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HQ 556638

February 3, 1993

CLA-2 COR:C:S 556638 BLS


TARIFF NO: Item 807.00, TSUS

District Director of Customs
La Puntilla #1
Old San Juan, Puerto Rico 00903

RE: Application for Further Review of Protest No. 4909-91- 100154; 807.00, TSUS; footwear uppers of leather; 19 CFR 10.24(a); 19 CFR 10.24(e); transaction value; computed value

Dear Sir:

The above-referenced protest concerns the eligibility of footwear uppers for the partial duty exemption under item 807.00, Tariff Schedule of the United States (TSUS), and the correct basis of appraisement for the imported merchandise.


The footwear uppers at issue were assembled in the Dominican Republic with leather parts, including vamps, plugs, collars, eyestays, backstays, vamp lining, laces, thread, eyelets, and rubber/plastic parts such as collar foam, tongue foam, and heel foam. All were stated to be U.S. origin components.

In the Dominican Republic, the assembly operations consisted of attaching the various upper parts by machine sewing and hand sewing, punching holes, inserting eyelits and rawhide laces. In addition, the uppers were soaked, dried, and placed on a last for hand sewing operations.

The merchandise was entered under the duty-free provisions of the Generalized System of Preferences (GSP) at a value of $14.34/pair. However, GSP treatment was denied and the merchandise was liquidated fully dutiable under the computed value basis of appraisement at $16.88/pair.

Protestant now seeks reliquidation under item 807.00, TSUS, with a duty allowance for the U.S. origin components assembled in the Dominican Republic, although the required documentation supporting this claim not been submitted. Protestant also argues that transaction value is the correct basis of appraisement, at $14.34/pair, the price stated to be paid to the foreign assembler
for the imported merchandise.


1) Whether the footwear uppers of leather are entitled to a partial duty exemption under item 807.00, TSUS.

2) Whether transaction value is the correct basis of appraisement, at the entered value of $14.34/pair.


1) Allowance Under Item 807.00

Item 807.00, TSUS, provides a partial duty exemption for:

[a]rticles assembled abroad in whole or in part of fabricated components, the product of the United States, which (a) were exported in condition ready for assembly without further fabrication, (b) have not lost their physical identity in such articles by change in form, shape, or otherwise, and (c) have not been advanced in value or improved in condition abroad except by being assembled
and except by operations incidental to the assembly process, such as cleaning, lubrication, and painting.

All three requirements of item 807.00, TSUS, must be satisfied before a component may receive a duty allowance. An article entered under this tariff provision is subject to duty upon the full appraised value of the imported assembled article, less the cost or value of the U.S. components assembled therein, upon compliance with the documentary requirements of section 10.24, Customs Regulations (19 CFR 10.24).

Pursuant to 19 CFR 10.24, the required documentation shall include an assembler's declaration describing the fabricated components, that they are of U.S. origin, and other pertinent information, and an endorsement by the importer certifying the accuracy of the declaration. (19 CFR 10.24(a).) The district director may waive the production of either or both of these documents, or any of the information required, if he is satisfied that unusual circumstances exist which make the production of such documents or information impractical, and he is satisfied that the requirements of the statute (and legal notes) have been met. (19 CFR 10.24(e).)

While the required documentation has not been submitted, Protestant contends, nevertheless, that a waiver for the production of such documents should be granted, pursuant to 19 CFR 10.24(e). Protestant notes that in three Customs documents (audit report, report of investigation, pre-penalty notice), findings were made by Customs officials that the components were produced in Puerto Rico, and that this acknowledgement of U.S. origin should warrant granting the waiver. Protestant states that the Company cannot now obtain the assembler's declaration due to litigation between the parties.

The granting of a waiver under 19 CFR 10.24(e) by the district director is based on establishing to his/her satisfaction that essentially, all of the requirements of the statute have been met without submission of the documentation. Therefore, even if Customs finds in another proceeding that the components involved in this protest were produced in Puerto Rico, such a finding would be relevant for only one of the several criteria for partial duty allowance under item 807.00, TSUS, i.e., the requirement that the components be of U.S. origin. You believe that the facts in this case establish that protestant has not satisfied the statutory requirements and that accordingly, a waiver of the documentary requirements of 19 CFR 10.24(a) is not warranted.

In a similar case, where Customs had not waived documentary requirements, the court in Green Giant Co. v. United States, C.D. 4715, 79 Cust. Ct. 61 (1977), stated:

Since compliance with all applicable regulations is mandatory, and an absolute precondition to recovery in this court, plaintiff's failure to satisfy [the regulations on documentary requirements] bars its claim under item 807.00.

Accordingly, we find in this case that the articles are not eligible for the partial duty exemption under item 807.00, TSUS, since Protestant has not complied with the regulatory requirements of 19 CFR 10.24(a).

Appraised Value

Protestant contends that the merchandise was erroneously appraised under computed value, at $16.88/pair. Protestant argues that transaction value is the proper basis of appraisement, at $14.38/pair, the price charged by the exporter. This price consists of $12.60 for the components and materials, which includes cutting in the U.S. and transportation, and $1.74 for assembly in the Dominican Republic.

The transaction value of imported merchandise is defined as the price paid or payable for the merchandise when sold for exportation to the U.S., plus certain other additions not here applicable. (19 U.S.C. 1401a(b).) If a transaction value cannot be determined, a different basis of appraisement must be used, based on the order of the statutory scheme.

Based on the audit report prepared by the Regulatory Audit Division, Southwest Region, dated June 27, 1990, Timberland, the parent corporation, paid for the imported merchandise by sending lump-sum payments to the assembler which included payment for the merchandise along with advances for payroll and other expenses. The auditors further stated that, in the transfers examined, there was always an unexplained balance. Therefore, the transaction value method of appraisement was rejected in favor of the computed value method. We believe that there is insufficient information to support the contention that the merchandise should have been appraised under transaction value rather than computed value. As a result, there is no basis to conclude that the appraisement was in error.


1) Protestant has failed to establish the eligibility of the merchandise for the partial duty exemption under item 807.00, TSUS.

2) Protestant has failed to overcome the presumption of correctness attached to the import specialist's determination that the transaction value method of appraisement is inapplicable and that computed value is the proper basis of appraisement, at $16.88/pair.

Under the circumstances, the protest is denied in full.


John Durant, Director
Commercial Rulings Division

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