CLA-2 RR:TC:SM W559448 MLR
Mrs. Lynnette Keffer
Jones & Klink Corp.
P.O. Box 92815
Los Angeles, CA 90009-2815
RE: Eligibility of pianos for duty-free treatment under the Generalized System of Preferences (GSP); imported directly; Ukraine; 19 CFR 10.175
Dear Mrs. Keffer:
This is in response to your letter of September 19, 1995, requesting a ruling on the eligibility of pianos from the Ukraine for duty-free treatment under the Generalized System of Preferences (GSP).
FACTS:
North American Music, Inc. ("N.A. Music") plans to import pianos manufactured in the Ukraine. The pianos, stated to be classifiable under subheading 9201.10.00, Harmonized Tariff Schedule of the United States (HTSUS), will be transported by truck from the Ukraine to Holland. In Holland, the pianos will be sorted by colors and a certain number of them will be shipped by vessel to the U.S. to fill orders for N.A. Music. It is stated that the pianos will remain under Customs authority of Holland and that no other processing in Holland is performed.
The factory which manufactures the pianos in the Ukraine, Ukraine Music U&SC Impex, is a 50 percent joint venture between the Ukraine Government and the seller/shipper Van Urk Import/Export B.V. in Holland. A copy of the joint venture government registration form is enclosed showing the relationship between the Ukrainian Government and Van Urk Import/Export B.V. A GSP Form A Certificate of Origin is also enclosed from the Chamber of Commerce in Rotterdam indicating Van Urk Import/Export B.V. in Rotterdam, Holland as the consignor and N.A. Music in the U.S. as the consignee of the pianos, and that the origin of the pianos is the Ukraine and Italy. Also enclosed is a copy of a signed Certificate of Non Manipulation, whereby the Chief Officer of the customshouse at Enschede certifies, at the request of Van Urk Import/Export B.V. at Rotterdam, that as per a T.I.R. Carnet, pianos of Ukrainian origin arrived by truck and were reshipped to the U.S. by vessel, and that the pianos were continuously under customs supervision and did not undergo any manipulation.
ISSUE:
Whether the pianos from the Ukraine are "imported directly" for purposes of the GSP when they are shipped through Holland to the U.S.
LAW AND ANALYSIS:
Under the GSP, eligible articles the growth, product or manufacture of a designated beneficiary developing country (BDC) which are imported directly into the customs territory of the U.S. from a BDC may receive duty-free treatment if the sum of (1) the cost or value of materials produced in the BDC, plus (2) 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(b). As provided in General Note 4(a), HTSUS, the Ukraine is a designated BDC for purposes of the GSP, and the pianos are classifiable in subheading 9201.10.00, HTSUS, which is a GSP-eligible provision.
Therefore, the issue in this case concerns whether the pianos from the Ukraine are considered to be "imported directly" from the BDC to the U.S., if they are shipped from the BDC through Holland, and subsequently entered into the U.S. Section 10.175, Customs Regulations (19 CFR 10.175) defines the term "imported directly" for purposes of the GSP. Paragraph (a), which sets forth the most restrictive definition of the term, provides that "imported directly" means "direct shipment from the beneficiary country to the United States without passing through the territory of any other country."
Recognizing the exigencies of trade and transportation, however, Customs has by regulation determined that merchandise shipped through a non-BDC to the U.S. is "imported directly" if: (1) the merchandise in the shipment does not enter into the commerce of any other country while en route to the U.S., and the invoice, bills of lading, and other shipping documents show the U.S. as the final destination {see 19 CFR 10.175(b)}; or (2) if the documents do not show the U.S. as the final destination, the shipment remains under the control of the customs authority of the intermediate country; the merchandise does not enter into the commerce of the intermediate country except for the purpose of sale other than at retail, the port director is satisfied that the importation results from the original commercial transaction between the importer and the producer or the latter's sales agent, and the merchandise is not subjected to operations other than loading and unloading, and other activities necessary to preserve the articles in good condition {see 19 CFR 10.175(d)}.
In this case, it is stated that the pianos to be shipped to the U.S. will not enter into the commerce of Holland. However, no invoices or bills of lading are submitted which show that the final destination of the pianos originating in the Ukraine will be the U.S. because not all of the pianos sent to Holland are required by N.A. Music in the U.S. Accordingly, it is our opinion that 19 CFR 10.175(b) is not applicable. However, it is our opinion that 19 CFR 10.175(d) is applicable. The Certificate of Non Manipulation indicates that the shipment remains under the control of the customs authority in Holland. It is also stated that the pianos to be shipped to the U.S. do not enter into the commerce of Holland, and that the pianos are only subjected to loading and unloading operations in order to sort them by color. It is also our opinion that the importation will result from the original commercial transaction between the importer (N.A. Music) and the producer (Ukraine Music U&SC Impex). Ukraine Music U&SC Impex is a 50 percent joint venture with the Ukraine Government and the seller/shipper Van Urk Import/Export B.V. in Holland. An original commercial transaction between the importer and producer appears to be demonstrated by the joint venture government registration form which verifies the relationship between the Ukrainian Government and Van Urk Import/Export B.V., and the GSP Form A which shows Van Urk Import/Export, B.V. as the consignor and N.A. Music as the consignee of the pianos. Consequently, we find that the pianos are "imported directly" to the U.S. from the Ukraine. Please note that the GSP expired July 31, 1995, and has not been renewed as of the date of this letter, although we understand Congress is considering legislation to that effect.
HOLDING:
Based on the information submitted, we find that the pianos shipped from the Ukraine through Holland, where they remain under the control of the customs authority in Holland and are only subjected to unloading and loading operations before importation into the U.S., are "imported directly" from the BDC for purposes of qualifying for duty-free treatment under the GSP. A copy of this ruling letter should be attached to the entry documents filed at the time the goods are entered. If the documents have been filed without a copy, this ruling should be brought to the attention of the Customs officer handling the transaction.
Sincerely,
John Durant, Director
Tariff Classification
Appeals Division