CLA-2 OT:RR:CTF:VS H257518 AJR
Port Director
U.S. Customs & Border Protection
9777 Via De La Amistad
San Diego, CA 92154
Re: Application for Further Review of Protest 2506-14-100002; NAFTA: sufficiency of documents
Dear Port Director:
This is in response to the Application for Further Review of Protest 2506-14-100002 timely filed by counsel on behalf of Frescos Don Gu, S.A. de C.V. (“Frescos Don Gu”), addressing whether certain asparagus imports were eligible for preferential tariff treatment under the North American Free Trade Agreement (“NAFTA”).
FACTS:
This case involves 16 entries of asparagus imported from Mexico between July 4, 2012 and September 18, 2012, and classified under subheading 0709.20.9090, Harmonized Tariff Schedule of the United States (“HTSUS”). The protestant and exporter, Frescos Don Gu, claims that the imported asparagus was harvested entirely in Mexico, and, therefore, was eligible for preferential tariff treatment under NAFTA.
On January 3, 2013, Customs and Border Protection (“CBP”) issued a Request for Information (CBP Form 28) to Frescos Don Gu, concerning the first entry from July 4, 2012, and allowing 30 days for a response. From March 13, 2013, to March 27, 2013, CBP received documents and information responding to CBP Form 28. The received information failed to include a costed bill of materials with invoices or receipts sufficient to show the materials and consumables used to produce the asparagus, and a valid address for the farm or actual location where the production of the asparagus took place, which had been requested by CBP Form 28.
On May 7, 2013, CBP issued a Notice of Action (CBP Form 29) rate advancing the first entry because the information provided did not substantiate the NAFTA preferential treatment claim. On August 28, 2013, CBP issued another Notice of Action (CBP Form 29) rate advancing the other 15 entries because the information provided did not substantiate the NAFTA preferential treatment claims made for these entries. Frescos Don Gu argues that it substantiated the NAFTA preferential treatment claims for all 16 entries and has submitted the following documentation in support:
Exhibit 1 – A description of the asparagus growing and packing process, which provides:
The name, address, and contact information for the grower, Frescos Don Gu, and its farm, “Rancho La Noria,” in Guanajuanto, Mexico;
A description of the production process, which includes preparation of land, sowing or planting, irrigation, fertilization, weed control, pest control, and harvesting process. The “Sowing or Planting” description states that the importer, Jacobs Malcolm & Burtts (“JMB”) located in San Francisco, California, supplies Frescos Don Gu with asparagus seeds from L&R Mussi Seed Inc. (“L&R”), located in Stockton, California;
A description of the asparagus packing flow, which includes reception and storing, feeding and washing, selection and sorting, bunching and packing, tagging and weighing, hydrocooling, palletizing and strapping, final product storage, and loading;
Exhibit 2 – A compilation of the entry documents, which includes:
A blanket NAFTA Certificate of Origin for 2012, dated January 2, 2012, listing Frescos Don Gu, as the exporter, and JMB, as the importer, and indicating that Mexico is the country of origin for the asparagus;
16 Entry Summaries for the merchandise entered into the United States from July 4, 2012, to September 18, 2012;
Inward Cargo Manifest (CBP Form 7533) and cover sheet for all 16 entries, except the first entry from July 4, 2012, which only has the cover sheet without CBP Form 7533;
Invoices for all 16 entries, with quantities and values that match their respective entry summary;
Exhibit 3 – A list of the equipment, other assists, and consumables used to grow the asparagus, which shows that Frescos Don Gu used:
Asparagus seeds produced by L&R, and supplied by JMB, both from Californa;
A John Deere tractor and fertilizer spreader that Frescos Don Gu purchased from a John Deere distributor in Mexico;
Three types of fertilizer that Frescos Don Gu purchased from a vendor in Mexico;
Herbicides that Frescos Don Gu purchased from two different vendors in Mexico;
Sickles for harvesting that Frescos Don Gu purchased from a tool store in Mexico;
An irrigation system that was supplied to Frescos Don Gu by a company in Mexico, and that was later modernized by “Automization para Invernaderos,” a company without a listed address;
Exhibit 4 – A costed bill of materials for asparagus, listing the supplier as Frescos Don Gu, the HTS Number as 070.20.9090, the country of origin as Mexico, and the value as “Entire Value”;
Exhibit 5 – A marketing agreement between Frescos Don Gu and JMB, signed by representatives of both companies and dated May 1, 2012; and,
Exhibit 6 – Notices of Action (CBP Form 29) and reliquidation statements for all 16 entries attached to their respective entry summaries, CBP Form 7533, and invoices, which were also noted in Exhibit 2.
ISSUE:
Whether the protestant has demonstrated that the imported asparagus is entitled to preferential treatment under the NAFTA?
LAW AND ANALYSIS:
To qualify for entry under the NAFTA, the rule set forth in General Note 12(b), HTSUS, must be satisfied, which provides, in part, 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…
General Note 12(n)(ii), HTSUS, provides that, “goods wholly obtained or produced entirely in the territory of Mexico […]” include “vegetable goods, as such goods are defined in this schedule, harvested in the territory of one or more of the NAFTA parties […].”Additionally, Part II, § 4(1)(b) of the NAFTA Rules of Origin Regulations (19 CFR § 181 Appendix), provides that, “a vegetable or other good harvested in the territory of one or more of the NAFTA countries” qualifies as a NAFTA originating good.
In this case, the imported asparagus was properly classified in subheading 0709.20.9090, HTSUS, and as such falls within the scope of Section II, Vegetable Products, HTSUS. Accordingly, for NAFTA purposes, the imported asparagus is eligible for preference if it was harvested in the territory of a NAFTA party.
Section 181.71, Customs Regulations (19 CFR § 181.71), provides that, “Customs shall deny preferential tariff treatment on an imported good […], 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)), states that, “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.”
In this case, the port found that Frescos Don Gu did not substantiate its claim for NAFTA preferential treatment on the 16 asparagus entries because it had failed to provide a valid address showing where the asparagus was harvested, and a sufficient costed bill of materials, as had been requested by the port. Frescos Don Gu argues that the imported asparagus was produced entirely in Mexico, and submitted documentation (Exhibits 1 – 6) to support this claim.
With regard to its failure to provide a valid address showing where the asparagus was harvested, Frescos Don Gu submitted Exhibit 1, which provides an address for Frescos Don Gu’s farm, “Rancho La Noria,” located in Guanajuanto, Mexico. Through this information, we found that “Rancho La Noria” has a website, which references Frescos Don Gu and the Guanajuanto, Mexico address provided in Exhibit 1. Additionally, a map view of this location shows the “Rancho La Noria” property surrounded by acres of ploughed fields. Based on the address submitted in Exhibit 1, which aligned with our own findings, we are satisfied that that Frescos Don Gu provided a valid address showing where the imported asparagus was harvested.
With regard to its failure to provide a sufficient costed bill of materials, we note General Note 12(s)(i), HTSUS, which states that “[a]gricultural and horticultural goods grown in the territory of a NAFTA party shall be treated as originating in the territory of that party even if grown from seed, bulbs, rootstock, cuttings, slips or other live parts of plants imported from a non-party[…].” Therefore, for NAFTA purposes, Frescos Don Gu did not need to demonstrate a costed bill of materials for the seeds and other materials used to harvest the asparagus. That is, provided that Frescos Don Gu demonstrates that the asparagus was harvested in Mexico, then the asparagus is an originating good, even if the origin of the seeds and other materials used to harvest the asparagus were from another country. Here, Frescos Don Gu submitted the farm address and a detailed description of the growing and packing process that took place at the farm in Mexico (Exhibit 1), a marketing contract between Frescos Don Gu and JMB that references Frescos Don Gu as the grower of the asparagus (Exhibit 5), and the other detailed information presented to us in Exhibits 2, 3, 4, and 6, further supporting Frescos Don Gu’s claim that the imported asparagus was harvested in Mexico.
Accordingly, based on the totality of the evidence, including, but not limited to, the documentation that detailed the asparagus harvesting process that took place at the farm located in Mexico, and the marketing contract between Frescos Don Gu (as the grower) and JMB (as the importer), we find that Frescos Don Gu substantiated its NAFTA preferential tariff treatment claim for the imported asparagus. Therefore, this protest should be allowed.
HOLDING:
The protest should be allowed. Based on the evidence presented, we find that sufficient 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