OT:RR:CTF:VS H267262 GaK
Port Director, Port of New York/Newark
U.S. Customs and Border Protection, Protest & Control
1100 Raymond Blvd. Suite 402
Newark, NJ 07102
RE: Application for Further Review of Protest No. 4601-15-100630; Protest against Denial of Preferential Treatment; UKFTA
Dear Port Director:
This is in response to your correspondence, dated July 13, 2015, forwarding the Application for Further Review (“AFR”) of Protest 4601-15-100630, timely filed by ALAC International Inc. (“ALAC” or “Protestant”), concerning diisononyl phthalate (“DINP”) classified under subheading 2917.33.00 of the Harmonized Tariff Schedule of the United States (“HTSUS”) for preferential tariff treatment under the United States-Korea Free Trade Agreement (“UKFTA”).
FACTS:
Protestant imported DINP on October 25, 2014, from Korea and the entry was liquidated on May 8, 2015. DINP is manufactured in Korea by way of a chemical reaction of phthalic anhydride, classifiable under subheading 2917.35.00, HTSUS, and isononyl alcohol, classifiable under subheading 2905.19.90, HTSUS. Protestant states that the production of DINP requires a chemical reaction in which the oxygen bond of the phthalic anhydride is broken and new chemical bonds are formed. The phthalic anhydride is manufactured in Korea and the isononyl alcohol is manufactured in Germany.
Protestant states that DINP qualifies for UKFTA preferential treatment under the tariff shift rule set forth in General Note (“GN”) 33(o), HTSUS, and the chemical reaction rule set forth in GN 33(n)(vii) and (viii), HTSUS. The port is of the opinion that while DINP meets the chemical reaction rule, it does not meet the applicable tariff shift rule. The port states that since the non-originating material is classified under heading 2905, it does not undergo the required tariff shift, because heading 2905 is within the designated group of headings in the applicable tariff shift rule in GN 33(o).
ISSUE:
Whether DINP qualifies for preferential treatment under the UKFTA.
LAW AND ANALYSIS:
The UKFTA is implemented in the HTSUS in GN 33. Under GN 33(b), HTSUS, goods imported into the U.S. are eligible for duty-free treatment under the UKFTA if:
(i) the good is wholly obtained or produced entirely in the territory of Korea or of the United States, or both;
(ii) the good is produced entirely in the territory of Korea or of the United States, or both, and—
(A) each of the nonoriginating materials used in the production of the good undergoes an applicable change in tariff classification specified in subdivision (o) of this note; or
(B) the good otherwise satisfies any applicable regional value-content or other requirements set forth in such subdivision (o); and satisfies all other applicable requirements of this note and of applicable regulations; or
(iii) the good is produced entirely in the territory of Korea or of the United States, or both, exclusively from materials described in subdivisions (i) or (ii), above.
Because DINP is comprised, in part, of non-originating materials, GN 33(b)(i), HTSUS does not apply. Therefore, we must determine whether the non-originating material undergoes the requisite tariff shift (or other applicable requirement) prescribed under GN 33(b)(ii), HTSUS. As discussed above, the imported DINP is classified under subheading 2917.33.00, HTSUS. The applicable rule set forth in GN 33(o)/29.2, HTSUS requires:
[a] change to headings 2902 through 2935 from any other heading.
We must determine whether the non-originating material undergoes the appropriate tariff shift prescribed under GN 33(o)/29.2, HTSUS. As the non-originating isononyl alcohol is classifiable in heading 2905, HTSUS, the rule of a change to heading 2917, HTSUS “from any other heading” is satisfied. Furthermore, Annex 6-A Specific Rules of Origin Part I, 1(e) of the UKFTA provides guidance on interpretation, which provides:
when a single rule of origin is applicable to a group of headings or subheadings and that rule of origin specifies a change of heading or subheading, it shall be understood that the change in heading or subheading may occur from any other heading or subheading, as the case may be, including from any other heading or subheading within a designated group. When, however, a rule refers to a change in heading or subheading “outside that group” this shall be understood to require that the change in heading or subheading must occur from a heading or subheading that is outside the group of headings or subheadings set out in the rule. (First emphasis in original, second emphasis added).
As stated above, the absence of the language “outside that group” permits a tariff shift from any other heading, including the designated group of headings in the product specific rule. The isononyl alcohol is manufactured in Germany and is, therefore, a non-originating material. The isononyl alcohol is classified under subheading 2905.19.90, HTSUS. While the designated group of headings specified in GN 33(o)/29.2, HTSUS includes heading 2905, HTSUS, in accordance with Annex 6-A of the UKFTA, the non-originating material meets the requisite tariff shift. Therefore, DINP qualifies for preferential treatment under the UKFTA.
HOLDING:
The protest is GRANTED.
In accordance with the Protest/Petition Processing Handbook (CIS HB, December 2007), you are to mail the 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 the mailing of the decision. Sixty days from the date of the decision the Office of International Trade, Regulations and Rulings, will make the decision available to CBP personnel and to the public 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