Protest #2720-10-100238; ATPDEA; textiles; sufficiency of documentation

HQ H235124 August 6, 2013 OT:RR:CTF:VS H235124 KSG Port Director U.S. Customs & Border Protection 11099 S. La Cienega Blvd. Los Angeles, CA 90045 RE: Protest #2720-10-100238; ATPDEA; textiles; sufficiency of documentation Dear Director: This is in response to an Application for Further Review filed by a broker on behalf of Indigenous Designs Corp. in response to Protest #2720-10-100238 involving the eligibility of imported textiles for preferential tariff treatment under the Andean Trade Promotion and Trade Preference Act (“ATPDEA”), set forth in subheading 9821.11.25 of the Harmonized Tariff Schedule of the United States (“HTSUS”). FACTS: The Protest in question refers to an entry on January 20, 2009, for women’s cotton knit vests, cardigans, dresses and skirts, alleged to be entirely made in Peru of Peruvian cotton. The various styles of knit garments were stated to be produced by New Expo S.A.C. and Art Atlas in Peru. CBP issued a Request for Information (CBP Form 28), dated April 16, 2009, to substantiate the ATPDEA claim for the goods manufactured by Art Atlas, asking for supporting documentation such as, but not limited to, a certificate of origin, bill of materials, cost data, as well as production and manufacturing records. The protestant claims that no request for information was received for the goods produced by New Expo. The Protestant submitted various documents, which include certificates of origin, affidavits from a yarn manufacturer, purchase orders, specification style sheets for various knit dresses, coats and tops, air waybills, and several telephone and electric bills. Art Atlas provided the following documents: Certificate of origin for 806 knit garments on Art Atlas letterhead, for a shipment on December 22, 2008, listing Art Atlas as the producer and Inca Tops of Peru as the yarn producer Invoices 404 and 405 dated December 22, 2008, for cardigans, dresses, and skirts sold by Art Atlas to Indigenous Design Invoice 411 dated January 12, 2008 (probably typo), for cardigans, and vests sold by Art Atlas to Indigenous Design P.O. 321 indicating a ship date of January 12, 2009, for vests and cardigans, with Art Atlas as the vendor and Indigenous Designs as Purchaser. Attached thereto, are design detail sheets showing the design of some of the articles mentioned on the purchase order. P.O. 309 indicating a ship date of December 15, 2008, for cardigans, pullovers, tunics etc., with Art Atlas as the vendor and Indigenous Designs as Purchaser. Certificate of origin dated January 12, 2009, for 5,684 knit garments that refers to invoice 411 and purchase order 321 which states the garments are wholly manufactured in Peru Specification sheets (Ficha Tecnica) on Art Atlas letterhead for more than 20 different styles including dresses, sweaters, and coats that show the basic design of the garment, sizes ordered and detailed physical description of the garment Art Atlas submitted a document dated May 7, 2010, on its letterhead, stating that six named women worked at Art Atlas in 2008 and participated in production of purchase order 321 and attached a photograph of a group of women. Country of Origin Textile Declaration signed by the production manager of Art Atlas, declaring that the 806 articles on invoice 404 and 405 (and Purchase Order 309 and 328) were wholly manufactured by Art Atlas in Peru. Packing lists New Expo provided the following documents: Invoices 3314 and 3315 to Indigenous Designs for cardigans and dresses, indicating New Expo as the manufacturer Certificate of origin dated October 1, 2008, indicating New Expo as the exporter and producer of the various goods, and Inca Tops as the yarn producer concerning invoices 3314 and 3315. The certificate indicates the articles are hadloomed, and qualify under Preference Groups I (apparel assembled from Andean formed fabrics, fabric components, or knit-to shape components from U.S. or Andean yarns). P.O. 313 from Indigenous Design to New Expo with a ship date of January 10, 2009 for hoodys, skirts, dresses, and cardigans. Packing list Inca Tops S.A.A., asserted to be the yarn manufacturer, provided the following documents: Yarn affidavit stating that thread sold to New Expo S.A.C. is 100 percent organic. It lists various lots numbers, and is dated December 2008. Purchase orders to Art Atlas dated August 8, 2006, September 19, 2006, May 25, 2007, and July 25, 2007, for various yarns Invoices for various yarns sold to New Expo and Art Atlas Indigenous Designs also submitted many production documents, indicating Art Atlas as the supplier, of various garments. One example is of a yoga zip and indicates a drawing and the dimensions in sizes extra small through extra large. CBP issued a proposed Note of Action (CBP Form 29), dated August 11, 2009, concerning the seller, New Expo, stating that the documents submitted for the cardigan sweater, skirt, and dresses do not substantiate the claim for preferential tariff treatment under the ATPDEA. The notice indicated that additional information may be submitted within 20 days. On September 17, 2009, a Notice of Action was issued denying preferential treatment. ISSUE: Whether the documentation submitted is sufficient to support the claim for preferential tariff treatment under the ATPDEA for the various knitted garments. LAW AND ANALYSIS: The ATPDEA provides certain specified trade benefits for certain Andean countries. Beneficiary countries are designated by the President of the United States after having met the eligibility requirements of the ATPDEA. Presidential Proclamation 7616 of October 21, 2002, published in the Federal Register (67 Fed. Reg. 67284), proclaimed necessary changes to the HTSUS to implement the ATPDEA and designated Bolivia, Colombia, Ecuador and Peru as ATPDEA beneficiary countries. We note that on September 26, 2008, the U.S. suspended the designation of Bolivia as an ATPDEA beneficiary country. Peru was a designated ATPDEA country for 2008, the relevant time period. The provisions for ATPDEA goods are set forth in subheading 9821.11.25, HTSUS, and the regulations set forth at 10 CFR 10.241 through 10.248. Subheading 9821.11.25, HTSUS, provides for preferential tariff treatment for articles imported from a designated ATPDEA beneficiary country enumerated in U.S. Note 1(a) to this subchapter: Apparel articles sewn or otherwise assembled in one or more such countries from fabrics or form fabric components formed or from components knit-to-shape in one or more such countries, from yarns wholly formed in the United States or in one or more such countries (including fabrics not formed from yarns, if such fabrics are classifiable in heading 5602 or 5603 of the tariff schedule and are formed in one or more such countries); the foregoing apparel articles imported under the terms of U.S. Note 3(d) and U.S. Note 3(e) to this subchapter. CBP issued TBT-02-035, dated November 8, 2002, titled “Implementation Information for the Andean Trade Promotion and Drug Eradication Act (ATPDEA) for Textile and Apparel Products.” In this document , CBP stated the following: A verification of a claim for preferential tariff treatment may involve, but need not be limited to, a review of: All records required to be made, kept, and made available to Customs by the importer or any other person under 19 CFR 163; Documentation and other information in a beneficiary ATPDEA country regarding the country of origin of an article and its constituent materials, including, but not limited to, production records, information relating to the place of production, the number and identification of the types of machinery used in the production, and the number of workers employed in production; and Evidence to document the use of U.S. or ATPDEA beneficiary country materials in the production of the article in question, such as purchase orders, invoices, bills of lading and other shipping documents, and customs import and clearance documents. Failure to provide either the Certificate of Origin or the requested documentation will result in the denial of the claim. The Port initiated a verification of the entry in this case. The importer claims that the garments were wholly produced in Peru. As set forth in the facts, the imported submitted affidavits, specification sheets, purchase orders and invoices in response to the CBP Form 28 from both the asserted manufacturers of the garments and the asserted yarn producer. However, the importer failed to provide production records that show that the yarn and the garments were wholly produced in Peru. The only production evidence submitted, the affidavit signed by various women and a document asserting production of styles under Purchase Order 309 for 73 garments bearing the names of various men, are not persuasive evidence. CBP would look to production and manufacturing records created at the time of production by the manufacturer in the ordinary course of business to establish that production occurred in Peru that would include documents listed in TBT-02-035 related to the place of production, the machinery used, and the number of workers employed in production. Although these records were requested in the CBP Form 28, no such records were submitted in this case. Accordingly, we find that the Port acted reasonably in denying preferential tariff treatment for this case. The Protest is hereby denied. HOLDING: The protest in this case is denied. In accordance with Sections IV and VI of the CBP Protest/Petition Processing Handbook (HB 3500-08A, December 2007, pp. 24 and 26), 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 in accordance with the decision must be accomplished prior to mailing of the decision. Sixty days from the date of the decision Regulations and Rulings of the Office of International Trade will make the decision available to CBP personnel, and to the public on the CBP Home page on the World Wide Web at www.cbp.gov, by means of the Freedom of Information Act, and other methods of public distribution. Sincerely, Myles B. Harmon, Director Commercial & Trade Facilitation Division