CLA-2 CO:R:C:S 557640 MLR
Mr. Gary Jordahl
Traffic Manager/Sales Support
Pioneer Industrial Components, Inc.
100 Pioneer Boulevard
Springboro, Ohio 45066
RE: Eligibility of components for duty-free treatment under the
Generalized System of Preferences (GSP); imported directly;
Singapore; 19 CFR 10.175(e)
Dear Mr. Jordahl:
This is in response to your letter of October 18, 1993,
requesting a ruling on the eligibility of components from
Thailand and Malaysia for duty-free treatment under the
Generalized System of Preferences (GSP).
FACTS:
Pioneer Industrial Components, Inc. ("Pioneer"), a car audio
electronics assembler, imports components such as resistors, wire
harnesses, inductors, and transformers from many Far East sources
including, Japan, Taiwan, Thailand, and Malaysia. The components
from Thailand and Malaysia are imported with the aid of Pioneer's
Southeast Asian agent, Pioneer Asiacentre, who purchases the
components and consolidates them in Singapore for shipment to the
U.S.
In Singapore, the components will not enter into the
commerce of Singapore while they are under the control of Pioneer
Asiacentre, and will not be subject to any other operations other
than unloading, loading and warehousing; however, it is stated
that because Singapore is a free market country and there is no
Customs controlling body, the term "remained under control of the
customs authority of the intermediate country" does not apply.
The exporter of the merchandise in Thailand and Malaysia will
complete the Form A Certificate of Origin which will accompany
each shipment. It is also stated that the exporter will also be
prepared to complete the "GSP Declaration" if requested by the
District Director.
ISSUE:
Whether the components from Thailand and Malaysia are
"imported directly" for purposes of the GSP when they are shipped
through Singapore to the U.S.
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 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). Although the resistors, wire harnesses, inductors, and
transformers are classifiable in subheadings 8533.10.00,
8544.41.00, 8504.31.40, and 8504.21.00, HTSUS, respectively,
which are GSP-eligible provisions, and Thailand and Malaysia are
designated BDCs for purposes of the GSP as provided in General
Note 3(c)(ii)(A), Harmonized Tariff Schedule of the United States
(HTSUS), Singapore is not.
Therefore, the issue in this case concerns whether the
components from Thailand and Malaysia are considered to be
"imported directly" from the BDCs to the U.S., if they are
shipped from the BDCs through Singapore, and subsequently entered
into the U.S. Section 10.175, Customs Regulations (19 CFR
10.175) defines the term "imported directly" for purposes of the
GSP. Paragraph (a), which sets forth the most restrictive
definition of the term, provides that "imported directly" means
"direct shipment from the beneficiary country to the United
States without passing through the territory of any other
country."
However, 19 CFR 10.175(e) (copy enclosed) incorporates into
the concept of "imported directly", a transaction involving goods
produced in a member of a GSP-designated association of countries
which are shipped through, and only subjected to limited
processing operations in, another member of the same association,
whose designation as a member of that association for GSP
purposes was terminated by the President. Brunei Darussalam and
Singapore are former BDCs for purposes of paragraph (e). The
articles in the shipment may also not enter into the commerce of
the former BDC except for those permissible operations specified
in 19 CFR 10.175(c)(1) which include packing and unpacking, and
except for purposes of purchase or resale, other than at retail,
for export. The person responsible for the articles in the
former BDC, or any person having knowledge of the facts, shall
also prepare and sign an additional Form A, declaring what
operations, if any, were performed in the former BDC, and should
submit it to Customs if requested along with the Form A from the
originating BDC.
In this case we find that because Singapore is a former BDC
for purposes of 19 CFR 10.175(e), and the components are only
subjected there to unloading, loading, and warehousing
operations, they will be "imported directly" from Thailand and
Malaysia, within the meaning of 19 CFR 10.175(e), and will be
entitled to duty-free treatment under the GSP, assuming they are
a "product of" Thailand or Malaysia and satisfy the 35 percent
value-content requirement.
HOLDING:
Based on the information submitted, we find that the
components shipped from Thailand and Malaysia through Singapore,
where they are only subjected to unloading, loading, and
warehousing operations before importation into the U.S., are
"imported directly" from the BDCs for purposes of qualifying for
duty-free treatment under the GSP.
Sincerely,
John Durant, Director
Commercial Rulings Division