OT:RR:CTF:VS H307281 AP
U.S. Customs and Border Protection
Pharmaceuticals, Health and Chemicals CEE
POE-Pembina, Port Office & Vault
112 W Stutsman St.
Pembina, ND 58271
Attn: Tracy Coffield, Import Specialist – Team 091
RE: Eligibility of certain titanium dioxide for duty-free treatment under the GSP; “imported directly” requirement; 19 C.F.R. § 10.175
Dear Ms. Coffield:
The following is our decision regarding the Applications for Further Review (“AFRs”) of Protests Numbers 3801-19-100904 and 3801-19-100905, timely filed on October 29, 2019, on behalf of Camia Trade, Inc. (“protestant”). The AFRs concern the eligibility of certain titanium dioxide for duty-free treatment under the Generalized System of Preferences (“GSP”).
FACTS:
Protestant states that the transactions at issue commenced when the importer, Camia Trade, Inc., issued a purchase order to Cyprus-based trading firm Titanium Standard Ltd., which functioned as a selling agent for PJSC Sumykhimprom (“SUMY”), a manufacturer of titanium dioxide, located in Ukraine. Once the order was placed, SUMY shipped the titanium dioxide wholly produced in Ukraine from Ukrainian materials to Camia Trade, Free on Board (“FOB”), from the Port of Odessa, Ukraine to Montreal, Canada. The bills of lading stated that the merchandise was “in transit to USA” and the certificate of origin issued in Ukraine stated that the merchandise was consigned “To order USA.”
The titanium dioxide remained under customs control while in Canada and did not enter the commerce of Canada. When the titanium dioxide was unloaded in Montreal, Camia Trade placed it into a customs-bonded warehouse approved by the Canada Border Services Agency. All the titanium dioxide placed in the warehouse in Canada was destined for customers in the United States. When the titanium dioxide was delivered to Camia Trade’s U.S. customers, it was withdrawn from the Canadian bonded warehouse and transported by a bonded carrier to the Port of Detroit, Michigan, where it was entered for consumption duty free under the GSP.
The titanium dioxide was classified under subheading 3206.11.00, Harmonized Tariff Schedule of the United States (“HTSUS”), a GSP eligible provision containing the Special Program Indicator (“SPI”) “A.” Your office denied GSP treatment stating that the shipment did not meet the “imported directly” requirement, and liquidated the merchandise as dutiable. The entry subject to Protest Number 3801-19-100904 was filed on May 7, 2018, and liquidated on June 7, 2019. The entry subject to Protest Number 3801-19-100905 was filed on May 5, 2018, and liquidated on June 14, 2019.
ISSUE:
Whether certain titanium dioxide manufactured in Ukraine, shipped to Canada, and subsequently entered into the U.S. was “imported directly” from Ukraine, for purposes of determining eligibility for duty-free treatment under the GSP.
LAW AND ANALYSIS:
We first note that the matter is protestable under 19 U.S.C. § 1514(a)(2), as a matter on classification. The AFRs were timely filed within 180 days of liquidation of the entries.
See Miscellaneous Trade and Technical Corrections Act of 2004, Pub. L. 108-429,
§ 2103(2)(B)(ii), (iii) (codified as amended at 19 U.S.C. § 1514(c)(3) (2006)).
Further review of Protests Numbers 3801-19-100904 and 3801-19-100905 is properly accorded to protestant pursuant to 19 C.F.R. § 174.24(b) because the decisions against which the protests were filed involve questions of law or fact, which have not been ruled upon by the Commissioner of Customs or his designee, or by the courts.
Under the GSP, eligible articles, which are the growth, product, or manufacture of a designated beneficiary developing country (“BDC”) and are imported directly into the customs territory of the U.S. from a BDC, may receive duty-free treatment if the sum of: (1) the cost or value of materials produced in the BDC, plus (2) the direct costs of the processing operations performed in the BDC, is equivalent to at least 35 percent of the appraised value of the article at the time of entry into the U.S. See 19 U.S.C. § 2463(a)(2)(A).
Pursuant to General Note 4(a), HTSUS, Ukraine is a designated BDC for GSP purposes and may be afforded preferential treatment if the imported merchandise is classified in a GSP-eligible provision containing SPI Code A. As indicated above, the titanium dioxide was classified under subheading 3206.11.00, HTSUS, a GSP eligible provision. The issue in this case concerns whether the titanium dioxide produced in Ukraine was “imported directly” from Ukraine to the U.S. when it was shipped from Ukraine through Canada, and subsequently entered into the U.S.
The term “imported directly” from a BDC, for GSP purposes, is defined in
section 10.175, Customs Regulations (19 C.F.R. § 10.175). Subsection 10.175 states, in part:
… (b) If the shipment is from a beneficiary developing country to the U.S. through the territory of any other country, the merchandise in the shipment does not enter into the commerce of any other country while en route to the U.S., and the invoice, bills of lading, and other shipping documents show the U.S. as the final destination; or …
(d) If the shipment is from any beneficiary developing country to the U.S through the territory of any other country and the invoices and other documents do not show the U.S
as the final destination, the articles in the shipment upon arrival in the U.S. are imported directly only if they:
(1) Remained under the control of the customs authority of the intermediate country;
(2) Did not enter into the commerce of the intermediate country except for the purpose of sale other than at retail, and the Center director is satisfied that the importation results from the original commercial transaction between the importer and the producer or the latter's sales agent; and
(3) Were not subjected to operations other than loading and unloading, and other activities necessary to preserve the articles in good condition;
The subject titanium dioxide was not shipped directly from Ukraine to the U.S. With respect to the applicability of 19 C.F.R. § 10.175(b), protestant claims that the titanium dioxide did not enter into the commerce of Canada and remained under the control of Canadian Customs the entire time it transited Canada. Protestant also claims that the titanium dioxide did not undergo any operations in Canada other than loading onto the vessel for export to the U.S. Protestant explains the titanium dioxide was packaged in bags before being exported from Ukraine and remained in the same bags until delivery to U.S. customers. Additionally, protestant states that the commercial documents, specifically the bills of lading, show the U.S. as its final destination.
We have held for purposes of the GSP that merchandise is deemed to have entered the commerce of an intermediate country if manipulated (other than loading or unloading), offered for sale (whether or not a sale actually takes place), or subjected to a title change in the country. See Headquarters Ruling Letter (“HQ”) 071575, dated Nov. 20, 1984. In HQ 560720, dated
Feb. 11, 1998, rifle scopes temporarily stored in a warehouse in an intermediate country before being reloaded for shipment to the U.S. were considered “imported directly” from the BDCs for purposes of qualifying for treatment under the GSP. While the rifle scopes were in the intermediary country, they were not sold, manipulated, offered for sale at retail, did not undergo a change of title, and were not repackaged or subdivided into lots and allocated to different customers in the U.S. or other countries. Assuming that the rifle scopes were only temporarily stored in a warehouse in an intermediate country and the commercial invoices, bills of lading, and other shipping documents show the U.S. as the final destination of the merchandise, U.S. Customs and Border Protection (“CBP”) concluded that the rifle scopes did not enter the commerce of the immediate country.
Similarly, in the instant matter, the titanium dioxide was placed in a bonded warehouse in Canada and when withdrawn from the warehouse, it was shipped in bond from the warehouse to Port Huron, Michigan in the U.S. where it entered for consumption. The submitted Canada Customs Coding Form shows that 19,500 kg titanium dioxide was placed in a bonded warehouse in Canada pursuant to a type “21” warehouse entry and no customs duties were assessed on the merchandise when it was deposited in the bonded warehouse. The same quantity was imported into the U.S. on May 5 and 7, 2018. While in the bonded warehouse in Canada, the titanium dioxide remained under the control of the Canadian Customs and did not undergo any processing and alteration. Also, the bills of lading showed that the titanium dioxide was being consigned to Montreal, Canada and was “in transit to the USA” and the certificate of origin showed that it was “to order USA.” Accordingly, we find that the titanium dioxide was “imported directly” under the GSP.
HOLDING:
Based upon the information submitted, the titanium dioxide, which was produced in Ukraine and shipped through Canada to the United States satisfies the “imported directly” requirement set forth under the GSP. In conformity with the foregoing, Protests Numbers 3801-19-100904 and 3801-19-100905 should be GRANTED.
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 entries 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, Office of Trade will make the decision available to CBP personnel, and to the public on the CBP Home Page at www.cbp.gov, by means of the Freedom of Information Act, and other methods of public distribution.
Sincerely,
Craig T. Clark, Director
Commercial and Trade Facilitation Division