CLA-2 OT:RR:CTF:VS H023266 KSG
U.S. Customs & Border Protection
11099 South La Cienega Blvd.
Los Angeles, California 90045
RE: Application for Further Review of Protest 2720-0810-0065; GSP; bovine leather
Dear Port Director:
This is in reply to your correspondence forwarding the Application for Further Review of Protest (AFR) 2720-810-0065 timely filed by Katzkin Leather Interiors, Inc.
This case involves the importation of bovine leather. The importer, Katzkin Leather Interiors Inc., entered the leather on March 27, 2007, classifying it at subheading 4107.92.50, of the Harmonized Tariff Schedule of the United States (“HTSUS”), and stated that Brazil was the country of origin. The importer claimed the good was eligible for Generalized System of Preferences (“GSP”) preferential tariff treatment. One document submitted to support the GSP claim is a certificate of origin issued by Federacao das Industrias do Estado do Rio Grande do Sul, which indicates that Mastrotto Reichert S.A. was the exporter of the leather, Tall International, S.P.A. was the importer and Tall International U.S. was the consignee. Another letter from Tall International, S.P.A., the Italian buyer of the leather, states that the leather is of Brazilian origin. An invoice from Tall International S.P.A. to Katzkin, the U.S. importer, stated that the country of origin of the leather is Brazil. An invoice from Mastrotto Reichert S.A. to Tall International S.P.A. does not indicate the origin of the imported leather.
CBP asked the importer for further documentation to substantiate the GSP claim. No further information was submitted by the importer. CBP then rate advanced the entry as dutiable. This protest was filed on January 29, 2008.
Whether the imported bovine leather described above is eligible for preferential tariff treatment under the GSP.
LAW AND ANALYSIS:
Under the GSP, eligible articles the growth, product or manufacture of a designated beneficiary developing country (BDC) which are imported directly into the customs territory of the U.S. from a BDC may receive duty-free treatment if the statutory requirements of 19 U.S.C. 2463(a)(2)(A) are met.
General Note 3(c)(i), HTSUS, provides, in part, that special tariff treatment under the GSP is indicated in the “Special” subcolumn in the tariff by the symbols “A”, “A*,” or “A+”.
In this case, the entry is classified in a GSP-eligible provision. Further, Brazil is designated as a beneficiary developing country for GSP purposes under General Note 4(a), HTSUS.
The “product of” requirement means that to receive duty-free treatment, an article either must be made of materials “wholly the growth, product or manufacture of” the BDC, or if made of materials imported into the BDC, those materials must be substantially transformed in the BDC into a new and different article of commerce. See 19 CFR 10.176(a). A substantial transformation occurs “when an article emerges from a manufacturing process with a name, character, or use which differs from those of the original material subjected to the process.” Texas Instruments Inc. v. United States, 681 F.2d 778 (1982).
To be eligible for duty-free treatment under the GSP statute, merchandise must also satisfy the 35% value-content requirement. 19 U.S.C. 2463(a)(2)(A) states that “the duty-free treatment provided under this sub-chapter shall apply to any eligible article which is the growth, product, or manufacture of a beneficiary developing country if—
(i) that article is imported directly from a beneficiary developing country into the customs territory of the United States; and (ii) the sum of (I) the cost or value of the materials produced in the beneficiary developing country …plus (II) the direct costs of processing operations performed in such beneficiary developing country or such member countries, is not less than 35 percent of the appraised value of such article at the time it is entered.”
Pursuant to 19 CFR 10.173(c), “any evidence of country of origin submitted under this section shall be subject to such verification as the port director deems necessary. In the event that the port director is prevented from obtaining the necessary verification, the port may treat the entry as dutiable.”
In this case, the importer has not specified how the “product of” requirement is met, ie. whether the good is claimed to be “wholly the growth, product or manufacture” of Brazil or if it is claimed that the bovine leather is substantially transformed in Brazil. The only information submitted to base a determination on is the certificate of origin, which was not issued by the foreign manufacturer, the invoice from the Italian company and the letter from the Italian buyer of the leather. We have no information from the Brazilian tannery with regard to the source of the leather skins to determine if the skins are “wholly the growth, product or manufacture of” Brazil. Further, the importer has not submitted any information regarding the processing in Brazil to determine if the leather was substantially transformed in the tannery in Brazil. Therefore, the importer has submitted insufficient information. CBP is unable to determine if the “product of” requirement is met in this case. Further, there was no information submitted to determine if the 35% value-content requirement is satisfied in this case.
The Port properly determined that the imported leather was not eligible for GSP treatment and rate advanced the entry as dutiable.
Based on the facts presented above, the protest should be denied.
In accordance with Section 3A(11)(b) of Customs Directive 099 3550-065, dated August 4, 1993, Subject: Revised Protest Directive, you are to mail this decision, together with the Customs 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 should be accomplished prior to mailing of this decision. Sixty days from the date of this decision, the Office of Regulations and
Rulings will make the decision available to Customs personnel, and to the public on the Customs Home Page on the World Wide Web at www.customs.gov, by means of the Freedom of Information Act, and other methods of public distribution.
Myles B. Harmon, Director
Commercial & Trade Facilitation Division