VAL OT:RR:CTF:VS H304537 EE
Port Director
U.S. Customs and Border Protection
3600 E Palsano Dr.
El Paso, TX 79905
RE: Application for Further Review of Protest No. 2704-19-102413; Fenpyroximate Technical under the United States-Korea Free Trade Agreement (“UKFTA”)
Dear Port Director:
This is in response to an Application for Further Review (“AFR”) of Protest No. 2704-19-102413, timely filed by counsel on February 14, 2019, on behalf of the importer, Nichino America Inc. (hereinafter, the “protestant”), concerning the eligibility of Fenpyroximate Technical for duty-free treatment under the UKFTA.
The protestant has requested that certain information submitted in connection with this AFR request be treated as confidential. Inasmuch as this request conforms to the requirements of 19 C.F.R. § 177.2(b)(7), the request for confidentiality is approved. The information contained within brackets and all attachments to this AFR request, forwarded to our office, will not be released to the public and will be withheld from published versions of this ruling.
FACTS:
The merchandise subject to the protest at issue, Fenpyroximate Technical, is a chemical ingredient used in certain pesticide products. Poohung Photo Chemical Co., Ltd. (“Poohung”), an unrelated contract manufacturer based in Korea, produces Fenpyroximate Technical in Korea. Fenpyroximate Technical is imported into the United States in a white or off-white crystalline solid state. It is comprised of 99.5% fenpyroximate and 0.5% other ingredients. Fenpyroximate is a pyrazole acaricide (i.e., a type of pesticide) used on various crops for mite control. It inhibits cell function in the mites that consume it. Post-importation, it is formulated into a liquid solution and sold to agricultural businesses.
The protestant entered [X] kilograms of Fenpyroximate Technical on January 3, 2018, duty-free under subheading 2933.19.23, Harmonized Tariff Schedule of the United States (“HTSUS”), as eligible for preferential tariff treatment under the UKFTA. On April 12, 2018, the Port issued a Request for Information (CBP Form 28) to the protestant requesting descriptive or illustrative literature or information explaining what the merchandise is, where and how it is used, and exactly how it operates. The Port also requested a breakdown of components, materials, or ingredients by weight and the actual cost of the components at the time of assembly into the finished article. On May 15, 2018, CBP issued a proposed Notice of Action (CBP Form 29) requesting purchase orders, invoices, and cost data for the raw materials used to produce the Fenpyroximate Technical to establish their origin. The port indicated that if this information was not provided after 20 days, preferential treatment under UKFTA would be denied. On August 16, 2018, CBP issued a CBP Form 29 advising the protestant that an action had been taken to deny the claim for preferential tariff treatment under the UKFTA to the entry which was the subject of the verification. Specifically, the Port indicated that insufficient documentation was provided to substantiate the originating status of the good and that the merchandise did not comply with a specific rule of origin. Subsequently, CBP liquidated the entries on August 24, 2018, denying UKFTA treatment. Counsel for the protestant timely filed a protest on February 14, 2019, claiming that the imported merchandise qualifies for duty-free treatment under the UKFTA.
The protestant states that Fenpyroximate Technical is produced by a series of chemical reactions, which result from the combining of various ingredients. Since Fenpyroximate Technical satisfies the chemical reaction rule of origin applicable to goods classified in Chapter 29, HTSUS, it is entitled to duty-free treatment under the UKFTA. The protestant provided the following documents in support of his claim that the Fenpyroximate Technical is eligible for duty-free treatment under the UKFTA.
-Invoice number 20180009, dated December 24, 2017, from the seller [X], located in Japan, to the protestant for Fenpyroximate Technical weighing [X] kilograms in the amount of $[X].
-A packing list, dated December 18, 2017, issued by Poohung Photo Chemical Co., Ltd. (“Poohung”), located in Korea, to the protestant, for the merchandise at issue.
-A certificate of origin, dated December 22, 2017, signed by the Manager of the Marketing Department of the producer/exporter listing the country of origin of the Fenpyroximate Technical as Korea.
-Certification analysis of the Fenpyroximate Technical issued by Poohung.
-Multimodal dangerous goods form for the merchandise, dated December 20, 2017, which lists the shipper as Poohung and the consignee as the protestant. The port/place of loading is Busan, Korea, and the port/place of discharge is Los Angeles, CA.
-A bill of lading, dated December 24, 2017, listing the shipper as Poohung and the consignee as the protestant. The net weight listed is [X] kilograms. The port of loading is Busan, Korea, and the port of destination is Long Beach, USA.
-Precautionary label for the Fenpyroximate Technical indicating that the active ingredient is made in Japan for the protestant.
-List of raw materials for production of Fenpyroximate Technical.
-A diagram of the chemical composition of the Fenpyroximate Technical.
-Poohung’s manufacturing records and illustrations showing how the molecular structure of the various ingredients evolve during the production of the Fenpyroximate Technical.
ISSUE:
Whether Fenpyroximate Technical imported from Korea is eligible for duty-free treatment under the UKFTA.
LAW AND ANALYSIS:
The requirements for eligibility for preferential tariff treatment under the UKFTA are set forth in General Note (“GN”) 33 of the HTSUS (19 U.S.C. § 1202). GN 33 provides in pertinent part:
For the purposes of this note subject to the provisions of subdivisions (c), (d), (n) and (o) thereof, a good imported ... is eligible for treatment as an originating good of a UKFTA country under the terms of this note if-
The good is wholly obtained or produced entirely in the territory of Korea or of the United States, or both.
The good is produced entirely in the territory of Korea or of the United States, or both, and-
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
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
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.
GN 33(n)(vii) provides that:
For purposes of applying this note to goods of chapters 27 through 40, inclusive (except a good of heading 3823), of the tariff schedule, a good that undergoes a chemical reaction as defined herein shall be treated as an originating good for purposes of
this note, notwithstanding any product-specific rules enumerated in this note, provided all other applicable requirements are satisfied. A “chemical reaction” is a process (including a biochemical process) which results in a molecule with a new structure by breaking intramolecular bonds and by forming new intramolecular bonds, or by altering the spatial arrangement of atoms in a molecule. The following are not considered to be chemical reactions for purposes of this note:
dissolving in water or other solvents;
the elimination of solvents including solvent water; or
the addition or elimination of water of crystallization.
The protestant provided manufacturing records and illustrations supplied by the unrelated producer in Korea demonstrating how the molecular structure of the various ingredients evolve during the production of the Fenpyroximate Technical. This evolution involves breaking intramolecular bonds and forming new intramolecular bonds. This office consulted with CBP’s Laboratories and Scientific Services Directorate concerning the production of the Fenpyroximate Technical, which informed us that the process described by the protestant indicates that there is a chemical reaction. Based on the information presented, we agree with CBP’s Laboratories and Scientific Services Directorate that there is a chemical reaction. In accordance with GN 33(n)(vii), HTSUS, since Fenpyroximate Technical undergoes a chemical reaction in Korea, it is treated as an originating good. Accordingly, we find that Fenpyroximate Technical is eligible for duty-free treatment under the UKFTA.
HOLDING:
Based on the information provided, the Fenpyroximate Technical is eligible for duty-free treatment under the UKFTA.
In conformity with the foregoing, the protest should be ALLOWED.
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 Customs Rulings Online Search System (CROSS) at https://rulings.cbp.gov/ which can be found on the U.S. Customs and Border Protection website at http://www.cbp.gov and other methods of public distribution.
Sincerely,
for Craig T. Clark, Director
Commercial and Trade Facilitation Division