Haitian Hemispheric Opportunity through Partnership Encouragement Act of 2006; imported directly requirement

HQ H011947 July 31, 2007 CLA-2 OT: RR: CTF: VS H011947 KSG CATEGORY: Classification Larry Ordet, Esq. Sandler, Travis & Rosenberg, P.A. The Waterford 5200 Blue Lagoon Drive Miami, Florida 33126-2022 RE: Haitian Hemispheric Opportunity through Partnership Encouragement Act of 2006; imported directly requirement Dear Mr. Ordet: This is in response to your letter of May 17, 2007, on behalf of Group IVI and your electronic ruling request dated June 13, 2007, requesting a binding ruling limited to the issue of whether certain wearing apparel assembled in Haiti for preferential tariff treatment under the Caribbean Basin Economic Recovery Act ("CBERA") satisfies the "imported directly'' requirement. At the request of counsel, a telephone conference was held on this matter at Headquarters. FACTS: You propose that garments would be assembled in Haiti from fabric formed in the Dominican Republic. In the first scenario, the garments would be shipped back to a bonded facility in the Dominican Republic after assembly in Haiti. In the Dominican Republic, the garments would be washed, dried, inspected, marked with hang tags/price tickets and packed and then shipped to the U.S. In the second scenario, you propose that after the garments are washed, dried, inspected and marked with hang tags/price tickets and packed in the Dominican Republic, the garments are shipped back to Haiti. In Haiti, one to five units out of a lot of 500 garments would be opened and inspected. If there are no problems with the units inspected, the lot of 500 would be shipped directly to the U.S. If there are any problems, at least 5 garments from the larger lot will be randomly selected for review. Depending on the results of this review, some or all of the remaining lot may be inspected, some or all of the lot may be repaired/altered/repacked in Haiti or returned to the Dominican Republic for repair/alteration/repacking. If the goods are returned to the Dominican Republic, the goods will be returned to Haiti for final inspection before being shipped directly to the U.S. ISSUE: Whether the wearing apparel, manufactured as described above in scenarios one and two, satisfy the "imported directly" requirement under the CBERA. LAW AND ANALYSIS: The Haitian Hemispheric Opportunity through Partnership Encouragement Act of 2006 ("HOPE"), Pub. L. 109-432, signed December 20, 2006, amended the CBERA to add a section called "Special Rules for Haiti." Section 213A(b) of the Special Rules for Haiti states that certain apparel articles that are "imported directly from Haiti" shall enter the United States free of duty during an applicable 1-year period, subject to limitations set forth in paragraphs (2) and (3), if Haiti has met the requirements of subsections (d) and (e). The "imported directly" requireme11t for CBERA is governed by 19 CFR 10.193, which states that ...the words "imported directly" mean: Direct shipment from any beneficiary country to the U.S. without passing through the territory of any non-beneficiary country; or If the shipment is from any beneficiary country to the U.S. through the territory of any non-beneficiary country, the articles in the shipment do not enter into the commerce of any non-beneficiary country while en route to the United States and the invoices, bills of lading, and other shipping documents show the U.S. as the final destination; or (c) If the shipment is from any beneficiary country to the U.S. through the territory of any non-beneficiary 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 producer'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. In the first scenario, the wearing apparel is shipped to the Dominican Republic, where it is washed, dried, inspected, marked with hang tags/price tickets and packed and then shipped to the U.S. Counsel argues that a lenient approach in the interpretation of the phrase 'imported directly from Haiti' is appropriate. CBP has consistently held in the context of various programs requiring goods to be "imported directly", that any operations other than loading and unloading and preservation of the articles-in good condition are not allowed in an intermediate country. There is no statutory language to suggest that any deviation from CBP's position regarding the definition of "imported directly" is appropriate in this context. Accordingly, we find that under scenario one, the goods would not satisfy the "imported directly" requirement. Pursuant to Headquarters Ruling Letter ("HRL") 557149, dated November 22, 1993, and HRL 560250, dated April 10, 1997, CBP stated that wearing apparel assembled in Israel and then sent to an intermediate country for manipulation satisfied the "imported directly" requirement if they were subsequently entered into the commerce of Israel, manipulated in Israel by undergoing final inspection and packaging, and then shipped directly to the U.S. The definition of "imported directly" under the U.S.­ Israel Free Trade Agreement is virtually the same as the definition set forth in CBERA. Consistent with our holding in HRL 560250, we find that scenario two would satisfy the "imported directly" requirement set forth in the Special Rules for Haiti under the CBERA. HOLDING: The wearing apparel, manufactured as described in scenario one is not eligible for preferential tariff treatment under the Special Rules of Haiti under the CBERA because the "imported directly" requirement is not met. The wearing apparel manufactured as described in scenario two satisfies the "imported directly" requirement set forth in the Special Rules for Haiti under the CBERA. 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. Sincerely, Monika R. Brenner, Chief, Valuation & Special Programs Branch cc: NIS Kenneth Reidlinger