HQ 0556565 - Eligibility of videocassettes from the Netherlands Antilles for duty-free treatment under the CBERA; direct costs of processing operations; 556226 - United States International Trade Commision Rulings

United States International Trade Commision Rulings And Harmonized Tariff Schedule

faqs.org Rulings By Number Rulings By Category Tariff Numbers

faqs.org > Rulings and Tariffs Home > Rulings By Number > 1993 HQ Rulings > HQ 0556480 - HQ 0556716 > HQ 0556565

HQ 556565

April 22, 1992

CLA-2 CO:R:C:S 556565 CW

CATEGORY: CLASSIFICATION

Mr. Carlito Camargo
TVTEC
Brievengat Industrial Park
P.O. Box 6024
ITC Building
Curacao, The Netherland Antilles

RE: Eligibility of videocassettes from the Netherlands Antilles for duty-free treatment under the CBERA; direct costs of processing operations; 556226

Dear Mr. Camargo:

This is in response to your letter of March 6, 1992, requesting a ruling on whether pre-recorded videocassettes produced in the Netherland Antilles satisfy the 35% value-content requirement under the Caribbean Basin Economic Recovery Act (CBERA). In response to your original request for a ruling dated August 19, 1991, on the eligibility of the videocassettes for duty-free treatment under the CBERA, we advised by letter dated December 27, 1991 (Headquarters Ruling Letter (HRL) 556226), that more detailed cost information was required before a determination could be made as to whether the 35% value-content requirement would be met.

FACTS:

Magnetic tape from Japan and videocassette boxes from the U.S. are imported into the Netherlands Antilles for use in producing pre-recorded videocassettes, made from a master tape on a high-speed duplicator machine.

ISSUE:

Whether the pre-recorded videocassettes satisfy the 35% value-content requirement under the CBERA.

LAW AND ANALYSIS:

Under the CBERA, eligible articles the growth, product or manufacture of designated beneficiary countries (BCs), may enter the U.S. free of duty if such articles are imported directly to the U.S. from the BC, and the sum of (1) the cost or value of the
materials produced in the BC or BCs, plus (2) the direct cost of processing operations performed in the BC or BCs, is not less than 35% of the appraised value of the article at the time it is entered into the U.S. See 19 CFR 2703(a). The cost or value of materials produced in the U.S. may be applied toward the 35% value-content minimum in an amount not to exceed 15% of the imported article's appraised value. See section 10.195(c), Customs Regulations (19 CFR 10.195(c)).

In HRL 556226, we stated that the videocassettes in question are considered to be "products of" the Netherlands Antilles for CBERA purposes. However, because the materials imported into the Netherlands Antilles are not subjected to a double substantial transformation in producing the videocassettes, we advised that the 35% requirement must be met by the direct costs of processing performed in the BC, plus the cost or value of U.S.-origin materials (subject to the 15% cap).

The additional cost information you have provided indicates that the sum of the direct processing costs incurred in the Netherlands Antilles, plus the cost or value of U.S. materials (videocassette boxes), represents 39.2% of the estimated appraised value of the imported videocassettes. Therefore, assuming that the direct cost and appraised value figures provided accurately represent the figures applicable to the videocassettes when imported into the U.S., the merchandise will be entitled to duty-free treatment under the CBERA.

HOLDING:

Based on the direct cost and appraised value information provided, the pre-recorded videocassettes will satisfy the 35% value-content requirement and, therefore, will be entitled to duty-free treatment under the CBERA, assuming they are imported directly to the U.S.

Sincerely,

John Durant, Director

Previous Ruling Next Ruling