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HQ 560688

January 26, 1998

CLA-2 RR:CR:SM 560688 RSD


Mr. Michael G. Weick
Customs Manager
IKEA North America Services, Inc.
Plymouth Commons
496 W. Germantown Pike
Plymouth Meeting, Pennsylvania 19462

RE: Eligibility of knock-down furniture under the Generalized System of Preferences ("GSP"); imported directly; 19 CFR ? 10.175

Dear Mr. Weick:

This is in response your letter of September 29, 1997, requesting a ruling on the eligibility of knock-down furniture for duty-free treatment under the Generalized System of Preferences ("GSP"). We have also received a supplemental letter dated November 20, 1997, containing documents that are illustrative of the proposed transactions.


IKEA imports knock-down furniture which originates from the GSP eligible countries of Macedonia (Former Yugoslav Republic of Macedonia), Slovakia, and Croatia. You state in your letter that the merchandise in question is classifiable under various tariff numbers designated as GSP-eligible products. The merchandise is shipped from the country of origin to the United States through consolidation points. The consolidation points are located in Bulgaria (handling furniture from Macedonia), the Czech Republic (handling furniture from Slovakia) and Slovenia (handling furniture from Croatia). They function as transit areas where the goods are collected and loaded to ensure full container loads.

You indicate that the goods transit through the intermediary country where the consolidation points are located in order to be loaded into shipping containers destined for the United States. Due to the number of small suppliers shipping minimum quantities, it is necessary to tranship and consolidate the goods to maximize container fill-rates and reduce ocean transportation costs. The goods are sold for exportation to the United States from the country of origin and are destined for the United States upon exportation from the country of origin.

According to your letter, all invoices, shipping documents, bills of lading, and certificates of origin will indicate that the United States is the final destination of the merchandise. The goods stay in the consolidation point for a relatively short period of time, usually five to ten days. In the consolidation points, the goods are not sold, manipulated, offered for sale at retail, or re-packed, and do not undergo any title change or enter the commerce of the intermediate country.

To illustrate the transaction, you have provided various documents such as a purchase order, packing list, CP delivery receipt, Form A, carrier arrival notice, pro-forma invoice, and an entry summary submitted to U.S. Customs. These documents indicate that, in regard to the sample transaction, the United States is the ultimate destination for the shipped merchandise.


Whether the knock-down furniture originating in Macedonia, Slovakia, or Croatia are "imported directly" for purposes of the GSP when it is shipped through an intermediary country to the United States as described above.


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. the articles are GSP eligible, are "products of" the GSP country, and the minimum local value-content requirement is met.

Therefore, the issue in this case concerns whether the knock-down furniture, which IKEA is importing from Macedonia, Slovakia, or Croatia, is considered to be "imported directly" from the BDC to the U.S., if it is first shipped from the BDC to another intermediary country, and then subsequently entered into the U.S. Section 10.175, Customs Regulations (19 C.F.R. ?10.175) defines the term "imported directly" for purposes of the GSP. Under 19 C.F.R. ?10.175(b), merchandise shipped from a BDC through another country to the U.S. is "imported directly" if: the merchandise "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."

In HQ 556079 dated July 2, 1991, ethylene glycol was produced in the Czech and Slovak Federal Republic (Czechoslovakia). However, as Czechoslovakia had no outlet on the sea, the produce had to be shipped overland from Czechoslovakia to Rotterdam, Netherlands, where it was held in storage tanks before being loaded onto a U.S.-bound ocean carrier and shipped to the U.S. In HQ 556079, it was possible that the ethylene glycol could be stored in the Netherlands for as long as 30 days. At no time did the ethylene glycol enter the commerce of the Netherlands or any other country of transshipment. Moreover, from the Czechoslovakia border until the goods were loaded on board the U.S.-bound ship, the merchandise was held under bond in storage. We held in HQ 556079 that if the invoice, bill of lading, GSP certificate, certificate of origin and other original shipping documents issued in Czechoslovakia showed the U.S. as the final destination, the ethylene glycol would be considered "imported directly" pursuant to 19 C.F.R. ?10.175(b). We stated that this requirement is intended both to establish a connection between the imported merchandise and its country of origin and to show that the passage of the merchandise through the intermediate country involved a mere transshipment rather than entry into the commerce of the intermediate country. Furthermore, we noted that whereas this requirement does not preclude multiple modes of transportation such as air, sea or different carriers of the same type, the documents presented as evidence of compliance with this requirement must include the original shipping documents issued in the BDC, showing the U.S. as the final destination.

In HRL 559535 dated September 20, 1996, calculators from Thailand, Malaysia, and countries qualifying under the GSP were temporarily stored in a warehouse in an intermediate country such as Japan. We held that the calculators shipped through Japan or another intermediary country before importation into the United States would satisfy the "imported directly" requirement under 19 CFR 10.175(b), assuming that the commercial invoices, bills of lading, and other shipping documents show the United States as the final destination for the merchandise, and the calculators did not enter the commerce of the intermediate country.

In HRL 555039 dated June 16, 1989, electronic component parts produced in a BDC were shipped in export packing to a non-BDC, where they were placed in a free trade zone and consolidated with other goods. The merchandise was not sold, repackaged, otherwise manipulated in the non-BDC other than by unloading and loading for shipment. The consolidated shipment was exported to the U.S. In deciding whether the merchandise entered the commerce of the non-BDC, we noted that the described operations do not appear to constitute more than loading and unloading of the merchandise, and, as such, will not cause the merchandise to enter the commerce of the non-BDC.

In the instant case, unlike HRL 555039 there is no indication that the merchandise will be placed in a foreign trade zone. Nevertheless we find that if the operations performed in the intermediate country consists only of consolidating merchandise by unloading and reloading it into a container for shipping purposes, then the merchandise will not have entered into the commerce of the intermediate country. In addition, the submitted the invoices, bills of lading and other shipping documents which are supposed to be representative of documents to be issued in the BDC show that the United States is the final destination for the furniture. Therefore, if the furniture is only consolidated in the intermediary country for shipping reasons, and the documentation shows that the United States is the final destination of the merchandise, then the shipment of the knock-down furniture will not have entered the commerce of the intermediate country and will meet the requirements for being imported directly under 19 CFR ?10.175.

Please note that, pursuant to 19 C.F.R. ?10.174, the port director may require that appropriate shipping papers, invoices, or other documents be submitted within 60 days of the date of entry as evidence that the articles were "imported directly". In addition, this provision states that any evidence of direct shipment required by the port director shall be subject to such verification as the port director deems necessary. Accordingly, we are unable to issue a prospective ruling covering any un-liquidated entries pending before a port.


Assuming that the commercial invoices, bills of lading, and other shipping documents show the United States as the final destination of the merchandise, and the furniture does not enter the commerce of the intermediate country, we find that the IKEA knock-down furniture originating from either Macedonia, Slovakia, or Croatia and shipped through either Bulgaria, the Czech Republic, or Slovenia, where it is consolidated before being shipped to the U.S., are "imported directly" from the BDCs for purposes of qualifying for 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.


John Durant, Director

Commercial Rulings Division

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