OT:RR:CTF:VS H119995 KSG
Port Director
U.S. Customs and Border Protection
101 E. Main Street
Norfolk, VA 23510
RE: Application for Further Review of Protest 1401-10-100067; QIZ; value-content requirement; documentation
Dear Port Director:
This is in response to your memorandum dated August 12, 2010, forwarding the Application for Further Review of Protest 1401-10-100067 submitted by counsel on behalf of Wear Me Apparel Corporation, importer of record and the protestant. Counsel claims that the imported apparel is eligible for duty-free treatment as a product of an Egyptian Qualified Industrial Zone (“QIZ”).
FACTS:
This case involves two styles of imported boys apparel that were entered as a product of an Eqyptian QIZ. The protestant states that polyester fabric from India was cut and assembled into garments in a qualified QIZ in Egypt and the garments were shipped to the U.S.
In a Request for Information (CBP Form 28) dated May 19, 2009, CBP asked the importer to submit supporting documentation for the imported goods, including (1) a list of materials used to produce the apparel, the names and addresses and country of origin of the suppliers of materials; (2) the quantity and price per unit of the imported apparel; (3) the supplier’s invoice for the fabric; (4) the per unit cost of the direct labor; and (5) production records for the processing in the QIZ; and (6) a country of origin statement.
The importer submitted the following documentation as support for its claim:
Purchase orders for the two styles of clothing from Wear Me to Future Fashion, a manufacturer located in a QIZ in Giza, Egypt;
An invoice from Future Fashion to Wear Me for the apparel;
A factory profile for Future Fashion;
A certificate issued by the Egypt-Israel QIZ Joint Committee stating that Future Fashion is located within the QIZ;
A purchase order for 100% polyester fabric width 180 cm, commercial invoice from Sangam India Limited to Future Fashion, dated January 30, 2008, for polyester fabric from India, packing lists and a bill of lading for the polyester fabric for shipment from India to Egypt;
Cutting orders for the two styles of clothing in Arabic and an English translation;
Daily cutting reports in Arabic and translated into English which specify the style cut, the date cutting occurred, the total quantity of apparel cut and the workers who allegedly performed the cutting operation;
Delivery notes and proof of payment for the screen printing of the boy’s apparel, indicating the quantity for each style and the date of delivery back to Future Fashion;
Daily production reports indicating the daily assembly records for the two styles indicating the total quantity for each style and the specific employees who allegedly assembled the garments;
Packing records for the two styles of garments;
Wage and time cards for the employees who performed the cutting, the assembly and the packing of the two styles of garments; and
A commercial invoice, packing list, country of origin declaration, bill of lading showing Wear Me as the importer and an English translation of the Egyptian export documents showing 1,890 and 2,090 garments, which the importer states covers the two styles of clothing as well as other styles.
ISSUE:
Whether the imported boy’s apparel is eligible for preferential tariff treatment under the U.S-Israel Free Trade Area Agreement.
LAW AND ANALYSIS:
Pursuant to the authority conferred by section 9 of the U.S.-Israel Free Trade Area Implementation Act of 1985 (19 U.S.C. 2112 note), the President issued Proclamation No. 6955, dated November 13, 1996 (published in the Federal Register on November 18, 1996, (61 Fed. Reg. 58761), which modified General Note 3(a), HTSUS, “GN 3(a))” to provide duty-free treatment to articles which are the product of the West Bank, Gaza Strip, or a QIZ, provided certain requirements are met. Such treatment was effective for products of the West Bank, Gaza Strip or a QIZ entered or withdrawn from warehouse for consumption on or after November 21, 1996.
Under GN 3(a)(v), HTSUS, articles the product of the West Bank, Gaza Strip or a QIZ which are imported directly to the U.S. from the West Bank, Gaza Strip, a QIZ or Israel qualify for duty-free treatment, provided the sum of 1) the cost or value of materials produced in the West Bank, Gaza Strip, QIZ, or Israel, plus 2) the direct costs of processing operations performed in the West Bank, Gaza Strip, QIZ or Israel, is not less than 35% of the appraised value of such articles when imported into the U.S. The cost or value of materials produced in the U.S. may be applied toward the 35% value content minimum in an amount not to exceed 15% of the imported article’s appraised value. An article is considered to be a “product of” the West Bank, Gaza Strip, or a QIZ if it is either wholly the growth, product or manufacture of one of those areas or a new or different article of commerce that has been grown, produced or manufactured in one of those areas. The effect of this provision is to offer to goods from the West Bank, Gaza Strip, and QIZ’s (encompassing portions of the territory of Israel and Jordan or Israel and Egypt) the same tariff treatment as is offered to Israel under the FTA.
We note that the importer submitted no documents to show that the 35% value-content requirement was met in this case. Counsel states that since the garments were cut and assembled in the QIZ, “there can be no question that the 35% local content requirements were satisfied.” The statutory language clearly requires that the 35% value-content requirement be satisfied. We find that the importer’s submission, which lacks any cost data to show that the value-content requirement has been met, fails to demonstrate that the value-content requirement was satisfied in this case. Accordingly, the importer has not shown that these garments are eligible for preferential tariff treatment under the FTA.
Further, the import specialist identified inconsistencies in the production documentation submitted, including the following: the invoice for the Indian fabric is not clear as to whether the fabric was cut in pieces or rolls; the time card for the employees show that they worked 8 hours a day seven days a week (including on the Islamic Sabbath); the cutting records and sewing tickets are summary documents rather than individual tickets; the quantities for the production records do not match the amount entered into the U.S.; and the invoice for the Indian fabric does not bear the symbol for the alleged supplier.
Based on all of the above, we agree and find that the importer has not submitted sufficient documentation to support their claim for preferential tariff treatment in this case. Accordingly, we find that this protest should be denied.
HOLDING:
The protest should be denied.
In accordance with the Protest/Petition Processing Handbook (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 the decision must be accomplished prior to mailing of the decision. Sixty days from the date of the decision 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 & Trade Facilitation Division