LIQ-9-01-RR:CR:DR 227605 LTO

Port Director of Customs
819 Water Street, Building 6
Laredo, Texas 78040
ATTN: Protest Section

RE: HQ 227245 modified; Protest 2304-96-100159; Post-Importation Duty Refund Claim; Merchadise Processing Fees; 19 U.S.C. 1514; 19 U.S.C. 1520(d); 19 CFR 181.21(a)

Dear Sir or Madame:

This in reference to Protest 2304-96-100159, which was GRANTED IN PART IN HQ 227245, dated May 6, 1997. We have found that it is necessary to modify the portion of this decision pertaining to the refund of merchadise porcessing fees (MPFs) pursuant to 19 U.S.C. 1520(d). Pursuant to section 625 (c) (1), Tariff Act of 1930 (19 U.S.C. 1625(c) (1)), as amended by section 623 of Title VI (Customs Modernization) of the North American Free Trade Agreement Implementation Act (Pub. L. 103-182, 107 Stat. 2057), notice of the proposed modification of HQ 227245 was published in the Customs Bulletin, Volume 31, Number 35 (August 27, 1997).

FACTS:

In HQ 227245, we found that the requirements for a section 1520(d) post-importation duty refund claim had been met for a particular entry, and granted the protest [regarding the denial of the section 1520(d) claim] for this entry, "as to duties only (underlining n original)." Quoting the General Notice on Post-Importation Duty Refund Claims Under the NAFTA in the Customs Bulletin, Volume 31, Number 5, page 1 (January 29, 1997), we stated that " [merchandise processing fees] may not be refunded pursuant to 19 U.S.C. 1520(d) and 19 CFR 181.31.'"

ISSUE:

Whether MPFs may be refunded pursuant to 19 U.S.C. 1520(d).

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LAW AND ANALYSIS:

On January 29, 1997, Customs published a General Notice setting forth our position regarding claims under 19 U.S.C. 1520 (d), which concerns post-importation duty refund claims for goods qualifying under the NAFTA rules of origin.

Under Article 310 of the North American Free Trade Agreement (NAFTA) the Parties agreed to maintain the userfee schedule set forth in Annes 310.1. Section B.1. of that Annex provides:

The United States shall not increase its merchandise processing fee and shall eliminate such fee according to the schedule set out in Article 403 of the Canada - United States Free Trade Agreement on originating goods where those goods qualify to be marked as goods of Canada pursuant to Annex 311, with-out regard to whether the goods are marked.

The schedule in Article 403 of the U.S.-Canada Free Trade Agreement, in pertinent part, provided:

With respect ot goods entered or withdrawn from warehouse for consumption o or after January 1, 1994, there shall be no customs user fee.

Pursuant to section 109 of the NAFTA implementation Act (Act of December 8, 1993, Pub. L. 103-182, 107 Stat 2057) and Executive Order No. 12889, 58 F.R. 69681, NAFTA entered into force on January 1, 1994. The above Agreements Show that the Parties intended, to eliminate Customs user fees for all Canadian origin NAFTA originating goods that were entered on or after January 1, 1994. The Statement of Administrative Action, H. Doc 103-159, Vol-1 456 (Nov. 4, 1993) recognizes that the NAFTA incorporates and carried forward most of the provisions of the U.S.- Canada Agreement. In fact, at pages 472-473, of H. Doc. 103-159, Vol. 1, it states that, the purpose of Annex 310.1 was to reaffirm the requirement imposed by - 3 -

the U.S. - Canada Agreement for the U.S. to eliminate its merchandise processing fee with respect to Canadian goods on January 1, 1994.

Customs believes tht the expressed intent foran unqualified elimination of imposition f the merchandise processing fee (MPF) is best carried out by an equal elimination of the fee to eligible goods so longas the claim for preference was lawfully made. Therefore, Customs will refund MPFs pursuant to a section 1520 (d) claim.

HOLDING:

MPFs may be refunded pursuant to 19 U.S.C. 1520(d) and 19 CFR 181.31. Accordingly, refunds of MPFs should be allowed on any entry on which liquidation or reliquidation has not become final.


Sincerely,


Stuart P. Seidel
Assistant Commissioner,
Office of Regulations and
Rulings