OT:RR:CTF:VS H192596 CMR

Port Director
U.S. Customs and Border Protection
6601 NW 25th Street
Room 272
Miami, FL 33122

RE: Protest and Application for Further Review No. 5201-11-100210

Dear Mr. Suliveras:

On October 7, 2011, this office set aside the denial of further review issued by your port for Protest No. 5201-11-100210 and voided the denial of the protest. The protest was filed by Sandler, Travis & Rosenberg, P.A., on behalf of their client, 5th & Ocean Clothing, LLC. We set aside the denial of further review because in the application for further review (AFR) set forth in the protest, counsel argued that denial of the protest due to insufficiency of documents without notifying the importer of the alleged insufficiency and opportunity to correct it is inconsistent with the Court of International Trade's decision in Estee Lauder v. United States, Slip Op. 11-23 (decided March 1, 2011). Customs and Border Protection (CBP) has not ruled upon the applicability of this court decision in situations involving the sufficiency of documentation in protests.

FACTS:

The protest involves one entry of merchandise consisting of various apparel articles for which preferential tariff treatment was claimed under the Dominican Republic Central America United States Free Trade Agreement (DR-CAFTA). On June 21, 2010, the port requested information via a Customs and Border Protection (CBP) Form 28, Request for Information. Specifically, the port requested DR-CAFTA certifications, as well as affidavits of origin from the producers of the fabric, yarn and thread used in manufacturing the entered garments. The request also included the same information for the elastic and trims. The CBP Form 28 indicated that the affidavits should provide a complete description of the item produced (including fiber content); producer; purchaser; date of sale; location of manufacturing plant; name, title, telephone number of person executing affidavit. The information was requested for the entry at issue in the protest along with five other entries. We note the CBP Form 28 indicates by handwritten notation that a response was received on July 20, 2010.

On August 2, 2010, a CBP Form 29, Notice of Action, was issued proposing to rate advance the entry at issue and noting deficiencies in the submitted information, but that Notice was cancelled on August 31, 2010. Another Notice of Action, CBP Form 29, was issued on August 31, 2010, proposing to rate advance the entry at issue and noting the deficiencies related to all entry numbers that were listed in the CBP Form 28, Request for Information. A handwritten notation dated September 23, 2010, indicates there was no response.

On September 23, 2010, the port issued a Notice of Action indicating it had made a DR-CAFTA Negative Determination in light of the failure to respond to the August 31, 2010 Notice of Action. The DR-CAFTA claims were denied for the entry at issue along with the five entries noted in the Request for Information. The entry at issue was liquidated on October 22, 2010 and a protest against the port's denial of DR-CAFTA preferential tariff treatment was timely filed on April 20, 2011. The protest and request for further review were denied on June 13, 2011. The reason given for the denial of the protest was Submitted documentation failed to substantiate DR-CAFTA claim.

In the submitted protests, counsel identifies each of the parties involved in the transaction and their roles. Counsel also identifies the documentation submitted to substantiate the DR-CAFTA claim for the individual styles in the entry.

The port attached to the protest denial a list of reasons it concluded the submitted documentation did not substantiate the preferential claim. The reasons included:

No documentation was submitted to show the fabric was shipped by the importer to the manufacturer.

No yarn affidavit was submitted for the yarns used by the U.S. fabric producer.

DR-CAFTA certifications for two style numbers were determined to be invalid. They did not provide the correct Harmonized Tariff Schedule of the United States (HTSUS) classification numbers.

A specified bill of lading indicated that cotton lint was exported.

Purchase orders were not provided from the importer.

Various problems were noted with affidavits, including: there were differences in fiber content between what was stated on one affidavit and the garment style in which the fabric was used; submission of one affidavit from a party not shown as a fabric producer on the certificates of origin; the address of the manufacturing

plant was not provided on one affidavit and invoices and purchase orders referred to therein were not provided; and an affidavit was not submitted from the producer of waistband fabric for a specific style.

As noted above, the denial of AFR was set aside by this office on October 7, 2011. We have reviewed the documentation submitted in support of the claim to the port, including the information submitted as part of the protest packet, and information submitted with the request to set aside the denial of the AFR which we view as supplemental documentation to the protest now before us. Our decision is set forth below.

ISSUE:

Does the documentation submitted by the importer support the claim for preferential tariff treatment under the DR-CAFTA for the merchandise imported in the entry in question?

LAW AND ANALYSIS:

Before we address the substance of this protest, we address the applicability of the Estee Lauder case to this protest and other protests involving the sufficiency of documentation submitted to substantiate a preferential tariff rate under a preference program, including Free Trade Agreements. It is our view that the Estee Lauder case does not apply. The decision of the Court of International Trade therein goes to the sufficiency of a protest for purposes of determining whether it is valid. It does not address the sufficiency of documents which an importer submits to support its claim under a preference program. Similarly, the reference to Customs Directive 3550-065 (August 4, 1993) in the court decision pertains to information in a section addressing Incomplete Protests which clearly references 19 CFR 174.13 of the Customs and Border Protection Regulations. Section 174.13 (19 CFR 174.13) is entitled Contents of protest. Therefore, counsel's reliance on the Estee Lauder case is clearly misplaced.

The DR-CAFTA is implemented in the HTSUS in General Note (GN) 29. However, at issue in this case is not the question of whether the merchandise met the terms of the GN 29 per se, but whether the information submitted substantiated the claim that the merchandise met the terms of GN 29 and that certain materials used in the manufacture of the merchandise originated within the territory of one or more of the DR-CAFTA parties.

The Customs and Border Protection (CBP) Regulations applicable to the DR-CAFTA are contained in 19 CFR 10.581 to 10.625. Section 10.616 specifically addresses Verification and justification of claim for preferential tariff treatment. With regard to verification of a claim by a port, the regulation references different methods by which verification may be conducted, including written requests for information. In this case, that is what the port did; it issued a CBP Form 28 requesting specific information. The DR-CAFTA claim was denied because the importer failed to respond to the port's request.

However, when the importer filed a protest against the port's action of liquidating the entry without benefit of the DR-CAFTA claim, the importer submitted additional information to support the claim for preferential tariff treatment. The port reviewed the submitted documentation and concluded that the documents were deficient.

In reviewing documents submitted to support a claim for preferential tariff treatment under a Free Trade Agreement or other tariff preferential program, we consider the guidance issued to CBP field personnel and the importing community by CBP Headquarter offices in the form of memorandum and Textile Book Transmittals (TBTs). This guidance includes the April 26, 2006, memorandum regarding Amendments to the U.S. Dominican Republic Central America Free Trade Agreement Implementation Instructions, issued by the Executive Director, Trade Enforcement and Facilitation, Office of Field Operations; TBT-07-019, Documents Used to Verify Free Trade Agreement and Legislated Trade Program Claims for Textiles and Wearing Apparel, issued by the Executive Director, Trade Policy and Programs, Office of International Trade on October 10, 2007; and TBT-11-004, Additional Documents Used to Verify Free Trade Agreement and Legislated Program Claims for Textiles and Wearing Apparel, issued by the Executive Director, Trade Policy and Programs, Office of International Trade on March 31, 2011.

With regard to the reasons given for denying the protest and the specific documents cited by the port we have the following comments.

The record does not show that the port requested documentation from the importer to show the fabric was shipped by the importer to the manufacturer.

Yarn affidavits from the supplier of yarns to the fabric suppliers/producers in the record were forwarded to this office from the port. One affidavit indicates yarn was sold to a specific supplier and specifies the type of yarn, amount and shipment date. It also indicates the manufacturing facility where the yarn was produced. A commercial invoice reflects the sale of the yarn to this supplier. The yarn was provided by the supplier to a manufacturer for knitting into fabric at their plant in the Dominican Republic. The manufacturer sold the fabric to the supplier who then sold the fabric to the importer who provided it to the garment manufacturer. In the case of style 4518W, the supplier purchased the yarn, provided it to a manufacturer who knit the yarn into fabric. The fabric was then finished by a finisher. The finished fabric was sold to the supplier who then sold it to the importer. Based on the documents in the file, we are satisfied with the yarn affidavits in the record.

The DR-CAFTA certification for two styles contained the correct Harmonized Tariff Schedule of the United States (HTSUS) classification subheading through the eight-digit level. The port objected to these DR-CAFTA certifications because the HTSUS classification numbers contained errors. However, they contained an error at the statistical level, identifying the garments as women's garments as opposed to girls'. While this is an error, it is possibly a typographical error and one which does not impact the classification information through the legal level, i.e., the eight-digit level. As pointed out by counsel, the submitted certifications contain the information required by the CBP regulations, specifically, 19 CFR 10.584. Section 10.584(a)(3)(iv) requires inclusion of the HTSUS tariff classification to six or more digits, as necessary for the specific change in tariff classification rule for the good set forth in General Note 29(n), HTSUS[.] As the applicable General Note (GN) 29(n) rule for the goods at issue only requires classification to the six-digit level, the error in the certifications of the classification of the goods at the ten-digit level has no bearing on determining whether the goods qualify under the DR-CAFTA. While an error, these were inconsequential errors for purposes of determining eligibility under the DR-CAFTA and are not a valid basis for denying preferential treatment.

The port objected to a bill of lading indicating that cotton lint was exported. However, the bill of lading stated in English the words (COTTON YARN) under the Spanish phrase HILASA DE ALGODON. The word hilaza means yarn, coarse thread. See http://dictionary.reverso.net/spanish-english/hilaza. We also found that in Spanish, another word for yarn is hilos and the word for lint is hilasa. As the document is primarily filled out in English, it appears the party who filled it out may not have been a native Spanish speaker, in which case, an error in translation would explain the use of the term hilasa when hilos should have been used. Counsel argues that hilasa is an alternative spelling for hilaza. While we may not embrace that argument, the English description is clear. The bill of lading reflects that cotton yarn was exported.

The port did not request purchase orders from the importer.

The port objected to a company not being shown as a fabric producer on DR-CAFTA certifications. The company finished fabrics, but did not form them. However, we understand the port's concern is that the Manufacturer's Affidavit of Origin for Fabric, dated September 11, 2009, indicates the fabric was wholly formed (dyed, finished or otherwise produced) in the Dominican Republic by us as described below: wholly of U.S.A. originating yarn and/or other materials. Yet, the affidavit also clearly indicates that the greige fabric was formed by a company in North Carolina and [X] dyed, finished or otherwise produced that fabric. As a dyer or finisher of fabric, [X] would not be listed as a producer of the fabric on the certificate of origin as it did not actually form the fabric. In spite of the inconsistencies within the affidavit, the specificity of the document regarding the name and address of the greige fabric producer in the United States, taken together with the Certificate of Origin by the seller/supplier of the fabric indicating the fabric was knit by the company named in the [X] affidavit and dyed at [X], causes us to believe the apparent error on the affidavit is not sufficient to deny preferential treatment under the DR-CAFTA.

The port found the affidavits of origin for the waistband material unacceptable. With regard to style 5122Y, for the reasons stated below, this issue is moot. For style 10154Y, we reviewed the affidavit of origin from the producer of the elastic material for the waistband, i.e, the waistband material, which was in the file and accompanied by a purchase order and an invoice. The purchase order and invoice indicate the manufacturer sold the material to the garment manufacturer. We see no reason not to accept the affidavit of origin.

The port noted various problems with affidavits, including: differences in fiber content between what was stated on one affidavit and the garment style in which the fabric was used; submission of one affidavit from a party not shown as a fabric producer on the certificates of origin; the address of the manufacturing plant was not provided on one affidavit and invoices and purchase orders referred to therein were not provided; and an affidavit was not submitted from the producer of waistband fabric for a specific style.

A number of the issues referenced above relate to style 5122Y. The importer conceded it does not have documents to support the origin of the yarn and fabric for this style. We believe the issues raised above have been addressed in our preceding discussion of the various reasons provided for denying preferential tariff treatment to the goods in the entry at issue.

We have reviewed the documents submitted to the port with regard to this protest. Some affidavits and certificates submitted in support of the claim had problems. The record contains two Certificates of Origin for the fabric used in the production of style 4493L. One contains the following statement in the certification statement at the bottom of the form: I certify that this fabric is knit and dyed in the United States and made of imported yarn with American cotton. The other does not. The one with the cited statement also indicates that the supplier is the producer of the fabric, when it was not the producer. Under the column for country of origin, the processing information for the fabric is correctly set forth in both certificates. The file contains three manufacturer's affidavits from the producer of the yarn used in making the fabric for style 4493L. One affidavit has the correct classification of the yarn in subheading 5509.53, HTSUS, as a man-made fiber yarn; one has the incorrect classification of the yarn as a cotton yarn of subheading 5206.13, HTSUS; and one does not provide a classification for the yarn. Counsel argues the corrected certificate and yarn affidavit were submitted to the port. The presence of corrected documents in the protest file supports counsel's assertion. While a corrected yarn affidavit was not provided for the document without a classification for the yarn, the description of the yarn is precise and the document is identical to the corrected affidavit with the exception of the missing HTSUS classification for the yarn. We do not believe denial of the preferential claim due to the missing HTSUS classification is warranted.

We received a corrected Certificate of Origin for the fabric used in style 4518W from counsel as part of the attachment to the request to set aside the denial of AFR, dated August 9, 2011, and it was asserted to have been submitted to the port. We note a corrected Certification of Origin with a corrected description of the good with the correct fiber content was submitted in Exhibit E to the protest.

The Certificate of Origin submitted for fabric used in producing style 7188L from the same supplier contains the following statement in the certification statement at the bottom of the form: I certify that this fabric is knit and dyed in the United States and made of imported yarn with American cotton. In addition, the certificates indicate that is the producer of the fabric, when it was not the producer. We note that under the column for country of origin, the processing information for the fabric is correctly set forth. Counsel submitted a corrected document when the obvious inconsistencies within the document were pointed out.

With regard to two of the submitted affidavits, one was not signed and the other was a copy of a notarized affidavit where the notary's stamp indicated the affidavit was invalid if a copy. With regard to the unsigned affidavit, it is in actuality a certification by the plant manager of the yarn producer and contains his name, phone number and fax number. While we agree with the port that the document should be signed, when viewed in totality with the other documents pertinent to the style at issue, we do not agree that failure to sign this document should result in denial of preferential treatment, especially in light of CBP's ability to verify the authenticity of the document by contacting the named individual. As for the copy of the notarized affidavit, it was provided in support of the preferential tariff treatment claim for style 5122Y which the importer now concedes through counsel that it lacks the documentation to support the claim. Therefore, we see no need to address this affidavit here.

The record contained documentation submitted by the importer that was carelessly prepared. The inattention to detail and failure to check the correctness of all of the information in the documentation led to the initial denial of the protest by the port. Under reasonable care, the importer must be responsible. Not only must records be maintained, but they must be accurate. Greater care needs to be exercised in executing the documents that are kept to support a claim for preferential treatment. An importer cannot rely on CBP to constantly ask for clarifications or corrections on documents that are shoddily prepared and contain inconsistencies.

HOLDING:

We note that the decision herein is based upon the specific facts of this case and the documents submitted to and reviewed by this office. You are instructed to allow the protest in part and deny in part. With regard to style 5122Y, the protest should be denied. With regard to the remaining styles, the protest should be allowed.

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 entry 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 of the Office of International Trade 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.


Sincerely,

Myles B. Harmon, Director
Commercial and Trade Facilitation Division