CLA-2 OT:RR:CTF:VS H310045 CMR
Port Director
U.S. Customs and Border Protection
City View Plaza, Suite 3000
#48 Rd. 165 Km. 1.2
Guaynabo, Puerto Rico 00968-8000
Attn: Nickolle Rivera-Santiago, Import Specialist
RE: Application for Further Review of Protest No. 4909-20-100121; Eligibility of Ultra-Low Sulfur Diesel for Preferential Tariff Treatment under the U.S. - Colombia Trade Promotion Agreement
Dear Port Director:
This is in reference to the Application for Further Review (“AFR”) of Protest No. 4909-20-100121, timely filed on February 19, 2020, by the customs broker on behalf of Trafigura Trading LLC (“protestant”) concerning the eligibility for preferential tariff treatment under the U.S. – Colombia Trade Promotion Agreement (“CTPA”) for one entry of ultra-low sulfur diesel (“ULSD”). We note that the AFR was properly approved.
FACTS:
Trafigura is a multinational firm which trades in physical commodities including oil and petroleum products. To procure and process these commodities, Trafigura negotiates agreements with oil producers, refiners, mining companies, and smelters. The protestant, Trafigura Trading LLC, is a subsidiary of Trafigura and is based in the United States. Another Trafigura subsidiary, based in Singapore, purchases the subject ULSD from a refinery located in Colombia and sells the ULSD to the protestant.
The protestant provided two Spanish language diagrams of the Colombian refinery’s diesel production process flow. The diagrams show that crude oil is blended and then processed into different fractions. These fractions are then subjected to hydrotreating and hydrocracking processes to produce ULSD. The final ULSD product is then packed into barrels and shipped directly to the United States.
It is undisputed that crude oil is classified under subheading 2709.00 of the Harmonized Tariff Schedule of the United States (“HTSUS”), which provides for “Petroleum oils and oils obtained from bituminous minerals, crude,” and that the ULSD is classified under subheading 2710.19, HTSUS, which provides, in pertinent part, for “diesel.” The protestant cannot obtain information regarding the country of origin of the crude oil which is processed into the ULSD from the refinery. As such, the protestant submits that the crude oil should not be treated as an originating material or good under the CTPA.
The protestant asserts that the imported ULSD, which is processed by the Colombian refinery, qualifies for preferential tariff treatment under the CTPA because the non-originating crude oil makes the requisite tariff shift set forth in General Note 34, Chapter 27, Rule 4(C). Certificates of Origin completed by the refinery and submitted to Customs and Border Protection (CBP) as part of the Entry Summary package are the basis for the protestant’s claim for preferential tariff treatment under the CTPA.
The ULSD, in barrels, was shipped from Colombia directly to Puerto Rico via two vessels, and barrels were admitted into a Foreign Trade Zone (FTZ) on November 2, 2018 and November 16, 2018. The protestant submitted copies of the bills of lading, Certificates of Origin and CBP Forms 214B (Application for Foreign Trade Zone Admission and/or Status Designation). The amount of barrels that were loaded onboard the vessels and for which the Certificates of Origin were issued by the refinery is greater than the amount of barrels admitted into the FTZ. Thus, not all of the barrels purchased by the protestant were offloaded and admitted into the FTZ at the time of the two admissions of the barrels at issue.
Based on the information on the CBP Forms 214B, 353,105.72 barrels of ULSD were admitted into the FTZ. The entry at issue involves 98,092 barrels of ULSD withdrawn from the FTZ from barrels admitted in the two admissions. The entry summary shows that a claim was made under the CTPA and the Certificates of Origin appear to be in order.
ISSUES:
Whether the ULSD at issue is entitled to preferential tariff treatment under the CTPA.
LAW AND ANALYSIS:
The U.S.- Colombia Trade Promotion Agreement Implementation Act, Public Law 112-42, 125 Stat. 462, is implemented in the Harmonized Tariff Schedule of the United States at General Note (GN) 34. GN 34(b) provides in relevant part:
(b) For the purposes of this note, subject to the provisions of subdivisions (c),
(d), (n) and (o) thereof, a good imported into the customs territory of the United States is eligible for treatment as an originating good of Colombia or of the United States under the terms of this note if–
* * *
(ii) the good is produced entirely in the territory of Colombia 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 . . . .
GN 34(o), Chapter 27, Rule 4(C) provides:
A change to all other goods of subheading 2710.19 from any other heading, except from heading 2207.
The crude oil which is refined in Colombia is classified in heading 2709, HTSUS, prior to being processed. After processing, the processed product is classified in heading 2710.19, HTSUS. Thus, the tariff shift requirement is met in Colombia such that the non-originating material makes a tariff shift as required by the rule set forth in GN 34(o), Chapter 27, Rule 4(C). Thus, we agree with the protestant that the ULSD at issue which is entered into the United States from Colombia qualifies as originating and is entitled to preferential tariff treatment accorded such goods under the CTPA.
The protestant did present valid Certificates of Origin which appear to be in order. Based upon the information provided to this office, the ULSD at issue is entitled to preferential tariff treatment under the CTPA.
HOLDING:
You are instructed to allow this protest for preferential treatment under the CTPA.
In accordance with sections IV and VI of the CBP Protest/Petition Processing Handbook, 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 re-liquidation 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 International Trade, Regulations and Rulings, will make the decision available to CBP personnel, and to the
public on the CBP Home Page on the World Wide Web at http://www.cbp.gov by means of the Freedom of Information Act, and other methods of public distribution.
Sincerely,
For Craig T. Clark, Director
Commercial and Trade Facilitation Division