CLA-2 RR:CR:SM 562759 CW
TARIFF NOS.: 9819.11.09; 9819.11.12
Port Director
Bureau of Customs and Border Protection
C/O Residual Liquidation and Protest Branch
1100 Raymond Blvd.
Newark, New Jersey 07102
RE: Protest No. 4601-02-102655; African Growth and Opportunity Act; Knit-to-shape articles
Dear Port Director:
This is a decision on the Protest and Application for Further Review (“AFR”) filed by counsel on behalf of USI Sportswear against the Port’s decision to deny African Growth and Opportunity Act (“AGOA”) preferential tariff treatment for certain knit-to-shape articles from Mauritius and Madagascar. The protest was filed with the Port on July 31, 2002, with regard to entry Nos. XXX-XXXXXX9-5 dated May 15, 2001, XXX-XXXXXX1-4 dated June 20, 2001, and XXX-XXXXXX0-7 dated August 8, 2001. The decision to deny AGOA preferential treatment was based on the port’s finding that the knit-to-shape apparel did not qualify under the AGOA provisions which were in effect at the time of the entries.
FACTS:
On May 8, 2001, men’s long sleeve pullovers and men’s sleeveless cardigans were imported from Mauritius under Entry No. XXX-XXXXXX9-5 dated May 15, 2001 with a liquidation date of May 3, 2002. On June 20, 2001, ladies and men’s long sleeve cardigans were imported from Madagascar under Entry No. XXX-XXXXXX1-4 dated June 20, 2001 with a liquidation date of May 3, 2002. On August 8, 2001, ladies’ long sleeve cardigans were imported from Mauritius under Entry No. XXX-XXXXXX0-7 dated August 8, 2001 with a liquidation date of June 21, 2002. Counsel for USI Sportswear filed a timely protest and AFR with respect to the three entries on July 31, 2002.
The protest was made against the tariff classification of the knitted upper body garments imported by USI Sportswear, from Mauritius and Madagascar. The record reflects that the garments imported from Mauritius were knit to shape and assembled in Mauritius from yarn formed in Mauritius. The garments imported from Madagascar were knit to shape and assembled in Madagascar from yarn formed in Mauritius. Your office determined that that various garments were properly classifiable in subheading 6110.10.20, Harmonized Tariff Schedule of the United States (“HTSUS”). Counsel for the protestant claims the garments are properly classifiable in subheading 9819.11.09, HTSUS, and therefore free of duty under AGOA. In addition, counsel asserts that the garments knit and assembled in Madagascar are entitled to duty-free treatment under an alternative AGOA classification -- subheading 9819.11.12, HTSUS.
Although protestant filed an application for further review (AFR) of the protest on Customs Form 19, the Port nevertheless denied the protest on December 2, 2002, by checking the box entitled “Denied in Full for the Reason Checked” in box 17. The explanation given for the denial in box 17 is: “As of 10/29/02 AGOA II has not passed and knit to shape cannot be claimed.” Box 16 regarding the disposition of the AFR was not checked by the Port.
By letter dated December 11, 2002, counsel for the protestant requested that the “implicit denial” of the Application for Further Review of Protest No. 4601-02-102655 be set aside pursuant to 19 U.S.C. 1515(c). This statutory provision authorizes a protesting party to request that Customs set aside a denial of an application for further review where the party believes that the application was erroneously or improperly denied.
A memorandum to this office from the Port’s Residual Liquidation and Protest Branch dated May 5, 2003, advises that the “protest has been re-opened and forwarded for further review as requested by importer,” pursuant to 19 U.S.C. 1515(d). According to 19 U.S.C. 1515(d):
If a protest is timely and properly filed, but is denied contrary to proper instructions, the Customs Service may on its own initiative, or pursuant to a written request by the protesting party filed with the appropriate port director within 90 days after the date of the protest denial, void the denial of the protest.
Therefore, the December 2, 2002, denial of the protest by your office has been voided pursuant to 19 U.S.C. 1515(d). We have reviewed the substance of the issues presented and our decision on the protest follows.
ISSUE:
Whether the three entries of apparel products subject to this protest qualify for preferential treatment under AGOA.
LAW AND ANALYSIS:
Subheading 9819.11.09, HTSUS
Title I of the Trade and Development Act of 2000 (“the Act”), referred to as the African Growth and Opportunity Act (“AGOA”), provides certain specified trade benefits for countries of sub-Saharan Africa. These benefits include duty-free treatment for certain non-textile articles previously excluded from preferential treatment under the Generalized System of Preferences, and duty- and quota-free treatment for certain textile and apparel articles that meet the requirements set forth in section 112 of the Act (codified at 19 U.S.C. 3721). With regard to the textile and apparel provisions, the law became effective on October 1, 2000, and will remain in effect through September 30, 2008. See 19 U.S.C. 3721(f).
Beneficiary countries are designated by the President of the United States after having met eligibility requirements set forth in the AGOA. Once designated, a beneficiary country is entitled to the duty-free treatment for the designated non-textile articles determined not to be import-sensitive in the context of imports from the beneficiary sub-Saharan African countries. A second designation by the United States Trade Representative (USTR), published in the Federal Register, that a beneficiary country has taken the measures required by the Act to prevent unlawful transshipment and has adopted an effective visa system, is necessary before a beneficiary country may enjoy the duty- and quota-free benefits extended to textile and apparel articles under the Act. Such countries shall be enumerated in U.S. Note 1, Subchapter XIX, Chapter 98, HTSUS, whenever the USTR issues a Federal Register notice as described herein. See Presidential Proclamation 7350, Annex, dated October 2, 2000, 65 Fed. Reg. 59321.
Mauritius and Madagascar are among the countries designated by the President as beneficiary sub-Saharan African countries in Presidential Proclamation 7350. The USTR issued a determination finding that Mauritius has adopted an effective visa system and related procedures to prevent unlawful transshipment and the use of counterfeit documents in connection with shipments of textile and apparel articles and has implemented and follows, or is making substantial progress toward implementing and following, the customs procedures required by the AGOA, effective January 19, 2001. See 66 Fed. Reg. 8440, dated January 31, 2001. In addition, effective March 9, 2001, the USTR issued a determination that Madagascar satisfies the two criteria set forth above (see notice published in the Federal Register on March 9, 2001 (66 Fed. Reg. 14242)).
The provisions implementing the textile provisions of the AGOA in the Harmonized Tariff Schedule of the United States (HTSUS) are contained, for the most part, in subchapter XIX, Chapter 98, HTSUS (an additional provision is included in subheading 9802.00.8042, HTSUS). The Interim Regulations pertinent to the textile and apparel provisions of the AGOA are set forth in sections 10.211 through 10.217 of the Customs Regulations (19 CFR 10.211 through 10.217).
Section 3108 of the Trade Act of 2002 (Pub. L. 107-210, 116 Stat. 933), enacted on August 6, 2002, amended the AGOA to modify the treatment accorded to certain textile and apparel articles imported from beneficiary sub-Saharan African countries. T.D. 03-15, published in the Federal Register on March 21, 2003 (68 Fed. Reg. 13820), amended the AGOA textile Interim Regulations to reflect the changes effected by section
3108 of the Trade Act of 2002.
Presidential Proclamation 7626 dated November 13, 2002 (published in the Federal Register at 67 Fed. Reg. 69459 on November 18, 2002) included in Annex II modifications to the HTSUS to implement the changes to the textile and apparel provisions of AGOA made by section 3108 of the Trade Act of 2002. The Proclamation provides that the HTSUS modifications that implement the changes made by section 3108(a) of the Trade Act of 2002 are effective with respect to eligible articles entered, or withdrawn from warehouse for consumption, on or after August 6, 2002. The Proclamation further provides that the HTSUS modifications that implement the change to the applicable quantitative limit percentage made by section 3108(b) of the Act are effective with respect to eligible articles entered or withdrawn from warehouse for consumption, on or after October 1, 2002.
Among the modifications to the HTSUS made by Annex II of Presidential Proclamation 7626 were changes to subheadings 9819.11.09 and 9819.11.12 providing that these HTSUS provisions encompass apparel articles assembled from components knit to shape in a beneficiary country or (in the case of subheading 9819.11.12) a lesser developed beneficiary country.
The garments in the present case were entered on May 15, 2001, June 20, 2001, and August 8, 2001. Therefore, as the merchandise subject to this protest was entered before the effective date of the modifications effected by the Trade Act of 2002, at issue is whether the garments satisfy the relevant AGOA provisions as they existed at the time of the above entry dates.
Before it was amended by Annex II of Presidential Proclamation 7626, subheading 9819.11.09, HTSUS, provided as follows:
Apparel articles wholly assembled in one or more such countries from fabric wholly formed in one or more such countries from yarn originating in either the United States or one or more such countries (including fabrics not formed from yarns, if such fabrics are classifiable under heading 5602 or 5603 and are wholly formed and cut in one or more such countries), subject to the provisions of U.S. Note 2 to this subchapter.
U.S. Note 2, Subchapter XIX, Chapter 98, HTSUS, provides a quantitative restriction for apparel articles classified in subheading 9819.11.09.
With respect to the apparel articles subject to this protest, the yarn was spun in Mauritius, the garment components were knit-to-shape in Mauritius or Madagascar, and the apparel was wholly assembled in Mauritius or Madagascar. The processing in the beneficiary countries involved a transition from yarn to knit-to-shape fabric components to the assembled apparel article. Subheading 9819.11.09, HTSUS (prior to its modification in 2002), did not encompass knit-to-shape garments as it required the processing in the beneficiary country to result in a transition from yarn to fabric to the apparel article. Accordingly, we find that the garments are not entitled to preferential treatment under AGOA pursuant to subheading 9819.11.09, HTSUS.
Subheading 9819.11.12, HTSUS
Section 112(b)(3)(B) of the Act (prior to its amendment by section 3108 of the Trade Act of 2002) provided as follows:
Subject to subparagraph (A), preferential treatment shall be extended through September 30, 2004, for apparel articles wholly assembled in one or more lesser developed beneficiary sub-Saharan African countries regardless of the country of origin of the fabric used to make such articles.
Subheading 9819.11.12, HTSUS, which implemented the above AGOA provision, provided (prior to being modified in 2002) as follows:
Apparel articles wholly assembled in a lesser developed such country enumerated in U.S. note 2(d) to this subchapter, subject to the provisions of U.S. note 2 to this subchapter, if entered during the period beginning on the date announced in a Federal Register notice issued by the United States Trade Representative and continuing through September 30, 2004, inclusive....
U.S. Note 2, Subchapter XIX, Chapter 98, HTSUS, provides a quantitative restriction for apparel articles classified in subheading 9819.11.12.
Pursuant to U.S. Note 2(d), Subchapter XIX, Chapter 98, HTSUS, Madagascar was designated as a lesser developed beneficiary country for the purposes of subheading 9819.11.12, HTSUS.
However, similar to the discussion above relating to subheading 9819.11.09, the processing performed in Madagascar in the instant case resulted in a transition from yarn to knit-to-shape fabric components to the finished apparel articles rather than from fabric to the finished articles, as required by subheading 9819.11.12, HTSUS (prior to the 2002 modifications). Therefore, we find that the apparel articles subject to this protest that were knit-to-shape and wholly assembled in Madagascar are not entitled to AGOA preferential treatment under subheading 9819.11.12, HTSUS.
HOLDING:
Based on the information provided, the subject garments, manufactured as described in this case are not eligible for duty-free treatment under subheading 9819.11.09 or 9819.11.12, HTSUS. The protest should be denied in full.
This decision should be mailed by your office to the protestant no later than sixty days from the date of this letter. On that date, the Office of Regulations & Rulings will take steps to make the decision available to Customs Personnel and to the public on the Customs Home Page on the World Wide Web at www.cbp.gov, by means of the Freedom of Information Act and other means of public distribution.
Sincerely,
Myles B. Harmon
Director, Commercial Rulings Division