OT:RR:CTF:VS H193959 YAG
U.S. Customs and Border Protection
11099 S. La Cienega Blvd.
Room 2218 – Team 745
Los Angeles, CA 90045
RE: Application for Further Review of Protest No. 2720-11-100079; Protest against Denial of Preferential Treatment; United States-Singapore Free Trade Agreement (“US-SFTA”); Claim for Preferential Treatment; General Note 25 of the HTSUS; Aircraft Gas Turbine Parts, Impellers, Wheel Turbines
Dear Port Director:
This is in response to the Application for Further Review (“AFR”) of Protest 2720-11-100079, timely filed on February 1, 2011. Our decision follows.
This protest was filed by Sandler & Travis Trade Advisory Services, Inc., on behalf of Hamilton Sundstrand Power System Co. (“Hamilton”), the importer, against the Port of Los Angeles’ decision to liquidate multiple entries of aircraft gas turbine parts, impellers, wheel turbines, and parts of fans and ventilating or recycling goods, denying preferential tariff treatment to this merchandise under General Note 25 of the Harmonized Tariff Schedule of the United States (“HTSUS”). The merchandise subject to this protest was imported by Hamilton in 2009 from Singapore. At the time of filing of the entry summary, the importer did not claim preferential treatment pursuant to the United States-Singapore Free Trade Agreement (“US-SFTA”). Therefore, the entry subject to this protest was liquidated as entered at the applicable general rates of duty on October 15, 2010.
After liquidation, the importer claimed preferential tariff treatment by filing a protest on February 1, 2011, and requested the refund of duty and the Merchandise Processing Fee (“MPF”). On June 9, 2011, in response to the importer’s claim of preferential tariff treatment under the US-SFTA, the Port of Los Angeles requested supporting documentation to show that the imported merchandise was originating in Singapore pursuant to General Note 25 of the HTSUS. Specifically, the Port requested the records, including, but not limited to, certifications of origin, bill of materials, cost data, as well as production and manufacturing records.
The Port argues that the importer did not provide sufficient information to claim preferential tariff treatment under the US-SFTA. Counsel for the protestant argues that the imported merchandise originated in Singapore and, thus, is eligible for preferential tariff treatment under the US-SFTA. In support of this argument and in response to the request from the Port of Los Angeles, on July 14, 2011, Counsel submitted the following documents: (1) multiple bills of materials for various part numbers, imported by Hamilton in 2009 (as well as some parts that were imported in 2010); (2) descriptions of the manufacturing process for each Singapore produced and imported part; and, (3) blanket certifications of origin for 2009, 2010, and 2011. With respect to the certifications of origin, the certification of origin dated and issued on March 14, 2011, which covers the blanket period from January 1, 2009 to December 31, 2009, is the only relevant certification, since the merchandise subject to this protest was imported in 2009.
May the importer claim preferential tariff treatment under the United States-Singapore Free Trade Agreement (“US-SFTA”) over a year after filing the entry summary by filing a protest under 19 U.S.C. §1514(a)?
Does the merchandise at issue in this protest qualify for preferential tariff treatment under General Note 25, HTSUS?
LAW AND ANALYSIS:
The United States-Singapore Free Trade Agreement (“US-SFTA”) was signed on May 6, 2003, and the United States-Singapore Free Trade Agreement Implementation Act (“the Act”) (Public Law 108-78; 117 Stat. 948; 19 U.S.C. §3805 note) was signed on September 3, 2003. Sections 201 and 202 of the Act authorized the President to proclaim the tariff modifications and provide the rules of origin for preferential tariff treatment with respect to goods of Singapore provided for under US-SFTA. Section 202 of the Act specifies the general rules of origin to be used in determining if a good qualifies for preferential tariff treatment under the Agreement. The HTSUS has been amended to include General Note 25, HTSUS, which contains Rules of Origin, definitions and other provisions to determine whether a good originates under the US-SFTA. Title 19, Code of Federal Regulations (“CFR”) was amended on June 11, 2007 to implement the US-SFTA and the Act. 19 CFR §§10.501-10.570. General Note 25(b), HTSUS, states as follows:
For the purposes of this note, subject to the provisions of subdivisions (c), (d), (n) and (o) thereof, goods imported into the customs territory of the United States are eligible for treatment as originating goods of a SFTA country under the terms of this note only if they–
(i) were wholly obtained or produced entirely in the territory of Singapore or of the United States, or both;
(ii) are goods that, in their condition as imported, are enumerated in subdivision (m) of this note and imported from the territory of Singapore; or
(iii) have been transformed in the territory of Singapore or of the United States, or both, so that each non-originating material:
(A) undergoes an applicable change in tariff classification set out in subdivision (o) of this note as a result of production occurring entirely in the territory of Singapore or of the United States, or both; or
(B) if no change in tariff classification is required, the good otherwise satisfies the applicable requirements set forth in such subdivision (o).
Article 3.13.1 of the US-SFTA states as follows:
Each Party shall provide that an importer may make a claim for preferential treatment under this Agreement based on the importer’s knowledge or on information in the importer’s possession that the good qualifies as an originating good.
Furthermore, Article 3.14.4 of the US-SFTA states that “the importing Party shall not subject an importer to any penalty for making an invalid claim for preferential treatment if the importer: (a) upon becoming aware that such claim is not valid, promptly and voluntarily corrects the claim and pays any duty owing; and (b) in any event, corrects the claim and pays any duty owing within a period determined by the Party, which shall be at least one year from submission of the invalid claim.”
As implemented by the United States, an importer may make a claim for preferential treatment under the US-SFTA based on the importer's knowledge or information in the importer's possession that the good qualifies as an originating good. 19 CFR 10.510(a). For the purposes of General Note 25, HTSUS, the term “SFTA country” refers only to Singapore or to the United States. See also 19 CFR §10.531.
Additionally, under the US-SFTA, a claim for preferential tariff treatment is made by including on the entry summary, or equivalent documentation, the letters “SG” as a prefix to the subheading of the HTSUS under which each qualifying good is classified, or by the method specified for equivalent reporting via an authorized electronic data interchange system. See 19 CFR §10.510(a). Pursuant to the US-SFTA, an importer’s right to preferential tariff treatment for qualifying goods does not vest automatically on entry. Thus, if an importer wishes to make a claim for preferential tariff treatment, an importer must do it at the time of filing of the entry summary. Moreover, under the mandate of the US-SFTA, as implemented by the Act and the CFR, an importer that does not meet these requirements at the time of entry is barred from making a claim for preferential tariff treatment under the US-SFTA and may not qualify for a post-entry duty refund per 19 U.S.C. §1520(d). Ford Motor Company v. United States, 635 F.3d 550 (2011).
In Xerox Corporation v. United States, 423 F.3d 1356 (2005), the importer claimed classification of the goods at 3.7 percent ad valorem rate under subheading 9009.12, HTSUS. Over a year later, the importer asserted, in a protest of the liquidation pursuant to 19 U.S.C. §1514(a), that its entries were entitled to preferential tariff treatment under the North American Free Trade Agreement (“NAFTA”). The Federal Circuit determined that liquidation by the U.S. Customs and Border Protection (“CBP”) of the goods as entered, rather than at the more preferential rate pursuant to NAFTA, was not a protestable decision under 19 U.S.C. §1514 because the issue of whether the subject merchandise was eligible for the NAFTA preference was never timely placed before CBP. Thus, Federal Circuit held that “in the absence of a proper claim for NAFTA treatment, either at entry or within a year of entry, Customs cannot make a protestable decision to deny an importer preferential NAFTA treatment.” In addition, the Federal Circuit found that an importer may not use 19 CFR §10.112 to circumvent the clear mandate of NAFTA and 19 U.S.C. §1520(d) that allowed the importer in Xerox only one year to file a claim in the first instance for NAFTA treatment. Simply put, the Federal Circuit declined to construe 19 CFR §10.112 to increase the one-year time period for making a post-importation NAFTA claim and thus increase the Court of International Trade’s jurisdiction under 28 U.S.C. §1581(a).
Similarly, in Corrpro Companies, Inc. v. United States, 433 F.3d 1360 (2006), the Federal Circuit also held that there was no protestable decision conferring jurisdiction on the Court of International Trade under 28 U.S.C. §1581(a) because CBP could not have and did not consider the merits of the importer’s claim in its initial classification decision or liquidation. Rather the plaintiff filed a protest challenging CBP’s liquidation of its entries at a general rate, which CBP denied. In Corrpro, the plaintiff claimed that its imported goods were entitled to NAFTA treatment even though it did not make a NAFTA claim at the time of entry or within one year of entry under 19 U.S.C. §1520(d). Citing Xerox, the Federal Circuit noted that the importer’s entries were not a protestable decision with respect to preferential treatment under NAFTA because “Customs at no time considered the merits of NAFTA eligibility, nor could it [have] without a valid claim by the [importer] for such eligibility.” See Corrpro, 423 F.3d at 1364. Thus, in dismissing the case on jurisdictional grounds, the Federal Circuit determined that CBP could not have engaged in any sort of decision-making as to NAFTA eligibility in liquidating the goods because Corrpro had not yet raised the NAFTA issue.
In this case, Hamilton did not make a claim for preferential tariff treatment at the time of filing of the entry summary in 2009 as required by 19 CFR §10.510, and the entry was liquidated at the applicable general rate of duty. Under the guise of a 19 U.S.C. §1514(a) protest of CBP’s liquidation of the subject entry and over a year after filing the entry summary, Hamilton seeks to claim preferential treatment under the US-SFTA. Since the importers may not file post entry preference claims under the US-SFTA, Hamilton may not avail itself of the benefit by filing a claim for preferential treatment within one year of the date of importation, per 19 U.S.C. §1520(d). Neither can the importer claim preference over a year after importation and receive an unintended benefit of the US-SFTA by filing a protest under 19 U.S.C. §1514(a) because it would be contrary to the Federal Circuit Court’s decisions in Xerox Corporation v. United States and Corrpro Companies, Inc. v. United States. Although these court decisions concern NAFTA, which allows post entry claims under 19 U.S.C. §1520(d), these cases stand for the general proposition that CBP may not render a protestable decision on FTA eligibility until a valid FTA claim is submitted to CBP. Indeed, in Xerox, the Federal Circuit expressly rejected the idea that the mere assessment of general rates at liquidation amounted to a protestable decision to deny preferential treatment if no claim was filed with CBP prior to the non-preferential rate being assessed.
Since Hamilton did not make a claim for preferential treatment at the time of entry, as required by 19 CFR §10.510 and US-SFTA, CBP’s liquidation of the imported merchandise at the general rates of duty was correct based on the information provided at entry, and this protest should be denied. Therefore, the importer may not claim preferential tariff treatment under the US-SFTA by filing a protest under 19 U.S.C. §1514(a). Furthermore, when the protest was filed on February 1, 2011, the certificate of origin dated March 4, 2011, was not yet signed and submitted.
Accordingly, we find that CBP’s liquidation of the imported merchandise at the general rates of duty was proper, and the entry subject to this protest was properly liquidated because the importer failed to file a claim for preferential tariff treatment at the time of filing of entry summary.
The subject protest is denied. 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.
Myles B. Harmon, Director
Commercial and Trade Facilitation Division