CLA-02 RR:CR:SM 560998 KKV
Mr. Martin W. Bloch
Import Manager
Fritz Companies, Inc.
28515 Goddard Road
Romulus, MI 48174
RE: Simultaneous claims for special tariff treatment program and partial duty exemption in Subchapter II, Chapter 98, HTSUS; Generalized System of Preferences (GSP); subheading 9802.00.80, HTSUS; merchandise processing fee (MPF)
Dear Mr. Bloch:
This is in response to your letter dated May 5, 1998, on behalf of Linamar USA, which requests clarification of Customs policy regarding the payment of the Merchandise Processing Fee (MPF) for merchandise eligible for preferential tariff treatment under subheading 9802.00.80, Harmonized Tariff Schedule of the United States (HTSUS) and the Generalized System of Preferences (GSP). We regret the delay in responding.
FACTS:
You indicate that Linamar USA imports merchandise from Hungary which is eligible for duty-free treatment pursuant to the GSP. You indicate that a portion of the component materials are of U.S. origin which are exported to Hungary for further processing and are subsequently returned and entered under subheading 9802.00.80, HTSUS, which entitles qualifying components entry into the United States without payment of the MPF. You inquire whether, given these circumstances, the importer is required to pay MPF on the portion of the goods which are eligible for GSP, stating that the U.S. Customs computer system (ACS) does not accept simultaneous claims for preferential tariff treatment under GSP and subheading 9802.00.80, HTSUS.
ISSUE:
Whether simultaneous entry claims may be made for special tariff treatment under the GSP and subheading 9802.00.80, HTSUS.
LAW AND ANALYSIS:
With regard to the assessment of the Merchandise Processing Fee (MPF), 19 U.S.C. 58c(a)(9)(A) provides that the Secretary of the Treasury shall charge and collect an ad valorem fee for the processing of merchandise that is formally entered or released. This fee, with certain exceptions, is based on the value of merchandise as determined under 19 U.S.C. 1401a.
The exceptions for which the MPF may not be charged are set forth at 19 U.S.C. 58c(b)(8)(B), which provides, in pertinent part, that no fee may be charged for the processing of any article “provided for under any item in chapter 98 of the Harmonized Tariff Schedule of the United States, except subheading 9802.00.60 or 9802.00.80....” (See 58c(b)(8)(B)(i) (emphasis added). Section 58c(b)(8)(D)(iv) provides that "in the case of merchandise classified under subheading 9802.00.80, the MPF shall "be applied to the full value of the merchandise, less the cost or value of the component United States products." There is no exemption from the MPF for articles which are products of beneficiary developing countries under the GSP.
With regard to claims for preferential tariff treatment, General Note 3(c)(i), HTSUS, lists the following programs under which special tariff treatment may be provided to imported articles: GSP, Automotive Products Trade Act, Agreement on Trade in Civil Aircraft, North American Free Trade Agreement (NAFTA), Caribbean Basin Economic Recovery Act (CBI), United States-Israel Free Trade Area (USIFTA), Andean Trade Preference Act (ATPA), Agreement on Trade in Pharmaceutical Products and the Uruguay Round Concessions on Intermediate Chemicals for Dyes).
General Note 3(a)(iii), HTSUS, provides, in pertinent part, as follows:
The “Special” subcolumn reflects rates of duty under one or more special tariff treatment programs described in paragraph (c) of this note and identified in parentheses immediately following the duty rate specified in such subcolumn. These rates apply to those products which are properly classified under a provision for which a special rate is indicated and for which all of the legal requirements for eligibility for such program have been met. . . . . Where no special rate of duty is provided for a provision, or where the country from which a product otherwise eligible for special treatment was imported is not designated as a beneficiary country under a program appearing with the appropriate provision, the rates of duty in the “General” subcolumn of column 1 apply.
It is clear from a reading of U.S. Note 1, Chapter 98, HTSUS, and U.S. Notes 3(c) and 4(b), subchapter II, Chapter 98, HTSUS, that an article entered under subheading 9802.00.80, HTSUS which satisfies all the requirements for entry under the applicable partial duty exemption provision is considered classified under that subheading for purposes of General Note 3(a)(iii), HTSUS. Therefore, it is that provision which is controlling in determining whether the article is eligible for one or more of the special tariff treatment programs (e.g., GSP, APTA, NAFTA, U.S.-Israel Trade Preference Act, etc.) The Special subcolumn opposite subheading 9802.00.80, HTSUS, indicates that merchandise classified in that tariff provision is eligible for preferential treatment under the following programs: U.S. Israel Free Trade Area, Automotive Products Trade Act, Agreement on Trade in Civil Aircraft, NAFTA, Caribbean Basin Economic Recovery Act and the Andean Trade Preference Act.
Inasmuch as the GSP is not one of the tariff treatment programs which appears in the Special subcolumn opposite subheading 9802.00.80, HTSUS, articles classified under this subheading are not eligible for preferential tariff treatment under this program. Therefore, simultaneous entry claims for preferential tariff treatment under GSP and subheading 9802.00.80, HTSUS, are not permitted. Accordingly, articles satisfying the statutory requirements for preferential tariff treatment under both subheading 9802.00.80, HTSUS, and the GSP, may be entered under either subheading 9802.00.80, in which case the MPF would be payable upon the full value of the merchandise, less the cost or value of the U.S.-origin components, or the GSP, in which case the MPF would be payable upon the full value of the articles.
HOLDING:
Articles properly classified under subheading 9802.00.80, HTSUS, are not also eligible for preferential tariff treatment under the GSP.
A copy of this ruling letter should be attached to the entry documents filed at the time the goods are 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
Commercial Rulings Division