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HQ 562913

January 28, 2004

MAR-2 RR:CR:SM 562913 KSG


Port Director
Bureau of Customs and Border Protection
Protest and Control Section
1100 Raymond Boulevard, Suite 402
Newark, New Jersey 07102

RE: Application for Further Review of Protest No. 4601-03-102368

Dear Director:

This is in reference to a Protest and Application for Further Review filed by Leschaco, Inc., on behalf of Helm U.S. Chemical Corporation, contesting the denial of preferential tariff treatment under the Generalized System of Preferences ("GSP") for imported nonylphenol ethoxylate 9 mol.


The importer states that the imported product is classified in subheading 3402.13.5000 of the Harmonized Tariff System of the United States ("HTSUS") and that the country of origin is Russia. In support of its claim for GSP, the importer submitted the following documents: 1) the ocean bill of lading indicating shipment from Antwerp, Belgium to New York; 2) a certificate of origin issued by a Chamber of Commerce in Hamburg, Germany; 3) a commercial invoice issued by Helm's German office and 4) and a letter from Helm U.S. stating that the goods were of Russian origin and were stored in Antwerp prior to shipment to the U.S.

At issue in this case is the payment of $19,790.23 in duties.


Congress enacted the GSP program to extend preferential tariff treatment to the exports of less-developed countries to encourage economic diversification and export development within the developing world. SDI Technologies Inc. v. United States, 977 F. Supp. 1235 (CIT 1997), quoting S. Rep. No. 93-1298, (1974). 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. 2463(a).

General Note 3(c)(i), HTSUS, provides, in part, that special tariff treatment under the GSP is indicated in the “Special” subcolumn in the tariff by the symbols “A”, “A*,” or “A+”. It is assumed for the purposes of this decision that the imported product is classified in subheading 3402.13.5000, HTSUS. This tariff provision is GSP-eligible. Under General Note 4(a), HTSUS, Russia is designated as a beneficiary developing country for GSP purposes.

The issue involved in this case is whether the importer has submitted sufficient documentation to support its contention that the product satisfies the "imported directly" requirement set forth in the GSP. The “imported directly” requirement is defined in 19 CFR 10.175, in pertinent part, as follows:

(a) Direct shipment from the beneficiary country to the U.S. without passing through the territory of any other country; or

(b) If the shipment is from a beneficiary developing country to the U.S. through the territory of any other country, the merchandise in the shipment 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; or

(c) If shipped from the beneficiary developing country to the U.S. through a free trade zone in a beneficiary developing country, the merchandise shall not enter into the commerce of the country maintaining the free trade zone, and

(1) the eligible articles must not undergo any operation other than:

(i) sorting, grading, or testing,
(ii) packing, unpacking, changes of packing, decanting or repacking into other containers, (iii) affixing marks, labels, or other like distinguishing signs on articles or their packing, if incidental to operations allowed under this section, or (iv) operations necessary to ensure the preservation of merchandise in its condition as introduced into the free trade zone.

(d) 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:

(1) remained under the control of the customs authority of the intermediate country; (2) did not enter into the commerce of the intermediate country except for the purpose of sale other than at retail, and the port director is satisfied that the importation results from the original commercial transaction between the importer and the producer or the latter’s sales agent; and (3) were not subjected to operations other than loading and unloading, and other activities necessary to preserve the articles in good condition;

Since the imported product in this case was not shipped directly from Russia to the U.S., it does not meet the “imported directly” requirement set forth in 19 CFR 10.175(a).

In Headquarters Ruling Letter ("HRL") 560720, dated February 11, 1998, Customs considered the issue of whether certain rifle scopes were eligible for duty-free treatment under the GSP. The imported rifle scopes originated in the Philippines, Thailand, and other countries and were stored in a warehouse in an intermediary country such as Japan, where they were not sold. The invoices, shipping documents and bill of lading showed the U.S. as the final destination for the merchandise. Customs stated that the purpose of the requirements of 19 CFR 10.175(b) is "both to establish a connection between the imported merchandise and its country of origin and show that the passage of the merchandise through the intermediary country involved a mere transshipment rather than entry into the commerce of the intermediary country." Customs ruled in HRL 560720 that the rifle scopes satisfied the "imported directly" requirement.

With respect to the applicability of 19 CFR 10.175(b), the protestant has not submitted shipping documents from Russia that establish the U.S. as the final destination. Therefore, the imported product does not satisfy the “imported directly” requirements of 19 CFR 10.175(b).

The protestant did not assert that the product was stored in a free trade zone and has not submitted any supporting documentation that would be necessary to support such an assertion. Therefore, the “imported directly” requirement set forth in 19 CFR 10.175(c) also are not met.

The only remaining provision under which the imported product in this case may be considered “imported directly” is 19 CFR 10.175(d). This provision was added by Customs in 1983 in Treasury Decision (“T.D.”) 83-144, dated June 28, 1983, in order to expand the definition of “imported directly” to encompass the traditional marketing procedure established for “Cameroon wrapper tobacco,” although there was no intent to limit 19 CFR 10.175(d) to that scenario. The traditional marketing procedure for Cameroon wrapper tobacco is that the wrapper paper is grown in the United Cameroon Republic and the Central African Republic and then the entire production of this product (which is used for cigar wrappers) is shipped to France, where it is stored in bonded warehouses and then sold at auction. The wrapper tobacco is not processed in France except for fumigation and preparation for shipment. The wrapper tobacco does not enter the commerce of France except for the sale at auction. Customs noted that it believed that this amendment was ”consistent with the fundamental intent of the GSP to extend direct preferential tariff treatment to the exports of BDC’s to encourage economic diversification and export development within those countries.” See 48 Fed. Reg. 15153, dated April 7, 1983.

In HRL 555039, dated June 16, 1989, Customs held that electronic component parts from Malaysia shipped to a free trade zone in a non-BDC met the “imported directly” requirement set forth at 19 CFR 10.175(d). Customs concluded that goods entered into a free trade zone are considered under the control of the customs authority of the non-BDC country because by definition, a free trade zone is secured by or under governmental authority. See 19 CFR 10.175(c)(3).

In HRL 559621, dated March 18, 1997, magnesium was shipped from Russia to a warehouse in Rotterdam by an independent intermediate buyer not acting as an agent of the Russian producer. Customs held in that case that the magnesium was not “imported directly” pursuant to 19 CFR 10.175(d). Similarly, in the instant case, the protestant has not shown that the original commercial transaction was between the importer and the Russian producer or an agent of the Russian producer. Based on the above, we find that the importer has not shown that the imported good qualifies for preferential tariff treatment under the GSP.


Based on the facts presented above, the protest should be denied in full.

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 the Customs Form 19, to the protestant no later than 60 days from the date of this letter. Any reliquidation of the entry or entries in accordance with the decision should be accomplished prior to mailing of this decision. Sixty days from the date of this 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.


Myles B. Harmon, Director
Commercial Rulings Division

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