CLA-2 OT:RR:CTF:VS H096197 KSG
Port Director
U.S. Customs & Border Protection
610 W. Ash Street Suite 1005
San Diego CA 92101
Re: Application for Further Review of Protest 2506-09-10091; NAFTA: sufficiency of documents
Dear Port Director:
This is in response to the Application for Further Review of Protest 2506-09-10091 timely filed by counsel on behalf of Crown West Mfg. Inc., addressing whether certain imported nylon flags were eligible for preferential tariff treatment under the North American Free Trade Agreement (“NAFTA”).
FACTS:
This case involves 22 entries of nylon flags imported from Mexico from October 2, 2008 to December 23, 2008, that are classified in subheading 6307.90, HTSUS. The protestant claims that in Mexico, MAQ TEC, S.A. de C.V. (“Maq Tec”) cut U.S.-origin fabric and sewed and assembled it with U.S. components to produce nylon flags.
On January 16, 2009, Customs and Border Protection (“CBP”) issued a Request for Information (CBP form 28) to the customs broker and importer requesting a NAFTA Certificate of Origin within 30 days for an entry dated February 28, 2008.
On February 27, 2009, CBP sent a CBP Form 29 proposing to rate advance the entry due to the failure to submit a NAFTA Certificate of Origin.
On March 12, 2009, CBP issued a CBP Form 28, stating that it received a NAFTA Certificate of Origin from the importer on March 10 and asking that a NAFTA Textile Verification questionnaire be completed along with the submission of documents relied upon to determine that the materials were originating, including invoices for fibers, yarns, and fabric and affidavits from the mills where the fibers, yarns and fabric were manufactured. The NAFTA Certificate of Origin was submitted for entries from January 1, 2009 through December 31, 2009.
On March 26, 2009, CBP received the response to the NAFTA questionnaire along with a NAFTA Certificate of Origin from the manufacturer of the nylon fabric. The questionnaire stated that rolls of nylon fabric were exported to Mexico where the fabric was cut and sewn into flags. The submission also included documents that were titled “Sewing Station Reports” and “Cutting Station Reports” with four columns of information: order numbers of flags, company names, descriptions of the flags (for example, “50 12” x18” Burgee 4 12” x 18” Burgee”), and urgency (example “PREBOOK”).
On May 20, 2009, CBP issued a CBP form 29 proposing to rate advance the entry because the NAFTA Certificate of Origin submitted covered entries from January 1, 2009, to December 31, 2009, and because the exporter did not submit cutting and sewing records or invoices referencing the purchase of the yarns, fabric or other components used in the manufacture of the flags. The exporter was asked to provide cutting and sewing records, invoices/purchase orders and a valid NAFTA Certificate of Origin for the flags and for the fabric and yarns used in milling the fabric and the other components. Further, Section III of the questionnaire needed to be completed.
A blanket NAFTA Certificate of Origin for 2008, for the appropriate period, was subsequently submitted, dated January 1, 2008, listing Maq Tec as the exporter and producer of the nylon flags and claiming preference based on Criterion B. The Certificate of Origin was signed by the president of Maq Tec. Invoices for the yarn and manufacturer’s affidavit submitted by Invista-Dupont for the relevant period were also received.
On October 1, 2009, CBP issued a Notice of Action (CBP Form 29) which acknowledged receipt of an amended NAFTA blanket Certificate of Origin, but noted that the NAFTA supporting documents submitted were inconclusive. Based on the verification, 22 entries listed on the CBP Form 29 were rate advanced.
ISSUE:
Whether certain nylon flags described above are eligible for preferential tariff treatment under the NAFTA?
LAW AND ANALYSIS:
To qualify for entry under the NAFTA under criterion A, the rule set forth in General Note 12(b)(i), of the Harmonized Tariff Schedule of the United States (“HTSUS”), must be satisfied.
General Note 12(b)(i) provides as follows:
Goods imported into the customs territory of the United States are eligible for the tariff treatment and quantitative limitations set forth in the tariff schedule as "goods originating in the territory of a NAFTA party" only if—
(i) they are goods wholly obtained or produced entirely in the territory of Canada, Mexico and/or the United States; or
(ii) they have been transformed in the territory of Canada, Mexico and/or the United States so that—
(A) …each of the non-originating materials used in the production of such goods undergoes a change in tariff classification described in subdivisions (r), (s) and (t) of this note or the rules set forth therein,
Section 181.71, Customs Regulations (19 CFR 181.71), provides as follows:
…Customs shall deny preferential tariff treatment on an imported good, or shall deny a post-importation claim for a refund filed under subpart D of this part, only after initiation of an origin verification under section 181.72(a) of this part which results in a determination that the imported good does not qualify as an originating good or shall not be accorded such treatment for any other reason as specifically provided for elsewhere in this part.
Section 181.72(a), Customs Regulations (19 CFR 181.72(a)), provides as follows:
…Customs may initiate a verification in order to determine whether a good imported into the United States qualifies as an originating good for purposes of preferential tariff treatment under the NAFTA as stated on the Certificate of Origin pertaining to the good. Such a verification (1) May also involve a verification of the origin of a material that is used in the production of a good that is the subject of a verification under this section;…
Section 181.75(a), Customs Regulations (19 CFR 181.75(a)), requires that Customs provide the exporter or producer with a written determination of whether the good qualifies as originating which sets forth the findings of fact made in connection with the verification and upon which the determination is based and the legal basis for the determination.
In Headquarters Ruling Letter (“HRL”) H013199, dated March 20, 2008, CBP denied NAFTA eligibility for certain imported articles of clothing based on the totality of the evidence submitted because the exporter failed to supply cutting and sewing records or other production records requested by CBP in the verification it conducted, along with an incorrect NAFTA Certificate of Origin. The protestant submitted affidavits, contracts, invoices, purchase orders, bills of lading employee payment records and an incorrect certificate of origin (which did not contain the correct producer).
In this case, the Mexican exporter/producer has asserted that the imported flags were wholly obtained or produced entirely in the U.S. and Mexico. A number of NAFTA Certificates of Origin were submitted for various materials. However, the Mexican exporter/producer did not submit supporting invoices, or cutting and sewing records or other production records that would demonstrate that the materials, including the fabric, were purchased by the Mexican exporter/producer to show that, indeed, it used the claimed U.S. materials in the manufacture of the flags at issue.
Inasmuch as the CBP Form 28 specifically requested invoices for various materials to show that the Mexican producer used these materials and this information was not provided, based on the totality of the evidence submitted, we find that the protestant has failed to support its claim for eligibility for preferential tariff treatment under the NAFTA for the imported flags. Accordingly, this protest should be denied.
HOLDING:
The protest should be denied. Based on the evidence presented, we find that insufficient documentation was presented to support the claim under the NAFTA.
In accordance with Sections IV and VI of the CBP Protest/Petition Processing Handbook (HB 3500-08A, December 2007, pp. 24 and 26), you are to mail this decision, together with the Customs Form 19, 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 Regulations and Rulings of the Office of International Trade will make the decision available to CBP personnel, and to the public on the CBP Home Page on the World Wide Web at www.cbp.gov, by means of the Freedom of Information Act, and other methods of public distribution.
Sincerely,
Myles B. Harmon, Director
Commercial & Trade Facilitation Division