HQ 0556837 - Protest No. 2002-92-1000144 concerning the eligibility of artificial flowers from Macau for duty-free treatment under the GSP - 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 0556734 - HQ 0557035 > HQ 0556837

HQ 556837

December 17, 1992

CLA-2 CO:R:C:S 556837 WAW

CATEGORY: CLASSIFICATION

District Director
U.S. Customs Service
Suite 625
7911 Forsythe Blvd
St. Louis, MO 63105

RE: Protest No. 2002-92-1000144 concerning the eligibility of artificial flowers from Macau for duty-free treatment under the GSP

Dear Sir:

This is a decision on an Application for Further Review of the above-referenced protest filed by Sharretts, Paley, Carter & Blauvelt, on behalf of F.W. Woolworth, against the assessment of duties on artificial flowers imported into the U.S. from Macau. We have considered the protest and our decision follows.

FACTS:

The protestant claims that the subject artificial flowers should be entitled to duty-free treatment under the Generalized System of Preferences (GSP) (19 U.S.C. 2461-2466) since they are manufactured by the "Feliz," "Union Arts," and "East Asia" factories located in Macau and are classifiable under a GSP eligible provision. In the protestant's declaration of the manufacturing and/or processing operations of the artificial flowers, the protestant states that Macau is the country where these operations took place. The entries which are the subject of this protest were filed on February 21 and 26, 1990, September 19, 1989 and June 22, 1990, and liquidated duty-free on November 15, 1991, and December 5, 1991, under the GSP as a product of Macau. Your office, however, subsequently amended the entry summary to reflect a change in the country of origin of the artificial flowers and consequently reliquidated the entries dutiable at 9 percent ad valorem.

ISSUE:

Whether the artificial flowers from Macau are entitled to duty-free treatment under the GSP.
LAW AND ANALYSIS:

Under the GSP, eligible products the growth, product of manufacture of a designated beneficiary developing country (BDC) which are imported directly into the U.S. qualify for duty-free treatment if the sum of (1) the cost or value of the material produced in a BDC, plus (2) the direct costs involved in processing the eligible article in the BDC, is not less than 35% of the appraised value of the article at the time it is entered into the U.S. See section 10.176(a), Customs Regulations (19 CFR 10.176(a)).

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).

By memorandum to the field dated October 31, 1991 (INV 8-02 CO:TO:C JRD), the Assistant Commissioner of Commercial Operations instructed the Regional Commissioners that all entries of artificial flowers claimed to be manufactured in Macau by any of the named factories listed in the memorandum should be denied GSP treatment and instead, should be rate advanced via the issuance of a Proposed Notice of Action (CF 29). The "Feliz," "Union Arts," and "East Asia" factories are three of the factories which have been precluded from receiving duty-free treatment under the GSP pursuant to this memorandum. In addition, the memorandum states that the SCR/Hong Kong has also 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 instructed all Regional Commissioners that in the absence of "compelling evidence" to the contrary, protests filed on the liquidation of entries from any of the factories enumerated in the memorandum should be denied.

We are of the opinion that the protestant has not submitted sufficient independent evidence to your office in support of its contention that the artificial flowers produced in the "Feliz," "Union Arts," and "East Asia" factories should be granted duty- free treatment under the GSP. Protestant simply asserts that the importer relied on the supplier's representations and the GSP Form A to show that the merchandise was manufactured in Macau.

We note that during Customs' investigation into the manufacturing processes of the Feliz factory, the evidence indicated that artificial flowers imported by this factory were neither produced by Feliz in their Macau factory, nor assembled in the PRC from components produced there. Based upon information obtained during the SCR/HK's investigation, Customs reported that there were no functioning cutting and texturizing machines visible in the factory, the injection molding machines were heavily rusted and did not appear to have been used for a long period of time.

Customs' investigation into the production of artificial flowers by Union Arts indicated that this factory had not produced artificial flower components or artificial flowers in Macau for several years. All the evidence gathered by Customs such as confidential source information, comments by other artificial flower manufacturers in Macau, investigations by the Macau authorities, statements made by the building's guard and observations by U.S. Customs agents during numerous visits indicated that Union Arts subcontracted all production to the PRC and only functioned as a location for the export packing and preparation of commercial documents.

Customs' investigation into the production of artificial flowers by East Asia revealed no evidence that East Asia had been in actual operation for several years. Confidential source information as well as comments by other artificial flower manufacturers in Macau, and a statement by the building's guard indicated that East Asia had subcontracted all production of artificial flowers and components to the PRC, and only functioned as a location for the export packing and preparation of commercial documents. Under the foregoing circumstances, we cannot conclude that the GSP Form A's and declarations represent compelling evidence for duty-free treatment for the subject entries.

In sum, without sufficient information to confirm that the artificial flowers in the instant case were manufactured in Macau by the Union Arts, Feliz and East Asia factory (i.e., evidence of manufacturing performed in Macau such as cutting, dying, texturizing, and injection molding), we cannot determine either whether the imported flowers were products of Macau, or whether any materials imported into Macau to produce 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:

Therefore, 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 to be returned to the protestant as part of the notice of action on the protest.

Sincerely,

John Durant, Director

Previous Ruling Next Ruling