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HQ 562466

August 5, 2002

CLA-02 RR:CR:SM 562466 EAC


TARIFF NO.: 4418.20.80

Ms. Christina Jurado
Compliance Manager
UPS Freight Services, Inc.
1515 W. 190th Street
Suite 300
Gardena, CA 90248

RE: Generalized System of Preferences (GSP); “imported directly” requirements; 19 C.F.R. §10.175

Dear Ms. Jurado:

This is in response to your letter dated July 8, 2002, on behalf of Lemieux Doors, in which you request a binding ruling regarding the eligibility of a prospective shipment of doors from Indonesia for duty-free entry into the United States under the Generalized System of Preferences (GSP).


We are informed that Lemieux Doors, a Canadian company, intends to export wooden doors to the U.S. You state that the doors are manufactured in Indonesia and are sold to Interpacific Sales Company, Inc., located in California. Upon completion of this initial sale, however, Interpacific sells the doors to their customer, Lemieux Doors, and the respective merchandise is subsequently exported from Indonesia to Canada. Upon entry into Canada, a portion of the shipment will be unloaded for immediate use by Lemieux and the remaining doors will be temporarily warehoused as inventory for sales agreements that Lemieux intends to conclude with customers in the U.S. You assert that it is Lemieux’s intention to export many of these remaining doors to the U.S. with “like goods manufactured in Canada”.

You advised by telephone that the shipping documentation, upon exportation from Indonesia, will indicate that Canada is the final destination for the shipment. As stated, supra, the doors that will presumably enter the U.S. will do so under separate agreements, not yet concluded, between Lemieux Doors and various U.S. customers.

You further advised by telephone that, upon entry into Canada, the stored doors will not be maintained in a customs bonded warehouse. Furthermore, you state that the warehoused doors will be subject to only a minimal amount of handling, to include unloading and re-packing operations.


Whether, under the circumstances described above, the shipment of wooden doors from Indonesia will be considered “imported directly” into the U.S., for purposes of determining whether the doors will be eligible for duty-free treatment under the GSP.


Under the GSP, eligible articles the growth, product or manufacture of a designated beneficiary 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 its entry into the U.S. See 19 U.S.C. §2463(a)(2)(A); section 10.176(a), Customs Regulations (19 C.F.R. §10.176(a)). It should also be noted that the GSP and NAFTA agreement are distinct programs that operate under their own respective eligibility requirements.

Indonesia is a designated BDC for purposes of the GSP. See General Note 4(a), HTSUS. You assert that the wooden doors are properly classified in subheading 4418.20.80, Harmonized Tariff Schedule of the United States (HTSUS), and for purposes of this ruling we assume that this classification is correct. Additionally, we will assume that the wooden doors are a “product of” Indonesia and that the 35 percent value-content requirement is satisfied (see 19 C.F.R. §10.176(a)).

However, production of a good in a BDC alone is not enough to confer eligibility for preferential treatment under the GSP. The goods must also be “imported directly” into the United States. The remaining issue in this case then concerns whether, in consideration of the aforementioned facts, the shipment satisfies the “imported directly” requirement upon entry into the U.S.

Section 10.175 of the Customs Regulations (19 C.F.R. §10.175), defines the “imported directly” requirement and provides, under certain limited circumstances, for the transshipment of goods through an intermediate country. Subsection 10.175(b) of the Customs Regulations (19 C.F.R. §10.175(b)), states that goods shipped from a BDC through a non-BDC to the U.S. are “imported directly” if: (1) the merchandise does not enter into the commerce of any other country while en route to the U.S., and (2) the invoices, bills of lading, and other shipping documents show the U.S. as the final destination.

You state that the shipping documentation does not show the U.S. as the final destination, therefore 19 C.F.R. §10.175(b) is not applicable. The only remaining applicable provision is 19 C.F.R. §10.175(d), which states that:

If the shipment is from any beneficiary developing country to the U.S. through the territory of any other country and the invoices and other documents do not show the U.S. as the final destination, the articles in the shipment upon arrival in the U.S. are imported directly only if they:

Remained under the control of the customs authority of the intermediate country;

Did not enter into the commerce of the intermediate country except for the purpose of sale other than at retail, and the district director is satisfied that the importation results from the original commercial transaction between the importer and the producer of the latter’s sales agent;

Were not subjected to operations other than loading and unloading, and other activities necessary to preserve the articles in good condition.

This provision was added as an amendment to the definition of the term “imported directly” to expand the definition to allow articles to qualify for GSP treatment where such articles: (1) originate in a beneficiary developing country, (2) are shipped to a developed country and auctioned there, and (3) then are shipped to the U.S. See Treasury Decision (T.D.) 83-144, dated June 28, 1983. In T.D. 83-144, Cameroon wrapper tobacco was produced in Cameroon and the Central African Republic. The Cameroon wrapper was shipped from the beneficiary countries to a French customs bonded transit warehouse in Le Havre until the sale was completed, at which time the tobacco was reloaded for shipment to its final destination. Because the purchase of the wrapper tobacco occurred after it left the beneficiary country, the bill of lading covering the first leg of the journey only indicated the intermediate destination, and did not show the U.S. as the final destination. While in the transit warehouse, the wrapper tobacco was not subjected to any processing or other operations. Customs found that the Cameroon wrapper tobacco which had been exported from the Cameroon Republic and the Central African Republic to France, sold there, and then reexported to the U.S. satisfied the GSP “imported directly” requirement, and thus, the amendment to the “imported directly” definition was created. See HRL 557921, dated July 27, 1994; HRL 557937, dated September 29, 1994; HRL 556373, dated January 17, 1992.

In HRL 560435, dated February 5, 1998, radiators were shipped from a BDC to Canada for storage and were subsequently imported into the United States. While in Canada, the radiators were stored in a customs bonded warehouse. We held that, since the radiators were stored in a Canadian bonded warehouse while they awaited shipment to the U.S., they remained under the customs authority of Canada thereby satisfying the requirements of 19 C.F.R. §10.175(d)(1).

The case under consideration can be distinguished, however, based upon your statement that the doors will not be stored in a customs bonded warehouse in Canada. In HRL 557937, two scenarios were considered. In the first, rough granite blocks were shipped from a BDC to Canada where they were stored in a private warehouse to await importation into the U.S. The shipping documentation from the first leg of the shipment did not show the U.S. as the final destination. We held that, since the shipping documentation did not indicate that the U.S. was the final destination and because the granite did not remain under the control of the customs authorities (in a customs bonded warehouse), the granite was not considered “imported directly” into the U.S. from the BDC. The second scenario was similar except for the fact that, upon importation into Canada, the granite was stored in a customs bonded warehouse, thereby remaining under the control of the customs authorities. In this instance we held that, even though the shipping documentation from the first leg of the journey did not show that the U.S. was the final destination, the granite was still considered to be “imported directly” because the shipment remained in bond under control of the Canadian customs authorities until shipment to the U.S, thereby satisfying the requirements of 19 C.F.R. §10.175(d)(1).

In the case under consideration, the doors are placed into a private Canadian warehouse to await shipment to the U.S. Therefore, the goods do not remain under control of the Canadian customs authorities and the requirements of 19 C.F.R. 10.175(d)(1) are not satisfied.

Additionally, the information provided indicates that the importation of the doors into the U.S. from Canada will not result from the original commercial transaction between the U.S. importer and the Indonesian producer (or its sales agent). Rather, it appears that the importation into the U.S. will result from a transaction between Lemieux Doors and a U.S. importer. Therefore, the requirements of 10.175(d)(2) also would not be met.


Based upon the information submitted, wooden doors shipped from Indonesia through Canada will not satisfy the requirement of being “imported directly” into the U.S. under 19 C.F.R. §10.175(b), because the shipping documentation will not show the U.S. as the final destination. Furthermore, the merchandise will not satisfy the “imported directly” requirements of 19 C.F.R. §10.175(d) because the goods will not be stored in a customs bonded warehouse in Canada, and the importation will not result from the original commercial transaction between the producer and the U.S. importer. Accordingly, the merchandise will not be eligible for preferential duty treatment under the GSP upon importation into the United States.

A copy of this ruling letter should be attached to the entry documents filed at the time this merchandise is 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.


Myles B. Harmon

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