HQ 0557081 - Application for Further Review of Protest No. 5501-91-100223 on the applicability of artificial flowers from Macau for duty-free treatment under the Generalized System of Preferences - United States International Trade Commision Rulings

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HQ 557081

August 2, 1993

CLA-2 CO:R:C:S 557081 WAW

CATEGORY: CLASSIFICATION

District Director
U.S. Customs Service
1215 Royal Lane
P.O. Box 619050
Dallas/Fort Worth, TX 75261

RE: Application for Further Review of Protest No. 5501-91-100223 on the applicability of artificial flowers from Macau for duty-free treatment under the Generalized System of Preferences

Dear Sir:

The above-referenced protest was forwarded to this office for further review. This protest filed by surety pursuant to Section 514(c)(2) of the Tariff Act of 1930, as amended, 19 U.S.C. section 1514(c)(2), contests the denial of duty-free treatment for artificial flowers from Macau under the Generalized System of Preferences (GSP) (19 U.S.C. 2461-2466). The importer, Celebrity, Inc. has filed Protest No. 5501-90-100627 dated November 6, 1990, against the subject liquidated duties (Headquarters Ruling Letter (HRL) 557080) (copy attached), and the surety claims that the importer will not honor surety's demand that payment be made until such time as the decision on the importer's protest has been made by Customs. The surety's protest parallels and duplicates claims made in the importer's protest. The nine entries of artificial flowers covered by this protest were dated March 13, March 29, April 5, April 13, May 2, and May 16, 1990.

The merchandise at issue in this protest consists of artificial flowers and foliage of polyester material. The protestant contends that Customs has erroneously classified the artificial flowers under subheading 6702.90.4001, Harmonized Tariff Schedule of the United States (HTSUS), which provides for artificial flowers of man-made fibers, under the general rate of 9 percent ad valorem which is the applicable duty rate for products from the Peoples' Republic of China (PRC). The protestant claims that the artificial flowers should be classified under subheading A 6702.90.4001, HTSUS, at the special duty-free rate for products of Macau under the GSP.

The question at issue in this protest is whether the artificial flowers from Macau are eligible for duty-free treatment under the GSP.

In HRL 557080 dated July 21, 1993, we determined that upon review of all of the documentary evidence submitted in connection with the protest, the combination of cutting, dyeing, pressing, heating and molding of the foreign-origin materials (fabric, polyethylene and metal wire) into artificial flowers did not constitute a double substantial transformation of these materials. Therefore, we held that the cost or value of these materials could not be included in the GSP 35% value-content requirement. However, based on the production cost data submitted by protestant, as the direct costs of processing operations represented at least 35% of the appraised value of the merchandise, we held that the artificial flowers were eligible for duty-free treatment under the GSP. However, as we had insufficient evidence to support a finding that the "Hip Wai" and "Union Trading" factories were producing artificial flowers, the protested entries of artificial flowers from these factories was denied.

Based on our holding in HRL 557080, the above-referenced protest should similarly be granted in part and denied in part. A copy of this decision should be attached to Customs Form 19 along with our decision on Protest No. 5501-90-100627 (HRL 557080) and mailed to the protestant as part of the notice of action on the protest.

Sincerely,

John Durant, Director
Commercial Rulings Division

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