United States International Trade Commision Rulings And Harmonized Tariff Schedule
faqs.org  Rulings By Number  Rulings By Category  Tariff Numbers
faqs.org > Rulings and Tariffs Home > Rulings By Number > 1998 NY Rulings > NY D83375 - NY D83455 > NY D83419

Previous Ruling Next Ruling
NY D83419




November 20, 1998

CLA-2-95:RR:NC:2:224 D83419

CATEGORY: CLASSIFICATION

TARIFF NO.: 9506.70.4000

Jacob Holzscheiter
A.N. Deringer, Inc.
PO Box 284
Rt I-89
Highgate Springs VT 05460

RE: GSP Treatment of Ice Skates made in Thailand and the Czech Republic.

Dear Mr. Holzscheiter:

In your letter dated October 28, 1998, on behalf of Bauer, Inc., you inquired whether ice skates manufactured in Thailand and in the Czech Republic were eligible for duty free treatment under the Generalized System of Preferences (GSP) if, prior to importation into the United States, they are warehoused in Canada.

You state that your client will manufacture ice skates wholly of material of Thailand and Czech Republic origin and ship the finished skates to the United States with an intermittent stop at a bonded warehouse in Canada. Two shipment scenarios are offered.

In scenario #1, Bauer, Inc., located in Montreal, Canada, will purchase ice skates from manufacturers in the Czech Republic or Thailand. The finished skates will be shipped directly to a Canadian bonded warehouse without entering the commerce of any intermediate country. There will be no processing operations regarding the ice skates other than loading and unloading. As orders are placed individual shipments will be sent in-bond from the bonded warehouse to the United States for entry. Bauer Inc., Montreal will be the importer of record.

In scenario #2, a company identified as Bauer, USA will purchase ice skates directly from producers in the Czech Republic and Thailand and the ordered merchandise will be shipped directly to a Canadian bonded warehouse for storage. The ice skates will not be subjected to any operations other than loading and unloading while in this bonded storage. When an order is placed the shipment will be sent in bond from the bonded warehouse to the United States for entry with Bauer USA as the importer of record. All invoices and shipping documents will show the United States as the final destination

Ice skates can be classified by reference to General Rule of Interpretation (G.I.) 1 in subheading 9506.70.4000, Harmonized Tariff Schedule of the United States Annotated (HTSUSA), the eo nomine provision for articles and equipment for general physical exercise...: ice skates and roller skates, including skating boots with skates attached. The applicable duty rate is 3.5 percent ad valorem.

The GSP is a remewable, preferential trade program that allows the products of many developing countries to enter the United States free of duty. 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 United States from a BDC may redceive duty-free treatment if the sum of the cost or value of materials produced in the BDC, plus the direct cost involved in the processing of the eligible article in the BDC is equivalent to at least 35 percent of the appraised value of the article at the time of entry. See 19 U.S.C. 2463(b).

Both Thailand and The Czech Republic are designated BDCs. See General Note 3(c)(ii)(A) of the HTSUSA. We have determined that the subject ice skates are classifiable in subheading 9506.70.40, HTSUSA, which is a GSP-eligible provision. Therefore, the ice skates will receive duty-free treatment under the GSP if they are "products of" Thailand or the Czech Republic, the 35 percent value-content requirement is satisfied, and they are imported directly to the U.S. There seems to be no GSP eligibility question arising from product origin or meeting the local value-content minimum. Eligibility for the ice skates will stand or fall on whether the given circumstances meet the test of the "imported directly" requirement.

Section 10.175 of the Customs Regulations (19 CFR 10.175) defines the expression "imported directly" for purposes of the GSP. Paragraph (a) provides the most restrictive definition (that is, direct shipment from the BDC to the United States without passing through the territory of any other country), and paragraphs (b)-(d) set forth certain limited derogations or exceptions from the strict "imported directly" rule contained in paragraph (a).

Under section 10.175, merchandise shipped through a non-BDC to the United States is "imported directly" if: 1) the merchandise does not enter into the commerce of the intermediate country while en route to the United States, and the invoices, bills of lading, and other shipping document show the United States as the final destination (19 CFR 10.175(b)); or 2) the shipment remains under the control of the Customs authority of the intermediate country, the merchandise does not enter into the commerce of the intermediate country, and the port director is satisfied that the importation results from the original commercial transaction between the importer and the producer, and the articles of the shipment are not subjected to operations other than loading and unloading and other activities necessary to preserve the articles in good condition (19 CFR 10.175(d)).

The shipment described in your letter's second scenario appears to meet the "imported directly" requirements of subsection (b) of Title 19, Part 10, section 175. It describes a shipment of ice skates exported from a BDC to the United States through the territory of Canada under circumstances in which the skates in the shipment do not enter into the commerce of Canada while en route to the United States, and the invoices, bills of lading, and other shipping documents associated with the movement of the ice skates show the United States as the final destination for the ice skates.

It is not clear from your description of the conditions set forth in the first scenario that the original shipping documents to be issued in the BDC will show the United States as the final destination, as required by 19 CFR 10.175(b). The transhipment through Canada will not qualify if the merchandise enters the commerce of the intermediate country such as if the articles are in some way manipulated or offered for sale or subjected to a title change in that country.

However, if, as you assert, the skates under this scenario remain under the control of the customs authority in Canada and the articles do not enter into the commerce of Canada and Customs in the person of the district director is satisfied that the importation results from the original commercial transaction between the importer and the producer, the shipment meets the requirements of subsection (d) of section 175, in part 10 of title 19 (19 CFR 10.175(d)) and will be eligible for duty-free treatment upon entering the United States by virtue of their GSP eligibility.

HOLDING:

On the basis of the circumstances of the scenarios provided, it is our opinion that your client's ice skates, manufactured in Thailand or the Czech Republic and transported to Canada where they will await fulfillment of orders from the United States are considered "imported directly" from the BDC to the United States as that term is defined in 19 CFR 10.175 and qualify for duty-free treatment under the GSP.

This ruling is being issued under the provisions of Part 1777 of the Customs Regulations (19 C.F.R. 177).

A copy of the ruling or the control number indicated above should be provided with the entry documents filed at the time this merchandise is imported. If you have any questions regarding the ruling, contact National Import Specialist Tom McKenna at 212-466-5475.

Sincerely,

Robert B. Swierupski
Director,
National Commodity

Previous Ruling Next Ruling

See also: