CLA-2 CO:R:C:S 557207 BLS
District Director of Customs
San Ysidro, California 92073
RE: Application for Further Review of Protest No. 2501-92-
100112; GSP; 35% value-content requirement
Dear Sir/Madame:
This is in reference to a memorandum dated March 22, 1993,
from the Office of Entry Control, forwarding Protest No. 2501-92-
100112, filed by Romano, Fernandez & McNally Co., Inc., on behalf
of Clayton Manufacturing. Protestant claims that the subject
merchandise, certain generators and parts imported from Mexico, is
eligible for duty-free treatment under the Generalized System of
Preferences (GSP).
FACTS:
The protest covers four shipments entered in June, 1992.
These entries were liquidated on September 25, 1992, October 2,
1992 and October 9, 1992, and the protest was timely filed on
December 14, 1992. In support of GSP eligibility, more
particularly the 35% value-content requirement, protestant
submitted on August 18, 1992, certain supporting cost data. The
concerned import specialist believes the submitted information was
not sufficient to support such claim, specifically that adequate
financial statements were not included, nor other such
documentation, and that, in addition, overhead expenses were only
estimated, i.e., quantified on an annual basis. Additional
documentation in support of the 35% value-content requirement,
labeled "Cost Submissions And Supporting Detail- FY 1992", dated
July 30, 1993, has since been submitted.
ISSUE:
Whether the imported merchandise satisfies the 35% value-
content requirement under the GSP, for purposes of determining
whether the imported articles are eligible for duty-free treatment
under the statute.
LAW AND ANALYSIS:
Under the GSP, eligible articles the growth, product or
manufacture of a designated beneficiary developing country (BDC)
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which are imported directly into the Customs territory of the U.S.
from a BDC may receive duty-free treatment if the sum of (1) the
cost or value of materials produced in the BDC, plus (2) the direct
costs of processing operations 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).
Mexico is a designated BDC. See, General Note 3(c)(ii)(A),
Harmonized Tariff Schedule of the United States (HTSUS). The
merchandise was entered and classified under subheading
8402.90.00909, HTSUS, "Steam or other vapor generating boilers,
Parts, Other," a GSP eligible provision. From a description of the
articles, we have no reason to believe that the import specialist's
determination as to classification was incorrect. Therefore, the
imported merchandise will receive duty-free treatment if it is
considered to be a "product of" Mexico and the 35 percent value-
content requirement is satisfied. Merchandise is considered the
"product of" a BDC if it is either wholly the growth, product or
manufacture of a BDC or has been substantially transformed there
into a new or different article of commerce. 19 U.S.C. 2463(b)(2).
In this regard, the import specialist has orally advised that, in
her opinion, the imported articles qualify as "products of" Mexico
for purposes of the GSP. The record contains no information which
would be inconsistent with this determination. Therefore, the
merchandise will be eligible for GSP benefits if the 35% value-
content requirement is satisfied.
The additional supporting documentation covers the imported
generator parts, i.e., coils and burners, but contains no
supporting cost information with respect to the dynamometers. The
Mexican content, composed of materials, labor, and allowable
overhead, is shown for each generator part, and in every case
exceeds 35 percent. The concerned supervisory import specialist
has reviewed the additional submission and agrees that the
documentation supports protestant's claim, with respect to the
generator parts, that the 35% value-content requirement has been
satisfied.
HOLDING:
Protestant has established, through supporting documentation,
that the imported generator parts satisfy the 35% value-content
requirement under the GSP. Accordingly, these parts should be
entered free of duty under that program. However, protestant has
failed to support its burden of establishing, through appropriate
documentation, that the imported dynamometer components meet the
35% value-content requirement. Therefore, these parts are not
eligible for duty-free treatment under the GSP.
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The protest should be granted in part and denied in part in
accordance with the foregoing. In accordance with Section
3A(11)(b) of Customs Directive 099 3550-065, dated August 4, 1993,
Subject: Revised Protest Directive, this decision should be mailed
by your office to the protestant attached to the Form 19, Notice
of action, no later than 60 days from the date of this letter. Any
reliquidation of the entries in accordance with the decision must
be accomplished prior to mailing of the decision. Sixty days from
the date of the decision the Office of Regulations and Rulings will
take steps to make the decision available to customs personnel via
the Customs Ruling Module in ACS and the public via the Diskette
Subscription Service, Lexis, Freedom of Information Act and other
public access channels.
Sincerely,
John Durant, Director
Commercial Rulings Division