CLA-2 OT:RR:CTF:VS H170536 HkP
Port Director
Port of Philadelphia
U.S. Customs and Border Protection
2nd & Chestnut Streets Room 102 Philadelphia, PA 19106
RE: Application for Further Review of Protest no. 1101-11-100095; Subheading
9810.00.15, HTSUS; Religious Articles; 19 U.S.C. § 1625 Treatment
Dear Port Director:
This is in response to the Application for Further Review of Protest no. 1101-11-100095, timely filed on March 3, 2011, on behalf of Hayes & Finch, Ltd., and forwarded to this office by your port. The protest concerns whether various religious articles qualify for duty-free entry under subheading 9810.00.15, Harmonized Tariff Schedule of the United States (HTSUS).
FACTS:
The importer, Hayes & Finch, is a manufacturer and for-profit supplier of church goods, including clerical garments, incense, and furnishings for religious ceremonies. Their goods are only available in the United States through their dealership network and cannot be bought directly from the importer. In a typical Hayes & Finch sales transaction, goods are shipped to the U.S. and held in a fulfillment warehouse. Invoices filed with the instant Protest establish that the goods are shipped from the United Kingdom to Hayes & Finch’s “East Coast Warehouse” in Pennsylvania. Orders are placed through dealers and the goods are then shipped directly to the customer from the warehouse.
The merchandise at issue is various types of incense, clerical vestments and shirts, and silver-plated chalices and patens used for communion. They were entered on June 24, 2010, under subheadings 9810.00.15, and 9810.00.20, HTSUS, which allow for duty-free entry of religious regalia, and hand-woven fabrics used by religious institutions to make religious vestments, respectively. On November 19, 2010, U.S. Customs and Border Protection (CBP) denied duty-free treatment to these goods and liquidated the items under various subheadings: 3307.41.00, HTSUS (incense); 6205.30.20, HTSUS (vestments and shirts); and, 7115.90.40, HTSUS (silver-plated chalices and patens). On March 3, 2011, the importer filed the instant Protest and AFR claiming that the goods qualify to be entered under subheading 9810.00.15, HTSUS, and that the goods are entitled to “treatment”. On August 2, 2011, the importer submitted additional information to this office concerning its sales practices and its claim of treatment.
ISSUES:
Whether the religious articles qualify for duty exemptions under subheadings 9810.00.15, HTSUS.
Whether the importer is entitled to liquidation of the entry under a claim of treatment.
LAW AND ANALYSIS:
Subheading 9810.00.15, HTSUS, Duty Exemption
The HTSUS subheading under consideration provides a duty exemption for:
Articles imported for the use of an institution established solely for religious purposes:
9810.00.15 Regalia
The U.S. Notes to Subchapter X, Chapter 98, HTSUS, provide in pertinent part:
Except as provided in subheading 9810.00.20 …, or as otherwise provided for in this U.S. Note, the articles covered by this subchapter must be exclusively for the use of the institutions involved, and not for distribution, sale or other commercial use within five years after being entered….
The term “regalia,” as used in this subchapter, (subheadings 9810.00.15 and 9810.00.45) embraces only such insignia of rank or office, emblems or other articles as may be worn upon the person or borne in the hand during public exercise of the institution, and does not include articles of furniture or fixtures, nor regular wearing apparel, nor personal property of individuals.
The port is of the view that the importer, which is a for-profit distributor of church goods, does not qualify for a duty exemption under subheading 9810.00.15, HTSUS because U.S. Note 1, Subchapter X, Chapter 98, HTSUS, explains that the articles covered by the subchapter must be exclusively for the use of the institutions involved, and not for distribution, sale, or other commercial use. In support of its position, the port cites Headquarters Ruling Letter (HQ) 950848 (May 11, 1992), HQ 086859 (July 18, 1990), and New York Ruling Letter (NY) R04135 (July 27, 2006), and NY H83272 (July 25, 2001).
The importer argues that the imported goods are only for church use and qualify for the duty exemption provided by subheading 9810.00.15, HTSUS. In support of its argument, the importer relies upon many of the same rulings cited by the port.
HQ 950848 concerned whether an alb, a liturgical vestment worn during Catholic religious ceremonies, was correctly classified under subheading 9810.00.15, HTSUS. CBP found that the alb met the requirements for religious regalia specified in U.S. Note 2 to Subchapter X, Chapter 98, HTSUS. However, the importation did not meet the requirements of U.S. Note 1 because the albs were sold to religious institutions and organizations after importation. On the other hand, in HQ 086859, liturgical vestments were found to qualify for duty-free entry under subheading 9810.00.15, HTSUS, because they were delivered directly to the customer and were not imported for sale, distribution, or other commercial use. Likewise, in NY H83272, vestures (the uppermost garment worn by a priest when celebrating Mass) were found to be eligible for duty-free treatment, if shipped directly from Canada to individual churches, used exclusively by the churches, and not sold or used for other commercial purposes. However, in NY R04135, choir robes were not entitled to a duty exemption because they did not meet the meaning of “regalia”, as defined in U.S. Note 2 to Subchapter X.
Based on the cited rulings, CBP has consistently found that in order to qualify for duty-free entry under subheading 9810.00.15, HTSUS, imported articles must be the subject of a pre-importation sale to a designated institution, in keeping with the requirements of U.S. Note 1 to Subchapter X, Chapter 98, HTSUS. See generally HQ 555483 (April 11, 1990), concerning whether educational materials imported in advance of orders from qualified nonprofit institutions could qualify for duty-free entry under the subchapter (subheading 9810.00.35, HTSUS). Customs found that the materials were not imported by a qualified institution or its agent pursuant to a pre-existing order and therefore did not qualify for duty-free entry. In the instant case, the importer has goods shipped to the U.S. and held in a warehouse until orders are placed with its dealers by various churches. Once the orders are placed, the goods are shipped from the warehouse to the churches. Based on these facts, it is clear that the goods at issue are not sold pre-importation but are sold after the goods enter the United States. Accordingly, these goods do not meet the requirements of U.S. Note 1, which prohibits the sale or commercial use of goods within five years of being entered. See HQ 950848, HQ 086859, and NY H83272. The goods do not qualify for entry under subheading 9810.00.15, HTSUS, because they are sold post-importation, and were correctly liquidated under their various Chapter 1-97, HTSUS, classifications.
Treatment
The importer argues that it has been importing church goods under subheading 9810.00.15, HTSUS, for as long as it has been importing church goods into the U.S., which is an unspecified period of time. As a result, the importer believes that it is entitled to treatment under the provisions of 19 U.S.C. § 1625. If CBP determines that the importer has acquired treatment with regard to the importation of religious items under subheading 9810.00.15, HTSUS, then we must allow this protest. Under the provisions of 19 U.S.C. § 1625, treatment may be modified or revoked only after CBP provides public notice and allows for the submission of comments on the proposed action.
With regard to treatment and the evidentiary requirements to substantiate a treatment claim, the CBP Regulations provide, in relevant part, at 19 C.F.R. § 177.12(c)(1):
(i) There must be evidence to establish that:
(A) There was an actual determination by a Customs officer regarding the facts and issues involved in the claimed treatment;
(B) The Customs officer making the actual determination was responsible for the subject matter on which the determination was made; and
(C) Over a 2-year period immediately preceding the claim of treatment, Customs consistently applied that determination on a national basis as reflected in liquidations of entries or reconciliations or other Customs actions with respect to all or substantially all of that person's Customs transactions involving materially identical facts and issues[.]
Determinations of whether a treatment occurred will be made by CBP on a case-by-case basis and will involve consideration of all relevant factors, including whether the past transactions were reviewed by CBP personnel. See 19 C.F.R. § 177.12(c)(1)(ii). With regard to the evidence required for establishing a treatment, 19 C.F.R. § 177.12(c)(1)(iv) provides:
The evidentiary burden as regards the existence of the previous treatment is on the person claiming that treatment. The evidence of previous treatment by Customs must include a list of all materially identical transactions by entry number (or other Customs assigned number), the quantity and value of merchandise covered by each transaction (where applicable), the ports of entry, the dates of final action by Customs, and, if known, the name and location of the Customs officer who made the
determination on which the claimed treatment is based. In addition, in cases in which an entry is liquidated without any Customs review (for example, the entry is liquidated automatically as entered), the person claiming a previous treatment must be prepared to submit to Customs written or other appropriate evidence of the earlier actual determination of a Customs officer that the person relied on in preparing the entry and that is consistent with the liquidation of the entry.
In this case, the importer was asked to state why the covered entry is entitled to treatment within the context of 19 C.F.R. § 177.12(c) and to submit any documents supporting this claim. The importer’s response was as follows:
Church supply companies in the USA and the rest of the world have used the regalia code for importing goods for a church for many years without any problems. We also acted on advice given by the freight forwarder when we first started to trade and used the code that was given in the recommendation. We had been importing goods duty free on the codes for many years with no problems, we then found out of the changes that happened overnight. … Please see additional information on protest already submitted, this details more of the reasons.
The importer’s response is insufficient to support the treatment claim. The treatment claim goes to the duty-free entry of religious regalia under subheading 9810.00.15, HTSUS. In addition, the importer failed to provide any evidence of previous treatment by Customs, including a list of all materially identical transactions by entry number or other Customs assigned number, the quantity and value of merchandise covered by each transaction, the ports of entry, the dates of final action by Customs, and the name and location of the Customs officer who made the determination on which the claimed treatment is based. See 19 C.F.R. § 177.12 (c)(1)(iv). The importer has, therefore, failed to meet its evidentiary burden and has not established that treatment existed.
HOLDING:
The protest is denied. In accordance with the Protest/Petition Processing Handbook (CIS HB 3500-08A, December 2007, pp. 24 and 26), you are to mail this decision, together with the CBP Form 19, to the protestant no later than 60 days from the date of this letter. Any reliquidation of the entry in accordance with this decision must be accomplished prior to mailing of the decision. Sixty days from the date of the decision Regulations and Rulings, Office of International Trade, will make the decision available to CBP personnel and to the public on the CBP website at www.cbp.gov, by means of the Freedom of Information Act and other methods of public distribution.
Sincerely,
Myles B. Harmon, Director
Commercial and Trade Facilitation Division