OT:RR:CTF:VS H322700 JMV
Center Director
Machinery Center of Excellence and Expertise
U.S. Customs and Border Protection
Laredo Field Office
109 Shiloh Drive, Suite 300
Laredo, TX 78045
RE: Application for Further Review of Protest number 2016-21-100103; Preference Claim under the Trade Agreement Between the United States and Japan
Dear Director:
This is in response to the Application for Further Review (“AFR”) of Protest number 2016-21-100103 received on January 7, 2022, and filed against U.S. Customs and Border Protection’s (“CBP”) decision to deny Denso Manufacturing Tennessee, Inc.’s (“DMTN”) claim for preferential tariff treatment under the Trade Agreement Between the United States and Japan
(“JP”) due to an imperfected certificate of origin. DMTN claims that its Certification of Origin (“CO”) complied with the terms of the JP.
FACTS:
DMTN entered merchandise, which included insulators, from a related exporter on April 17, 2020 and claimed preferential tariff treatment under JP. DMTN included in the entry documents a CO which states, “The exporter of the products covered by this document declares that these products qualify for preferential treatment, under the rules of the Japan-US Trade Agreement.” On August 6, 2021, your office forwarded a CF-29 CBP Notice of Proposed Action to DMTN, in which CBP requested a:
VALID Japan Certification of Origin for the FTA claim on line 159. The Certificate of Origin received by this office is not acceptable Pursuant to Proclamation 9974/Annex II to the Japan Free Trade Agreement. The Certificate of Origin data elements missing are: the Producer information, valid telephone numbers and email addresses, invoice date, quantities and the ‘certification statement’ with the signature of the individual making the ‘certification statement’ on behalf of Denso Manufacturing TN Inc.
The goods entered on line 159 were insulators. In response to the CF-29, DMTN provided the same CO included with the entry documents.
On September 9, 2021, CBP issued a CF-29 Notice of Action Taken, wherein CBP informed DMTN that it was denying DMTN’s claim for preferential tariff treatment. In response DMTN filed this protest. DMTN provided this office with the CO and a bill of materials (“BOM”). The CO included the following information:
A statement reading, “The exporter of the products covered by this document declares that these products qualify for preferential treatments, under the rules of the Japan-US Trade Agreement;”
Exporting company information including the company name, address, a representative’s name, electronic signature, and phone number;
Importing company’s name and address;
The covered period;
Producer’s name and address;
Product information; and
An agreement to provide the U.S. government information regarding origin upon request.
The BOM includes silicon nitride, which is classified in subheading 2850.00 of the Harmonized Tariff Schedule of the United States (“HTSUS”), yttrium, classified in 2846.60, HTSUS, and erbium, classified in 2846.90, HTSUS. The insulator is classified in 8546.20.00, HTSUS.
ISSUE:
Whether the importer’s claim for JP preference was properly denied.
LAW AND ANALYSIS:
The Trade Agreement between the United States and Japan (“JP”) was signed by the Governments of the United States and Japan on October 7, 2019. On December 26, 2019, Proclamation 9974 set forth modifications to the Harmonized Tariff Schedule by inserting General Note 36 and to the tariffs with respect to certain goods to carry out the JP, effective on January 1, 2020. 84 FR 72187 (December 30, 2019). The JP Rules of Origin and Origin Procedures are set out in Annex II of the agreement. https://ustr.gov/countries-regions/japan-korea-apec/japan/us-japan-trade-agreement-negotiations/us-japan-trade-agreement-text. Paragraphs 11 through 15 of the text address the requirements that must be met to claim or support product eligibility at the time of entry:
11. The United States shall provide that an importer may make a claim for preferential tariff treatment for a good listed in the Tariff Schedule of the United States based on the importer’s knowledge or on information in the importer’s possession that the good is originating.
12. The United States shall provide that, for the purposes of claiming preferential tariff treatment, the importer shall make a statement forming part of the import documentation that the good qualifies as an originating good.
13. The United States may require that an importer be prepared to submit, upon request, a statement setting forth the reasons that the good qualifies as an originating good, including pertinent manufacturing information. The statement need not be in a prescribed format and may be submitted electronically, where feasible.
14. The United States may request any information or documentation necessary to demonstrate that a good is originating and qualified for preferential tariff treatment. The importer may arrange for the exporter or producer to provide such information or documentation directly to the United States.
15. The United States may deny a claim for preferential tariff treatment if:
(a) it determines that the good does not qualify for preferential tariff treatment;
(b) pursuant to paragraph 14, it has not received sufficient information to determine that the good qualifies for preferential tariff treatment; or
(c) the importer fails to comply with the requirements of these Rules of Origin and Origin Procedures.
As of this time, no further regulation or guidance has been promulgated by CBP. Pursuant to Annex II, the CO need only include a statement that the goods are originating. However, the United States may require the importer to submit a statement setting forth the reasons that the good qualifies as an originating good and any information or documentation necessary to support that statement. Annex II, Articles 13-14.
DMTN fulfilled the first requirement in paragraph 12 of making a statement that the goods qualify for preferential tariff treatment by including the special program indicator “JP” on the entry documentation. Pursuant to paragraph 11, DMTN made this statement based on the CO from the exporter. No other requirements currently exist for the CO under the JP. Therefore, DMTN’s original CO is valid.
However, DMTN did not provide the information requested by the Machinery Center of Excellence and Expertise (CEE) to that CEE. Normally, additional information requested by the CEE is to be analyzed and verified by the respective CEE and is normally not subject to further review by this office. Nonetheless, DMTN did provide our office with the BOM from the company that provided the producer with the source materials from which the insulator was produced. The insulator is classified under subheading 8546.20.00, HTSUS. General Note (“GN”) 36(a) of the HTSUS provides:
Originating goods under the terms of the Trade Agreement between the United States and Japan, entered into on October 7, 2019, are subject to duty as provided herein and in subchapter XXI of chapter 99 of the tariff schedule. For the purposes of this note, originating goods of Japan, as defined in Annex II of the Trade Agreement between the United States and Japan, that are imported into the customs territory of the United States and entered under a provision for which a rate of duty appears in the “Special” subcolumn of column 1 followed by the symbol “JP” in parentheses are eligible for the tariff treatment, and any applicable quantitative limitations, set forth in the “Special” subcolumn of Rates of Duty column 1.
The JP Rules of Origin set out in Annex II set forth the criteria for determining whether a good is an originating good for purposes of the JP. Paragraph 2 of the JP Rules of Origin states:
For a good listed in the Tariff Schedule of the United States, the United States shall provide that a good is originating from Japan, except as otherwise provided in these Rules of Origin and Origin Procedures, if it is:
(a) wholly obtained or produced entirely in one or both of the Parties, as defined in paragraph 3;
(b) produced entirely in one or both of the Parties, exclusively from originating materials; or
(c) produced entirely in one or both of the Parties, using non-originating materials provided such materials satisfy the applicable change in tariff classification requirement under the Product-Specific Rules of Origin set forth in paragraphs 17 through 19 and the table below,
and the good satisfies all other applicable requirements of these Rules of Origin and Origin Procedures.
Since the insulator contains non-originating materials, it is not considered a good wholly obtained or produced entirely in a JP party under subparagraphs (a) or (b). We must then determine whether the insulator qualifies under subparagraph (c).
The product specific rules of origin are set out in the table of Annex II, and paragraph 19 of the ROO defines the terms used in the product specific rules of origin. The applicable rule of origin in Annex II for products classified under 8546.20.00, HTSUS is CTSH. Paragraph 19 states that “CTSH” means “that all non-originating materials used in the production of the good have undergone a change in tariff classification at the 6-digit level.”
Since the non-originating components, silicon nitride, classified in 2850.00, HTSUS, yttrium, classified in 2846.60, HTSUS, and the erbium, classified in 2846.90, HTSUS, are classified in a subheading other than 8546.20, HTSUS, the rule of origin is met. Accordingly, the insulators may be viewed as originating under the JP.
HOLDING:
Based on the information presented, the insulators may be viewed as originating under the JP. This protest may be granted.
You are instructed to notify the protestant of this decision no later than 60 days from the date of this decision. Any reliquidation of the entry or entries in accordance with the decision must be accomplished prior to this notification. Sixty days from the date of the decision, the Office of Trade, Regulations and Rulings will make the decision available to CBP personnel and the public on the Customs Rulings Online Search System (CROSS) at https://rulings.cbp.gov/, or other methods of public distribution.
Sincerely,
For Craig T. Clark, Director
Commercial and Trade Facilitation Division