OT:RR:CTF:VS H282674 RMC
Port Director
U.S. Customs & Border Protection
Protest & Control
1100 Raymond Blvd., Suite 402
Newark, NJ 07102
Re: Application for Further Review of Protest 4601-16-100070; U.S.-Oman Free Trade Agreement; Tariff Preference Level; Apparel
Dear Port Director:
This is in response to the Application for Further Review (“AFR”) of Protest No. 4601-16-100070, timely filed on January 20, 2016 by Bass Pro LLC (“Bass Pro”). You denied the AFR and protest on April 29, 2016. Counsel for Bass Pro timely filed a request to set aside the denial of the AFR pursuant to 19 U.S.C. § 1515(c). After review of the request, this office set aside the denial of the AFR and the protest pursuant to 19 U.S.C. § 1515(c).
FACTS:
Bass Pro is a retailer of outdoor gear and apparel with stores across North America. At issue in this case is men’s fleece jackets and fleece pants that were cut and sewn in Oman. The merchandise is classified in subheading 6101.30.2010, Harmonized Tariff Schedule of the United States (“HTSUS”), and subheading 6103.43.1520, HTSUS. Entry was made at the Port on Newark on July 18, 2014, after the merchandise arrived by ship from the Port of Sohar, Oman. The entry claimed duty-free treatment for the merchandise on the grounds that the apparel qualified as goods originating in Oman under the U.S.-Oman Free Trade Agreement (“OFTA”).
Your port subsequently initiated a verification of Bass Pro’s claim for duty-free treatment. Specifically, U.S. Customs and Border Protection (“CBP”) requested information to verify that the merchandise qualified under the U.S.-Oman FTA rules of origin for textiles. CBP asked Bass Pro to supply relevant information about the origin of the fabric and the assembly operations that occurred in Oman.
ACE records indicate that the entry was liquidated on May 29, 2015. CBP then issued a Notice of Action (CBP Form 29) dated June 23, 2015, denying Bass Pro’s claim for duty-free treatment under the U.S.-Oman on the grounds that the importer failed to supply sufficient documentation to support the claim. Accordingly, the entry was reliquidated within 90 days, as authorized by 19 C.F.R. § 173.3, at the applicable Most Favored Nation (“MFN”) 28.2% ad valorem rates of duty.
Bass Pro timely protested. As noted above, the port denied the protest and AFR on April 29, 2016. However, as Bass Pro’s request to set aside the denial of the AFR pursuant to 19 U.S.C. § 1515(c) was granted, this office will now consider the issues raised by Bass Pro in its protest.
In its protest, Bass Pro concedes that, contrary to the notation that it made on the entry documentation, the merchandise does not qualify as originating goods under the OFTA. Although the merchandise was cut and sewn in Oman, it contains foreign fabric that prevents the goods from qualifying as originating under the OFTA rules of origin. Nevertheless, according to Bass Pro, because the jackets and pants were cut and sewn in Oman, the merchandise is entitled to duty-free treatment under the Trade Preference Level (“TPL”) provisions of the OFTA. In support of this argument, Bass Pro points to the 2014 CBP Quota Report showing that only 0.5% of the available TPL quantity was used in 2014, the year of entry.
ISSUE:
Whether the merchandise is entitled to preferential tariff treatment under the OFTA TPL provisions.
LAW AND ANALYSIS:
General Note 31(b), HTSUS, sets forth the criteria for determining whether a good is an originating good for purposes of the OFTA.
As noted above, Bass Pro concedes that the merchandise does not consist of originating goods under the OFTA. Instead, Bass Pro argues that the goods are eligible for duty-free treatment under the OFTA TPL provisions in subheading 9916.99.20, HTSUS, which provides duty-free treatment to “[i]mports from Oman, in an aggregate quantity not to exceed an annual quantity of 50 million SME, of goods provided for in U.S. Note 13 of this subchapter.” U.S. Note 13 clarifies that the TPL provisions in subheading 9916.99.20, HTSUS, apply only to:
cotton or man-made fiber apparel goods provided for in chapters 61 or 62 of the tariff schedule that are cut or knit to shape, or both, and sewn or otherwise assembled in the territory of Oman from fabric or yarn produced or obtained outside the territory of Oman or of the United States.
See also 19 C.F.R. § 10.882.
The OFTA implementing regulations provide that, in order to make a TPL claim, “the importer must include on the entry summary, or equivalent documentation, the applicable subheading in Chapter 99 of the HTSUS (9916.99.20) immediately above the applicable subheading in Chapter 61 or Chapter 62 under which each non-originating cotton or man-made fiber apparel good is classified.” 19 C.F.R. § 10.881. The importer must also, if requested by the Center director, submit a declaration that sets forth all pertinent information concerning the production of the good. See 19 C.F.R. § 10.884. If the importer “fails to comply with any applicable requirement under [19 C.F.R. §§ 10.861-10.890], the Center director may deny preferential tariff treatment to the imported good.”
Here, the merchandise is a “cotton or made-man fiber apparel good[ ] provided for in chapters 61 or 62 of the tariff schedule” (i.e., subheading 6101.30.2010, HTSUS, and subheading 6103.43.1520, HTSUS), and the importer claims that the goods were “cut or knit to shape . . . in the territory of Oman from fabric or yarn produced or obtained outside the territory of Oman or the United States.” See 19 C.F.R. § 10.882. Furthermore, according to CBP’s 2014 Quota Report, only 0.5% of the available OFTA TPL for goods of chapters 61 or 62 was used. Accordingly, the only remaining issue is whether Bass Pro’s claim for preferential tariff treatment under the OFTA TPL is properly before us on protest.
At the time of entry, Bass Pro made a claim that the merchandise was eligible for preferential treatment as originating goods under the OFTA. Although Bass Pro later conceded that it incorrectly made this claim, it now makes a claim for duty-free treatment under the TPL provisions. As noted above, the merchandise is classified in an OFTA TPL-eligible provision and was “knit or cut to shape” in Oman from fabric or yarn produced outside the territory of Oman or the United States. Furthermore, at the time of entry, the OFTA TPL was not closed. Because the merchandise met the requirements for preferential treatment under the OFTA TPL provisions at the time of importation and Bass Pro properly sought a post-importation TPL claim through a protest pursuant to 19 U.S.C. § 1514, the merchandise should be granted preferential treatment under the OFTA TPL provisions.
HOLDING:
The protest should be granted. The merchandise is eligible for preferential tariff treatment under the OFTA TPL provisions.
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 CBP Form 19, to the Protestant no later than 60 days from the date of this letter. Any reliquidation of the entry or entries in accordance with the decision must be accomplished prior to mailing the decision. Sixty days from the date of the decision, the Office of Trade, Regulations and Rulings, will make the decision available to CBP personnel, and to the public on the CBP website 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