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HQ 557640


January 5, 1994

CLA-2 CO:R:C:S 557640 MLR

CATEGORY: CLASSIFICATION

Mr. Gary Jordahl
Traffic Manager/Sales Support
Pioneer Industrial Components, Inc.
100 Pioneer Boulevard
Springboro, Ohio 45066

RE: Eligibility of components for duty-free treatment under the Generalized System of Preferences (GSP); imported directly; Singapore; 19 CFR 10.175(e)

Dear Mr. Jordahl:

This is in response to your letter of October 18, 1993, requesting a ruling on the eligibility of components from Thailand and Malaysia for duty-free treatment under the Generalized System of Preferences (GSP).

FACTS:

Pioneer Industrial Components, Inc. ("Pioneer"), a car audio electronics assembler, imports components such as resistors, wire harnesses, inductors, and transformers from many Far East sources including, Japan, Taiwan, Thailand, and Malaysia. The components from Thailand and Malaysia are imported with the aid of Pioneer's Southeast Asian agent, Pioneer Asiacentre, who purchases the components and consolidates them in Singapore for shipment to the U.S.

In Singapore, the components will not enter into the commerce of Singapore while they are under the control of Pioneer Asiacentre, and will not be subject to any other operations other than unloading, loading and warehousing; however, it is stated that because Singapore is a free market country and there is no Customs controlling body, the term "remained under control of the customs authority of the intermediate country" does not apply. The exporter of the merchandise in Thailand and Malaysia will complete the Form A Certificate of Origin which will accompany each shipment. It is also stated that the exporter will also be prepared to complete the "GSP Declaration" if requested by the District Director.

ISSUE:

Whether the components from Thailand and Malaysia are "imported directly" for purposes of the GSP when they are shipped through Singapore to the U.S.

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 operations performed in the BDC, is equivalent to at least 35 percent of the appraised value of the article at the time of entry into the U.S. See 19 U.S.C. 2463(b). Although the resistors, wire harnesses, inductors, and transformers are classifiable in subheadings 8533.10.00, 8544.41.00, 8504.31.40, and 8504.21.00, HTSUS, respectively, which are GSP-eligible provisions, and Thailand and Malaysia are designated BDCs for purposes of the GSP as provided in General Note 3(c)(ii)(A), Harmonized Tariff Schedule of the United States (HTSUS), Singapore is not.

Therefore, the issue in this case concerns whether the components from Thailand and Malaysia are considered to be "imported directly" from the BDCs to the U.S., if they are shipped from the BDCs through Singapore, and subsequently entered into the U.S. Section 10.175, Customs Regulations (19 CFR 10.175) defines the term "imported directly" for purposes of the GSP. Paragraph (a), which sets forth the most restrictive definition of the term, provides that "imported directly" means "direct shipment from the beneficiary country to the United States without passing through the territory of any other country."

However, 19 CFR 10.175(e) (copy enclosed) incorporates into the concept of "imported directly", a transaction involving goods produced in a member of a GSP-designated association of countries which are shipped through, and only subjected to limited processing operations in, another member of the same association, whose designation as a member of that association for GSP purposes was terminated by the President. Brunei Darussalam and Singapore are former BDCs for purposes of paragraph (e). The articles in the shipment may also not enter into the commerce of the former BDC except for those permissible operations specified in 19 CFR 10.175(c)(1) which include packing and unpacking, and except for purposes of purchase or resale, other than at retail, for export. The person responsible for the articles in the former BDC, or any person having knowledge of the facts, shall also prepare and sign an additional Form A, declaring what operations, if any, were performed in the former BDC, and should submit it to Customs if requested along with the Form A from the originating BDC.

In this case we find that because Singapore is a former BDC for purposes of 19 CFR 10.175(e), and the components are only subjected there to unloading, loading, and warehousing operations, they will be "imported directly" from Thailand and Malaysia, within the meaning of 19 CFR 10.175(e), and will be entitled to duty-free treatment under the GSP, assuming they are a "product of" Thailand or Malaysia and satisfy the 35 percent value-content requirement.

HOLDING:

Based on the information submitted, we find that the components shipped from Thailand and Malaysia through Singapore, where they are only subjected to unloading, loading, and warehousing operations before importation into the U.S., are "imported directly" from the BDCs for purposes of qualifying for duty-free treatment under the GSP.

Sincerely,

John Durant, Director

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