OT:RR:CTF:VS H121799 ARU
Area Port Director
U.S. Customs and Border Protection
Otay Mesa Commercial Facility
9777 Via de la Amistad
San Diego, CA 92154-7209
RE: Application for Further Review, Protest 2507-10-300025; 9802.00.50; 8443.99.2010; NAFTA; General Note 12(u)
Dear Area Director:
The purpose of this correspondence is to address the Application for Further Review (“AFR”) of Protest Number: 2507-10-300025, dated August 9, 2010. The Importer of Record and Protesting Party is Data Products LLC. (“protestant”).
FACTS:
The protestant gathers used toner cartridges from various retail stores at its Distribution Center in California. The used toner cartridges are assigned a part number and sent to Mexico for repair. Once the repaired cartridges are quality tested they are returned to the Distribution Center in California. Some empty cartridges are exported directly to the facility in Mexico; these cartridges are not assigned a part number. As a result, it is impossible to match all of the returning cartridges to those previously exported from the United States.
The goods at issue were entered January 12, 2010. The goods were classified under subheading 9802.00.50, Harmonized Tariff Schedule of the United States (“HTSUS”), with an underlying classification of 8443.99.00, HTSUS. The entry was originally selected for review of the Chapter 98 duty-free claim. The supporting documents provided revealed that direct identification of the goods exported from the United States to Mexico for repair/alteration was not possible due to the recordkeeping procedures used by the protestant. The protest subsequently claims duty-free benefits under the provisions of General Note 12(u) of the HTSUS and North American Free Trade Agreement (“NAFTA”) preference criterion E. No Certificate of Origin was submitted with the entry.
ISSUE:
Whether toner cartridges for printers classified under subheading 8443.99.00, HTSUS, and entered from Mexico qualify for duty-free treatment under General Note 12(u) of the HTSUS or NAFTA preference criterion E. LAW AND ANALYSIS:
General Note 12 of the HTSUS incorporates Article 401 of NAFTA as implemented by section 207 of the NAFTA Implementation Act (Pub. L. 103-182, 107 Stat. 2057) (December 8, 1993), into the HTSUS. General Note 12(a)(ii) provides that:
(a) Goods originating in the territory of a party to the NAFTA are subject to duty as provided herein. For the purposes of this note--
… (ii) Goods that originate in the territory of a NAFTA party under the terms of subdivision (b) of this note and that qualify to be marked as goods of Mexico under the terms of the marking rules set forth in regulations issued by the Secretary of the Treasury (without regard to whether the goods are marked), and goods enumerated in subdivision (u) of this note, when such goods are imported into the customs territory of the United States and are entered under a subheading for which a rate of duty appears in the “Special” subcolumn followed by the symbol “MS” in parentheses, are eligible for such duty rate, in accordance with section 201 of the NAFTA Implementation Act.
General Note 12(b) provides in relevant part:
For the purposes of this note, goods imported into the customs territory of the United States are eligible for the tariff treatment and quantitative limitations set forth in the tariff schedule as “goods originating in the territory or a NAFTA party” only if--
“(i) … (v) they are goods enumerated in subdivision (u) of this note and meet all other requirements of this note.” (emphasis added).
General Note 12(u) incorporates Table 308.11 of Annex 308.1 of the NAFTA and provides:
Goods that shall be considered originating goods. For the purposes of subdivision (b)(v) of this note, notwithstanding the provisions of subdivision (t) above, the automatic data processing machines, automatic data processing units and parts of the foregoing that are classifiable in the tariff provisions enumerated in the first column and are described opposite such provisions, when the foregoing are imported into the customs territory of the United States form the territory of Canada or of Mexico, shall be considered originating goods for the purposes of this note:
Provisions Description
(1) … …
(8) 8443.99, 8473.30, 8517.70, 8529.90 Parts of automatic data processing machines
(10) … …
Assuming that the goods at issue are properly classified under subheading 8443.99.2010, HTSUS, the goods would fall within the provision of General Note 12(u). As noted above, however, simply falling within one of the subheadings provided in General Note 12(u) is not sufficient to receive duty-free treatment, the goods must also “meet all other requirements of this note.” General Note 12(b)(v), HTSUS; see also Headquarters Ruling Letter (“HRL”) HQ H074136, dated January 21, 2010.
Customs and Border Protection (“CBP”) Regulations require each importer claiming preferential tariff treatment to maintain all documentation relating to the importation of the good in the United States for five years from the date of entry. See 19 C.F.R. 181.22. Included in this requirement is the submission and retention of the Certificate of Origin. Id. In the event that an importer does not submit a Certificate of Origin, the port director may deny preferential tariff treatment to the imported goods. 19 C.F.R. 181.23.
Here, no Certificate of Origin was submitted with the entry. As a result, we find that the goods do not qualify for duty-free treatment under General Note 12(u) or NAFTA preference criterion E. We note, however, that the goods may qualify for a post-importation NAFTA duty refund pursuant to 19 U.S.C. 1520(d). See also 19 C.F.R. 181 Subpart D.
HOLDING: The available evidence supports the conclusion that the toner cartridges do not qualify for duty-free treatment under General Note 12(u) or NAFTA preference criterion E because the entry did not include a Certificate of Origin.
You are to DENY this protest. In accordance with the Protest/Petition Processing Handbook (CIS HB, December 2007), 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 of 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