CLA-2 RR:TC:SM 559581 KBR
Port Director
U.S. Customs Service
200 St. Paul Place
Baltimore, MD 21202
RE: Application for Further Review of Protest No. 1303-94-100275 Concerning the Eligibility of Magnesium for Duty-free
Treatment Under the Generalized System of Preferences ("GSP");
Imported Directly; 19 CFR 10,175(b)
Dear Sir:
This is in reference to the above-cited Application for
Further Review of Protest filed by Samuel Shapiro & Company,
Inc., on behalf of F& S Alloys and Minerals Corp., contesting the
denial of eligibility of magnesium for duty-free treatment under
the Generalized System of Preferences ("GSP").
FACTS:
F & S Alloys and Minerals Corp. ("FS") is protesting a
denial of eligibility of magnesium for duty-free treatment under
the GSP. FS purchased magnesium from Solikamsk Magnesium Works
("SMW"), a producer of magnesium in Russia through SMW's agent
Razno Alloys, LTD. The contact for sale of the Russian magnesium
stated that the magnesium was to be delivered "FOB Kotka,
Finland." In a letter to Customs dated August 9, 1994, and the
Entry Summary, the importer indicated that the shipment was
shipped through Helsinki, Finland, rather than Kotka, Finland.
Two undated letters, one from Razno Alloys Ltd., and one from SMW
indicate that the magnesium is of Russian origin and was shipped
to "Finland, Loviisa" for further shipment to Baltimore,
Maryland. The magnesium was denied duty-free treatment under the
GSP and was found to be dutiable at 8 percent ad valorem.
A timely Application for Further Review of Protest was filed
on October 28, 1994.
ISSUE:
Whether the magnesium from Russia is "imported directly" for
purposes of the GSP when it is shipped through an intermediary
country to the U.S. as described above.
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)(1). The magnesium is classifiable under subheading
8104.11.0000, Harmonized Tariff Schedule of the United States
("HTSUS"), which at the time of the subject entry was a GSP
eligible provision. Also at the time of the subject entry,
Russia was a BDC.
The issue in this case concerns whether the magnesium from
Russia is considered to be "imported directly" from the BDC. to
the U.S., when it is shipped from the BDC through Finland to the
U.S. Section 10.175, Customs Regulations (19 CFR 10.175) defines
the term "imported directly" for purposes of the GSP. Under 19
CFR 10.175(b), merchandise shipped from a BDC through a non-BDC
to the U.S. is "imported directly" if: (1) the merchandise does
not enter into the commerce of any other country while en route
to the U.S., and the invoices, bills of lading, and other
shipping documents show the U.S. as the final destination.
In this instance, the original contract of sale of the
magnesium and the amendment thereto, was from SMW to FS, stating
the New York address of FS. However, this contract showed as the
only delivery location, Kotka, Finland. Since the letters from
SMW only states that the magnesium is intended for "further
transportation by sea", but does not say to where. The letter
from Razno Alloys Ltd., states that the shipment is intended to
be shipped from Russia "directly to Finland ... for direct
transportation by sea to Baltimore" for FS. This letter is
undated and, therefore, it is unclear whether or not it was
issued prior to the importation and was part of the import
documentation, or issued afterwards for purposes of the protest.
Therefore, we find that the record does not contain evidence to
establish that the U.S. was the final destination intended from
the original sale to the importer from the producer or its agent
as required by 19 CFR 10.175(b). Further, there is no evidence
that when the magnesium was in the intermediary country that it
remained within customs control and that the importation did not
enter into the commerce of that country, as required by 19 CFR
10.175(d). Therefore, the magnesium is not considered "imported
directly" from a BDC to the U.S.
HOLDING:
Based on the information submitted, we find that the
magnesium shipped from Russia through Finland before importation
into the U.S., does not satisfy the "imported directly"
requirement under 19 CFR 10.175(b) or (d). A copy of this
decision should be attached to Customs Form 19, to be sent to the
protestant.
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 attached to Customs Form 19,
Notice of Action, and 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
Tariff Classification Appeals Division