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HQ 556157


November 25, 1991

CLA-2 CO:R:C:G 556157 WAW

CATEGORY: CLASSIFICATION

District Director
U.S. Customs Service
Commercial Operations
2500 Paseo Internacional
San Ysidro, CA 92173

RE: Application for further review of Protest No. 2501-90- 000034 under 19 U.S.C. section 1514(c)(2); GSP; wooden cask barrels; planters

Dear Sir:

The above-referenced protest was forwarded to this office for further review. We have considered the protest and our decision follows.

FACTS:

In this case, Akron Chemical Plastics ("protestant") contests the assessment of duties by your office on wooden cask barrels from Mexico which are being used as planters. This protest includes 36 entries filed by the protestant during the period September 1989, through March 1990. Protestant claims that the wooden cask barrels are eligible for duty-free treatment under the Generalized System of Preferences (GSP) (19 U.S.C. 2462-2466). The wood used to manufacture the wooden planters originates from the U.S. In Mexico, a quantitative analysis is performed and the wood is sorted according to its grade. Next, the wood is smoothed and prepared to enter into the cutting stage. In the cutting stage, different sizes and angles are made in the wood according to the size and style of the planter. The cut wood is then sent to the painting department where it is stained and then transferred to the assembly department. Once the planter is assembled, it is inspected, tested and given final approval. The planter is then labeled with the country of origin and prepared for shipment to the U.S.

The protestant claims that documentation has been submitted to substantiate his claim for GSP treatment. However, the protestant's claim for GSP was initially denied by your office because insufficient information was provided. The protestant maintains that other importers with similar documentation or without any documentation whatsoever have been granted GSP status.

ISSUE:

Whether the wooden planters from Mexico are entitled to duty-free treatment under the GSP.

LAW AND ANALYSIS:

Under the GSP, eligible articles the growth, product or manufacture of a designated beneficiary developing country (BDC) which are imported directly into the customs territory of the U.S. from a BDC may receive duty-free treatment if the sum of (1) the cost or value of materials produced in the BDC, plus (2) the direct costs of the processing operation in the BDC, is equivalent to at least 35% of the appraised value of the article at the time of entry. See 19 U.S.C. 2463(b).

Mexico is a BDC. See General Note 3(c)(ii)(A), Harmonized Tariff Schedule of the United States Annotated (HTSUSA). Based on the information provided, the wooden cask barrels are classified under subheading 4416.00.9020, HTSUSA, which provides for "[c]asks, barrels, vats, tubs and other coopers' products and parts thereof, of wood, including staves: Other: New." Articles classified under this provision are eligible for GSP treatment.

Information submitted by your office indicates that data was provided by the protestant on August 22, 1989, in support of their claim that the GSP 35% value-content requirement was met. However, clarifying information was immediately requested by your office. On September 19, 1989, a similar request by the protestant for GSP was returned because of insufficient data. Finally, on April 4, 1990, a meeting was held between your office and the protestant, at which time the protestant substantiated the claim for GSP treatment to the satisfaction of your office with respect to entries filed during the period of this protest.

Protestant submitted cost information during the April meeting which reflected the items which were and were not included in the direct costs of processing operations in the manufacture of the wooden planters for the period covered by this protest. Your office agreed that the breakdown of the qualifying and non-qualifying cost figures prepared by the importer were valid for that time period. We find that the cost information included in the importer's GSP worksheet for the period covered by this protest is also consistent with the definition of "direct costs of processing operations" set forth in 19 CFR 10.197(a). The issue of double substantial transformation was not considered by your office since you had determined that the direct costs of processing operations incurred in the manufacture of the wooden planters in Mexico were sufficient to satisfy the 35% value- content requirement without including the cost or value of the U.S.-origin wood.

Based on the manufacturing processes performed in Mexico, and the figures representing the direct costs of processing operations, we find that the imported wooden planters subject to this protest satisfy the 35% value-content requirement and, therefore, are entitled to GSP duty-free treatment.

HOLDING:

Based on the information provided, this protest should be granted in full. A copy of this decision should be attached to the Customs Form 19 and mailed to the protestant as part of the notice of action on the protest.

Sincerely,

John Durant, Director

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