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HQ 229424

February 20, 2003


Port Director
US Customs Service
198 West Service Road
Champlain, NY 12919

RE: Protest # 0712-01-100198; 19 U.S.C. 58c; Certificate of Origin; Subheading 0506.90.00; 19 CFR 181.22;

Dear Sir:

This is in reference to Protest # 0712-01-100198 filed by Excel Corporation ("Excel") on May 15, 2001 involving a total of 42 entries. Our analysis pertains specifically to entry # 144-9186524-3 (entry date February 16, 2001), however, the issue relates equally to all the entries involved in this protest. The protestant claims that Customs erroneously disallowed the Merchandise Processing Fee exemption under 19 U.S.C. 58c(b)(10)(b). Our review and decision follows.


Between the period of April 17, 2000 through December 21, 2000, Excel Corporation imported "Bulk Beef Bone Chips - Degreased" classified under subheading CA 0506.90.0020, HTSUS. Upon importation, Excel claimed NAFTA preference. Subheading 0506.90.0020 carries a "free" Normal Trade Relations ("NTR") duty rate. No NAFTA preferential tariff rate applied to this provision. At the time of importation, the NAFTA preference was indicated in order to claim the MPF exemption under 19 USC 58c(b)(10)(b). The CF7501 for entry # 144-9186524-3 described line #1 as "Bone Crude, Steamed or Ground, CA 0506.90.0020.

The CF 434 submitted covered the blanket period of January 01, 2000 through December 31, 2000. The list of products covered by the blanket certificate included the following 17 items: Fresh Bone-in Beef, Frozen Bone-in Beef, Fresh Boneless Beef, Frozen Boneless Beef, Fresh Beef Offal, Frozen Beef Tongues, Frozen Beef Livers, Frozen Beef Offal, Beef Tallow, Blood Meal, Beef Meat & Bone Meal, Bile Glands & Pancreas, etc, Beef Marrow Bones, Cattle Hides, Bone Meal, Slunk Skin Hides, Cattle Live. The CF434 did not include the item specified as "Bone Crude Steamed or Ground" in the CF7501.

On December 14, 2000 the Port issued a CF28- Request for Information notifying the importer that, as a result of a review conducted under the U.S. Customs Stratified Compliance Program, certain discrepancies had been discovered on the subject entry. Among the discrepancies, the Port stated, that for another entry (# 144-9171489-6), the description of the product in the CF 434 was "Bone Meal". In an effort to clarify the description of the product and ascertain the appropriate classification, the Port requested Excel to provide documents describing the merchandise such as purchase orders, invoices, etc. The Port requested information to ascertain whether "Bone Meal" and "Bulk Beef Bone Chips" constituted the same article. Specifically, the port noted:

"4. We also note that the CF434 you previously submitted for entry # 144-9171489-6 includes "Bone Meal", HTS 0506.90, but does not specifically list "Bulk Beef Bone Chips- -Degreased (Copy is attached) Are these the same items? Please explain.

On January 8, 2001, the broker responded that the "Bulk Beef Bone Chips - Degreased" had been "added to our CF 434 because it differs from Bone Meal". Excel submitted an amended CF 434 by adding "Bulk Beef Bone Chips", 0506.90, HTSUS with a country of origin "CA" as Canada. In response to the Port's question concerning the difference between the two products, Excel included a letter dated December 19, 2000 from Cargill Foods, High River, Alberta CA. It stated that the "bulk beef bone chips" were used for the "film processing industry" while the "bone meal" was used as a "feed supplement".

On January 31, 2001, the Port issued a CF-29 Notice of Action notifying the importer that the subject entry would be rate advanced, as a result of the findings made in the review under the Stratified Compliance Program. The discrepancy specifically relating to this protest was described as follows:

"Although you claimed NAFTA preference for this merchandise, the CF 434 "Certificate of Origin" did not include this merchandise ("Bulk Beef Bone Chips Degreased") at the time the NAFTA claim was made. Therefore, your NAFTA claim is denied. Payment of the merchandise processing fee (MPF) is required. Action on other entries imported during the period January 1, 2000 to December 31, 2000 will be forthcoming".

On April 3, 2001, the Port issued a CF 29 Notice of Action notifying the importer that the listed 41 entries (in addition to the entry described above) had been rate advanced to include the MPF because the corresponding CF434 "Certificate of Origin" that were initially submitted at the time of entry had failed to include "Bulk Beef Bone Chips" - Degreased".

It was the Port's position that since the claim for NAFTA preference was not lawfully made in accordance to the applicable regulations, the goods were not considered NAFTA "originating goods" and as such, the exemption provided under 19 U.S.C. 58 c(a)9(A) and 58c(b)(10)(B) was inapplicable.

On May 15, 2001, Excel Corporation submitted the subject protest against Customs' liquidation of these entries. Along with the protest, the protestant submitted a "Manufacturer's Affidavit" dated April 26, 2000 from Cargill Limited d/b/a Cargill Foods, the Canadian manufacturer of the "Bulk Beef Bone Chips - Degreased". It certified that the imported merchandise was entirely produced in High River, Alberta, Canada, made solely on cattle born and raised in Canada or the USA.


1) Whether Customs improperly denied Excel's claims for NAFTA preference which resulted in the rate advance of the subject entries to include the MPF, an exemption which is applicable to goods originating in Canada as provided by the North American Trade Agreement?

Law & Analysis:

Initially we note that the subject protest was timely submitted under the provisions of Title 19 U.S.C. 1514(a)(5) which pertains the "liquidation or reliquidation of an entry, reconciliation as to the issues contained therein or any modification thereof". The liquidation on these entries occurred on April 20, 2001. The protest was filed by Excel Corporation on May 15, 2001, thus filed timely in accordance to 19 U.S.C. 1514(c)(3). The request for further review is also granted.

Title 19 U.S.C. 58c(b)(10)(B) provides that for goods qualifying under the rules of origin set out in section 3332 of Title 19, the fee under subsection (a)(9) or (10) may not be charged with respect to goods that qualify to be marked as goods of Canada pursuant to Annex 311 of the North American Free Trade Agreement (for such time as Canada remains a NAFTA country). If the goods do not qualify for the exemption, subsection (a)(9) applies to the processing of merchandise that is formally entered or released during any fiscal year. It indicates, among other things, a fee in an amount equal to 0.21 percent ad valorem, applies unless adjusted. Subsection (10) would not apply to this case since it involves the processing of merchandise that is informally entered. According to section 58c(b)(10)(B), in order to qualify for the exemption, the claimant must first establish that the goods are entitled to preference under General Note 12(a), HTSUS, (19 U.S.C. 1202).

Concerning the submission of a certificate of origin, the relevant regulation is set forth in 19 C.F.R. 181.22(c) in pertinent part:

(a) Acceptance of Certificate: A Certificate of Origin shall be accepted by the port director as valid for the purpose set forth in 181.11(a) of this part, provided that the Certificate is completed, signed and dated in accordance with the requirements of paragraph (b) of this section. If the port director determines that a certificate is illegible or defective or has not been completed in accordance with paragraph (b) of this section, the importer shall be given a period of not less that five working days to submit a corrected Certificate. Acceptance of a Certificate will result in the granting of preferential tariff treatment to the imported good unless, in connection with an origin verification initiated under subpart G of this part or based on a pattern of conduct within the meaning of (19 C.F.R.) 181.76(c) of this part, the port director determines that the imported good does not qualify as an originating good or should not be accorded such treatment for any other reason as specifically provided for elsewhere in this part...
The issue is whether the port correctly rate advanced the 42 entries to include the Merchandise Processing Fee after it determined that the importer had failed to include "Bulk Beef Bone Chips" (classified under 0506.90.0020) in the CF434. The Port's position was that, because the merchandise was not initially included on the CF434 at the time the NAFTA preference was made, the Special Program Indicator (SPI) code "CA" was improperly cited in the CF7501 and the MPF exemption was not appropriate. On January 8, 2001, in response to the Customs inquiry, a certificate dated December 28, 1999, listing the bone chips, was provided. The submission of the amended CF 434 did include the correct description for the product.

We find that the language of 19 C.F.R. 181.22(c) expressly allows for the acceptance of a certificate that complies with 19 C.F.R. 181.22(b). As such, we have determined to allow the amendment based upon the fact that "bulk beef bone chips" and "bone meal" are similar products, both derived from cattle bones and classified within the same six-digit category, subheading 0506.90., HTSUS. The "bulk beef bone chips" and bone meal" are both described on tariff 0506.90.0020 as "bones, crude , steamed or ground", and are consistent with the instructions on filling out the Certificate of Origin for block 5 (a full description of each good) and 6 (identify the H.S. tariff classification to six digits) of the Customs Form 434, NAFTA Certificate of Origin. As described by the importer, the difference between the two products stems from the fact that these serve two different commercial purposes. "Bone meal" is "primarily used as a feed supplement" whereas the "bulk beef bone chips" is used for the "film processing industry in the form of gelatine extraction". Upon review of the documents submitted by the importer, including the manufacturer's affidavit, there is proof of entitlement to the exemption by demonstrating, with sufficient evidence, the Canadian origin of the goods.


The protest is to be granted.

In accordance with Section 3A(11)(b) of Customs Directive 099 3550-065, dated August 4, 1993, Subject: Revised Protest Directive, you are to mail this decision, together with Customs Form 19 to the protestant no later than sixty (60) days from the date of this letter. Any reliquidation of the entry or entries in accordance with this decision must be accomplished prior to mailing of the decision. Sixty (60) days from the date of the decision the Office of Regulations and Rulings will make this decision available to Customs personnel and to the public on the Customs Home Page on the World Wide Web at www.customs.ustreas.gov, the Freedom of Information Act and other public access channels.

Myles Harmon, Director
Commercial Rulings Division


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