OT:RR:CTF:VS H185140 EE
Port Director
Area Port of Jacksonville
U.S. Customs and Border Protection
2831 Talleyrand Avenue
Jacksonville, FL 32206
RE: Application for Further Review of Protest No. 1803-09-100019; NAFTA
Verification
Dear Port Director:
This is in reference to the Application for Further Review (“AFR”) of Protest No. 1803-09-100019, timely filed on August 27, 2009, on behalf of Clover Garments, Inc. (hereinafter, the “protestant”) concerning the eligibility of certain women’s knitted long sleeve crewneck blouses and short sleeve blouses from Mexico for preferential tariff treatment under the North American Free Trade Agreement (“NAFTA”).
FACTS:
The merchandise subject to the protest at issue are women’s 100% cotton knitted fabric half open placket, short sleeve blouses, style no. 79K01 and production no. FG 5708; and women’s 100% cotton knitted fabric, crew neck, long sleeve blouses, style no. 79W90 and production no. FG 6742. The merchandise was entered by the protestant on December 18, 2007 under subheadings 6106.10.00 (style no. 79K01) and 6110.20.20 (style no. 79W90), Harmonized Tariff Schedule of the United States (“HTSUS”), claiming duty-free treatment under NAFTA. Both garments feature the Ralph Lauren trademark of a mounted rider on a horse holding a raised polo mallet. The protestant states that the yarns for both garments were produced at a large spinning cotton mill of 100,000 spindles located in Sonora, Mexico. The yarns were transported to a factory (“manufacturer”) which both knit the fabrics and manufactured the garments in Mexico in response to purchase orders issued by the third party intermediary. The protestant imported the garments from the third party intermediary.
On June 24, 2008, U.S. Customs and Border Protection (“CBP”) issued a Request for Information (CBP Form 28) to the protestant requesting all origin conferring records in support of the NAFTA claim, including all records relating to the production of the imported garments; yarn and fabric invoices, including the country of origin of the materials; cutting and sewing records; purchase orders; receiving records; and transportation and export records from the yarn and fabric suppliers to the final production facility. On October 9, 2008, and December 10, 2008, CBP issued proposed Notices of Action (CBP Form 29) requesting yarn production records; yarn invoices; transportation records for yarn and fabric to production facility; and delivery ticket for the fabric. Further, the port requested a correlation of the knit records to the style numbers; identification and correlation of the fabric in the cutting records; identification numbers for the yarn or fabric that correlate to the garments; and correlation of sewing or cutting records to the style numbers or invoices.
In response to the port’s requests, the protestant submitted the following documents for the long sleeve crewneck blouse style no. 79W90 (production no. FG 6742).
Yarn:
Counsel submitted purchase order (“PO”) number BYG1000418, dated March 22, 2007, from the manufacturer to the yarn producer; invoice no. 1514, dated April 4, 2007, from the yarn producer to the manufacturer; a packing list, dated April 9, 2007; a yarn delivery report, dated April 4, 2007; yarn transportation receipt no. 24264, issued by Transpack, S.A. De C.V. on April 4, 2007; and a table labeled “yarn receiving record”.
Fabric and garment:
Counsel submitted PO number 6742, dated July 2, 2007, from the third party intermediary to the manufacturer; PO no. 6742 from the third party intermediary to the manufacturer; an internal knit order from the manufacturer, dated July 4, 2007; fabric knit records between September 1, 2007 to September 21, 2007; fabric die records between October 19, 2007 and October 25, 2007; invoice no. 0940, dated November 29, 2007, from the manufacturer to the third party intermediary; the cutting records for the fabric between November 8, 2007 and November 14, 2007; the sewing records between November 21, 2007 and November 30, 2007; the pressing records from November 22, 2007 to December 7, 2007; the packing records from December 4, 2007 to December 11, 2007; invoice no. 0956 from the manufacturer to the third party intermediary, dated December 28, 2007; invoice no. 3459 from the third party intermediary to Clover Garments, dated December 12, 2007, and the corresponding packing list, dated December 15, 2007.
The protestant submitted the following documents for the short sleeve blouse style no. 79K01 (production no. FG 5708).
Yarn:
Counsel submitted PO number BYG1000426, dated May 23, 2007, from the manufacturer to the yarn producer; invoice no. 1553, dated May 24, 2007, from the yarn producer to the manufacturer; the packing list and yarn delivery receipt, dated May 24, 2007; the yarn transportation receipt no. 5086 from Arturo Martinez Garduno stamped by the manufacturer; and a table labeled “yarn receiving record”.
Fabric and garment:
Counsel provided PO number 5708, dated June 7, 2007, from the third party intermediary to the manufacturer; PO 5708 from the third party intermediary placed to the manufacturer; an internal knit order from the manufacturer, dated July 9, 2007; fabric knit records between July 18, 2007 to July 27, 2007; fabric die records between August 14, 2007 and September 6, 2007; invoice no. 0915, dated September 29, 2007, from the manufacturer to the third party intermediary; a delivery order listing the fabric; the cutting records for the fabric between September 17, 2007 and October 10, 2007; the sewing records between October 9, 2007 and December 11, 2007; the pressing records from October 18, 2007 to December 11, 2007; the packing records from October 30, 2007 to December 11, 2007; invoice no. 0956 from the manufacturer to the third party intermediary, dated December 28, 2007; invoice no. 3458 from the third party intermediary to Clover Garments, dated December 12, 2007, and the corresponding packing list.
On March 31, 2009, CBP issued a CBP Form 29 advising the protestant that an Action had been taken to deny the claim for preferential tariff treatment under the NAFTA to the entry which was the subject of the verification. In the CBP Form 29, the port listed the following items as the reasons the documentation presented to CBP was insufficient to support the claim: the fabric and yarn affidavits were incomplete; the affidavits did not state who actually produced the yarn and fabric, when the yarn and fabric was produced, and if the processing was performed in Mexico; the transportation records did not match the other documents; the fabric production could not be matched to the complete garments; the fabric records could not be matched to the sewing or cutting records; and the documents did not demonstrate direct correlation of the materials and production to the finished goods by way of style numbers, fabric type and construction or other means. CBP stated that as a result, the protestant’s NAFTA claim would be denied. Subsequently, CBP liquidated the entry on May 29, 2009, denying NAFTA treatment. Counsel for the protestant timely filed a protest on August 27, 2009, claiming that the imported merchandise qualifies for duty-free treatment under NAFTA.
For both garments, counsel also provided the manufacturer’s affidavit for yarn and the manufacturer’s affidavit for fabric. For style no. 79W90 (production no. FG 6742), counsel provided a NAFTA Certificate of Origin signed by the yarn producer. For style no. 79K01 (production no. FG 5708), counsel provided a NAFTA Certificate of Origin signed by the third party intermediary.
ISSUE:
Whether the documentation, submitted by the protestant, supports the claim for preferential tariff treatment under the NAFTA for the imported garments.
LAW AND ANALYSIS:
General Note (“GN”) 12, HTSUS, incorporates Article 401 of the NAFTA into the HTSUS. GN 12(a)(ii), HTSUS, provides that goods are eligible for the NAFTA rate of duty if they originate in the territory of a NAFTA party and qualify to be marked as goods of Mexico. GN 12(b), HTSUS, sets forth the various methods for determining whether a good originates in the territory of a NAFTA party. Specifically, these provisions provide, in relevant part, as follows:
(a) Goods originating in the territory of a party to the North American Free Trade Agreement (NAFTA) are subject to duty as provided herein. For the purposes of this note--
* * * *
(ii) Goods that originate in the territory of a NAFTA party under the terms of subdivision (b) of this note and that qualify to be marked as goods of Mexico under the terms of the marking rules set forth in regulations issued by the Secretary of the Treasury (without regard to whether the goods are marked), and goods enumerated in subdivision (u) of this note, when such goods are imported into the customs territory of the United States and are entered under a subheading for which a rate of duty appears in the “Special” subcolumn followed by the symbol “MX” in parentheses, are eligible for such duty rate, in accordance with section 201 of the North American Free Trade Agreement Implementation Act.
(b) For the purposes of this note, goods imported into the customs territory of the United States are eligible for the tariff treatment and quantitative limitations set forth in the tariff schedule as “goods originating in the territory of a NAFTA party” only if—
(i) they are goods wholly obtained or produced entirely in the territory of Canada, Mexico and/or the United States; or
(ii) they have been transformed in the territory of Canada, Mexico and/or the United States so that—
(A) except as provided in subdivision (f) of this note, each of the non-originating materials used in the production of such goods undergoes a change in tariff classification described in subdivisions (r), (s) and (t) of this note or the rules set forth therein, or
(B) the goods otherwise satisfy the applicable requirements of subdivisions (r), (s) and (t) where no change in tariff classification is required, and the goods satisfy all other requirements of this note; or
(iii) they are goods produced entirely in the territory of Canada, Mexico and/or the United States exclusively from originating materials.
There is no dispute as to the classification of the merchandise in subheadings 6106.10.00 and 6110.20.20, HTSUS. The port states that the importer failed to provide yarn and fabric supplier’s affidavits or certificate of origin records for the fabric or yarn.
As noted in the FACTS section of this AFR, Counsel has now provided the missing manufacturer’s affidavit for the yarn used in the production of both style no. 79W90 and style no. 79K01. The affidavit is dated May 18, 2009 and certifies that the 20s/1 100% cotton combed yarn listed on PO number BYG1000418 (invoice no. 1514) and 40s/1 100% combed cotton yarn listed on PO number BYG1000426 (invoice no. 1553), which was sold to the manufacturer during the period from January 1, 2007 to December 30, 2007, was formed (spun or extruded) in Mexico. It provides the address of the yarn producer’s factory, a phone number, and was signed by the Director General of the yarn producer. Counsel also provided the manufacturer’s affidavit for the fabric used in the production of both styles, dated April 15, 2009, certifying that the 20s/1 100% cotton rib fabric (production no. 6742) and the 40s/1 100% cotton interlock fabric (production no. 5708), which was sold to the third party intermediary during the period from January 1, 2007 to December 30, 2007, was formed (knitted) in Mexico. It provides the address of the manufacturer where the fabric was knit, dyed and finished, a phone number and was signed by the General Manager of the manufacturer. Further, counsel provided a NAFTA Certificate of Origin signed by the yarn producer, dated March 22, 2007. The Certificate of Origin lists the blanket period from January 1, 2007 to December 31, 2007; the description of goods as combed yarn 100% cotton 20s/1 (PO number BYG1000418); classification number; exporter and producer as the yarn producer; the address of the yarn producer; and Importer as the manufacturer. Counsel also submitted a NAFTA Certificate of Origin signed by the third party intermediary, dated December 12, 2007. The Certificate of Origin lists the blanket period from January 1, 2007 to December 31, 2007; the description of the merchandise as ladies 100% cotton knitted fabric half open placket short sleeve blouse; the classification number (6106.10.10); exporter and producer as the third party intermediary; the address of the third party intermediary; and Importer as Clover Garments. Counsel also submitted a NAFTA Certificate of Origin with the same information for ladies 100% cotton knitted fabric crew neck long sleeve blouse classified in 6109.10.00. We are satisfied with these documents.
Further, the port claimed that the production records were not sufficiently linked. With regard to the port’s finding that the documents did not demonstrate direct correlation of the materials and production to the finished goods by way of style numbers, fabric type and construction or other means, we have the following comments.
Women’s 100 percent cotton knitted long sleeve crewneck blouse style no. 79W90 (production no. FG 6742)
Yarn:
As noted in the FACTS section of this AFR, counsel provided PO number BYG1000418, dated March 22, 2007, from the manufacturer to the yarn producer for 40,000 lbs of 20/1 100% greige cotton yarn. Counsel claims that the code YARNCOTON20100000MEXHY references NAFTA originating yarn. Invoice no. 1514, dated April 4, 2007, from the yarn producer to the manufacturer, lists, among other items, 11,024 lbs of 20s/1 R.S. Combed 100% Cotton Yarn referencing PO number BYG1000418. Counsel claims that it is this yarn that was spun in Mexico for production no. FG 6742, the crewneck blouse. The packing list, dated April 9, 2007, and yarn delivery report, dated April 4, 2007, which correspond to invoice no. 1514 list matching information, and reference fabric lot number 170108. The total weight of the merchandise listed on the packing list and yarn delivery report is 41,365.6 lbs (18,780 kgs) in 44 boxes. This information matches the amounts listed on yarn transportation receipt no. 24264, issued by Transpack, S.A. De C.V. on April 4, 2007. The yarn transportation receipt lists the place of departure as the address of the yarn producer’s factory and the destination as the manufacturer. Counsel claims that the goods were signed for by the manufacturer on April 9, 2007 as established by the receipt chop on the packing list. A table which is labeled “yarn receiving record” indicates that 11,024 lbs 20s/1 combed yarn 100% cotton was received from the yarn producer on April 9, 2007 and references invoice no. 1514 and PO number BYG1000418.
We find that the evidence submitted is sufficient to demonstrate the yarn was produced in Mexico by the yarn producer and transported to the manufacturer. The invoice from the yarn producer to the manufacturer references the PO for the greige yarn. The total weight and quantity of the merchandise listed on the packing list and yarn delivery report correspond to the transportation records which indicate shipment from the yarn producer’s factory to the manufacturer.
Fabric and garment:
Counsel submitted PO number 6742, dated July 2, 2007, from the third party intermediary to the manufacturer for 4,700 lbs of 20/1 100% cotton rib fabric in red, Austin blue, and fresh pink. Counsel states that the item code on the PO is 20/1 100%COTTONRIBMEX which means that the manufacturer requires that the fabric that is knit in Mexico must also use NAFTA originating yarn that was spun in Mexico. On the same date, the third party intermediary placed PO no. 6742 with the manufacturer for 7004 long sleeve crewneck blouses manufactured from 100% cotton knitted fabric in red, Austin blue, and fresh pink. Both POs show a stamp by the manufacturer, which, according to counsel, indicates that the manufacturer accepted and confirmed both POs.
Counsel submitted an internal knit order from the manufacturer, dated July 4, 2007, which references PO number 6742 and lists 4,500 lbs of 20/1 100% cotton rib fabric from yarn lot number 170108. This number matches the yarn lot number listed on the packing list and yarn delivery report from the yarn producer to the manufacturer for invoice no. 1514. The item code listed on the internal knit order is COTTON2010001534MEX. Counsel claims that this translates into 20/1 100% cotton Mexican spun yarn. Based on this information, we are satisfied that the third party intermediary ordered garments from the garment manufacturer made from yarn spun in Mexico which was the subject of invoice no. 1514.
Counsel submitted fabric knit records between September 1, 2007 to September 21, 2007. The records reference yarn lot number 170108, production no. FG 6742, and which rolls of fabric were knit based on the fabric batch number. Counsel also provided fabric die records between October 19, 2007 and October 25, 2007 establishing that the fabric was dyed red, Austin blue, and fresh pink. The die records reference the yarn lot number 170108, production no. FG 6742, and which rolls of fabric were dyed based on the fabric batch number. Counsel provided invoice no. 0940, dated November 29, 2007, from the manufacturer to the third party intermediary which lists, among other items, 4,339 lbs of 20/1 100% cotton rib fabric which references production no. FG 6742. Counsel also provided manufacturer’s affidavit for fabric, dated April 15, 2009, issued by the manufacturer certifying that the 20s/1 100% cotton rib fabric (production no. 6742), which was sold to the third party intermediary during the period from January 1, 2007 to December 30, 2007, was formed (knitted) in Mexico. It provides the address of the manufacturer where the fabric was knit, dyed and finished, a phone number and was signed by the General Manager of the manufacturer.
Counsel submitted the cutting records for the fabric between November 8, 2007 and November 14, 2007. The cutting records reference production no. FG 6742 and the dye lot numbers from the fabric dye records. Counsel submitted the sewing records between November 21, 2007 and November 30, 2007 for the cut components in red, pink and blue. The sewing records refer to production no. FG 6742. Counsel also submitted the pressing records from November 22, 2007 to December 7, 2007 and the packing records from December 4, 2007 to December 11, 2007 referring to production no. FG 6742.
Counsel submitted invoice no. 0956 from the manufacturer to the third party intermediary, dated December 28, 2007, which lists, among other items, 7176 ladies long sleeve crew neck blouses (production no. FG 6742). Invoice no. 3459 from the third party intermediary to Clover Garments, dated December 12, 2007, and the corresponding packing list, dated December 15, 2007, list 7027 ladies 100% cotton knitted fabric crew neck long sleeve blouse and an additional 149 as “seconds”. The documents submitted sufficiently demonstrate that the long sleeve crewneck blouse style no. 79W90 was made from yarn spun in Mexico, knit into fabric which was dyed, cut, sewn into garments, pressed, and packed in Mexico. Accordingly, we are satisfied that the protestant's records are sufficient to conclude that the garments at issue qualify for preferential treatment under the NAFTA.
Women’s 100 percent cotton knitted short sleeve blouse style no. 79K01 (production no. FG 5708)
Counsel states that the body fabric of style no. 79K01 (production no. FG 5708) was manufactured using 40/1 cotton yarn. Counsel provided PO number BYG1000426, dated May 23, 2007, from the manufacturer to the yarn producer for 40,000 lbs of 40/1 100% greige cotton yarn. Counsel claims that the item code COTTON40100000MEXHY listed on the PO means that it is for NAFTA yarn spun in Mexico.
Invoice no. 1553, dated May 24, 2007, lists, among other items, 20,352 lbs of 40s/1 R.S. Combed 100% Cotton Yarn referencing PO Number BYG1000426. The packing list and yarn delivery receipt, dated May 24, 2007, which correspond to invoice no. 1553 list matching information and reference fabric lot number 160712. The total weight of the merchandise listed on the packing list and yarn delivery report is 44,478 lbs (20,193 kgs) and total number of 48 boxes. The number of boxes matches the number noted on the yarn transportation receipt no. 5086 from Arturo Martinez Garduno stamped by the manufacturer. However, the place of departure and date are not printed on the invoice. A table which is labeled “yarn receiving record” indicates that 40s/1 combed 100% cotton yarn was received from the yarn producer on May 30, 2007 and references invoice no. 1553 and PO number BYG100426. Counsel also provided manufacturer’s affidavit for yarn, dated May 18, 2009, issued by the yarn producer certifying that the 40s/1 100% combed cotton yarn listed on PO number BYG1000426 and invoice no. 1553, which was sold to the manufacturer during the period from January 1, 2007 to December 30, 2007, was formed (spun or extruded) in Mexico. It provides the address of the yarn producer’s factory, a phone number and was signed by the Director General of the yarn producer. We find the evidence submitted is sufficient to demonstrate the yarn was produced in Mexico by the yarn producer and transported to the manufacturer.
Counsel provided PO number 5708, dated June 7, 2007, from the third party intermediary to the manufacturer for 10,810 lbs of 40/1 100% cotton interlock for the body fabric in spring lime, lemon ice, fresh pink, Maui pink, and regent blue. On the same date, the third party intermediary placed PO 5708 with the manufacturer for 26,400 half open placket short sleeve blouses manufactured from 100% cotton knitted fabric in spring lime, lemon ice, fresh pink, Maui pink, and regent blue. Both POs show a stamp by the manufacturer which counsel claims that the manufacturer accepted and confirmed both P.Os. Counsel submitted an internal knit order from the manufacturer, dated July 9, 2007 which references PO number 5708 and lists 20,000 lbs of 40/1 100 percent cotton interlock fabric from yarn lot number 160712. This number matches the yarn lot number listed on the packing list and yarn delivery report from the yarn producer to the manufacturer for invoice no. 1553. The item code listed on the internal knit order is COTTON4010002438MEX which counsel claims means that yarn spun in Mexico is to be used. Based on this information, we are satisfied that the third party intermediary ordered garments from the garment manufacturer made from yarn produced in Mexico by the yarn producer.
Counsel submitted fabric knit records between July 18, 2007 to July 27, 2007. The records reference yarn lot number 160712 and production no. FG 5708. Counsel also provided fabric die records between August 14, 2007 and September 6, 2007 establishing that the fabric was dyed blue, pink, lemon ice, and lime. The die records reference the yarn lot number 160712, production no. FG 5708, and which rolls of fabric were dyed based on the fabric batch number. Counsel provided invoice no. 0915, dated September 29, 2007, from the manufacturer to the third party intermediary which lists, among other items, 9,896 lbs of 100% cotton interlock fabric which references production no. FG 5708. A delivery order listing the fabric was submitted. Counsel provided manufacturer’s affidavit for fabric, dated April 15, 2009, issued by the manufacturer certifying that the 40s/1 100% cotton interlock fabric (production no. 5708), which was sold to the third party intermediary during the period from January 1, 2007 to December 30, 2007, was formed (knitted), dyed, and finished in Mexico. It provides the address of the manufacturer, a phone number and was signed by the General Manager of the manufacturer.
Counsel submitted the cutting records for the fabric between September 17, 2007 and October 10, 2007. The cutting records reference production no. FG 5708 and the dye lot numbers from the fabric dye records. Counsel submitted the sewing records between October 9, 2007 and December 11, 2007 the cut components in blue, pink, lemon ice, and lime. The sewing records refer to production no. FG 5708. Counsel also submitted the pressing records from October 18, 2007 to December 11, 2007 and the packing records from October 30, 2007 to December 11, 2007 referring to production no. FG 5708.
Counsel submitted invoice no. 0956 from the manufacturer to the third party intermediary, dated December 28, 2007, which lists, among other items, 26,945 ladies half open placket short sleeve blouses (production no. FG 5708). Invoice no. 3458 from the third party intermediary to Clover Garments, dated December 12, 2007, and the corresponding packing list is for 26,477 100% cotton half open placket short sleeve blouse and 468 “seconds”. Counsel submitted a NAFTA Certificate of Origin signed by the third party intermediary, dated December 12, 2007. The Certificate of Origin lists the blanket period from January 1, 2007 to December 31, 2007; the description of the merchandise as ladies 100% cotton knitted fabric half open placket short sleeve blouse; the classification number (6106.10.10); exporter and producer as the third party intermediary; the address of the third party intermediary; and Importer as Clover Garments. Counsel also submitted a NAFTA Certificate of Origin with the same information for ladies 100% cotton knitted fabric crew neck long sleeve blouse classified in 6109.10.00. Based on the documents submitted, we find that the documents submitted demonstrate that the short sleeve blouse style no. 79K01 was manufactured from fabric that was knit from yarn spun in Mexico.
We find that the documents submitted demonstrate that the garments were made from yarn spun in Mexico by the yarn producer, transported to the manufacturer to be knit into fabric which was dyed, cut, sewn into garments, pressed, and packed in Mexico. Based on the information provided, we are satisfied that the protestant's records are sufficient to conclude that the garments at issue qualify for preferential treatment under the NAFTA.
HOLDING:
The protest should be allowed.
In accordance with Sections IV and VI of the CBP 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 or entries in accordance with the decision must be accomplished prior to mailing the decision.
Sixty days from the date of the decision, the Office of International Trade, Regulations and Rulings, 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 and Trade Facilitation Division