OT:RR:CTF:VS H167111 CMR
U.S. Customs and Border Protection
1901 Crossbeam Drive
Charlotte, NC 28217
RE: Application for Further Review of Protest No. 1512-11-100005; Israel Free Trade
Agreement; Eligibility of certain garments
Dear Port Director:
This is in response to the Application for Further Review of Protest No. 1512-11-100005 filed by NSP America Inc. (hereinafter, NSP) against your denial of preferential tariff treatment to certain garments in an entry filed claiming eligibility under the United States – Israel Free Trade Area Implementation Act of 1985 (hereinafter, IFTA). We note the protest was timely filed on December 28, 2010 and further review was properly accorded pursuant to 19 CFR 174.24(a) as the port’s action is inconsistent with its prior approval of a protest on the same issue by the same protestant earlier in the year.
FACTS:
The entry at issue contained garments described as ESD (electrostatic discharge) coats, gray or white in color. There is no issue regarding the classification of the garments in subheading 6211.43.0091, Harmonized Tariff Schedule of the United States (HTSUS), as women’s or girls’ other garments of man-made fibers, other. On entry, the importer claimed the merchandise was duty-free pursuant to the IFTA. The date of entry was March 11, 2010 with liquidation on October 1, 2010.
Your port requested information to substantiate the claim for preferential tariff treatment under the IFTA. In response, NSP submitted copies of documents including the manufacturer’s invoice dated March 5, 2010; a Certificate of Origin which identified the merchandise, the quantity and weight, identified the air carrier, signed by the manufacturer and dated March 7, 2010; a freight air waybill from the freight company dated March 7, 2010; an explanation of the manufacturer’s production process identifying each company involved with each step of production; cost information to show the goods meet the 35 percent value requirement under the IFTA; an invoice from
the fabric manufacturer dated December 15, 2009; an invoice from the fabric dyeing and finishing company dated January 5, 2010; a fabric cutting order dated January 15, 2010; an invoice from the company that cut the fabric into garment pieces dated January 31, 2010; an invoice from the assembler or sewing company dated January 17, 2010; a purchase order from NSP to the vendor in Israel dated February 26, 2010, identifying multiple garments with a “due date” of March 10, 2010, and shipping terms, FOB Charlotte; an invoice from the vendor to NSP, identifying multiple garments and with a ship date of March 5, 2010 and shipping terms, CIF; a packing list; and evidence of an international wire transfer from NSP to another bank for the benefit of the vendor for the amount due on the invoice when taking into account the amount indicated for wire fees and other credits.
We note the fabric manufacturer’s invoice describes the fabrics as woven and details the fiber composition, quantity in meters, price and totals for two fabrics. The fabrics are described respectively as consisting of 53% cotton/43% polyester/4% carbon and 59% cotton/37% polyester/4% carbon. The invoice for the fabric dyeing and finishing indicates only “Bleaching+Softening of woven Polycotton Fabric” and specifies the quantity by weight in kilograms. The cutting services invoice identifies a number of various garments for which services are being charged. None are identified as coats though the reference to smocks may be a reference to the garments at issue. The sewing invoice lists various garments and quantities; the purchase order from NSP to its vendor lists various smocks of varying colors (white, gray, burgundy and blue) for a total of 441 garments (some with knit cuffs); the vendor’s invoice is for a total of 439 garments; the vendor’s packing list includes 439 garments; the vendor’s invoice is for 439 garments; the certificate of origin is for 9 cartons of garments identified as ESD coats of varying colors (white, gray, burgundy and blue) and the Air Waybill identifies the garments in the same manner.
NSP raised the approval of an earlier 2009 protest and claims the same type of information to the same level of detail is provided for this protest. NSP states the only difference between the prior protest and this one is that their supplier is using a different sewing house.
ISSUE:
Is the merchandise in the entry at issue entitled to preferential tariff treatment under the IFTA based upon the information provided by the protestant?
LAW AND ANALYSIS:
The IFTA is implemented in the HTSUS in General Note (GN) 8. GN 8 provides that for purposes of the note, goods imported into the customs territory of the United States are eligible for treatment as “products of Israel” only if:
each article is the growth, product or manufacture of Israel or is a new or different article of commerce that has been grown, produced or manufactured in Israel;
each article is imported directly from Israel (or directly from the West Bank, the Gaza Strip or a qualifying industrial zone as defined in general note 3(v)(G)to the tariff schedule) into the customs territory of the United States; and
the sum of—
(A) the cost or value of materials produced in Israel, and including the cost or value of materials produced in the West Bank, the Gaza Strip or a
qualifying industrial zone pursuant to general note 3(a)(v) to the tariff schedule, plus
(B) the direct costs of processing operations performed in Israel, and including the direct costs of processing operations performed in the West Bank, the Gaza Strip or a qualifying industrial zone pursuant to general note 3(a)(v) to the tariff schedule, is not less than 35% of the appraised value of each article at the time it is entered.
On December 8, 1994, the President signed into law the Uruguay Round Agreements Act. Section 334 of that Act (codified at 19 U.S.C. § 3592) provides new rules of origin for textiles and apparel entered, or withdrawn from warehouse, for consumption, on and after July 1, 1996. On September 5, 1995, Customs published section 102.21, Customs Regulations, in the Federal Register, implementing section 334 (60 FR 46188). Thus, effective July 1, 1996, the country of origin of a textile or apparel product is determined by sequential application of the general rules set forth in paragraphs (c)(1) through (5) of Section 102.21. However, section 334(b)(5) provides that:
This section shall not affect, for purposes of the customs laws and administration of quantitative restrictions, the status of goods that, under rulings and administrative practices in effect immediately before the enactment of this Act, would have originated in, or been the growth, product, or manufacture of, a country that is a party to an agreement with the United States establishing a free trade area, which entered into force before January 1, 1987. For such purposes, such rulings and administrative practices that were applied, immediately before the enactment of this Act, to determine the origin of textile and apparel products covered by such agreement shall continue to apply after the enactment of this Act, and on and after the effective date described in subsection (c), unless such rulings and practices are modified by the mutual consent of the parties to the agreement.
Israel is the only country that qualifies under the terms of section 334(b)(5). As the section 334 rules of origin for textiles and apparel products do not apply to Israel, we refer to the 19 CFR 102.22 rules of origin, which were the rules of origin applicable to textiles and textile products before the enactment of section 334. Section 334(b)(5) makes clear that if, by application of these rules, Israel was determined to be the country of origin of a product prior to enactment of section 334, the same treatment will be accorded after enactment of section 334. This interpretation of section 334(b)(5) was confirmed in a Notice of a general statement of policy, Treasury Decision (T.D.) 96-58, appearing in the Federal Register, Vol. 61, No. 148, dated July 31, 1996.
In this case, the port requested information to substantiate the claim that the merchandise in the entry qualified for preferential treatment under the IFTA. By a Notice of Action, dated September 14, 2010, the port notified the importer that the information submitted by him was insufficient to show that the merchandise qualified for the IFTA and that the merchandise had been rate advanced. The port notified the importer of his right to protest and he did so as reflected by this decision.
We have examined the documentation submitted by the importer and discussed the documentation with the import specialist at the port. We agree that there are problems with the documentation submitted to substantiate that the entry at issue qualifies under the IFTA. For example, while the dates for the various invoices follow in chronological order up to the shipment of the goods, the fabric invoice describes woven fabric in chief weight of cotton. However, the garments entered in the subject entry are classified as women’s or girls’ other garments of man-made fibers. The chief weight cotton fabric simply does not match with the garments entered and classified as of man-made fibers. Another example of a problem with the documentation, and thus presenting a problem with verification of the claim, is the fabric manufacturer describes the quantity of woven fabric sold to the vendor in meters, but the dyer/finisher describes the quantity in terms of kilograms. It is not possible for CBP to follow the documentation and link one step to the next. Another example of an incongruity in the documentation is that the invoice from the dyer/finisher only refers to bleaching and softening of the fabric. Yet, garments entered are described as blue, burgundy and gray, not just white.
The port is not disputing that the garments are of Israeli origin. The documents show that the vendor buys fabric, has it processed, cut and sewn into garments in Israel. However, CBP cannot follow the presented documentation to see that it applies to the entry at issue and that this entry qualifies under the IFTA. Another issue worth noting is the invoice from the sewing company which appears to include over 900 garments. As the shipment involved only 37 dozen and specific garments are not identified on the sewing invoice as garments in this particular entry, it is impossible to match the sewing invoice to the entered garments.
The Customs Modernization Act, enacted as Title VI of the North American Free Trade Agreement Implementation Act (Pub. L. No. 103-182) requires importers to exercise reasonable care in providing entry information including the values, tariff classifications, quantities, and rate of duty applicable to their merchandise. Part of the responsibility of importers is providing accurate documentation to the ports when requested to verify claims made at entry. In this case, the port requested information to substantiate that the merchandise in the entry at issue qualified for preferential treatment. However, the information submitted is simply insufficient due to incongruities present in the documentation as noted previously.
HOLDING:
The port should deny the protest. In accordance with the Protest/Petition Processing Handbook (CIS HB 3500-08A, December 2007, pp. 24 and 26), you are to mail this decision, together with the CBP Form 19, to the protestant no later than 60 days from the date of this letter. Any reliquidation of the entry in accordance with this 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 and Trade Facilitation Division