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HQ 556661

May 15, 1992

CLA-2 CO:R:C:S 556661 WAW

CATEGORY: CLASSIFICATION

District Director of Customs
Air Transportation Division
5758 West Century Blvd.
Los Angeles International Airport
Los Angeles, CA 90045

RE: Application for Further Review of Protest No. 2704-91- 102533 under 19 U.S.C. section 1514(c)(2)

Dear Sir:

This is a decision on an Application for Further Review of the above-referenced protest filed by C & R Customs Brokers, Inc., on behalf of Kuang Yi Inc., against the assessment of duties on artificial flowers imported into the U.S. from Macau. We have considered the protest, which contests the denial of duty-free treatment for certain artificial flowers from Macau under the Generalized System of Preferences (GSP) (19 U.S.C. 2461-2466), and our decision follows.

FACTS:

A protest and Application for Further Review was made by the protestant against the tariff classification of artificial flowers under subheading 6702.90.4000, Harmonized Tariff Schedule of the United States Annotated (HTSUSA), at a duty rate of 9 percent ad valorem. Protestant claims that the subject artificial flowers were manufactured by Fabrica de Flores Artificials Tai Keong ("Tai Keong") in Macau and should be classifiable under subheading 6702.90.4000, HTSUSA, and eligible for duty-free treatment under the GSP.

ISSUE:

Whether the artificial flowers from Macau are eligible for 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).

Protestant's request for further review may be summarily disposed of. The scope of review in this protest is on the administrative record, and protestant has not presented any evidence in support of its assertions. The Customs Service will not grant further review of a blanket protest. Protestant must comply with the statutory and regulatory requirements. Under 19 U.S.C. section 1514(c)(1) a protest of a decision must set forth distinctly and specifically each decision as to which protest is made. See generally, United States v. Parksmith Corp., 514 F.2d 1052, 62 C.C.P.A. 76 (1975); American Commerce Co. v. United States, 173 F. Supp. 812 (Cust. Ct. 1959); United States v. E.H. Bailey & Co., 32 C.C.P.A. 89 (1945).

In the instant case, the protestant simply asserts that it was an innocent party because it was under the impression that Tai Keong was or is a "real manufacturer." The Customs Regulations require that a protest contain the nature of, and justification for the objection set forth distinctly and specifically with respect to each claim. Section 174.13(a)(6), Customs Regulations (19 CFR 174.13(a)(6)). The Customs Service has and will continue to fully consider any relevant allegation in a protest supported by competent evidence. However, in acting on a protest, Customs cannot and will not assume facts that are not presented (e.g., an unsubstantiated claim that the manufacturing operations of the artificial flowers took place in Macau).

Pursuant to INV 8-02 CO:TO:C RG, dated January 22, 1991, the Assistant Commissioner of Commercial Operations instructed the Regional Commissioners that entries of artificial flowers claimed to be manufactured in Macau by certain factories listed in the memorandum should be denied GSP treatment and rate advanced via the issuance of a Proposed Notice of Action (CF 29). The supplier in this case, "Tai Keong," is one of the factories which has been precluded from receiving duty-free treatment under the GSP pursuant to this memorandum. Furthermore, the Assistant Commissioner's memorandum states that the SCR/Hong Kong has issued reports of investigation concerning the alleged transshipment of PRC-origin artificial flowers via Macau, which indicate that the named factories were either "not manufacturing artificial flowers in Macau, or were incapable of manufacturing them in the quantities exported to the U.S." Therefore, the Assistant Commissioner stated that in the absence of "compelling evidence" to the contrary, protests filed on the liquidation of entries from any of the named factories should be denied.

With regard to the instant case, protestant has not submitted any independent evidence in support of its claim that the artificial flowers should be granted duty-free treatment under the GSP. Protestant simply asserts that the importer relied on the supplier's representations that the merchandise was manufactured in Macau by the Tai Keong factory. Without sufficient information to indicate that the artificial flowers were manufactured in Macau (i.e., evidence of processes performed in Macau such as cutting, dying, texturizing, and injection molding), we cannot determine whether the materials imported into Macau and used in the production of the artificial flowers have undergone a double substantial transformation, so that the cost or value of these materials may be included in the GSP 35% value- content requirement. Therefore, absent compelling evidence to the contrary, the artificial flowers in this case will not be eligible for duty-free treatment under the GSP.

HOLDING:

Based on the foregoing discussion, this protest should be denied 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 A. Durant, Director

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