MAR 2-10 RR:TC:SM 559535 KBR
Leonard M. Fertman
2049 Century Park East, Suite 1800
Los Angeles, CA 90067
RE: Eligibility of calculators for duty-free treatment
under the Generalized System of Preferences ("GSP"); imported
directly; 19 CFR 10,175(b)
Dear Mr. Fertman:
This is in reference to your letter of October 19, 1995, on
behalf of your client, CBM America Corp., requesting a ruling on
the eligibility of calculators for duty-free treatment under the
Generalized System of Preferences ("GSP"). We are sorry for
the delay in responding.
FACTS:
In your submission you state that CBM America Corp., imports
calculators from Malaysia, Thailand and other countries
qualifying under the GSP as beneficiary developing countries.
You state that the calculators will be temporarily stored in a
warehouse in an intermediary country, such as Japan. You state
that while in the intermediary country, the calculators will not
be sold, manipulated, offered for sale at retail, repackaged,
subdivided into lots for allocation to different customers,
undergo a change in title, or otherwise enter the commerce of the
intermediate country. The invoices, shipping documents and bills
of lading will all show the U.S. as the final destination. You
believe that, upon importation into the U.S., the calculators
will still qualify as being "imported directly".
ISSUE:
Whether the calculators from Thailand and Malaysia or other
beneficiary developing country are "imported directly" for
purposes of the GSP when they are shipped through an intermediary
country to the U.S. as described above.
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 sum of (1)
the cost or value of materials produced in the BDC, plus (2) the
direct costs of the processing operations performed in the BDC,
is equivalent to at least 35 percent of the appraised value of
the article at the time of entry into the U.S. See 19 U.S.C.
2463(b)(1). The phrase "imported directly" is defined in section
10.175 of the Customs Regulations (19 CFR 10.175). For purposes
of this ruling, we will assume that the articles are GSP
eligible, they are "products of" the GSP country, and the minimum
local value-content requirement is met.
.
Therefore, the issue in this case concerns whether the
calculators from Thailand and Malaysia or other BDCs are
considered to be "imported directly" from the BDCs to the U.S.,
if they are shipped from the BDCs through Japan or other
intermediary country, and subsequently entered into the U.S.
Section 10.175, Customs Regulations (19 CFR 10.175) defines the
term "imported directly" for purposes of the GSP. Under 19 CFR
10.175(b), merchandise shipped from a BDC through a non-BDC to
the U.S. is "imported directly" if: (1) the merchandise does not
enter into the commerce of any other country while en route to
the U.S., and the invoices, bills of lading, and other shipping
documents show the U.S. as the final destination.
In HQ 556079 dated July 2, 1991, ethylene glycol was
produced in the Czech and Slovak Federal Republic
(Czechoslovakia). However, as Czechoslovakia had no outlet on
the sea, the produce had to be shipped overland from
Czechoslovakia to Rotterdam, Netherlands, where it was held in
storage tanks before being loaded onto a U.S.-bound ocean carrier
and shipped to the U.S. In HQ 556079, it was possible that the
ethylene glycol could be stored in the Netherlands for as long as
30 days. At no time did the ethylene glycol enter the commerce
of the Netherlands or any other country of transshipment.
Moreover, from the Czechoslovakia border until the goods were
loaded on board the U.S.-bound ship, the merchandise was held
under bond in storage. We held in HQ 556079 that if the invoice,
bill of lading, GSP certificate, certificate of origin and other
original shipping documents issued in Czechoslovakia showed the
U.S. as the final destination, the ethylene glycol would be
considered "imported directly" pursuant to 19 CFR 10.175(b). We
stated that this requirement is intended both to establish a
connection between the imported merchandise and its country of
origin and to show that the passage of the merchandise through
the intermediate country involved a mere transshipment rather
than entry into the commerce of the intermediate country.
Furthermore, we also noted that whereas this requirement does not
preclude multiple modes of transportation such as air, sea or
different carriers of the same type, the documents presented as
evidence of compliance with this requirement must include the
original shipping documents issued in the BDC, showing the U.S.
as the final destination.
In another case involving the transshipment of merchandise
from a BDC, HQ 071696 dated May 30, 1984, merchandise was shipped
from Swaziland, a landlocked BDC country, through South Africa
for shipment to the U.S. In that case, it was deemed impractical
from a commercial standpoint to pack the merchandise for shipment
in Swaziland. Therefore, the merchandise was transshipped by
land to South Africa for both packing and shipment to the U.S.
We held that under the facts presented, the packing of the
merchandise in South Africa would cause the merchandise to enter
the commerce of that country. We also stated that "assuming that
shipment by air freight would not be possible, the only solution
would be to avoid packing the merchandise in South Africa so that
the importation could fall under the terms of section 10.175(b),
Customs Regulations (19 CFR 10.175(b))." See also HQ 557933
(September 26, 1994).
Please note that, pursuant to 19 CFR 10.174, the port
director may require that appropriate shipping papers, invoices,
or other documents be submitted within 60 days of the date of
entry as evidence that the articles were "imported directly." In
addition, this provision states that any evidence of direct
shipment required by the port director shall be subject to such
verification as the port director deems necessary.
In this instance, as the invoices, bills of lading and other
original shipping documents to be issued in the BDC will show the
U.S. as the final destination and the calculators will not enter
the commerce of the intermediate country, the shipment will meet
the requirements of 19 CFR 10.175(b). See HQ 555039 (June 16,
1989), HQ 557640 (January 5, 1994). Therefore, pursuant to the
submission of the appropriate documentation, the calculators will
satisfy the GSP "imported directly" requirement.
HOLDING:
Based on the information submitted, we find that the
calculators shipped from Thailand and Malaysia or other BDC
through Japan or other intermediary country, before importation
into the U.S., will satisfy the "imported directly" requirement
under 19 CFR 10.175(b), assuming that the commercial invoices,
bills of lading and other shipping documents show the U.S. as the
final destination, and the calculators do not enter the commerce
of the intermediate country.
A copy of this ruling letter should be attached to the entry
documents filed at the time this merchandise is entered. If the
documents have been filed without a copy, this ruling should be
brought to the attention of the Customs officer handling the
transaction.
Sincerely,
John Durant, Director
Tariff Classification Appeals Division