CLA-2 CO:R:C:S 556648 WAW
District Director
U.S. Customs Service
610 South Canal Street
Chicago, IL 60607
RE: Protest No. 3901-91-101040 concerning the eligibility of
artificial flowers from Macau for duty-free treatment under
the GSP
Dear Sir:
This is a decision on an Application for Further Review of
the above-referenced protest filed by All World Imports, Inc.,
against the assessment of duties on artificial flowers imported
into the U.S. from Macau. We have considered the protest and our
decision follows.
FACTS:
The protestant claims that the subject artificial flowers
should be entitled to duty-free treatment under the Generalized
System of Preferences (GSP) (19 U.S.C. 2461-2466) since they are
manufactured by the "Fabrica de Flores Artificials Man Fong"
(hereinafter Man Fong) factory located in Macau and are
classifiable under a GSP eligible provision. In the protestant's
declaration of the manufacturing and/or processing operations of
the artificial flowers, the protestant states that Macau is the
country where these operations took place. The merchandise which
is the subject of this protest was entered on September 4, 1990.
Your office, however, subsequently liquidated the entry dutiable
at the rate of 9 percent ad valorem on June 28, 1991.
ISSUE:
Whether the artificial flowers from Macau are entitled to
duty-free treatment under the GSP?
LAW AND ANALYSIS:
Under the GSP, eligible products the growth, product of
manufacture of a designated beneficiary developing country (BDC)
which are imported directly into the U.S. qualify for duty-free
treatment if the sum of (1) the cost or value of the material
produced in a BDC, plus (2) the direct costs involved in
processing the eligible article in the BDC, is not less than 35%
of the appraised value of the article at the time it is entered
into the U.S. See section 10.176(a), Customs Regulations (19 CFR
10.176(a)).
Protestant's request for further review may be summarily
disposed of. The scope of review in this protest is on the
administrative record, and protestant has not presented any
evidence in support of its assertions. The Customs Service will
not grant further review of a blanket protest. Protestant must
comply with the statutory and regulatory requirements. Under 19
U.S.C. section 1514(c)(1) a protest of a decision must set forth
distinctly and specifically each decision as to which protest is
made. See generally, United States v. Parksmith Corp., 514 F.2d
1052, 62 C.C.P.A. 76 (1975); American Commerce Co. v. United
States, 173 F. Supp. 812 (Cust. Ct. 1959); United States v. E.H.
Bailey & Co., 32 C.C.P.A. 89 (1945).
Pursuant to INV 8-02 CO:TO:C JRD, dated October 31, 1991,
the Assistant Commissioner of Commercial Operations instructed
the Regional Commissioners that all entries of artificial flowers
claimed to be manufactured in Macau by any of the named factories
listed in the memorandum should be denied GSP treatment and
instead, should be rate advanced via the issuance of a Proposed
Notice of Action (CF 29). The Man Fong factory is one of the
factories which has been precluded from receiving duty-free
treatment under the GSP pursuant to this memorandum. In
addition, the memorandum states that the Senior Customs
Representative (SCR/Hong Kong) has also issued reports of
investigation concerning the alleged transshipment of PRC-origin
artificial flowers via Macau, which indicate that the named
factories were either "not manufacturing artificial flowers in
Macau, or were incapable of manufacturing them in the quantities
exported to the U.S." Therefore, the Assistant Commissioner
instructed all Regional Commissioners that in the absence of
"compelling evidence" to the contrary, protests filed on the
liquidation of entries from any of the factories enumerated in
the memorandum should be denied. The Assistant Commissioner
also recommended that any evidence submitted on behalf of an
importer of artificial flowers from Macau must be forwarded to
the Commercial Compliance Branch for their analysis and review
before any action is taken.
With regard to the instant case, the protestant has not
submitted any independent evidence to the District Director in
your office to substantiate its claim for duty-free treatment
pursuant to the GSP. Protestant simply asserts that the importer
relied on the supplier's representations, sales confirmations,
letters of credit and the GSP Form A, as evidence that the
merchandise was manufactured in Macau by the Man Fong factory.
Based on an investigation beginning in June 1989, conducted
by the Senior Customs Representative, Hong Kong (SCR/HK), Customs
concluded that the Man Fong factory was not capable of
manufacturing artificial flowers at its facility due to its very
limited production capacity. Customs informants in Macau
revealed that the Man Fung factory had been producing artificial
flowers in China for many years and simply performed packaging
operations at its facility in Macau. Therefore, based on this
information, the SCR/HK concluded that the vast majority, if not
all, of the flowers shipped from the Man Fong factory and labeled
"made in Macau" were actually produced in China. Protestant has
not provided "compelling evidence" to rebut the evidence reported
by the SCR/HK.
Moreover, without sufficient information to confirm that the
artificial flowers in the instant case were manufactured in Macau
by the Man Fong factory (i.e., evidence of manufacturing
performed in Macau such as cutting, dying, texturizing, and
injection molding), we cannot determine whether the materials
imported into Macau and used in the production of the artificial
flowers have undergone a double substantial transformation, so
that the cost or value of these materials may be included in the
GSP 35% value-content requirement. Therefore, the artificial
flowers in this case will not be eligible for duty-free treatment
under the GSP.
HOLDING:
Based on the foregoing discussion, this protest should be
denied in full. A copy of this decision should be attached to
the Customs Form 19 to be returned to the protestant as part of
the notice of action on the protest.
Sincerely,
John Durant, Director
Commercial Rulings Division