OT:RR:CTF:TCM H068277 KSH
U.S. Customs and Border Protection
Port of New Orleans
1515 Poydras Street, Suite 1700
New Orleans, Louisiana 70112
Attn: Protest Office
RE: Application for Further Review of Protest No. 2002-09-100051; women’s two-way stretch trousers and skirts.
Dear Port Director:
This is in reply to your correspondence, dated June 30, 2009, forwarding Application for Further Review of Protest (AFR) 2002-09-100051, filed by counsel, on behalf of Pressman-Gutman Co.FACTS:
The merchandise at issue is three entries of women’s two-way stretch woven fabric trousers and skirts constructed of polyester, rayon and spandex. The fabric used to construct the garments was woven in China with U.S. spandex. The fabric was shipped to Guatemala where it was cut and sewn into the subject trousers and skirts. The garments were then imported into the United States.
The protest is against Customs and Border Protection’s (CBP) denial of duty free treatment under the Dominican Republic Central America Free Trade Agreement (DR-CAFTA). On June 27, 2007 and July 11, 2007, protestant entered the merchandise subject to this protest duty-free in subheading 9822.05.01, of the Harmonized Tariff Schedule of the United States (HTSUS), as goods described in Additional U.S. Note 3(b) to Section XI, HTSUS.
On August 7, 2008, a CBP Form 29, Notice of Action was issued denying the claim for preferential treatment due to CBP Laboratories and Scientific Services’ analysis which indicated that the fabric of the garments did not meet the description of the claimed fabric in the short supply list. Among the cited discrepancies were the decitex of the spandex, the yarn numbers of the warp and filling, the component material breakdown and the weight per square meter.
On August 22, 2008, the merchandise was liquidated in subheading 6204.63.35, HTSUS, which provides for: “Women's or girls' suits, ensembles, suit-type jackets, blazers, dresses, skirts, divided skirts, trousers, bib and brace overalls, breeches and shorts (other than swimwear): Trousers, bib and brace overalls, breeches and shorts: Of synthetic fibers: Other: Other: Other: Other: Other” and subheading 6204.53.30, HTSUS, which provides for: “Women's or girls' suits, ensembles, suit-type jackets, blazers, dresses, skirts, divided skirts, trousers, bib and brace overalls, breeches and shorts (other than swimwear): Skirts and divided skirts: Of synthetic fibers: other: Other.” On February 17, 2009, protestant filed a protest and application for further review against the denial of the claim for preferential treatment. Protestant’s AFR request was approved.
Whether the garments are eligible for duty-free treatment under subheading 9822.05.01, HTSUS.
LAW AND ANALYSIS:
Initially, we note that the matter is protestable under 19 U.S.C. §1514(a)(2) as a decision on the duty rate. The protest was timely filed within 180 days of liquidation of the entry made on June 27, 2007. (Miscellaneous Trade and Technical Corrections Act of 2004, Pub.L. 108-429, § 2103(2)(B) (codified as amended at 19 U.S.C. § 1514(c)(3) (2006)).
Further review of the protest is warranted pursuant to 19 CFR §§174.24(b) and 174.25 as the protest is alleged to be involve questions of law or fact that have not been ruled on by CBP or the Court of International Trade. Specifically protestant argues, in relevant part, that the question whether short supply specifications describe the materials used to make the fabric or yarn or the characteristics of a finished garment containing the fabric or yarn has not yet been addressed.
LAW & ANALYSIS:
The DR-CAFTA was signed on August 5, 2004, and includes as parties the United States, the Dominican Republic, El Salvador, Guatemala, Honduras, Nicaragua, and Costa Rica. The provisions of the DR-CAFTA were adopted by the U.S. in the Dominican Republic Central America Free Trade Agreement Implementation Act, Public Law 109-53 (2005). General Note 29, of the Harmonized Tariff Schedule of the United States ("HTSUS") sets forth the rules
of origin for the DR-CAFTA. Regulations for the DR-CAFTA are set forth in 73 FR 33673, dated June 13, 2008, and are found at 19 CFR 10.581 et seq.
General Note (GN) 29 of the HTSUS implements the DR-CAFTA. GN 29(a) states, in relevant part: Goods for which entry is claimed under the terms of the Dominican Republic-Central America-United States Free Trade Agreement are subject to duty as set forth herein. For the purposes of this note –
(i) originating goods or goods described in subdivision (a)(ii), subject
to the provisions of subdivisions (b) through (n) of this note, that are imported into the customs territory of the United States and entered under a provision –
* * *
(B) in chapter 98 or 99 of the tariff schedule where rate of duty or other treatment is specified,
are eligible for the tariff treatment and quantitative limitations set
forth therein in accordance with sections 201 through 203,
inclusive, of the Dominican Republic-Central America-United States
Free Trade Agreement Implementation Act (Pub. L. 109-53; 119
* * *
GN 29(b) sets forth criteria for determining whether a good (other than agricultural goods provided for in GN 29(a)(ii)) is an originating good for purposes of the DR-CAFTA. GN 29(b) states, in relevant part: For the purposes of this note, subject to the provisions of subdivisions (c), (d), (m) and (n) thereof, a good imported into the customs territory of the United States is eligible for treatment as an originating good under the terms of this note if –
* * *
the good was produced entirely in the territory of one or more of the parties to the Agreement, and –
(A) each of the nonoriginating materials used in the production of the good undergoes an applicable change in tariff classification specified in subdivision (n) of this note; or
(B) the good otherwise satisfies any applicable regional value content or other requirements specified in subdivision (n) of this note;
and the good satisfies all other applicable requirements of this note; or
* * *
Subdivision (n) referred to in GN 29(b) sets forth the tariff shift method of qualifying as an originating good under DR-CAFTA. GN 29(m)(viii)(B) provides an alternative method for an apparel good to qualify as an "originating" good under DR-CAFTA. GN 29(m)(viii)(B) provides: An apparel good of chapter 61 or 62 of the tariff schedule and imported under heading 9822.05.01 of the tariff schedule shall be considered originating if it is cut or knit to shape, or both, and sewn or otherwise assembled in the territory of one or more of the parties to the Agreement, and if the fabric of the outer shell, exclusive of collars and cuffs where applicable, is wholly of –
(1) one or more fabrics listed in U.S. note 20 to subchapter XXII of
chapter 98; or
one or more fabrics formed in the territory of one or more of the parties to the Agreement from one or more of the yarns listed in U.S. note 20 to subchapter XXII; or
(3) any combination of the fabrics referred to in subdivision (B)(1), the
fabrics referred to in subdivision (B)(2) or one or more fabrics
originating under this note.
The originating fabrics referred to in subdivision (B)(3) may contain up to 10 percent by weight of fibers or yarns that do not undergo an applicable change in tariff classification set out in subdivision (n) of this note. Any elastomeric yarn contained in a fabric referred to in subdivision (B)(1), (B)(2) or (B)(3) must be formed in the territory of one or more of the parties to the Agreement.
The women’s trousers and skirts are apparel goods of chapter 62 of the tariff. The garments which were cut and sewn in Guatemala were entered under subheading 9822.05.01, HTSUS, which provides for “textile or apparel goods described in U.S. Note 20 to this subchapter and entered pursuant to its provisions.” In addition, protestant states that the fabric of the outer shell is wholly of a fabric listed in U.S. note 20 to subchapter XXII of chapter 98. Specifically, protestant argues that the outer shell fabric of the garments cut and sewn in the Dominican Republic is a fabric listed in Note 20(a)(75) , subchapter XXII, chapter 98. In the alternative, protestant states that the fabric meets the requirements of Note 20(a)(76), subchapter XXII, chapter 98.
U.S. Note 20(a) provides, in relevant part: Heading 9822.05.01 shall apply to textile or apparel goods of chapters 50 through 63 and subheading 9404.90 that contain any of the fabrics, yarns
or fibers set forth herein, are described in general note 29 to the tariff schedule and otherwise meet the requirements of such general note 29: * * *
Certain Woven Two-Way Stretch Fabrics HTS Subheading: 5515.11.00Fiber content: 58 to 68 percent polyester; 29 to 36 percent rayon; 3 to 7 percent spandexFiber length: Metric: 4.44 to 6.99 centimeters; English: 1.75 to 2.75 inches Yarn number (two configurations):Configuration #1: Metric: Warp and filling: 51/2 to 85/2 polyester/rayon staple combined with 44 to 77 decitex spandex filamentEnglish: Warp and filling: 30/2 to 50/2 polyester/rayon staple combined with 40 to 70 denier spandex filamentConfiguration #2: Metric: Warp and filling: 51/1 to 85/1 polyester/rayon staple combined with 44 to 77 decitex spandex filamentEnglish: Warp and filling: 30/1 to 50/1 polyester/rayon staple combined with 40 to 70 denier spandex filamentThread count: Metric: 27 to 47 warp ends by 24 to 39 filling picks per centimeterEnglish: 70 to 120 warp ends by 60 to 100 filling picks per inchWeave type: Various (including plain and twill)Weight: Metric: 203 to 339 grams per square meter; English: 6 to 10 ounces per square yardWidth: Metric: 122 to 152 centimeters; English: 48 to 60 inchesFinish: Dyed and of yarns of different colors
Certain Woven Two-Way Stretch Fabrics HTS Subheading: 5515.11.00 Fiber Content: 60% to 75% polyester / 20% to 35% viscose rayon / 3% to 6% spandexStaple Length: 44 to 70 mm (1.75 to 2.75 inches)Yarn Size: 40/2 to 84/2 metric wrapped Warp and filling: around 225 to 118 metric spandex (24/2 to 40/2 English wrapped around 40 to 70 denier spandex)Thread Count: 24 to 44 warp ends x 16 to 32 filling picks per square centimeterWeave Type: Various Weight: 200 to 300 grams per square meter (5.9 to 8.9 ounces per square yard) Width: 127 to 152 centimeters (50 to 60 inches)Finish: (Piece) dyed and of yarns OF different colors
The fundamental issue in this case is the probative value of the
testing methodologies performed by CBP laboratory staff. Protestant argues that CBP relied on improper laboratory methodologies, specifically protestant argues that CBP employed a standard applicable to wool and not to man-made staple fibers. Protestant offers its own independently commissioned laboratory analysis to support its claim that the garments are eligible for the short supply specifications for item 75. Alternatively, protestant claims that the CBP’s laboratory results support a finding that the garments comply with short supply
item 76. Lastly, protestant argues that CBP should have applied the specifications to the pre-production inputs into the fabric.
a. The Presumption of Correctness
By statute, CBP decisions regarding the classification of imported merchandise are presumed correct and the burden is on the importer to prove otherwise. See 28 U.S.C. § 2639(a)(1). See also Rollerblade, Inc. v. United States, 282 F.3d 1349, 1352 (Fed. Cir. 2002) (“a classification of merchandise by Customs is presumed to be correct . . . [so] the burden of proof is upon the party challenging the classification.”). The presumption of correctness, however, “does not add evidentiary weight; it simply places the burden of proof on the challenger.” Anhydrides & Chems., Inc. v. United States, 130 F.3d 1481, 1486 (Fed. Cir. 1997).
b. Protestant’s Prima Facie Case
A prima facie case is a case based on evidence, i.e., prima facie evidence, which is sufficient to establish a fact unless rebutted. The term “prima facie evidence” is defined as, “evidence that will establish a fact or sustain a judgment unless contradictory evidence is produced.” Black’s Law Dictionary, 638 - 39 (9th ed. 2009). Consequently, the initial burden of proof in challenging the reliability of evidence used by CBP to classify imported merchandise is on the importer. In this case, the laboratory tests presented by protestant do not constitute a prima facie case. Specifically, protestant states that the independent laboratory testing was conducted on garments made of fabric woven to the same specifications as the fabrics tested by CBP. There is no evidence to establish the garments tested were substantially similar to those tested by CBP. Further, the methodology selected by the independent laboratory, ASTM D 1059 cautions that yarns exceeding a certain percent stretch when under specified tension are not candidates for analysis under this section. See ASTM D 1059, Section 1.2. A review of the independent laboratory report makes no mention of this provision though the garments at issue contain an elastomer.
Protestant also seeks to overcome the presumption of correctness by criticizing the methodology of the CBP Laboratory’s examination. As explained in the appellate court’s decision in Aluminum Company of America v. United States, 477 F.2d 1396 (1973), however, CBP’s testing procedures are reviewed only after the importer has satisfied its burden of making a prima facie case. See Aluminum Co., 477 F. 2d at 1399. Consequently, any review of the alleged defects in CBP’s analysis of the garments will not be addressed as protestant has not met its burden of making a prima facie case in support of its claim.
It is a basic concept of Customs law that articles which are imported into the United States are classified and duty is assessed on the basis of their condition when they are imported into the United States, not on the basis of what their condition may become after being imported into the United States. See United States v. Citroen, 223 U.S. 407, 414-415 (1911), and cases cited therein; see also Simod America Corp. v. United States, 872 F. 2d 1572, 1577 (Fed. Cir. 1989)). Thus, whether merchandise is eligible for preferential treatment based on a claim that it is cut and sewn in the region from short supply fabric is dependent on the condition of the merchandise as imported.
Furthermore, U.S. Note 20(a) states that heading 9822.05.01 applies to “apparel goods of chapters 50 through 63…that contain any of the fabrics…described in general note 29 to the tariff schedule and otherwise meet the requirements of such general note 29.” By the express terms of U.S. Note 20(a) we must examine the article in its condition as imported and determine whether the finished apparel contains a short supply fabric.
Upon review of the laboratory analysis conducted by the CBP Laboratory, we note that of the sixteen samples tested from the five styles of trousers and one style of skirt only two of the sample trousers comply with the specifications of short supply item 75. With regard to the remaining fourteen samples of trousers and skirts, the yarn number for configuration #1, specifically with respect to the
warp and fill of the staple fiber polyester/rayon yarns, is below the requisite minimum specified in short supply item 75.
However, two samples of the one style of skirt consisting of two samples and seven of the samples of trousers are within the specified criteria for short supply item 76. We note that one sample of trousers also met the short supply criteria for short supply item 75. The remaining six samples of trousers do not comply with the with specified percentage fiber content. Upon review of the evidence, we find that the skirts and eight samples of trousers are eligible for preferential treatment. The remaining six samples of trousers are not eligible for preferential treatment. The six samples of trousers not eligible for preferential treatment are identified in the following CBP Laboratory reports as follows:
Laboratory Report #SV200701964 - samples 5104BLK460 and 5104VNE460;
Laboratory Report #SV200701966 - sample 5941BLK460
Laboratory Report #SV20071968 – samples 5109BLK460, 5109VNE460 and 5109CHO460.
By application of General Note 29(b), the one style of skirt and eight of the samples of trousers are eligible for preferential treatment under the DR-CAFTA. The remaining six samples of trousers identified above, are classified in heading 6204, HTSUS, specifically subheading 6204.63.35, HTSUSA, which provides for “Women's or girls' suits, ensembles, suit-type jackets, blazers, dresses, skirts,
divided skirts, trousers, bib and brace overalls, breeches and shorts (other than swimwear): Trousers, bib and brace overalls, breeches and shorts: Of synthetic fibers: Other: Other: Other: Other: Other.” The 2007 general, column one rate of duty was 28.6% ad valorem.
Of the three entries at issue in this protest, entry number MQ7-00188724, consisting of women’s skirts qualifies for preferential treatment under the DR-CAFTA. The protest is allowed with respect to this entry.
You are instructed to deny the protest, except to the extent reclassification of the merchandise as indicated above results in a net duty reduction and partial allowance.
In accordance with the Protest/Petition Processing Handbook (CIS HB, January 2007), please promptly mail this decision, together with the Customs Form 19, to the protestant, but in no event later than 60 days from the date of this letter. Any reliquidation of the entry in accordance with the decision must be accomplished prior to mailing of 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 www.cbp.gov, by means of the Freedom of Information Act, and other methods of public distribution.
Myles B. Harmon, Director
Commercial and Trade Facilitation Division