CLA-2 OR:RR:CTF:VS H233041 RSD
Port Director
U.S. Customs and Border Protection
4341 International Pkwy, Suite 1000 Atlanta, GA 30354-3910
RE: Protest number 1704-11-100407; Generalized System of Preferences; Classification of Stone; Granite; Laboratory Analysis and Report; subheading 6902.93, HTSUS
Dear Port Director:
This is in response to your memorandum dated August 21, 2013, forwarding the above referenced protest filed by counsel on behalf of Hood International, Incorporated, doing business as Stone International (Hood) claiming preferential tariff treatment under the Generalized System of Preferences (GSP) for the importation of three kinds of stone. The record contains several laboratory reports. Our decision follows:
FACTS:
The merchandise at issue is three types of stone imported from Brazil used as building materials for items such as kitchen counter tops. The specific stones at issue in the shipments are known commercially by the names Tahoe, Green Peacock, and Giallo Napole. According to the Protestant, all of the stones were mined from stone quarries located in Brazil.
In the instant case, all of the imported stones are commercially described as “granite”. However, the proper tariff classification of stone in the Harmonized Tariff Schedule of the United States commercially referred to as “granite”, can only be determined through laboratory analysis of a sample of the stone. Therefore, the import specialist obtained samples of the three stones contained in the entry and forwarded them to the Customs and Border Protection (CBP) Office of Laboratories and Scientific Services (CBP Lab) for testing.
The CBP Lab analyzed the samples of stone and determined that the first sample, known as Tahoe, was composed of granite. The CBP Lab determined that the second sample, Peacock Green, consisted of two different stones, had a face-side polished section of a stone slab measuring 3.1 centimeters in thickness, and it was composed of granite. The CBP Lab determined that the third sample, Giallo Napole, was also composed of granite.
Protestant also sent samples of the stones from its warehouse inventory to a private laboratory known as MAS, located in Suwanee, Georgia for testing. The MAS Laboratory report dated October 2, 2009, indicated that it received 19 samples of polished dimension stone on September 29, 2009. The report noted that all of the samples were referred to as granite by industry standards. However, the MAS Laboratory analysis determined that the Tahoe and Giallo Napole stones were not geologically granite, despite being commercially labeled as granite. The report further indicated that the stones were geologically “gneiss”. The MAS Laboratory also concluded that the Green Peacock stone was not geologically granite, but instead was composed of syenite/monzanite.
Based on CBP’s lab tests, your office classified the Tahoe, Green Peacock, and Giallo Napole stones as granite in subheading 6802.93, Harmonized Tariff Schedule of the United States (HTSUS), which meant that these stones were not eligible for preferential tariff treatment under the GSP. In this protest, Protestant challenges the liquidation of the entry of the stones with a classification in subheading 6802.93, HTSUS, as granite contending that the stones should have been classified in subheading 6802.99, HTSUS as other stone, which would have made them eligible for preferential tariff treatment under the GSP.
ISSUES:
I. Whether the imported stones are classified as granite in subheading 6802.93, HTSUS, or as other stone in subheading 6802.99, HTSUS.
II. Whether the imported stones imported from Brazil are eligible for preferential tariff treatment under the GSP.
LAW AND ANALYSIS:
Initially, we note the protest with application for further review was timely filed under the statutory and regulatory provisions for a protest, 19 U.S.C. § 1514(c)(3)
Generalized System of Preferences
Title V of the Trade Act of 1974, as amended (19 U.S.C.A. 2461-65), authorizes the President to establish a Generalized System of Preferences to provide duty-free treatment for eligible articles from beneficiary developing countries (“BDCs”). Articles produced in a BDC may qualify for duty-free treatment under the GSP if the goods are imported directly into the customs territory of the U.S. from the BDC and the sum or value of materials produced in the BDC plus 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(a)(2) and (3).
Brazil has been designated a BDC. Thus, if the product at issue was produced in Brazil, it may be afforded preferential tariff treatment under the GSP assuming that the other requirements of the GSP have been satisfied. See General Note (GN) 4(a), HTSUS.
A good is considered to be a “product of” a BDC if it is wholly the growth, product or manufacture of the BDC, or if made of materials imported into the BDC, those materials were substantially transformed in the BDC into a new and different article of commerce. See 19 CFR 10.176(a). A substantial transformation occurs “when an article emerges from a manufacturing process with a name, character, or use which differs from those of the original material subjected to the process.” Texas Instruments Inc. v. United States, 681 F.2d 778 (1982).
The record indicates that there is no controversy as to whether the subject stones were products of Brazil and that they were imported directly into the United States from Brazil.
In order to be eligible for GSP, the imported stones must also be classified in a provision of the HTSUS, which is a GSP-eligible provision. GN 4(d), HTSUS, states that articles provided for in a provision for which a rate of duty of "Free" appears in the "Special" subcolumn of rate of duty column 1 followed by the symbol "A*" in parentheses, if imported from a BDC set out opposite the provisions enumerated, are not eligible for the duty-free treatment. After reviewing samples, and getting a laboratory analysis, CBP classified the stones subheading 6802.93, as granite. The symbol “A*” appears in the Special subcolumn of rate of duty column 1 for subheading 6802.93, HTSUS. GN 4(d) further indicates that articles from Brazil classified in subheading 6802.93, HTSUS, are among the items that are excluded from the tariff preference under the GSP. Thus, CBP concluded that the stones were not eligible for the GSP.
Protestant contends that CBP’s classification of the stones was incorrect and that the imported stones should have been classified in subheading 6802.99, as other stone, a subheading eligible for the tariff preference under the GSP. Thus, in order to determine whether the stones are eligible for the GSP, we must determine the correct classification of the imported stones.
CLASSIFICATION
Classification of imported merchandise is accomplished pursuant to the Harmonized Tariff Schedule of the United States ("HTSUS"). Classification under the HTSUS is guided by the General Rules of Interpretation of the Harmonized System ("GRIs"). GRI 1 states, in part that for legal purposes, classification shall be determined according to the terms of the headings and any relative section or chapter notes, and provided the headings or notes do not require otherwise, according to GRIs 2 through 6.
The HTSUS provisions under consideration are as follows:
6802.93.00 Granite.
6802.99.00 Other stone
When interpreting and implementing the HTSUS, the Explanatory Notes (ENs) of the Harmonized Commodity Description and Coding System may be utilized. The ENs, while neither legally binding nor dispositive, provide a guiding commentary on the scope of each heading, and are generally indicative of the proper interpretation of the HTSUS. CBP believes the ENs should always be consulted. See T.D. 89-90, 54 Fed. Reg. 35127, 35128 (August 23, 1989).
According to Headquarters Ruling (HQ) 085266 dated September 9, 1989, and the ENs, stones are classified in HTSUS based on their geological makeup. See also HQ 964308, dated June 22, 2000; HQ 955738, dated March 30, 1994; HQ 955355, dated April 28, 1994; and 954358, dated August 18, 1993; (all of which conclude that CBP will determine the classification of stones based on the geological definition).
In order to determine an accurate geological makeup of imported stones, a laboratory analysis of their composition is necessary. Accordingly, your office requested samples of the merchandise. We note that the Protestant provided stone samples with no indication or objection that the samples were not identical to the imported merchandise that is the subject of this protest. Samples of the three stones were sent to the CBP Lab for an analysis of the composition of the stones. The CBP Lab determined that the three sample stones were composed of granite, and thus your office classified the stone in subheading 6802.93, HTSUS, as granite.
Protestant also sent samples of the stones from its warehouse inventory to its own private laboratory, MAS, located in Suwanee, Georgia for testing. The MAS Laboratory determined that the Tahoe and Giallo Napole stones were not geologically granite, despite being commercially labeled as granite. Rather these stones were geologically “gneiss”. The MAS Laboratory also concluded that the Green Peacock stone was not geologically granite, but instead stone known as syenite/monzanite. Thus, according to Protestant none of the three stones at issue should have been classified as granite in subheading 6802.93, HTSUS. Instead, the Protestant contends the stones should be classified in subheading 6802.99, HTSUS, as other stone.
With respect to the reliability of CBP laboratory tests, "[i]t is well settled that the methods of weighing, measuring, and testing merchandise used by [CBP] officers and the results obtained are presumed to be correct.” Aluminum Company of America v. United States, 60 C.C.P.A. 148, 151,477 F.2d 1396, 1398 (1973). Absent a conclusive showing that the testing method used by the CBP laboratory is in error, or that the CBP's laboratory results are erroneous, there is a presumption that the results are correct. See Exxon Corp. v. United States, 462 F. Supp. 378, 81 Cust. Ct. 87 (1978). The initial burden of proof in challenging the reliability of CBP's testing methods lies with the Protestant. An importer may rebut the presumption of correctness by showing that CBP's methods or results are erroneous. If a prima facie case is made out, the presumption is destroyed and the Government has the burden of going forward with the evidence. See Libas, Ltd. v. United States, 24 C.I.T. 893, 894, 118 F. Supp. 2d 1233, 1234 (2000).
There are two means in which an importer may successfully overcome the presumption of correctness afforded to a CBP laboratory report. As the court stated in American Sporting Goods v. United States, 27 C.I.T. 450, 456 (2003), 259 F. Supp. 1302, 1308, "the plaintiff in a case such as this may make out a prima facie case either by showing that Custom's results or methods are erroneous," Consolidated Cork Corp. v. United States, 54 Cust. Ct. 83, 85 (1965), or by "submitting evidence of analysis [that the plaintiff] applied to the merchandise which gave a result different from that claimed by the Government." See also HQ H089795, dated April 19, 2010. HQ H024861, August 4, 2009.
In Libas, Ltd. v. United States, the court noted that challenges to the reliability of CBP's laboratory tests should be scrutinized according to the standards articulated by the United States Supreme Court in Daubert v. Merrell Dow Pharmaceuticals, Inc., 509 U.S. 579, 113 S. Ct. 2786 (1993). See Libas, Ltd. v. United States" 193 F.3d 1361, 1366-67 (Fed. Cir. 1999), (Libas II). The Daubert standards are: (1) whether a theory or technique, such as Customs' test, has been tested; (2) whether it has been subjected to peer review and publication; (3) its known or potential rate of error; and (4) whether it is generally or widely accepted. See Daubert v. Merrell Dow Pharmaceuticals, Inc., 509 U.S. 579, 593-94 (1993).
In this case, Protestant has not shown that CBP Lab’s testing methodology on the stones was based on inaccurate tests that are not generally or widely accepted. Additionally, Protestant has not shown that the CBP laboratory improperly applied the testing methods to the subject merchandise, or that CBP's laboratory testing results were erroneous.
Protestant has presented a report from the private laboratory which determined that the imported stones are not geologically granite. Conflicting results alone, however, are not enough to establish the prima facie case required to rebut CBP’s presumption of correctness. In cases such as this, where the protestant submits an outside report that differs from the CBP laboratory report, the CBP laboratory report cannot be disregarded and, therefore, takes precedence over the outside report. Customs Directive 099 3820-002 dated May 4, 1992. In administering the HTSUS, CBP must be consistent while classifying the same type of merchandise entering the U.S. In order to consistently classify stone products according to their geological make up, the same laboratory analysis must be used throughout CBP. CBP cannot rely on outside reports which may or may not utilize different testing methods and still remain consistent in its tariff classification. Additionally, CBP does not have any evidence that the merchandise tested by the outside laboratory is the same merchandise that was imported into the U.S. Therefore, CBP must rely on its own laboratory analysis when determining the proper tariff classification.
Because the protestant has failed to demonstrate that the methods used by the CBP laboratory were in error, or that the results were erroneous, the CBP laboratory report takes precedence over the results of the tests administered by the Protestant’s private laboratory. Therefore, based on the CBP Lab report, we find that the imported subject three stones were geologically granite, and thus would be properly classified in subheading 6802.93, HTSUS, as granite. Because articles from Brazil classified in subheading 6802.93, HTSUS, are excluded from the preferential tariff treatment under the GSP, the three imported stones are not eligible for preferential tariff treatment under the GSP.
HOLDING:
The three subject stones are classified in subheading 6802.93.00, HTSUS, as granite. The three imported stones are not eligible for preferential tariff treatment under the GSP because articles classified in subheading 6802.93.00 of Brazilian origin are excluded from the GSP pursuant to General Note 4(d), HTSUS. The column one, general rate of duty is 3.7% ad valorem. Duty rates are provided for your convenience and subject to change. The text of the most recent HTSUS and the accompanying duty rates are provided on the World Wide Web at www.usitc.gov.
The protest should be denied in full. 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 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 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 and Trade Facilitation Division