OT:RR:CTF:VS H287801 CMR
U.S. Customs and Border Protection
Bldg. 77, JFKIA
2nd Floor, CPMM 038-6
Jamaica, NY 11430
Attn: Import Specialist, Jacqueline S. Hawley
RE: Application for Further Review of Protest No. 4701-16-100449; Classification; Israel Free Trade Agreement
Dear Port Director:
This is in response to the Application for Further Review of Protest No. 4701-16-100449, filed by All-ways Forwarding International, Inc., on behalf of Zaka Ltd., against your denial of preferential tariff treatment to certain goods in one entry filed in November 2015, claiming eligibility under the United States – Israel Free Trade Area Implementation Act of 1985 (hereinafter, ILFTA). We note the protest was timely filed on December 21, 2016. Further review was properly accorded pursuant to 19 CFR 174.24(c) as the protestant provided additional facts not previously considered.
FACTS:
The merchandise at issue consists of tallit bags (prayer shawl bags), shofarot (trumpets made of rams’ horns), silver candle sticks, and silver Kiddush cup sets with plates. Your office disagrees with the importer’s classification of the merchandise at entry. The importer classified the tallit bags in subheading 9810.00.90, Harmonized Tariff Schedule of the United States (HTSUS), which provides for “Prayer shawls, bags for the keeping of prayer shawls and headwear of a kind used for public or private religious observances, whether or not any of the foregoing is imported for the use of a religious institution. The importer classified the shofarot in subheading 9601.90.60, HTSUS, which provides for “Worked ivory, bone, tortoise-shell, horn, antlers, coral, mother-of-pearl and other animal carving material, and articles of these materials (including articles obtained by molding): Other [other than worked ivory or articles of ivory]: Of bone, horn, hoof, whalebone, quill or any combination thereof. The importer classified the silver candle sticks and silver Kiddush cup sets with plates in subheading 7114.11.60, HTSUS, which provides for “Articles of goldsmiths’ or goldsmiths’ wares and parts thereof, of precious metal or of metal clad with precious metal: Of precious metal whether or not plated or clad with precious metal: Of silver, whether or not plated or clad with other precious metal: Articles not elsewhere specified or included of a type used for household, table or kitchen use; toilet and sanitary wares; all the foregoing and parts thereof, of silver: Other.
While your office agrees with the classification of the silver goods in subheading 7114.11.60, HTSUS, it disagrees with the classification of the tallit bags and the shofarot. Your office believes the tallit bags are properly classified in subheading 4202.92.30, HTSUS, which provides for “Trunks, suitcases, . . ., and similar containers; traveling bags, . . ., sports bags, , , , and similar containers, of leather or of composition leather, of sheeting of plastics, of textile materials, of vulcanized fiber or of paperboard, or wholly or mainly covered with such materials or with paper: Other: With outer surface of sheeting of plastic or of textile materials: Travel, sports and similar bags: With outer surface of textile materials: Other. Your office believes the shofarot are properly classified in subheading 9208.90.00, HTSUS, which provides for “Music boxes, fairground organs, mechanical street organs, mechanical singing birds, musical saws and other musical instruments not falling within any other heading of this chapter; decoy calls of all kinds; whistles, call horns and other mouth-blown sound signaling instruments: Other.”
The importer claimed preferential tariff treatment under the ILFTA for the goods of silver, i.e., the candle sticks, and Kiddush cup sets with plates. The importer submitted additional information to your office to substantiate the claim for preferential tariff treatment. The information consisted of a statement of the average cost of labor per kilo and average cost of the raw material for 2015, photos of the silver goods at issue, a flow chart of the production process, and an invoice for the importation of the silver material used in the production of the goods in Israel. The invoice showed that sheets of “AG 925%” were imported by the manufacturer.
ISSUE:
Whether the tallit bags and the shofarot were properly classified by the protestant at entry and whether the silver candles sticks and Kiddush cup sets qualify for preferential tariff treatment under the ILFTA.
LAW AND ANALYSIS:
Classification of goods under the Harmonized Tariff Schedule of the United States Annotated (HTSUSA) is governed by the General Rules of Interpretation (GRIs). GRI 1 provides that "classification shall be determined according to the terms of the headings and any relative section or chapter notes and, provided such headings or notes do not otherwise require, according to [the remaining GRIs taken in order]."
Customs and Border Protection (CBP) has issued rulings on the classification of shofarot. CBP has classified shofarot in subheading 9208.90.80, HTSUS, as the provision provides for, among other things, whistles, call horns and other mouth-blown sound signaling instruments. See New York (NY) Ruling Letter 808529, dated April 25, 1995, and NY N208238, dated March 28, 2012. Musical instruments, which a shofar is considered to be, are excluded from classification in Chapter 96. See Note 1(h), Chapter 96. We agree with your office that the merchandise was misclassified in subheading 9601.90.60, HTSUS, and is properly classified in subheading 9208.90.80, HTSUS.
CBP has also issued a classification ruling on a tallit bag, which is used to store a tallit (prayer shawl). In NY B89909, dated October 21, 1997, CBP classified a tallit bag in subheading 9810.00.90, HTSUS, which is the provision claimed by the importer. U.S. Note 1, Subchapter X, Chapter 98, begins by stating: “Except as provided in subheading 9810.00.20 and subheadings 9810.00.70, 9810.00.85, 9810.00.90 and 9810.00.95, or as other provided for in this U.S. note, the articles covered by this subchapter must be exclusively for the use of the institutions involved, and not for distribution, sale or other commercial use within 5 years after being entered.” Subheading 9810.00.90, HTSUS, is an excepted provision. The language of the subheading specifically states that the articles subject to the provision, prayer shawls, bags for the keeping of prayer shawls and headwear of a kind used for public or private religious observances, are classified therein whether or not they are imported for the use of a religious institution.” We agree with the protestant that the tallit bags are classified in subheading 9810.00.90, HTSUS.
As for the silver candlesticks and silver Kiddush cup and plate sets, we found a sampling of the items at issue on the website of the manufacturer. Each item was described as being of sterling silver. Furthermore, the raw material invoice indicated that sheets of “AG 925%” were imported by the manufacturer. “AG 925%” indicates that the imported silver sheets were semi-finished sterling silver goods in which raw silver had already been alloyed with other metals. Therefore, we disagree with both your office and the importer as to the correct classification of the Kiddush cup and plate sets. Rather, subheading 7114.11.50, HTSUS, provides for sterling silver tableware. The Kiddush cup and plate sets are classifiable in subheading 7114.11.50, HTSUS. See NY N808529, wherein CBP classified a Kiddush set consisting of a Kiddush cup, a plate, four small cups and a small dish, all of sterling silver, in a carved, fitted wooden holder, in subheading 7114.11.50, HTSUS. See also, NY K84523, dated April 2, 2004. We agree with the classification of the candlesticks in subheading 7114.11.60, HTSUS.
The importer also claimed preferential tariff treatment under the ILFTA for the candlesticks and Kiddush cup and plates sets. In order to qualify for preferential tariff treatment, the goods must meet certain requirements set forth in General Note (GN) 8, HTSUS, which implements the ILFTA. GN 8(b) provides, in pertinent part:
For purposes of this note, goods imported into the customs territory of the United States are eligible for treatment as "products of Israel" only if—
each article is the growth, product or manufacture of Israel or is a new or different article of commerce that has been grown, produced or manufactured in Israel;
each article is imported directly from Israel (or directly from the West Bank, the Gaza Strip or a qualifying industrial zone as defined in general note 3(a)(v)(G) to the tariff schedule) into the customs territory of the United States; and
the sum of—
the cost or value of the materials produced in Israel, and including the cost or value of materials produced in the West Bank, the Gaza Strip or a qualifying industrial zone pursuant to general note 3(a)(v) to the tariff schedule, plus
the direct costs of processing operations performed in Israel, and including the direct costs of processing operations performed in the West Bank, the Gaza Strip or a qualifying industrial zone pursuant to general note 3(a)(v) to the tariff schedule, is not less than 35 percent of the appraised value of each article at the time it is entered.
There is no disagreement as to the Israeli origin of the silver candlesticks and Kiddush cup and plate sets. However, your office was concerned as to whether the requisite value added requirement, i.e., 35 percent or more of the appraised value, was met in Israeli. Your office noted the illegibility of documents, the lack of a breakdown of the cost of silver utilized in this specific shipment, and a hand-written flow chart characterizing the production process. This office contacted the customs broker and received legible copies of the submitted documentation.
Our review of the submitted documentation shows that semi-manufactured sterling silver sheets were imported by the manufacturer into Israel from Italy. The manufacturer sells sterling silver Judaica goods. The manufacturer starts production with sterling silver sheets. As the imported silver has already been alloyed, it does not undergo a double substantial transformation in Israel during the production process. As such, the value of the imported sterling silver sheets cannot be counted toward the 35 percent value added requirement for qualifying for preferential treatment under the ILFTA. The statement of the average cost of labor and average cost of the raw material (which we have determined may not be counted toward the 35 percent value added requirement), is insufficient to support that the requisite value added requirement set forth in GN 8(b)(iii) has been met. We agree with you that insufficient information has been submitted to support that the silver candlesticks and Kiddush cup and plate sets qualify for ILFTA preferential tariff treatment.
HOLDING:
The protest should be allowed in part and denied in part. The shofarot are classified in subheading 9208.90.80, HTSUS, which provides for, among other things, whistles, call horns and other mouth-blown sound signaling instruments. The duty rate at the time of entry for this provision was 5.3 percent ad valorem. The tallit bags are classified in subheading 9810.00.90, HTSUS, which provides for, among other things, bags for the keeping of prayer shawls of a kind used for public or private religious observances, whether or not imported for the use of a religious institution. The duty rate at the time of entry for this provision was FREE. The silver Kiddush cup and plate sets are classified in subheading 7114.11.50, HTSUS, which provides for sterling silver tableware. The silver candlesticks are classified in subheading 7114.11.60, HTSUS, as silver articles not elsewhere specified or included of a type used for household, table or kitchen use, of silver, other than sterling silver tableware. The silver Kiddush cup and plate sets and candlesticks do not qualify for preferential tariff treatment under the ILFTA.
In accordance with the Protest/Petition Processing Handbook (CIS 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 this decision must be accomplished prior to mailing of the decision. Sixty days from the date of the decision, the Office of Trade, Regulations and Rulings will make the decision available to CBP personnel, and to the public on the Customs Rulings Online Search System (CROSS) at
https://rulings.cbp.gov/ which can be found on the U.S. Customs and Border Protection website at http://www.cbp.gov and other methods of public distribution.
Sincerely,
Myles B. Harmon, Director
Commercial and Trade Facilitation Division