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HQ 967808




October 11, 2005

CLA-2: RR:CTF:TCM 967808 KSH

CATEGORY: CLASSIFICATION

TARIFF NO.: 9819.11.12

Port Director
U.S. Customs and Border Protection
Port of Savannah
1 East Bay Street
Savannah, GA 31401

RE: Application for Further Review of Protest 1703-03-100439

Dear Port Director:

This is in reply to your correspondence forwarding Application for Further Review of Protest (AFR) 1703-03-100439, filed by Kmart Corporation.

Protestant has requested confidential treatment of all documents submitted. We are granting protestant’s request for confidential treatment for the commercial information referring to the merchandise under protest. It has long been the position of Customs and Border Protection (CBP) that a section 177.2(b)(7) grant of confidentiality is coterminous with Exemption 4 of the Freedom of Information Act (5 U.S.C. 552(b)(4)). Exemption 4 was enacted to protect from disclosure information such as customer lists, costs, identities of suppliers, quantities of merchandise, formulas, assets, profits, losses, market shares, and similar information, the disclosure of which would inure to the competitive disadvantage of the party providing the information.

FACTS:

The protest at issue is against Customs and Border Protection’s (CBP) liquidation and assessment of additional duties on one entry of men’s cotton woven shorts, girls’ cotton trousers, and women’s or girls’ pullovers under subheadings 6203.42.4050, 6204.62.4050 and 6110.20.2075 respectively, of the Harmonized Tariff Schedule of the United States (HTSUS).

Protestant entered the merchandise subject to this protest free of duty in subheading 9819.11.12, HTSUS. However, the merchandise was liquidated under subheadings 6203.42.4050, 6204.62.4050 and 6110.20.2075, HTSUSA, on July 7, 2003, dutiable at 16.8%, 16.8% and 17.3% ad valorem, respectively.

Protestant filed a protest with an application for further review on October 6, 2003. The protest was timely filed pursuant to 19 U.S.C. 1514 (c)(3) and 19 C.F.R. 174.12 (e)(1). The AFR request was approved on March 15, 2005. Further review is warranted pursuant to 19 CFR §§174.24(a) and 174.25.

ISSUE:

Whether the subject apparel article is eligible for preferential treatment under the AGOA.

LAW AND ANALYSIS:

The African Growth and Opportunity Act (AGOA) provides certain specified trade benefits for countries of sub-Saharan Africa. These benefits include duty-free treatment for certain non-textile articles previously excluded from preferential treatment under the Generalized System of Preferences, and duty- and quota-free treatment for certain textile and apparel articles which meet the requirements set forth in Section 112 of the Act (codified at 19 U.S.C. 3721). Beneficiary countries are designated by the President of the United States after having met eligibility requirements set forth in the AGOA. Once designated, a beneficiary country is entitled to the duty-free treatment for the designated non-textile articles determined not to be import-sensitive in the context of imports from the beneficiary sub-Saharan African countries. A second designation by the United States Trade Representative (USTR), published in the Federal Register, that a beneficiary country has taken the measures required by the Act to prevent unlawful transshipment and has adopted an effective visa system, is necessary before a beneficiary country may enjoy the duty- and quota-free benefits extended to textile and apparel articles under the Act. The Kingdom of Lesotho has been designated a "beneficiary sub-Saharan African country," a "lesser developed beneficiary sub-Saharan African country" (LDBC) and has been declared by the U.S. Trade Representative to have satisfied the requirements of the Act protecting against transshipment. See Presidential Proclamation 7350, 65 Fed. Reg. 59321 (2000); 66 Fed. Reg. 21192 (2001).

The provisions implementing the textile provisions of the AGOA in the Harmonized Tariff Schedule of the United States (HTSUS) are contained, for the most part, in subchapter XIX, Chapter 98, HTSUS (one provision may be found in subheading 9802.00.80, HTSUS). The regulations pertinent to the textile provisions of the AGOA may be found at §§10.211 through 10.217 of the Customs Regulations (19 CFR 10.211 through 10.217).

Apparel articles wholly assembled in a sub-Saharan African lesser developed beneficiary country (LDC) and directly imported into the U.S. are entitled to duty free treatment, subject to certain restrictions. Such articles are entered under subheading 9819.11.12, HTSUS, which provides as follows:

Apparel articles wholly assembled, or knit-to-shape and wholly assembled, or both, in one or more such lesser developed countries enumerated in U.S. note 2(d) to this subchapter, subject to the provisions of U.S. note 2 to this subchapter, regardless of the country of origin of the fabric or the yarn used to make such articles, if entered during the period beginning on the date announced in a Federal Register notice issued by the United States Trade Representative and continuing through September 30, 2007, inclusive.

U.S. Note 2(d) lists Lesotho as qualifying for designation as a LDC. U.S. Note 2, Subchapter XIX, Chapter 98, HTSUS, provides for a quantitative restriction for apparel articles classified in subheading 9819.11.12, HTSUS.

Prior to the enactment of the Miscellaneous Trade and Technical Corrections Act of 2004, Public Law 108-429, which allows for the retroactive application to October 1, 2000, of benefits to certain textile and apparel articles otherwise eligible for preferential treatment under the AGOA but for the addition of foreign collars and cuffs, CBP interpreted the provisions of the AGOA to only allow foreign yarn or fabric to be used in the manufacture of apparel articles in LDC’s. It did not extend duty-free treatment to foreign formed textile components (i.e. cut to shape or knit to shape collars and cuffs). See HQ 965871, dated September 25, 2002 and HQ 562612, dated April 30, 2003.

Pursuant to the Miscellaneous Trade and Technical Corrections Act, importers eligible to receive retroactive application of the benefits to certain textile and apparel articles otherwise eligible for preferential treatment under the AGOA but for the addition of foreign collars and cuffs, must have submitted a written request to the port of entry by March 3, 2005, included detailed entry information, and mention the Miscellaneous Trade and Technical Corrections Act as the reason for the requested refunds.

In this instance, protestant has failed to file a request for a refund pursuant to the Miscellaneous Trade and Technical Corrections Act. Accordingly, the protested entry remains subject to the provisions of the AGOA as interpreted by CBP prior to the enactment of the Miscellaneous Trade and Technical Corrections Act. Protestant argues that it is evident from the documentation submitted that the fabric was imported in rolls or the equivalent and there were no pre-cut components. Upon review of the file, the evidence submitted in support of the protest, including the purchase order, invoice and bill of lading, adequately establishes that the merchandise was cut and assembled in Lesotho. Therefore, we find that the articles are entitled to duty free entry under subheading 9819.11.12, HTSUS.

HOLDING:

The protest should be allowed.

The merchandise is classified in subheading 9819.11.12, HTSUS, which provides for “Articles imported from a designated beneficiary sub-Saharan African country enumerated in U.S. note 1 to this subchapter: Apparel articles wholly assembled, or knit to shape and wholly assembled, or both, in one or more such lesser developed countries enumerated in U.S. note 2(d) to this subchapter, subject to the provisions of U.S. note 2 to this subchapter, regardless of the country of origin of the fabric or the yarns used to make such articles, if entered during the period beginning on the date announced in the Federal Register notice issued by the United States Trade Representative and continuing through September 30, 2007, inclusive .” The general column one rate of duty is free.

In accordance with the Protest/Petition Processing Handbook, (CIS HB, January 2002, pp 18 and 21), 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 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 CBP personnel, and to the public on the CBP Home Page on the World Wide Web at www.cbp.gov, by means of the Freedom of Information Act, and other methods of public distribution.

Sincerely,

Myles B. Harmon, Director
Commercial and Trade Facilitation Division

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