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HQ 563351




January 11, 2006

CLA-2 RR:CTF:VS 563351 KSG

Port Director
U.S. Customs & Border Protection
10 Causeway Street, Room 603
Boston, Massachusetts 02222

RE: Application for Further Review of Protest 0401-05-100117; brassieres; CBTPA; DR-CAFTA; 9802.00.80

Dear Port Director:

This is in reply to your correspondence forwarding the Application for Further Review of Protest (AFR) 0401-05-100117 timely filed by counsel on behalf of Eveden, Inc.

FACTS:

The Protest is against Customs and Border Protection’s (CBP) rate advance of 11 entries of imported brasseries. The Protestant states that the bras were made from over 85% U.S.-origin fabric and were manufactured in El Salvador. On September 24, 2003, Eveden submitted a Compliance Declaration Form to CBP, to be assigned a unique identifier number. CBP assigned Eveden a unique identifier number on September 26, 2003. On April 14, 2005, Eveden received a fax from its broker notifying it of rate advances on the subject entries because the unique identifier number was only valid for entries made through October 1, 2004. These 11 entries were filed subsequent to October 1, 2004.

ISSUES:

Whether the imported brasseries are eligible for preferential tariff treatment under subheading 9820.11.15, of the Harmonized Tariff Schedule of the United States (“HTSUS”).

Whether the imported brasseries are eligible for preferential tariff treatment under the U.S.- Dominican Republic Central America Free Trade Agreement (“DR-CAFTA”).

Whether the imported brasseries are eligible for a partial duty exemption under subheading 9802.00.80, HTSUS.

LAW AND ANALYSIS:

CBTPA

Title II of the Trade and Development Act of 2000, Pub. L 106-200, 114 Stat. 251, May 18, 2000, referred to as the Caribbean Basin Trade Partnership Act (“CBTPA”), concerns trade benefits for Caribbean Basin countries. The CBTPA authorizes the expansion of trade benefits to designated countries in the Caribbean Basin by providing for the entry of specific textile and apparel articles free of duty and free of any quantitative restrictions, limitations or consultation levels, and the extension of NAFTA duty treatment standards to certain non-textile articles that are excluded from duty-free treatment under the Caribbean Basin Initiative program. In order to implement the CBTPA, CBP issued regulations at 19 CFR 10.221 through 10.237.

Subheading 9820.11.15, HTSUS, provides for duty-free treatment as follows:

Articles imported from a designated beneficiary Caribbean Basin Trade Partnership country enumerated in general note 17(a) to the tariff schedule:

Brassieres classifiable in subheading 6212.10 of the tariff schedule, both cut and sewn or otherwise assembled in the United States or one or more such countries or both, subject to the provisions of U.S. note 2(d) to this subchapter.

U.S. Note 2(d), subchapter XX, Chapter 98, HTSUS, provides as follows:

For purposes of subheading 9820.11.15, imports of brassieres of a producer or an entity controlling production, during the period beginning on October 1, 2001, and during each of the six succeeding 1-year periods, shall be eligible for preferential treatment only if the aggregate cost of fabrics (exclusive of all findings and trimmings) formed in the United States that are used in the production of all such articles of that producer or entity that are entered and eligible under subheading 9820.11.15 during the preceding 1-year period is at least 75 percent of the aggregate declared customs value of the fabric (exclusive of all findings and trimmings) contained in all such articles of that producer or entity that are entered and eligible under subheading 9820.11.15 during the preceding 1-year period. The United States Customs Service shall develop and implement methods and procedures to ensure ongoing compliance with the provisions of this paragraph. If the Customs Service finds that a producer or entity controlling production has not satisfied such provisions in a 1-year period, then such apparel articles of that producer or entity shall be ineligible for preferential treatment under subheading 9820.11.15 during any succeeding 1-year period until the aggregate cost of fabrics (exclusive of all findings and trimmings) formed in the United States used in the production of such articles of that producer or entity entered during the preceding 12-month period is at least 85 percent of the aggregate declared customs value of the fabric (exclusive of all findings and trimmings) contained in all such articles of that producer or entity that are entered and eligible under subheading 9820.11.15 during the preceding 1-year period.

The provisions of U.S. Note 2(d), subchapter XX, Chapter 98, HTSUS, were effective beginning October 1, 2001.

Additional requirements for preferential tariff treatment of brasseries under this provision are set forth in 19 CFR 10.228.

Counsel argues that there is no legal requirement that the importer obtain a new unique identifier each year. Counsel states that neither the law (subheading 9820.11.15, HTSUS) or the regulation set forth at 19 CFR 10.228 require that a new unique identifier be obtained each year. Counsel claims that this requirement exists only in several Customs Directives that have been issued which do not have the force or authority of law. We find that this argument has no merit.

The protestant in this case filed a Declaration of Compliance which stated as follows: “ 1. Year beginning date: October 1, 2002. Year ending date: September 30, 2003.” At the bottom of the Declaration, below the signature is the date “September 16, 2003.” The protestant checked the box to declare that “the aggregate cost of fabric components formed in the United States that were used in the production of all articles that were produced and entered during the year as stated above was at least 85 percent of the aggregate declared customs value of the fabric contained in all articles that were produced and entered during the year as stated above.”

Pursuant to 19 CFR 10.228(c), in order for an importer to comply with the CBTPA additional requirements for brassieres, the producer or the entity controlling production must file with CBP a proper Declaration of Compliance as set forth in 19 CFR 10.228. Once the Declaration has been filed with CBP, CBP will assign a unique qualifier to that Declaration. As explained in CBP Directive TBT-04-028, dated October 26, 2004, the identifier number, which will be reported in block 34 of the CF7501 consist of nine characters. The first character represents the fiscal year in which the claims can be made (i.e. “3” for October 1, 2002 to September 30, 2003), then “CB” for CBTPA claims , then a six digit serial number starting with a “1” for a producer and “2” for an entity controlling production.

CBP specified in 19 CFR 10.228(b)(2)(i)(J) that the Declaration of Compliance applies to all articles for the year in question. The relevant language is as follows:

(J) In the case of a producer, the 75 or 85 percent standard specified in paragraph (b)(1)(i) or paragraph (b)(1)(ii) of this section and the declaration of compliance procedure under paragraph (c) of this section apply to all articles of that producer for the year in question, even if some but not all of that production is also covered by a declaration of compliance prepared by an entity controlling production.

U.S. Note 2(d), HTSUS, references “six succeeding 1-year periods”. A review of the entries during the preceding one year period is a basis of eligibility for brassieres under the CBTPA. This format indicates that the Declaration of Compliance would expire at the end of the year on September 30.

The Customs Directive also states that the unique identifier expires at the end of the fiscal year in question and that an annual Declaration of Compliance must be filed in order to qualify for preferential tariff treatment under subheading 9820.11.15, HTSUS, for the year in question. In short, the statutory scheme and the regulations require that an annual Declaration of Compliance be filed. That was not done in this case.

Accordingly, since a Declaration of Compliance was not submitted for the fiscal year beginning October 1, 2003, at the expiration of FY2003, we find that the entries involved in this case would not be eligible for preferential tariff treatment under subheading 9820.11.15, HTSUS.

II. DR-CAFTA

Section 205 of the Dominican Republic-Central America-United States Free Trade Agreement (DR-CAFTA), Pub. L. 109-53, dated August 2, 2005, provides for the retroactive application to entries of certain textile or apparel goods of a CAFTA-DR country that the United States Trade Representative (“USTR”) has designated as an eligible country and that would have qualified as originating goods under section 203 if the good had been entered after the date of entry into force of the Agreement for that country, that were made on or after January 1, 2004, and before the date of the entry into force of the Agreement with respect to that country, and for which customs duties in excess of the applicable rate of duty for those goods set out in the Schedule of the United States to Annex 3.3 of the Agreement were paid. CBP will refund any such excess customs duties paid with respect to such entries. Section 205(c) states that liquidation or reliquidation may be made under subsection (a) with respect to an entry of a textile or apparel good only if a request therefor is filed with CBP within such period as CBP shall establish by regulation.

The DR-CAFTA has not been implemented to date. CBP has not yet established a period of time by regulation in which to file such entries and USTR has not yet designated which countries would be eligible under this provision. Accordingly, the entries in this case are not eligible for preferential treatment under DR-CAFTA at this time.

III. Subheading 9802.00.80, HTSUS

Subheading 9802.00.80, HTSUS, provides for a duty exemption for:

Articlesassembled abroad in whole or in part of fabricated components, the product of the United States, which (a) were exported in condition ready for assembly without further fabrication, (b) have not lost their physical identity in such articles by change in form, shape, or otherwise, and (c) have not been advanced in value or improved in condition abroad except by being assembled and except by operations incidental to the assembly process such as cleaning, lubricating and painting.

Based on the facts presented, the imported brasseries are eligible for a partial duty exemption under subheading 9802.00.80, HTSUS, provided the documentary requirements of 19 CFR 10.24 are satisfied or waived by the port. The garments are assembled abroad (El Salvador) and contain components that are a product of the U.S. Based on the facts presented, it does not appear that there is any further fabrication, change in form, shape or otherwise and the components are not advanced in value or improved in condition except by being assembled and operations incidental to the assembly process.

HOLDING:

Based on the facts presented above, the protest should be denied as to the CBTPA and DR-CAFTA claims, and allowed with regard to the claim for a partial duty exemption under subheading 9802.00.80, HTSUS, provided that the documentary requirements of 19 CFR 10.24 are satisfied or waived by the port.

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 should be accomplished prior to mailing of this decision. Sixty days from the date of this 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.gov, by means of the Freedom of Information Act, and other methods of public distribution.

Sincerely,

Monika R. Brenner, Chief
Valuation & Special Programs Branch

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