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HQ

559582

April
4, 1996

CLA-2 RR:TC:SM 559582 BLS

CATEGORY: CLASSIFICATION

TARIFF NO.: 2516.90

Port Director
P.O. Box 1490
St. Albans, VT 05478

RE: Application for Further Review of Protest No. 0201-94-100457

Dear Sir:

This is in reference to an Application for Further Review of Protest No. 0201- 94-100457, timely filed by Tower Group International, Inc., on behalf of Granite Industries.

FACTS:

Five entries were filed during the period February 8 through February 15, 1994, covering certain stone imported from South Africa. The merchandise was entered under subheading 2516.11, Harmonized Tariff Schedule of the United States (HTSUS), as "Crude or roughly trimmed" granite blocks, which are free of duty. Samples were analyzed by the Customs Laboratory, which determined that the merchandise was "Other monumental or building stone", classifiable under subheading 2516.90, (HTSUS), dutiable (during the period in question) at a 6 percent rate of duty. The concerned import specialist further states that information regarding the cost of freight was also requested, since it was not itemized on the submitted documentation. However, no information was submitted in accordance with the request. The entries were liquidated accordingly.

The protestant claims that the merchandise is properly classifiable under subheading 2516.11, HTSUS, and now submits that the imported material is entitled to duty-free treatment under the Generalized System of Preferences (GSP). Protestant submits a copy of a statement dated November 22, 1994, from the seller, Ketter Granite, certifying that the blocks are wholly the growth, product, or manufacture of South Africa. Also submitted into evidence is documentation from Ketter reflecting that the cost of freight (from Durban, South Africa to Barre, VT,
via Montreal) was included in the price, and the itemization of such costs.

ISSUES:

1) Whether the merchandise is properly classified under subheading 2516.11 or subheading 2516.90, HTSUS.

2) Whether South Africa was a beneficiary developing country ("BDC") during the period in question, for purposes of determining whether the merchandise is eligible for duty-free treatment under the GSP.

3) Whether freight costs and charges incidental to such transportation from Durban, South Africa to the importer's plant in Barre, Vermont, may be deducted from invoice value to arrive at the transaction value of the goods.

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).

On April 24, 1994, President Clinton signed Presidential Proclamation 6676, designating South Africa as a beneficiary developing country under the GSP. The designation applies to merchandise entered or withdrawn from warehouse for consumption on or after May 10, 1994. See Fed. Reg. Vol.59, No. 79, pg. 19679, dated April 25, 1994. In the instant case, each of the subject entries was filed in February of 1994, prior to the date that South Africa was granted BDC status. Accordingly, the merchandise covered by these entries is not eligible for the benefits of the GSP.

Based on the analysis of samples by the Customs Laboratory, it is our opinion that the merchandise is properly classifiable under subheading 2516.90, HTSUS, "Other monumental or building stone", and not under subheading 2516.11, HTSUS, as "Crude or roughly trimmed" granite blocks.

Transaction value, the preferred method of appraisement, is defined in section

402(b) of the Tariff Act of 1930, as amended by the Trade Agreements Act of 1979 (19 U.S.C. 1401a(b), TAA), as the "price actually paid or payable for the merchandise when sold for exportation to the United States" plus enumerated additions. The "price actually paid or payable" is defined in section 402(b)(4)(A) of the TAA as the "total payment (whether direct or indirect, and exclusive of any costs, charges, or expenses incurred for transportation, insurance, and related services incident to the international shipment of the merchandise...) made, or to be made, for the imported merchandise by the buyer to, or for the benefit of, the seller." We are assuming that transaction value is the proper method of appraisement in this case.

Protestant now submits with the protest documentation itemizing the cost of international freight and related charges from Durban, South Africa, to Montreal, Canada; and from Montreal to Barre, Vermont. In this regard, the concerned import specialist accepts the documentation as establishing the cost of international freight, totaling $11,134.07 ($428.23 per block), to be deducted from dutiable value. We concur that the evidence establishes the cost of international freight, to be deducted from the invoice price for purposes of determining transaction value under 19 U.S.C. 1401a(b).

HOLDING:

1) Based on an analysis of samples by the Customs Laboratory, it is our opinion that the subject merchandise is properly classifiable under subheading 2516.90, HTSUS, as "Other monumental or building stone."

2) Presidential Proclamation 6676 dated April 24, 1994, designated South Africa as a beneficiary developing country of the GSP, effective for merchandise entered or withdrawn from warehouse for consumption on or after May 10, 1994. Since each of the subject entries was filed in February 1994, the merchandise is not eligible for duty-free treatment under the GSP.

3) International freight and related charges incidental to such transportation totaling $11, 134.07 is properly deductible from invoice value for purposes of determining transaction value under 19 U.S.C. 1401a(b).

The protest should be granted in part and denied on part in accordance with the foregoing. 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 attached to the Form 19, Notice of Action, no later than 60 days from the date of this letter. Any reliquidation of the entries 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 Module in ACS and the public via the Diskette Subscription Service, Freedom of Information Act and other public access channels.

Sincerely,

John

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