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HQ 224853


April 6, 1994

ENT-1-03 CO:R:C:E 224853 TLS

CATEGORY: ENTRY

District Director
U.S. Customs Service
Second & Chestnut Streets Rm. 102
Philadelphia, Pennsylvania 19106

RE: Protest #1101-93-100327 concerning merchandise processing fee on merchandise imported from a Caribbean Basin Intiative (CBI) country; Harmonized Tariff Schedule of the United States Annotated (HTSUSA) subheading 9802.00.8060; 19 U.S.C. 58c(b)(8)(B); 19 CFR 12.130.

Dear Sir:

This office has received the above-referenced protest as provided for under Customs regulations. We have considered the points raised and have made the following decision.

FACTS:

The protestant entered 1152 dozen nightgowns from Jamaica on May 26, 1992. The merchandise was entered duty-free for the most part under HTSUSA subheading 9802.00.8060, with that portion of the merchandise determined not to be a product of the United States being assessed a duty rate of 17% as provided for under HTSUSA subheading 6208.22.00. A merchandise processing fee (MPF) was assessed on the dutiable portion of the merchandise as well.

The protestant contends that the MPF should not have been assessed because the merchandise was imported from a CBI country. Your office claims that Customs regulations provides for the charging of the fee for merchandise entered under 9802.00.8060.

ISSUE:

Whether the merchandise processing fee should be assessed on merchandise assembled in and imported from a country designated under the Caribbean Basin Initiative program under subheading 9802.00.8060, HTSUSA.

LAW AND ANALYSIS:

The merchandise in this case was entered on March 25, 1993, with the entry being liquidated on May 14, 1993. This protest was timely filed on June 9, 1993.

The protestant claims that the MPF does not apply in this case because the goods originated from a CBI country. The goods in this case were imported from Jamaica. Jamaica is a country designated as a beneficiary country under the CBI. See HTSUSA General Note 3(c)(v).

The relevant language of 19 U.S.C. 58c(b)(8)(D)(iv) provides that, "in the case of merchandise classified under heading 9802.00.80," the MPF shall be applied to the "full value of the merchandise, less the cost or value of the component United States products." The MPF, however, does not apply to any "product of" a CBERA beneficiary country because the MPF statute specifically excepts such products from its application. 19 U.S.C. 58c(b)(8)(B)(iii). Articles are considered "products of" a CBERA beneficiary country, and therefore exempt from the MPF, if the processing performed in that country results in a substantial transformation (i.e., a new or different article with a new name, character, or use).

In order to reconcile the MPF limitation provided for "product[s] of" CBERA beneficiary countries in 19 U.S.C. 58c(b)(8)(B)(iii) with the other MPF limitation excepting articles "provided for under any item in chapter 98, of the [HTSUSA], except subheading 9802.00.60 or 9802.00.80" in 19 U.S.C. 58c(b)(8)(B)(i), we determined that if merchandise is substantially transformed into a "product of" the BC and entered under 9802.00.8060, HTSUSA, the merchandise will not be subject to the MPF. If the merchandise, however, is not substantially transformed, the imported merchandise will be subject to the MPF, which is applied to the full value of the article, less the value of the U.S. components. Customs ruling HQ 557379 (Sept. 13, 1993).

Section 12.130(c), Customs Regulations, however, states that in order to have a single definition of the term "product of" and, therefore, a single country of origin for a textile or textile product, notwithstanding 19 CFR 12.130(b) which discusses substantial transformation, merchandise which falls within the purview of Chapter 98, Subchapter II, Note 2(a), HTSUSA, may not, upon its return to the U.S., be considered a product of the U.S. Chapter 98, Subchapter II, Note 2(a), HTSUSA, provides that any product of the U.S. which is returned after having been advanced in value or improved in condition abroad, or assembled abroad, shall be a foreign article for the purposes of the Tariff Act of 1930, as amended. Pursuant to T.D. 90-17, 19 CFR 12.130 is applicable for country of origin determinations for all Customs purposes. Consequently, the textile and apparel goods of U.S. origin which are exported to a CBERA beneficiary country for assembly need not undergo a substantial transformation to be considered "products of" a CBERA country. They are exempt from the MPF if they are merely advanced in value or improved in condition by any means (including assembly) in the CBERA country.

Since the merchandise at issue does consist of textile components produced in the United States which was improved in condition in Jamaica before being imported back into this country, it is exempt from assessment of MPF.

HOLDING:

A merchandise processing fee shall not be assessed on merchandise imported from a CBI country and entered under HTSUSA subheading 9802.00.8060. This protest should be GRANTED.

In accordance with Section 3A(11)(b) of Customs Directive 099 3550-065, dated August 4, 1993, Subject: Revised Protest Directive, this decision should be mailed by your office to the protestant no later than 60 days from the date of this letter. Any reliquidation of the entry in accordance with the decision must be accomplished prior to mailing of the decision. Sixty days from the date of the decision the Office of Regulations and Rulings will take steps to make the decision available to customs personnel via the Customs Rulings Module in ACS and the public via the Diskette Subscription Service, Lexis, Freedom of Information Act and other public access channels.

Sincerely,

John Durant, Director

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