OT:RR:CTF:VS H060423 YAG
Mr. Kenneth M. Carmon
Bay Brokerage, Inc.
44951 County Route 191
P.O. Box 293
Wellesley Island, NY 13640
RE: Subheading 9801.00.10, Harmonized Tariff Schedule of the United States (“HTSUS”); Documentary evidence; 19 CFR §10.1; Automotive Parts
Dear Mr. Carmon:
This is in response to your request, dated April 21, 2009, on behalf of Keystone Automotive Distributors (“Keystone”), seeking a ruling with respect to the acceptability of Keystone’s current procedures and documentation as proof of origin in order to comply with subheading 9801.00.10, HTSUS.
FACTS:
The heart of the matter at issue is Keystone’s eligibility for subheading 9801.00.10, HTSUS and the documentation required therefore.
Keystone is a specialty automotive parts marketer with more than a quarter million accessories and performance parts representing over 700 product lines. You state that the majority of products marketed by Keystone are acquired from suppliers in the United States, warehoused in Exeter, Pennsylvania, and shipped to Canada. Keystone uses a proprietary system for customer orders, purchasing, receiving, and accounting. All goods exported to Canada are shipped pursuant to customer orders. It is stated that all customer order goods are made from the Keystone catalogue. Keystone’s products are placed in their catalog after their vendors have been approved by Keystone. Specifically, in this case, Keystone’s procedure is to provide the prospective vendor its written instructions outlining requirements and validation of NAFTA eligibility. Next, the vendor is required to provide a NAFTA certificate of origin if the goods qualify for NAFTA. A third party trade service provider reviews all new vendor NAFTA certificates of origin for accuracy. Once NAFTA is approved by a third party, the country of origin information is entered into the Keystone system and the NAFTA certificate is filed. You further state that vendor information, including part/SKU numbers and related country of origin information are entered into the Keystone proprietary system that resides on an AS400 system. This information is retained in the system and used for Customs invoices for Canada and the United States. Keystone purchases products primarily from vendors domiciled in the United States. All products purchased for export to Canada are entered into inventory in Exeter, Pennsylvania. You state that the vast majority of the products shipped to Canada are marked with their country of origin on the product (“made in the U.S.”). Additionally, you claim that Keystone’s products are also clearly marked with the names and address of the U.S. manufacturers the vast majority of time.
All items returned from Canada are returned due to defect, damage, or customer returns. These items have to be authorized on a Merchandise Return Authorization (“MRA”) form, and all returns are issued a credit. The return manifest is created from the MRA in the Keystone AS400 system. You state that the return is linked to the original customer order, and this customer order is linked to the truck and trip number that moved the goods into Canada. The order can also be tracked to the Canada Customs import entry from the United States.
You request that we accept Keystone’s current processes and procedures as meeting the documentary requirements of 19 CFR §10.1. In support of your arguments, you provide this office with the following documents for our review and consideration: (1) CF 28, dated October 15, 2008 (the CF 28 requested an affidavit from the actual manufacturer identifying the location of production in the United States); (2) CF 28, dated November 17, 2008; (3) CF 29, dated November 13, 2008; (4) CF 29, dated January 14, 2009; (5) CBP Form 3311, Declaration for Free Entry of Returned American Products, dated September 30, 2008; (6) Foreign Shipper Statement for US Goods Returned; (7) Canada Customs Import Data (showing the merchandise entered from the United States into Canada); (8) Pro-Forma Invoice; (9) a List of Returns to Keystone Automotive from Keystone of Canada; (10) Bill of Lading; and, (11) CBP Form 7533, Inward Cargo Manifest. We note that some of the documents above relate to prior entries, none of which are currently pending at the port of entry. ISSUE:
Whether the documentation provided by Keystone is adequate to support its claim under subheading 9801.00.10, HTSUS?
LAW AND ANALYSIS:
Subheading 9801.00.10, HTSUS, provides for the free entry of products of the United States that have been exported and returned without having been advanced in value or improved in condition by any process of manufacture or other means while abroad, provided the documentary requirements of Section 10.1, Customs Regulations (19 CFR §10.1), are met. Some change in the condition of the product while it is abroad is permissible. However, operations that either advance the value or improve the condition of the exported product render it ineligible for duty free entry upon return to the United States. Border Brokerage Company, Inc. v. United States, 314 F. Supp. 788 (1970), appeal dismissed, 58 CCPA 165 (1970).
Section 10.1(a), Customs Regulations (19 CFR §10.1(a)) provides in part that a declaration by the foreign shipper and a declaration by the owner, importer, consignee, or agent shall be filed in connection with the entry or articles in a shipment valued over $2,000 and claimed to be free under subheading 9801.00.10 or 9801.00.20, HTSUS. Section 10.1(a) requires that “. . . the owner, importer, consignee, or agent having knowledge of the facts regarding the claim for free entry . . .” sign a declaration that the foreign shipper’s declaration is true and provide the name and location of the manufacturer of the articles. See Headquarters Ruling Letter (“HRL”) 559719, dated July 11, 1996.
Section 10.1(b), CBP Regulations (19 CFR §10.1(b)) states as follows:
In any case in which the value of the returned articles exceeds $2,000, and the articles are not clearly marked with the name and address of the U.S. manufacturer, the Port Director may require, in addition to the declarations required in paragraph (a) of this section, such other documentation or evidence as may be necessary to substantiate the claim for duty free treatment. Such other documentation or evidence may include a statement from the U.S. manufacturer verifying that the articles were made in the United States, or a U.S. export invoice, bill of lading or airway bill evidencing the U.S. origin of the articles and/or the reason for the exportation of the articles.
Section 10.1(d), CBP Regulations (19 CFR §10.1(d)) provides:
If the port director is reasonably satisfied, because of the nature of the articles or production of other evidence, that articles are imported in circumstances meeting the requirements of subheading 9801.00.10 or 9802.00.20, HTSUS, and related section and additional U.S. notes, he may waive the requirements for producing the documents specified in paragraph (a) of this section.
You state that Keystone is able to provide a shipper’s declaration, owner’s declaration, export information, and proof of origin information (via a NAFTA Certificate of Origin and country of origin marking on the product) in accordance with 19 CFR §10.1(a). In a situation involving a previous Customs transaction that is no longer under consideration, you state that the Port only accepted a manufacturer’s affidavit for purposes of proving eligibility under subheading 9801.00.10, HTSUS, instead of
allowing proof via a CBP Form 3311, Declaration for Free Entry of Returned American Products, Foreign Shipper Statements for U.S. Goods Returned, and Canada Customs Import Data, showing that the goods were entered from the United States into Canada. Further, you request that we consider the country of origin information contained in Keystone’s proprietary system as acceptable documentary evidence.
It is clear from the regulatory language of 19 CFR §10.1 that in certain circumstances (where the value of the returned articles exceeds $2,000 and the articles are not clearly marked with the name and address of the U.S. manufacturer), the Port Director may require additional information to substantiate a subheading 9801.00.10 claim. 19 CFR §10.1(b). It is also clear that the Port Director may waive the requirements for producing the documents specified in 19 CFR §10.1(a) if he is reasonably satisfied that the articles meet the requirements of subheading 9801.00.10, HTSUS. 19 CFR §10.1(d). Neither of these provisions is mandatory, i.e., the action described in these provisions is at the discretion of the Port Director. Thus, the Port Director must be satisfied that the requirements of subheading 9801.00.10 are met and may require additional information as reasonably necessary to substantiate the claim.
In HRL 563394, dated October 11, 2006, CBP considered the evidentiary requirements of 19 CFR §10.1. CBP stated that in order for a good to qualify for duty free treatment under subheading 9801.00.10, HTSUS, the Importer must satisfy CBP that the conditions of this subheading are met through documentation. Therefore, in HRL 563394 we stated that export records could be requested by the port even though invoices and manufacturers’ affidavits had been submitted as proof of origin. In HRL 563394, we noted that a database listing serial numbers of goods and their U.S. location of production could be considered as evidence of the U.S. origin of the merchandise. In addition, we determined that if it could be shown that the goods were made in the United States and shipped abroad, the original export invoices may not be necessary. However, we found that the Port Director may require any documents that would reasonably substantiate a claim under subheading 9801.00.10, HTSUS.
You claim that your response to the CF 28 was rejected with an instruction that only manufacturers’ affidavits from the original manufacturer would be accepted as documentation to substantiate the 9801.00.10 claim, even though the alternate evidence was provided and available. In terms of the information before us, we note that Keystone provided us with a list of Canada Customs Import Data (tracking the merchandise entered into Canada) and a list of Returns to Keystone Automotive from Keystone of Canada. Both lists track the merchandise by part numbers and specify the country of origin. Additionally, a list of returns to Keystone Automotive from Keystone of Canada specifies the vendor number for each part being returned. Therefore, as stated in HRL 563394, these printouts from Keystone’s database, listing the part numbers and the country of origin (and in some cases, the vendor numbers) of the returned merchandise could be considered as evidence of the U.S. origin of merchandise. However, as stated in HRL 563394, the Port Director may require any documents that would reasonably substantiate a claim under subheading 9801.00.10, HTSUS.
Further, you suggest that Keystone’s proprietary system is similar to what was considered acceptable in HRL H007668, dated June 20, 2009. In HRL H007668, the Importer claimed that the country of origin of all products could be established by records maintained in its SAP business system software in that the manufacturing location was a required field in every SAP production order record. Once this location was entered, it could not be changed. Additionally, the Importer’s system in HRL H007668 contained a unique serial number for each item manufactured. Thus, the Importer argued that the information contained in its SAP software program should be permitted to assist in meeting the requirements of 19 CFR §10.1(a) because that information tied the manufacturing plant code to the serial number of each item manufactured. Accordingly, we accepted the Importer’s position and recommended that the Port Directors accept the location of manufacture information supplied by the Importer’s software program, provided that the Port Directors are reasonably satisfied with the information submitted. We note certain differences between this case and HRL H007668. In HRL H007668, information not only tied the manufacturing plant code to the serial number of each item manufactured, but the country of origin information once entered into the Importer’s system could not be changed. In this case, you are able to not only change the country of origin, but also the tariff classification of the merchandise. Additionally, in this instance, when the Port reviewed the information provided, it found some inconsistencies and asked for additional information. Hence, considering the evidence, we again find that the Port acted within its discretion in requesting the manufacturers’ affidavits, as determined in HRL 563394 in HRL H007668.
Moreover, even though you submitted a shipper’s declaration, a declaration by the owner, importer, consignee, or agent having knowledge of the facts regarding the claim for free entry, as required by 19 CFR §10.1(a), was not submitted. Instead, you submitted Customs Form 3311, Declaration for Free Entry of Returned American Products. Please note that CBP eliminated the use of this form for purposes of the section 10.1(a) documentary requirements in 1994. Additionally, CBP Form 3311 submitted for our consideration states “various” in the field requiring the names and addresses of manufacturers, thus, effectively omitting the information required by 19 CFR §10.1(a). Finally, the fact that merchandise is marked “made in the USA” does not, by itself, entitle Keystone to claim preferential treatment under subheading 9801.00.10, HTSUS. See HRL 559719, dated July 11, 1996.
HOLDING:
Consistent with our previous rulings, we find that the Port Director may require any documentation that would reasonably substantiate a claim under subheading 9801.00.10, HTSUS. Therefore, even though the documentation submitted by Keystone could be considered as evidence to determine Keystone’s eligibility for subheading 9801.00.10, HTSUS, we find that this evidence must be satisfactory to the Port Director and the Port Director may request additional information, such as manufacturers’ affidavits, as needed.
A copy of this ruling letter should be attached to the entry documents filed at the time this merchandise is entered. If the documents have been filed without a copy, this ruling should be brought to the attention of the Customs official handling the transaction.
Sincerely,
Monika R. Brenner, Chief
Valuation & Special Programs Branch