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HQ 560720





February 11, 1998

CLA-2 RR:CR:SM 560720 RSD

CATEGORY: CLASSIFICATION

Mr. Charles C. Danache, President
Danache & Associates
One World Trade Center
Suite 1870
Long Beach, California 90831-1870

RE: Eligibility of imported rifle scopes under the Generalized System of Preferences ("GSP"); imported directly; 19 CFR ? 10.175

Dear Mr. Danache:

This is in response to your letter dated October 17, 1997, on behalf of Ninon, Inc. (Ninon) requesting a ruling regarding the eligibility of certain rifle scopes for duty-free treatment under the Generalized System of Preference ("GSP"). We have also received a supplemental letter dated November 3, 1997, clarifying the name of your client.

FACTS:

Nikon intends to import rifle scopes from the Philippines, Thailand, and other countries into the United States. You claim that all the countries in which the rifle scopes are made will be GSP beneficiary developing countries. Before the rifle scopes are shipped from the beneficiary developing country to the United States, they are temporarily stored in a warehouse in an intermediary country, such as Japan. While the rifle scopes are in the intermediary country, they will not be sold, manipulated, offered for sale at retail, undergo a change of title, repackaged or subdivided into lots and allocated to different customers in the United States or other countries. You further claim that the rifle scopes will meet all of the requirements for GSP duty-free treatment. The invoices, shipping documents and bill of lading will all show the United States as the final destination for the merchandise.

ISSUE:

Whether the rifle scopes originating in the Philippines, Thailand, or another beneficiary developing country are "imported directly" for purposes of the GSP when they are shipped through an intermediary country to the United States as described above.

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. section 10.175 of the Customs Regulations (19 C.F.R. ?10.175). For purposes of this ruling, we will assume that the articles are GSP eligible, they are "products of" the GSP country, and the minimum local value-content requirement is met. However no evidence has been presented to support the claim for GSP eligibility.

Section 10.175, Customs Regulations (19 C.F.R. ?10.175) defines the term "imported directly" for purposes of the GSP. Under 19 C.F.R. ?10.175(b), merchandise shipped from a BDC through any other country to the U.S. is "imported directly" if the merchandise does not enter into the commerce of any other country while en route to the U.S., and the invoices, bills of lading, and other shipping documents show the U.S. as the final destination.

In HQ 556079 dated July 2, 1991, ethylene glycol was produced in the Czech and Slovak Federal Republic (Czechoslovakia). However, as Czechoslovakia had no outlet on the sea, the produce had to be shipped overland from Czechoslovakia to Rotterdam, Netherlands, where it was held in storage tanks before being loaded onto a U.S.-bound ocean carrier and shipped to the U.S. In HQ 556079, it was possible that the ethylene glycol could be stored in the Netherlands for as long as 30 days. At no time did the ethylene glycol enter the commerce of the Netherlands or any other country of transshipment. Moreover, from the Czechoslovakia border until the goods were loaded on board the U.S.-bound ship, the merchandise was held under bond in storage. We held in HQ 556079 that if the invoice, bill of lading, GSP certificate, certificate of origin and other original shipping documents issued in Czechoslovakia showed the U.S. as the final destination, the ethylene glycol would be considered "imported directly" pursuant to 19 C.F.R. ?10.175(b). We stated that this requirement is intended both to establish a connection between the imported merchandise and its country of origin and to show that the passage of the merchandise through the intermediate country involved a mere transshipment rather than entry into the commerce of the intermediate country. Furthermore, we noted that whereas this requirement does not preclude multiple modes of transportation such as air, sea or different carriers of the same type, the documents presented as evidence of compliance with this requirement must include the original shipping documents issued in the BDC, showing the U.S. as the final destination.

In HRL 559535 dated September 20, 1996, we held that calculators shipped from Thailand and Malaysia through Japan or other intermediary country before importation into the United States would satisfy the "imported directly" requirement under 19 CFR 10.175(b),
assuming that the commercial invoices, bills of lading, and other shipping documents show the United States as the final destination for the merchandise, and the calculators did not enter the commerce of the immediate country.

In HRL 560688 dated January 26, 1998, we found that operations consisting only of consolidating merchandise by unloading and reloading it into a container for shipping purposes would not constitute the entry of the merchandise into the commerce of the foreign country.

Similarly, in the instant case, if the rifle scopes are merely unloaded in the intermediary country, stored temporarily in a warehouse, and reloaded for shipment to the U.S., they will not have entered into the commerce of the intermediate country. In addition, if all the commercial invoices, bills of lading, and other shipping documents show the United States as the final destination of the merchandise then the "imported directly" requirement of 19 C.F.R. ?10.175(b) will be met.

Please note that, pursuant to 19 C.F.R. ?10.174, the port director may require that appropriate shipping papers, invoices, or other documents be submitted within 60 days of the date of entry as evidence that the articles were "imported directly". In addition, this provision states that any evidence of direct shipment required by the port director shall be subject to such verification as the port director deems necessary. Furthermore, because you have not provided any evidence regarding the other requirements of a claim for GSP, we cannot rule whether the merchandise, is in fact, entitled to duty-free treatment under the GSP.

HOLDING:

Assuming that the rifle scopes are only temporarily stored in a warehouse in an intermediate country and the commercial invoices, bills of lading, and other shipping documents show the United States as the final destination of the merchandise, the rifle scopes would not enter the commerce of the immediate country. Accordingly, the rifle scopes originating from Philippines, Thailand, or another beneficiary developing country which are first shipped through an intermediary country before being shipped to the U.S., would be considered "imported directly" from the BDCs for purposes of qualifying for treatment under the GSP.

A copy of this ruling letter should be attached to the entry documents filed at the time the goods are entered. If the documents have been filed without a copy, this ruling should be brought to the attention of the Customs officer handling the transaction.

Sincerely,

John Durant, Director

Commercial Rulings Division

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