- Type : • HTSUS :
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Related:
224852
OT:RR:CTF:VS H156916 KSG
Port Director
U.S. Customs & Border Protection
477 Michigan Avenue, Room 210
Detroit MI 48226
Re: Protest # 3801-10-100224; GSP; merchandise processing fee; exemption for least-developed beneficiary developing countries
Dear Port Director:
This is in response to the Application for Further Review of Protest #3801-10-100224 submitted by the broker on behalf of Ash City USA Inc., contesting the denial of an exemption from the merchandise processing fee (“MPF”) for garments imported from Bangladesh.
FACTS:
This case involves garments imported from Bangladesh. CBP applied the MPF to goods that were entered via a post entry adjustment.
The Exporter’s statement of origin indicates that the country of origin is Bangladesh citing to a particular invoice. The Port also noted that the entry summary indicates that the goods were exported on June 30, 2009, shipped from Bangladesh on July 15, 2009, via air but were not imported into the U.S. until August 29, 2009. There was no information submitted regarding the variances in dates or indication where the goods were stored until importation. No claim for preferential tariff treatment under the Generalized System of Preferences (“GSP”) was made as the goods do not meet the 35% value-content requirement and were not imported directly from Bangladesh to the U.S.
We note that there are also invoices, packing lists and a country of origin statement that reference garments made in Pakistan. This decision only concerns the goods which the protestant states were made in Bangladesh.
ISSUE:
Whether the imported goods described above are eligible for an exemption from the MPF regardless of whether such goods are eligible for preferential tariff treatment under the GSP.
LAW AND ANALYSIS:
The exemptions to the MPF, or user fee, which are set forth in 19 CFR 24.23(c)(iv) include “…products of least-developed beneficiary developing countries (General Note 4(b)(i), HTSUS)….” Bangladesh is listed in GN 4(b)(i) as a least-developed beneficiary developing country (LDDC). We note that Pakistan is not listed as a LDDC.
Section 111 of the Senate bill titled “the Customs and Trade Act of 1990”, S.REP. No. 101-252, amended 19 U.S.C. 58c (the statutory authority for 19 CFR 24.23) to include an exemption from the Merchandise Processing Fee (“MPF”) for “a product” of any country listed in the HTSUS as a LDDC. The Senate Report stated that “Exempted from the fee are imports from CBI beneficiary countries, U.S. insular possessions and least developed developing countries,…” The House Conference Report No. 101-650 (Pub. L. 101-382, 101 Cong. 2nd Sess. 1990), indicates an intent to “restore the fee exemption for LDDC’s.” This language would indicate that the language from the Senate Bill was restored to the final bill that became law by the Conference Committee. The legislative history demonstrates an intent on the part of Congress to create an exemption from the MPF for product of LDDC’s, imports from CBI countries and products of U.S. insular possessions.
Customs discussed this provision in Headquarters Ruling Letter (HRL) 223842, dated July 14, 1992, which considered whether goods imported from Sierra Leone would qualify for the exemption from MPF as a product of a least-developed BDC. In that case, the goods were held not to be eligible for the exemption because the goods were entered prior to the effective date of the amendment to 19 U.S.C. 58c. There was no discussion of whether the goods were eligible for preferential tariff treatment under the GSP or whether such eligibility would be required to qualify for the MPF exemption.
HRL 224852, dated April 6, 1994, dealt with the provision that exempted products of Caribbean Basin Initiative (“CBI”) countries from the MPF. CBP held that articles would be exempt from the MPF “if the processing performed in that country results in a substantial transformation….” Goods that are substantially transformed in the beneficiary country satisfy the “product of” requirement for the purposes of the CBI. The language of this provision mirrors the MPF exemption for products of LDDC’s and was passed in the same legislation. Therefore, we find this analysis applicable to products of LDDC’s.
Based on the above, we conclude that the intent of the MPF exemption is to apply to imported goods from a LDDC that satisfy the “product of” requirement of GSP regardless of whether or not the good is eligible for duty-preference under the GSP. For textile goods, the tariff shift rules set forth in 19 CFR 102.21 would apply to determine if the goods are a “product of” the LDDC. Your office was of the opinion that the 35% value-content requirement and the “imported directly” requirement for eligibility for preferential tariff treatment under the GSP were not met in this case. The law and regulations do not require that the value-content requirement or the “imported directly” requirement be satisfied to qualify for an exemption from MPF for products of LDDC’s. An invoice from the seller in Bangladesh indicates that the garments are products of Bangladesh and an exporter statement of origin indicates that the goods were produced in Bangladesh. Your office does not indicate an issue with this fact, but rather that the imported directly and value-content requirement has not been met. Accordingly, as the garments may be considered products of Bangladesh, this protest should be granted.
HOLDING:
The protest is hereby granted.
In accordance with Sections IV and VI of the CBP Protest/Petition Processing Handbook (HB 3500-08A, December 2007, pp. 24 and 26), 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 Regulations and Rulings of the Office of International Trade 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 & Trade Facilitation Division