agrees . . . to . . . do any other thing to the merchandise in order to comply with the law and regulations governing its admission . . . ." The goods were subject to visa requirements by virtue of the bilateral agreement with Yugoslavia, as a result of the application of 19 C.F.R. { 12.130, which determined the country of origin. The notice, CF 4647, informed the pro- testant that in order for the goods to be admissible, the protestant had to furnish the required visas.

The protestant does not claim that the demand to present a proper visa was complied with, or that the demand was made after liquidation had become final. Rather, the protestant relies solely on the claim that Customs cannot secure perform- ance under section 113.62(d) of the bond contract. That reli- ance is misplaced. The demand made is to furnish proper visas in accordance with 19 C.F.R. { 12.130, the bilateral agreement with Yugoslavia, 19 U.S.C.A. { 1484(a)(2)(B) (1980 and Supp. 1988), and 19 U.S.C.A. { 1485(a)(4) (1980 and Supp. 1988). Performance under those provisions is secured by the agreement in section 113.62(e) to rectify noncompliance with provisions of admission. More importantly, the issue for the purpose of the protest is whether Customs could demand a visa and not whether that demand could be enforced under a bond condition.

HOLDING:

Since the required visas from Yugoslavia were not pre- sented, you should deny the protest in full. A copy of this decision should be sent to the protestant along with your Form 19 Notice of Action.

Sincerely,

John Durant, Director
Commercial Rulings Division

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