HQ 562328 - Protest No. 23401-01-1500002; Validity of NAFTA Certificate of Origin; Opportunity for Correction; 19 CFR 181.22 - United States International Trade Commision Rulings

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HQ 562328

July 30, 2002

MAR-05 RR:CR:SM 562328 NL

CATEGORY: CLASSIFICATION

Port Director
U.S. Customs Service
Juarez/Lincoln Bridge
Administrative Bldg. #2
Laredo, TX 78040

RE: Protest No. 23401-01-1500002; Validity of NAFTA Certificate of Origin; Opportunity for Correction; 19 CFR 181.22

Dear Port Director:

This is a decision on the Protest and Application for Further Review filed by Miami International Freight Forwarders on behalf of STS Apparel Corp. (STS) against your decision to deny NAFTA preferential tariff treatment. The Protest was filed on August 6, 2001 with respect to entry No. 179-0049835-7, dated January 4, 2001. The decision to deny NAFTA preferential treatment was based on your finding that SPS had failed to show that it was in possession of a valid NAFTA Certificate of Origin at the time of claiming NAFTA eligibility.

FACTS:

Electronic entry was made for a shipment of boys’ knit cotton tops on January 4, 2001. The importer was STS; the commercial invoice indicated the seller/exporter as Sofi Classics, SA, of Lerma, Mexico. The importer claimed duty-free status for the merchandise as originating in Mexico.

By a CF 28 dated January 24, 2001, Customs requested that STS provide a NAFTA Certificate of Origin for the merchandise. In response, by letter dated February 6, 2001, the Chief Executive Officer of STS provided two documents. The first was a CF 434 Certificate of Origin showing STS as the exporter, Rintex, of Jiutepec, Mexico, as the producer, and Gap (Canada) as the importer. The second CF 434 Certificate of Origin was identical, except that it showed Sofi Classics as the producer. Both certificates of origin were executed by the CEO of STS, dated January 1, 2001, and covering calendar year 2001. An accompanying letter by this officer stated in response to a question in the CF 28 that STS and Sofi Classics were not related, affiliated or associated companies.

The protest record indicates that Customs contacted SPS by telephone to advise that these CF 434’s were not acceptable because Gap (Canada) was not the importer of the merchandise. It appears to have been clarified by STS that Gap (Canada) imported the merchandise into Canada after it had passed through the U.S, and that these certificates had been prepared for use with importations into Canada.

Having been afforded the opportunity to correct the CF 434’s, STS on March 5, 2001 submitted a new CF 434 executed by the STS CEO, showing Sofi Classics as the exporter, STS as the producer, and STS as the importer.

By a CF 29 Notice of Action dated March 6, 2000 Customs denied the STS claim of NAFTA eligibility for the subject merchandise on the basis that no valid Certificate of Origin had been supplied. Customs indicated that this most recent CF 434 was unacceptable, citing 19 CFR 181.22(b)(2). The requirements of that provision were not satisfied in that the CF 434 was not executed by the exporter (Sofi Classics) or alternatively, by the exporter’s authorized agent having knowledge of the relevant facts. The Protest record indicates that Customs attached importance to the fact that STS had indicated in its letter of February 6, 2001, that STS was not related or affiliated with Sofi Classics. Customs concluded that the STS officer executing the Certificate of Origin did not have authorization to act on behalf of Sofi Classics nor did the person executing have knowledge of the relevant facts concerning originating status of the merchandise as required by 19 CFR 181.22(b)(2).

On March 16, 2001, STS supplied copies of two certificates of origin. One was executed by Rintex on its behalf as exporter, but the date of execution, December 27, 2001, was obviously incorrect. The second, executed by Sofi Classics, appeared to Customs to be valid, but for the fact that no proof was offered that the certificate had been in the possession of the importer STS at the time it claimed.

Customs takes the view that it had acted in accordance with 19 CFR 181.22, and that STS “was afforded an opportunity to perfect the Certificates of Origin presented and failed to do so in a timely manner.”

This protest followed on August 6, 2001. The broker supplied with its protest memorandum the two amended versions of the CF 434, with the date corrected on the Rintex Certificate. SPS urges reliquidation with reinstatement of full NAFTA benefits on the basis of these amended CF 434’s.

ISSUE:

Did Customs officials properly deny NAFTA duty treatment for the merchandise?

LAW & ANALYSIS:

The requirements governing the execution and validity of NAFTA Certificates of Origin are set out in Article 501 of the NAFTA and §181.21 et seq., Customs Regulations (19 CFR 181.21-23).

Article 501 of the NAFTA provides that the exporter shall execute a Certificate of Origin for any exportation of a good for which an importer may claim preferential tariff treatment in another NAFTA country.

With respect to Certificates of Origin submitted for goods imported into the United States, §181.22(b)(2) of the Customs Regulations (19 CFR §181.22(b)(2)) states that the Certificate of Origin “(s)hall be signed by the exporter or by the exporter’s authorized agent having knowledge of the relevant facts”.

In reply to Customs’ CF 28 dated January 28, 2001, the Protestant STS on February 5, 2001 supplied a CF 434 executed by itself as exporter, and showing GAP (Canada) Ltd. as the importer. Given that the entry documents indicated Sofi Classics, S.A. as the supplier, and STS as the importer, this CF 434 was plainly invalid with respect to the January 4, 2001 importation into the U.S. from Mexico.

The protest record shows that when afforded on March 5, 2001, the opportunity to correct this first offering, the Protestant submitted a CF 434 correctly indicating Sofi Classics, SA as the exporter, but executed by the Protestant. Inasmuch as the Protestant had stated in its letter dated February 6, 2001, that it was “not related, affiliated, or associated with Sofi Classics”, Customs officials justifiably concluded that the Protestant was not an authorized agent of the exporter with knowledge of the relevant facts. A CF 434 is not valid unless executed by the exporter or the exporter’s authorized agent having knowledge of the relevant facts. 19 CFR §181.22(b)(2). The CF 29 Notice of Action denying NAFTA duty treatment stated that the importer responded to Customs’ notification that the first submission was incorrect by again submitting an invalid CF 434.

Customs’ decision to deny NAFTA duty treatment under these circumstances was in accordance with Customs Regulations. Customs provided the Protestant an opportunity to correct its defective submission as required by 19 CFR §181.22(c). That provision states that the importer shall be given not less than five working days to submit a corrected certificate. Here, the Protestant chose to submit his “correction” immediately. There is nothing in the Customs Regulations indicating entitlement to further opportunities for correction.

As to the invalidity of the second CF 434 on the basis that the Protestant was without authority or knowledge to execute, this finding is supported by the Protestant’s subsequent conduct. Instead of providing evidence that it executed the second CF 434 as an agent of Sofi Classics, S.A. which Customs could within its discretion have considered and accepted, the Protestant instead on March 15 provided CF 434’s executed by Rintex and Sofi Classics and apparently in good order. A reasonable inference is that the Protestant was not in a position to demonstrate that it was an authorized agent of Sofi Classics.

HOLDING:

This Protest should be DENIED.

In accordance with Section 3A(11)(b) of Customs Directive 099 3550-065, dated August 4, 1993, this decision and the Customs Form 19 are to be mailed to the protestant no later than sixty days from the date of this letter. Any reliquidation of the entry or entries in accordance with the decision must be accomplished prior to mailing the decision. Sixty days from the date of the decision, the Office of Regulations and Rulings will make the decision available to Customs personnel, and to the public on the Customs Home Page on the World Wide Web at www.customs.gov, by means of the Freedom of Information Act, and other methods of public distribution.

Sincerely,

Myles B. Harmon
Acting Director

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