ENT-1-03 CO:R:C:E 224852 TLS
District Director
U.S. Customs Service
Second & Chestnut Streets Rm. 102
Philadelphia, Pennsylvania 19106
RE: Protest #1101-93-100302 concerning merchandise processing fee
on merchandise imported from a Caribbean Basin Initiative (CBI)
country; Harmonized Tariff Schedule of the United States
Annotated (HTSUSA) subheading 9802.00.8060; 19 U.S.C.
58c(b)(8)(B); 19 CFR 12.130.
Dear Sir:
This office has received the above-referenced protest as
provided for under Customs regulations. We have considered the
points raised and have made the following decision.
FACTS:
The protestant entered 22 cartons of nightshirts from El
Salvador on March 25, 1993. The merchandise was entered duty-free for the most part under HTSUSA subheading 9802.00.8060, with
that portion of the merchandise determined not to be a product of
the United States being assessed a duty rate of 17% as provided
for under HTSUSA subheading 6208.22.00. A merchandise processing
fee (MPF) was assessed on the dutiable portion of the merchandise
as well.
The protestant contends that the MPF should not have been
assessed because the merchandise was imported from a CBI country.
Your office claims that Customs regulations provides for the
charging of the fee for merchandise entered under 9802.00.8060.
ISSUE:
Whether the merchandise processing fee should be assessed on
merchandise assembled in and imported from a country designated
under the Caribbean Basin Initiative program under subheading
9802.00.8060, HTSUSA.
LAW AND ANALYSIS:
The merchandise in this case was entered on March 25, 1993,
with the entry being liquidated on May 14, 1993. This protest
was timely filed on June 9, 1993.
The protestant claims that the MPF does not apply in this
case because the goods originated from a CBI country. The goods
in this case were imported from El Salvador. El Salvador is a
country designated as a beneficiary country under the CBI. See
HTSUSA General Note 3(c)(v).
The relevant language of 19 U.S.C. 58c(b)(8)(D)(iv) provides
that, "in the case of merchandise classified under heading
9802.00.80," the MPF shall be applied to the "full value of the
merchandise, less the cost or value of the component United
States products." The MPF, however, does not apply to any
"product of" a CBERA beneficiary country because the MPF statute
specifically excepts such products from its application. 19
U.S.C. 58c(b)(8)(B)(iii). Articles are considered "products of"
a CBERA beneficiary country, and therefore exempt from the MPF,
if the processing performed in that country results in a
substantial transformation (i.e., a new or different article with
a new name, character, or use).
In order to reconcile the MPF limitation provided for
"product[s] of" CBERA beneficiary countries in 19 U.S.C.
58c(b)(8)(B)(iii) with the other MPF limitation excepting
articles "provided for under any item in chapter 98, of the
[HTSUSA], except subheading 9802.00.60 or 9802.00.80" in 19
U.S.C. 58c(b)(8)(B)(i), we determined that if merchandise is
substantially transformed into a "product of" the BC and entered
under 9802.00.8060, HTSUSA, the merchandise will not be subject
to the MPF. If the merchandise, however, is not substantially
transformed, the imported merchandise will be subject to the MPF,
which is applied to the full value of the article, less the value
of the U.S. components. Customs ruling HQ 557379 (Sept. 13,
1993).
Section 12.130(c), Customs Regulations, however, states that
in order to have a single definition of the term "product of"
and, therefore, a single country of origin for a textile or
textile product, notwithstanding 19 CFR 12.130(b) which discusses
substantial transformation, merchandise which falls within the
purview of Chapter 98, Subchapter II, Note 2(a), HTSUSA, may not,
upon its return to the U.S., be considered a product of the U.S.
Chapter 98, Subchapter II, Note 2(a), HTSUSA, provides that any
product of the U.S. which is returned after having been advanced
in value or improved in condition abroad, or assembled abroad,
shall be a foreign article for the purposes of the Tariff Act of
1930, as amended. Pursuant to T.D. 90-17, 19 CFR 12.130 is
applicable for country of origin determinations for all Customs
purposes. Consequently, the textile and apparel goods of U.S.
origin which are exported to a CBERA beneficiary country for
assembly need not undergo a substantial transformation to be
considered "products of" a CBERA country. They are exempt from
the MPF if they are merely advanced in value or improved in
condition by any means (including assembly) in the CBERA country.
Since the merchandise at issue does consist of textile
components produced in the United States which was improved in
condition in El Salvador before being imported back into this
country, it is exempt from assessment of MPF.
HOLDING:
A merchandise processing fee shall not be assessed on
merchandise imported from a CBI country and entered under HTSUSA
subheading 9802.00.8060. This protest should be GRANTED.
In accordance with Section 3A(11)(b) of Customs Directive
099 3550-065, dated August 4, 1993, Subject: Revised Protest
Directive, this decision should be mailed by your office 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 Regulations and
Rulings will take steps to make the decision available to customs
personnel via the Customs Rulings Module in ACS and the public
via the Diskette Subscription Service, Lexis, Freedom of
Information Act and other public access channels.
Sincerely,
John Durant, Director
Commercial Rulings Division