CLA-2 CO:R:C:G 556157 WAW
District Director
U.S. Customs Service
Commercial Operations
2500 Paseo Internacional
San Ysidro, CA 92173
RE: Application for further review of Protest No. 2501-90-
000034 under 19 U.S.C. section 1514(c)(2); GSP; wooden cask
barrels; planters
Dear Sir:
The above-referenced protest was forwarded to this office
for further review. We have considered the protest and our
decision follows.
FACTS:
In this case, Akron Chemical Plastics ("protestant")
contests the assessment of duties by your office on wooden cask
barrels from Mexico which are being used as planters. This
protest includes 36 entries filed by the protestant during the
period September 1989, through March 1990. Protestant claims
that the wooden cask barrels are eligible for duty-free treatment
under the Generalized System of Preferences (GSP) (19 U.S.C.
2462-2466). The wood used to manufacture the wooden planters
originates from the U.S. In Mexico, a quantitative analysis is
performed and the wood is sorted according to its grade. Next,
the wood is smoothed and prepared to enter into the cutting
stage. In the cutting stage, different sizes and angles are made
in the wood according to the size and style of the planter. The
cut wood is then sent to the painting department where it is
stained and then transferred to the assembly department. Once
the planter is assembled, it is inspected, tested and given final
approval. The planter is then labeled with the country of origin
and prepared for shipment to the U.S.
The protestant claims that documentation has been submitted
to substantiate his claim for GSP treatment. However, the
protestant's claim for GSP was initially denied by your office
because insufficient information was provided. The protestant
maintains that other importers with similar documentation or without any documentation whatsoever have been granted GSP
status.
ISSUE:
Whether the wooden planters from Mexico are entitled to
duty-free treatment under the GSP.
LAW AND ANALYSIS:
Under the GSP, eligible articles the growth, product or
manufacture of a designated beneficiary developing country (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 operation in the BDC, is
equivalent to at least 35% of the appraised value of the article
at the time of entry. See 19 U.S.C. 2463(b).
Mexico is a BDC. See General Note 3(c)(ii)(A), Harmonized
Tariff Schedule of the United States Annotated (HTSUSA). Based
on the information provided, the wooden cask barrels are
classified under subheading 4416.00.9020, HTSUSA, which provides
for "[c]asks, barrels, vats, tubs and other coopers' products and
parts thereof, of wood, including staves: Other: New." Articles
classified under this provision are eligible for GSP treatment.
Information submitted by your office indicates that data was
provided by the protestant on August 22, 1989, in support of
their claim that the GSP 35% value-content requirement was met.
However, clarifying information was immediately requested by your
office. On September 19, 1989, a similar request by the
protestant for GSP was returned because of insufficient data.
Finally, on April 4, 1990, a meeting was held between your office
and the protestant, at which time the protestant substantiated
the claim for GSP treatment to the satisfaction of your office
with respect to entries filed during the period of this protest.
Protestant submitted cost information during the April
meeting which reflected the items which were and were not
included in the direct costs of processing operations in the
manufacture of the wooden planters for the period covered by this
protest. Your office agreed that the breakdown of the qualifying
and non-qualifying cost figures prepared by the importer were
valid for that time period. We find that the cost information
included in the importer's GSP worksheet for the period covered
by this protest is also consistent with the definition of "direct
costs of processing operations" set forth in 19 CFR 10.197(a).
The issue of double substantial transformation was not considered
by your office since you had determined that the direct costs of
processing operations incurred in the manufacture of the wooden
planters in Mexico were sufficient to satisfy the 35% value-
content requirement without including the cost or value of the
U.S.-origin wood.
Based on the manufacturing processes performed in Mexico,
and the figures representing the direct costs of processing
operations, we find that the imported wooden planters subject to
this protest satisfy the 35% value-content requirement and,
therefore, are entitled to GSP duty-free treatment.
HOLDING:
Based on the information provided, this protest should be
granted in full. A copy of this decision should be attached to
the Customs Form 19 and mailed to the protestant as part of the
notice of action on the protest.
Sincerely,
John Durant, Director
Commercial Rulings Division