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HQ 955029

March 8, 1994

CO:R:C:T 955029 CAB


TARIFF NO.: 6702.90.3500

District Director of Customs
1717 East Loop
Houston, Texas 77029

RE: Request for Further Review of Protest No. 5501-93-100240, dated June 29, 1993, concerning the classification of artificial flowers

Dear Madam:

This is a decision on application for further review of a protest timely filed by Fred Hall & Associates, on behalf of Jobe Enterprises, against your decision concerning the classification of artificial flowers under the Harmonized Tariff Schedule of the United States Annotated (HTSUSA). No sample was submitted for examination.


The protestant contests the denial of duty-free treatment for artificial flowers from Macau under the Generalized System of Preferences (GSP). The protestant further maintains that the subject merchandise should be classified under subheading 6702.90.4000, HTSUSA, at the special duty-free rate for products of Macau under the GSP. Since the date of the protest, June 29, 1993, the goods previously provided for under subheading 6702.90.4000, HTSUSA, are now classifiable under subheading 6702.90.3500, HTSUSA.


Whether the artificial flowers from Macau are eligible for duty-free treatment under the GSP?


Based on the information provided, there is no dispute that at the time of liquidation, the artificial flowers at issue were properly classifiable under subheading 6702.90.4000, HTSUSA, which provides for artificial flowers of man-made fibers.

Under the GSP, eligible articles, which are the growth, product or manufacture of a designated beneficiary developing country (BDC) and 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 the materials produced in the BDC, plus (2) the direct costs of the processing operations in the BDC is equivalent to at least 35 percent of the appraised value of the article at the time of entry. See 19 USC 2463(b).

Macau is considered a BDC. See General Note 4(a), HTSUSA.

Every subheading under Heading 6702, HTSUSA, is a GSP- eligible provision. Accordingly, the subject merchandise may be eligible for duty-free treatment, if they are considered to be "products of" Macau, the 35 percent value-content minimum is met, and they are "imported directly" into the United States.

A memorandum was sent to the field dated October 31, 1991, (INV 8-02 CO:TO:C JRD) from the Assistant Commissioner for Commercial Operations which generally stated that entries of artificial flowers claiming to be manufactured in Macau by certain factories, including Luen Fat, the factory allegedly producing the subject merchandise, should be denied GSP treatment. The memorandum further maintained that the Senior Customs Representative, Hong Kong (SCR/HK) issued reports of investigations concerning the alleged transshipment of artificial flowers manufactured in China and transported to Macau. These reports explained that the named factories were either not manufacturing artificial flowers in Macau, or were incapable of manufacturing them in the quantities exported to the United States. Therefore, the Assistant Commissioner stated that in the absence of "compelling evidence" to the contrary, protests filed on the liquidation of entries from any of the named factories should be denied.

In the instant case, the evidence submitted to substantiate the protestant's claim is based generally on a letter from the President of the importing company, Jobe Enterprises. The letter states that he, Mr. Jobe, visited the Luen Fat Factory and personally watched workers making flowers on two different floors in the factory. The letter further states that Jobe Enterprises only ordered one container holding fourteen items which took the factory over two months to produce. Therefore, Mr. Jobe fails to understand why Customs concluded that the Luen Fat Factory was incapable of producing a single container.

The protestant has failed to present any persuasive "compelling evidence" that would lead Customs to conclude that Luen Fat Factory has the capabilities to produce the amount of merchandise in question. As the artificial flowers are not considered products of Macau, there is no need for Customs to determine whether they meet the 35 percent value-content minimum, and whether the goods are "imported directly" into the United States. Consequently, the protestant's claim is denied and the artificial flowers are not entitled to duty-free treatment under the GSP.


Based on the foregoing, the artificial flowers are not entitled to duty-free treatment under the GSP and were properly liquidated under 6702.90.4000, HTSUSA, without benefit of GSP duty treatment, which provides for artificial flowers, foliage and fruit and parts thereof; articles made of artificial flowers, foliage or fruit, of man-made fibers. The applicable rate of duty is 9 percent ad valorem.

The protest should be denied in full. A copy of this decision should be attached to the Customs Form 19 and provided to the protestant as part of the notice of action.

In accordance with Section 3(A)(11)(b) of Customs Directive 099 3550-065, dated August 4, 1993, Subject: Revised Protest Directive, this decision should be mailed by your office 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 the Office of Regulations and Rulings will take steps to make the decision available to Customs personnel via the Customs Rulings Module in ACS and the public via the Diskette Subscription Service, Lexis, Freedom of Information Act and other public access channels.


John Durant, Director
Commercial Rulings Division

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