OT:RR:CTF:VS H304675 CMR
Alice Buchanan
Apparel, Footwear & Textiles Center
Assistant Center Director
U.S. Customs and Border Protection
555 Battery Street, Room 433
San Francisco, CA 94111
RE: Application for Further Review of Protest 1704-18-100172; Denial of § 1520(d) claim; Origin certification
Dear CEE Director:
This is in response to the Application for Further Review (AFR) for Protest 1704-18-100172, filed by Geodis, on behalf of their client, Chico’s FAS, Inc., (the protestant) against your decision to deny, in part, two post-importation claims for preferential tariff treatment under the United States-Korea Free Trade Agreement (“UKFTA”) for certain women’s knit garments.
FACTS:
The protestant’s merchandise at issue was admitted into a Foreign Trade Zone (FTZ) under one Customs and Border Protection (CBP) Form 214 Zone Admission number involving four different commercial invoices and under two CBP Form 214 Zone Admissions involving five different commercial invoices. Subsequently, the merchandise was entered into the customs territory of the United States from the FTZ in eight separate entries. The protestant, through their broker, made post-importation claims for preferential treatment of certain merchandise entered under the eight entries as eligible for the UKFTA, under 19 U.S.C. § 1520(d). The § 1520(d) claims for one entry (involving merchandise from one zone admission including four commercial invoices) and seven entries (involving merchandise from two zone admissions including five commercial invoices) were received by U.S. Customs and Border Protection (CBP) on January 13, 2017, and January 18, 2017, and were denied in part on January 19, 2018. The Protest was timely filed on April 4, 2018, with the AFR filed on April 27, 2018. The date of importation for the merchandise at issue, as reflected on the three CBP Form 214s involved was February 12, 2016.
In submitting the § 1520(d) claim, the protestant’s broker provided documentation to support the claim, including documents entitled, “U.S.-Korea Free Trade Certification.” For the garments at issue, the classification of the merchandise, reflected on the applicable certifications, was changed from a subheading of 6110, Harmonized Tariff Schedule of the United States (HTSUS), by drawing a line through the classification typed on the document, and writing by hand a subheading of 6106, HTSUS, onto the form. The documentation submitted also included commercial invoices; flow charts of the fabric production in the Republic of Korea (hereinafter, Korea); origin declarations for the yarns used in the production of the fabrics used to produce the garments; origin declarations for the fabrics used to produce the garments, including declarations from the fabric finishers (including dyeing and printing); textile declarations of origin and certificates of origin, signed by the exporter; and, copies of the freight forwarder’s cargo receipts. For the garments at issue, the classification was changed from a subheading of 6110 to a subheading of 6106 on the commercial invoices, in addition to the certifications. The broker explained that the classification change from heading 6110 to heading 6106 was due to an update in the stitch count of the garments at issue which resulted in the changed classification. As supporting documentation was submitted to substantiate that the garments qualify for preferential tariff treatment under the UKFTA, and as both heading 6106 and 6110 are eligible for UKFTA preferential treatment, the protestant believed the 1520(d) claims should have been approved. However, the CEE denied, in part, the § 1520(d) claims, stating that insufficient information was provided on the country of origin of the heading 6106 garments. In addition, this office was informed that corrected certifications were not submitted to CBP. Further, concern was express about CBP’s ability to quantify the merchandise being withdrawn from the FTZ due to insufficient information.
This protest involves only one style with six print/pattern variations. In response to a request from this office, protestant’s broker submitted additional production records for this style. The documents include: Chico’s purchase order wherein the factory, and its location, is identified; a bill of materials; a factory profile; a copy of the contract between the factory and the vendor; a certificate of garment delivery; proof of payment to the factory by the vendor; garment worksheet; cutting information, including a cutting summary and daily cutting report; sewing information, including a sewing summary, sewing report, and sewing summary report; finishing report (summary, ironing, inspecting, polybag and inspecting); time card statement and time cards for the same time period; proof of payment of the workers; and a quality assurance report for the merchandise prepared by a third party (agent).
ISSUE:
Whether the subject § 1520(d) claims were properly denied.
LAW AND ANALYSIS:
Section 520(d), Tariff Act of 1930, as amended (19 U.S.C. § 1520(d)), provides, in relevant part, as follows:
Notwithstanding the fact that a valid protest was not filed, the Customs Service may, in accordance with regulations prescribed by the Secretary, reliquidate an entry to refund any excess duties (including any merchandise processing fees) paid on a good qualifying under the rules of origin set out in . . . section 202 of the United States – Korea Free Trade Agreement Implementation Act, . . . for which no claim for preferential tariff treatment was made at the time of importation if the importer, within 1 year after the date of importation, files, in accordance with those regulations, a claim that includes –
(1) a written declaration that the good qualified under the applicable rules at the time of importation; (2) copies of all applicable NAFTA Certificates of Origin (as defined in section 1508(b)(1) of this title), or other certificates or certifications of origin, as the case may be; and (3) such other documentation and information relating to the importation of the goods as the Customs Service may require.
[Bold added.]
The pertinent CBP regulations implementing 19 U.S.C. § 1520(d) for purposes of the UKFTA, may be found at 19 C.F.R. §§ 10.1010 through 10.1012. Section 10.1010 provides:
Notwithstanding any other available remedy, where a good would have qualified as an originating good when it was imported into the United States but no claim for preferential tariff treatment was made, the importer of that good may file a claim for a refund of any excess duties at any time within one year after the date of importation of the good in accordance with the procedures set forth in §10.1011 of this subpart. Subject to the provisions of §10.1008 of this subpart, CBP may refund any excess duties by liquidation or reliquidation of the entry covering the good in accordance with §10.1012(c) of this subpart. [Bold added.]
Section 10.1011 sets forth the filing procedures for making a post-importation claim for preferential tariff treatment under the UKFTA. With regard to the contents of a post-importation claim for a refund of duties filed with CBP at a port of entry, or electronically, the regulation requires, at § 10.1011(b), the presentation to CBP of the following:
A written or electronic declaration or statement stating that the good was an originating good at the time of importation and setting forth the number and date of the entry or entries covering the good;
A copy of a written or electronic certification prepared in accordance
with §10.1004 of this subpart if a certification forms the basis for the claim, or other information demonstrating that the good qualifies for preferential tariff treatment;
A written statement indicating whether the importer of the good
provided a copy of the entry summary or equivalent documentation to any other person. If such documentation was so provided, the statement must identify each recipient by name, CBP identification number, and address and must specify the date on which the documentation was provided; and
A written statement indicating whether or not any person has filed a
protest relating to the good under any provision of law; and if any such protest has been filed, the statement must identify the protest by number and date.
[Bold added.]
In Headquarters Ruling Letter (HQ) H275567, dated May 8, 2018, CBP stated that “date of importation” means:
In the case of merchandise imported otherwise than by vessel, the date on which
the merchandise arrives within the Customs territory of the United States. In the case of merchandise imported by vessel, “date of importation” means the date on which the vessel arrives within the limits of a port in the United States with intent then and there to unlade such merchandise.
19 C.F.R. § 101.1. The ruling further stated that:
. . . the FTZ regulations define foreign merchandise as: “imported merchandise which has not been properly released from Customs custody in Customs territory.” 19 C.F.R. § 146.1 (emphasis added). Therefore, prior to its admission into the FTZ, the merchandise has been “imported,” but it simply has not been entered into the Customs territory of the United States.
See also, HQ H282601, dated September 18, 2018.
The § 1520(d) claims at issue were received by CBP on January 13, 2017, and January 18, 2017. The language of 19 U.S.C. § 1520(d) states that an importer must file a claim for a refund of any excess duties at any time within one year after the date of importation of the merchandise. The § 1520(d) claims were timely as the garments at issue were imported on February 12, 2016, and subsequently entered into the United States from the FTZ in the entries at issue.
With regard to the garments at issue, the commercial invoices and the UKFTA certifications submitted to CBP contained handwritten corrections regarding the classifications of the garments. The classifications were changed from a 6110 subheading to a 6101 subheading. Section 10.1011(b)(2), cited above, provides that when filing a post-importation claim for a refund of duties at a port, an importer must present to CBP a “copy of a written or electronic certification prepared in accordance with §10.1004 of this subpart if a certification forms the basis for the claim, or other information demonstrating that the good qualifies for preferential tariff treatment.”
In this case, the classification of the style at issue was incorrect on the certifications and commercial invoices. As certifications were submitted with the § 1520 claims, and those certifications contained an error with regard to the classification of the merchandise, CBP CEE personnel believed a corrected certification, pursuant to 19 CFR § 10.1003(c) needed to be submitted by the importer. Section 10.1003(c) provides:
If, after making the claim specified in paragraph (b) of this section, the importer has reason to believe that the claim is based on inaccurate information or is otherwise invalid, the importer must, within 30 calendar days after the date of discovery of the error, correct the claim and pay any duties that may be due. The importer must submit a statement either in writing or via an authorized electronic data interchange system to the CBP office where the original claim was filed specifying the correction . . . .
In addition to submitting certifications for the garments at issue, the importer’s broker submitted production documents to substantiate that the yarn and fabrics used to produce the garments at issue were originating under the UKFTA. Further, at the request of this office, additional documents were submitted, including cutting and sewing records.
Section 10.1003(a) provides that an importer may make a claim for UKFTA preferential tariff treatment based upon either a certification prepared by the importer, exporter, or producer of the good, or based upon the importer’s knowledge that the good is an originating good. As cited above, § 10.1011(b)(2) provides that a claim may be based on information, other than a certification, demonstrating that the good qualifies for preferential tariff treatment.
In this case, documentation was submitted to substantiate that the garments at issue were produced in Korea from originating yarns and fabrics. While the certifications contained an error with regard to the classification of the garments at issue, and such error was corrected by handwritten notations, as opposed to obtaining a corrected certification, the claims were not based solely on the certifications. The submitted documentation supported the claim. The additional documentation submitted to this office, further supports the claim.
HOLDING:
This protest should be allowed. For garments imported on February 12, 2016, the § 1520(d) claims should be allowed, provided the importer can provide the CEE with the information necessary to substantiate that the garments in the entries were from this importation.
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, the Office of Trade, Regulations and Rulings will make the decision available to CBP personnel, and to the public on the Customs Rulings Online Search System (CROSS) at https://rulings.cbp.gov/ which can be found on the U.S. Customs and Border Protection website at http://www.cbp.gov and other methods of public distribution.
Sincerely,
Myles B. Harmon, Director
Commercial and Trade Facilitation Division