CLA-2 CO:R:C:S 557921 WAS
Mr. James F. Carroll
J.M. Rodgers Co., Inc.
International Freight Forwarders
90 West Street, Room 1510
New York, N.Y. 10006-1039
RE: "Imported Directly"; 19 CFR 10.175; Singapore; T.D. 92-6
Dear Mr. Carroll:
This is in response to your letter dated May 4, 1994,
addressed to the New York Seaport, concerning whether merchandise
which is produced in Indonesia and shipped to either Dubai,
U.A.E. or Singapore for sale before being imported into the U.S.
will satisfy the "imported directly" requirement under the
Generalized System of Preferences (GSP) (19 U.S.C. 2461-2466).
FACTS:
In your letter, you state that the facts under the first
scenario are as follows:
The importer buys merchandise which has been manufactured in
Indonesia and is otherwise eligible for duty-free status. A
certificate of origin is available. The seller is a
Japanese firm. At the time the goods leave Indonesia they
have not yet been sold to the U.S. importer. Before that
sale takes place, the goods travel to Dubai, U.A.E., where
they are warehoused pending the sale. While in Dubai, the
goods do not in any way, enter the commerce of that country.
Once the sale is initiated, and the L/C opened to the
Japanese firm, the goods are loaded on a vessel for New
York.
Under the second scenario, you state that the facts are the
same as under the first scenario, except that the goods are
shipped from Indonesia to Singapore pending the sale before being
imported into the U.S. As under the first scenario, you state
that the goods under the second scenario do not enter into the
commerce of Singapore while warehoused there.
ISSUE:
Whether merchandise which is produced in Indonesia and
shipped to either Dubai, U.A.E. or Singapore for sale before
being imported into the U.S. will satisfy the "imported directly"
requirement for purposes of the GSP?
LAW AND ANALYSIS:
Under the GSP, eligible articles the growth, product or
manufacture of a designated 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).
The issue in this case concerns whether merchandise which is
produced in Indonesia and shipped to either Dubai, U.A.E. or
Singapore for sale before being imported into the U.S. will
satisfy the "imported directly" requirement for purposes of the
GSP.
The term "imported directly" from a BDC, for GSP purposes,
is defined in section 10.175, Customs Regulations (19 CFR
10.175). Subsection 10.175(d) states as follows:
If the shipment is from any beneficiary developing country
to the U.S. through the territory of any other country and
the invoices and other documents do not show the U.S. as the
final destination, the articles in the shipment upon arrival
in the U.S. are imported directly only if they:
(1) Remained under the control of the customs authority
of the intermediate country;
(2) Did not enter into the commerce of the intermediate
country except for the purpose of sale other than at retail,
and the district director is satisfied that the importation
results from the original commercial transaction between the
importer and the producer or the latter's sales agent; and
(3) Were not subjected to operations other than loading
and unloading, and other activities necessary to preserve
the articles in good condition.
The above provision was added as an amendment to the
definition of the term "imported directly" to expand the
definition to allow for articles to qualify for GSP treatment
under the GSP which: (1) originate in a beneficiary developing
country, (2) are shipped to a developed country and auctioned
there, and (3) then are shipped to the U.S. See T.D. 83-144
(June 28, 1983). The specific factual situation which led to the
creation of the amendment to the "imported directly" definition
was designed specifically to encompass the traditional marketing
procedure established for "Cameroon wrapper tobacco." Cameroon
wrapper was produced in Cameroon and the Central African
Republic. It was sold at an auction held once a year in Paris.
The Cameroon wrapper was shipped from the beneficiary countries
to a French customs bonded transit warehouse in Le Havre until
the Paris auction was completed, at which time the tobacco was
reloaded for shipment to its final destination. Because the
purchase of the wrapper tobacco occurred after it left the
beneficiary country, the bill of lading covering the first leg of
the journey only indicated the intermediate destination, and did
not show the U.S. as the final destination. While in the transit
warehouse, the wrapper tobacco was not subjected to any
processing or other operations. Customs found that the Cameroon
wrapper tobacco which had been exported from the Cameroon
Republic and the Central African Republic to France, auctioned
there, and then reexported to the U.S. satisfied the GSP
"imported directly" requirement, and thus, the amendment to the
"imported directly" definition was created.
We are of the opinion that the facts in the instant case are
analogous to the facts in the "Cameroon wrapper tobacco" case
described above. You state that the goods in this case are
produced in Indonesia and are classified in a GSP-eligible
provision, and satisfy the GSP "product of" and 35% value-content
requirements. The goods are shipped from Indonesia to Dubai,
U.A.E., where they are warehoused, and remain under the control
of the customs authority while in the warehouse and during that
time the goods are sold to the importer. You state that a
certificate of origin is available at the time the merchandise is
shipped to Dubai. However, we are assuming in this case that the
certificate does not indicate the U.S. as the final destination.
You also state that the goods do not enter into the commerce of
the intermediate country other than for sale other than at
retail. After the sale, the goods will be shipped directly from
Dubai to the U.S. As in the Cameroon tobacco case, in the
instant case, the sale of the goods to the importer in Dubai will
not defeat the requirement that the importation result from the
original commercial transaction between the importer and producer
or the latter's sales agent. Thus, provided that the goods
remain under the customs authority of the intermediate country
(U.A.E.) during the time that the goods are warehoused, and
provided that while in the transit warehouse, the merchandise is
not subjected to any processing or other operations, the
merchandise will be considered to have been "imported directly"
from a BDC to the U.S.
Pursuant to T.D. 92-6, dated January 17, 1992 (57 Fed. Reg.
2018), section 10.175 was amended by new subsection 10.175(e),
which provides the following additional definition of "imported
directly":
(e)(1) Shipment to the U.S. from a beneficiary developing
country which is a member of an association of countries
treated as one country under section 502(a)(3), Trade Act of
1974, as amended (19 U.S.C. 2462(a)(3)), through the
territory of a former beneficiary country whose designation
as a member of the same association for GSP purposes was
terminated by the President pursuant to section 504, Trade
Act of 1974, as amended (19 U.S.C. 2464), provided:
(i) The articles in the shipment did not enter into the
commerce of the former beneficiary developing country except
for purposes of performing one or more of the operations
specified in paragraph (c)(1) of this section and except for
purposes of purchase or resale, other than at retail, for
export.
Singapore is no longer a BDC since it was terminated as a
member of the Association of South East Asian Nations (ASEAN) for
GSP purposes. Subsection 10.175(e) was designed to remedy those
situations where GSP duty-free treatment was being denied for
articles produced in any remaining GSP-eligible ASEAN member
country and shipped to Singapore or Brunei Darussalam where
unpacking, testing, labeling, repacking or other minimal
operations were being performed on such articles prior to final
shipment to the U.S. 57 Fed. Reg. 2018.
We are of the opinion that shipping the merchandise from
Indonesia to a warehouse in Singapore pending sale of the
merchandise to an importer is specifically provided for in 19 CFR
10.175(e)(1)(i). Therefore, provided that the merchandise does
not enter into the commerce of Singapore in any way other than
for sale of the merchandise (and to perform one of the operations
specified in 19 CFR 10.175(c)(i)), the "imported directly"
requirement will be satisfied in this scenario.
HOLDING:
Under the first scenario, we find that, provided that the
goods remain under the customs authority of the intermediate
country (U.A.E.) during the time that the goods are warehoused,
and provided that while in the transit warehouse, the merchandise
does not enter into the commerce of the intermediate country
except for sale other than at retail, the merchandise will be
considered to have been "imported directly" from Indonesia into
the U.S.
Furthermore, under the second scenario, we find that,
provided that the merchandise does not enter into the commerce of
Singapore in any way except for sale of the merchandise other
than at retail (and to perform one of the operations specified in
19 CFR 10.175(c)(i)), the merchandise will be considered to have
been "imported directly" from Indonesia into the U.S.
Sincerely,
John Durant, Director
Commercial Rulings Division