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HQ 114766

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November 17, 2000

QUO-2-01-RR:IT:EC 114766 CC

CATEGORY: ENTRY

Attn: Protest Section
U.S. Customs Service
819 Water St., Bldg. 6
Laredo, TX 78040

RE: Application for further review of Protest No. 2304-98-100158; TPL; 19 CFR § 12.132(b); Certificates of Eligibility

Dear Sir:

The above-referenced protest was forwarded to this office for further review. We have considered the facts and issues raised, and our decision follows.

FACTS:

The merchandise the subject of this protest consists of women’s knit trousers, jackets, blouses, skirts, and dresses, 90 percent and over polyester. The protest consists of 5 entries. Two of the entries were made on August 13, 1997, and the other entries were made on August 22, 1997, August 29, 1997, and September 30, 1997. The merchandise is classified under subheading 9802.00.8065 of the Harmonized Tariff Schedule of the United States (HTSUS). In addition, under subheading 9999.00.60, HTSUS, the merchandise was eligible for a Tariff Preference Level (TPL) under the North American Free Trade Agreement (NAFTA) with the submission of a valid certificate of eligibility.

At the time of entry, valid certificates of eligibility were not submitted. Supplemental Information Letters (SIL’s) with certificates of eligibility were submitted on December 2, 1997. Although the certificates were valid for the subject entries, the claim in the SIL was rejected on March 28, 1998, because it was not in proper form. Two of the entries were liquidated on June 26, 1998, and the other entries were liquidated on July 6, 1998, July 10, 1998, and August 14, 1998. The protest was filed on September 11, 1998. Valid certificates of eligibility were resubmitted with the protest along with a claim for TPL treatment under the proper classification. The protest was denied because when the protest was filed, the applicable 1998 TPL had just closed. In addition, the protestant claims that the dutiable value listed for line 3 of one of the entries is incorrect due to a clerical error. You forwarded this protest to us for further review.

ISSUE:

Whether the subject entries are eligible for preferential tariff treatment under TPL’s.

LAW AND ANALYSIS:

Many goods entered from Mexico and Canada which are considered “originating” goods from those countries are granted preferential tariff treatment under NAFTA. In addition specified textile and apparel goods imported into the U.S. from Canada or Mexico which are not “originating” goods may nevertheless be granted preferential tariff treatment like originating goods up to specific annual quantitative TPL’s. Once a TPL applicable to a NAFTA country’s exports to another NAFTA country has been reached, any further exports of goods of that TPL category to the same NAFTA country during that year may not be accorded NAFTA preferential tariff treatment, but rather will be subject to duty at the most-favored nation rate. See T.D. 95-98, the final rule implementing the submission of certificates of eligibility in 19 CFR § 12.132(b). Consequently, a TPL is a type of tariff-rate quota.

Concerning making a claim for preferential duty treatment as a TPL, 19 CFR § 12.132(b) provides the following:

In connection with a claim for NAFTA preferential tariff treatment involving non-originating textile and apparel goods subject to the tariff preference level provisions of appendix 6.B. to annex 300-B of the NAFTA and Additional U.S. Notes 3 through 6 to Section XI, Harmonized Tariff Schedule of the United States, the importer shall submit to Customs a Certificate of Eligibility covering the goods. The Certificate of Eligibility shall be properly completed and signed by an authorized official of the Canadian or Mexican government and shall be presented to Customs at the time the claim for preferential tariff treatment is filed under § 181.21 of this chapter.

Concerning the filing of a certificate of eligibility and a claim for preferential tariff treatment as a TPL after the entry is filed, T.D. 95-98 states, in a discussion of public comments on this issue, the following:

While a failure to supply the required Certificate of Eligibility will preclude the filing of a claim for preferential tariff treatment and will result in liquidation of the entry at the non-preferential duty rate, Customs believes that importers in most cases will have adequate opportunity, following the date of entry, to submit the Certificate and make the claim when the Certificate is not available at the time of entry. Customs notes in this regard that the importer may supply the necessary documentation and make the claim either at any time prior to final liquidation or in connection with the filing of a protest within 90 days following final liquidation.

We first note that the applicable laws and regulations do not specifically provide for TPL’s in the quota regulations, part 132. Therefore, there are certain issues that are not specifically provided for by the regulations, e.g., what is the time of presentation for a TPL. Consequently, when this is the case, we will look to the intent of the regulations concerning tariff-rate quotas, and apply those principles to TPL’s.

Since the date of presentation determines the quota priority and status and determines when the quota is charged for tariff-rate quotas (See 19 CFR §§ 132.1(d), 132.11a, and 141.68(d)), we must first determine what is the date of presentation for the scenario described. The time of presentation is the time entry summary is delivered in proper form with estimated duties attached (unless ABI procedures are used). Thus for other tariff-rate quotas, whether the merchandise is subject to quota and if so, whether it takes the low or over-quota rate, is determined when the entry summary is filed. For a TPL, the date of presentation may not be when the entry summary is filed since 19 CFR 12.132(b) provides that a certificate of eligibility must be submitted when a claim for treatment as a TPL is made and thus the entry summary may be filed without submitting the certificate of eligibility. T.D. 95-98, which includes comments on the implementation of section 12.132(b), states that the submission of the certificate of eligibility and thus the claim for preferential treatment as a TPL may be made prior to liquidation or after liquidation with a timely filed protest. Consequently, the date of presentation for merchandise eligible for a TPL, which is entered without the submission of the certificate of eligibility, should be the time the valid certificate of eligibility is submitted, with a SIL prior to liquidation or a valid protest within 90 days of liquidation.

In this case the subject merchandise was released in 1997 and the protest with a valid certificate of eligibility was filed in 1998. The question which arises is whether the merchandise can take a presentation date in 1998, and the TPL would be charged to 1998, if it were still open at the time of presentation. 19 CFR § 142.23 and 19 CFR § 142.21(e) provide that for merchandise subject to quota, the entry summary must be filed and the estimated duties must be deposited within 10 days or before the end of the quota period, whichever expires first. Based on these regulations, in Headquarters Ruling (HQ) 114071, dated January 15, 1998, in which we note that the tariff-rate quota involved in that ruling was a TPL, we stated the following:

Clearly the regulations provide that for merchandise subject to a tariff-rate quota and released by immediate delivery near the end of a quota period, entry summary must be filed by the end of that quota period if it occurs prior to 10 working days of the date of release. In such a scenario, if the regulations are followed, entry summary would be filed and presentation would occur before the end of the quota period in which release occurred. Consequently, the purpose of the applicable regulations, 19 CFR § 142.23 and 19 CFR § 142.21(e), is clear: to ensure that importers may not gain release of merchandise subject to a tariff-rate quota at the end of a quota period and file entry summary after the close of that period in order to circumvent the tariff-rate quota in effect at the time of release.

If the date of presentation is considered to be in 1998 and quota for that period is applicable to the subject merchandise, then the tariff-rate quota at the time of release would be circumvented. Such an outcome is inconsistent with 19 CFR § 142.23, 19 CFR § 142.21(e), and HQ 114071. Consequently, in order for the TPL to be charged to the period in which the merchandise was released, and to establish a date of presentation consistent with quota period in which merchandise was released, the date of presentation for the subject merchandise should be the last day of the quota period in which the goods were released.

Since the goods were released in 1997, the date of presentation should be December 31, 1997. On that date the 1997 TPL had not filled. Consequently, the subject merchandise is eligible for preferential tariff treatment under TPL’s for the 1997 quota period.

The protestant has also protested the dutiable value listed in line 3 of one of the entries, which resulted in the overpayment of duty. The protestant claims that for that line on the CF 7501 the entered value was incorrectly declared as $99,465, because of a typographical error on the value sheet. The correct value, according to the protestant, was $9,465.

The protestant has submitted documentation, including a value sheet and proof of payment to the manufacturer, which substantiates this claim. Consequently, the entered value for this line will be corrected and the overpayment should be refunded.

HOLDING:

The subject entries are eligible for preferential tariff treatment under TPL’s. In addition, line 3 of one of the entries incorrectly overstated the entered value. Consequently, the protest should be GRANTED.

In accordance with Section 3A(11)(b) of Customs Directive 099 3550-065, dated August 4, 1993, Subject: Revised Protest Directive, you are to mail this decision, together with the Customs Form 19, to the protestant no later than 60 days from the date of this letter. Any reliquidation of the entry or entries in accordance with the decision must be accomplished prior to mailing the decision.

Sixty days from the date of the decision, the Office of Regulations and Rulings will make the decision available to Customs personnel, and to the public on the Customs Home Page on the World Wide Web at www.customs.ustreas.gov, by means of the Freedom of Information Act, and other methods of public distribution.

Sincerely,

Larry L. Burton
Chief

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See also:

• Tariff No.: 9802.00.80 - U.S. articles assembled abroad, which have not lost their physical identity or have not advanced in value or improved in condition abroad
• Tariff No.: 9999.00.60 - Imports of cotton or manmade fiber apparel from Mexico described in additional US note 3(b) to section XI except as provided in (d) and (e)