HQ H013199

March 20, 2008

CLA-2 OT:RR:CTF:TCM H013199 KSH

CATEGORY: Classification

TARIFF NO.: 6201.92.2051; 6201.93.3511; 6201.93.2020; 6202.93.5011;
6202.92.2061; 6204.63.1510; 6211.43.0010; 6201.92.2029

Port Director

U.S. Customs and Border Protection

P.O. Box 3130

Laredo, TX 78044-3130

RE: Application for Further Review of Protest 2304-06-100093

Dear Port Director:\
\
This is in reply to your correspondence dated June 18, 2007, forwarding
the Application for Further Review of Protest (AFR) 2304-06-100093,
filed by

Rode & Qualey on behalf of its client, A.R.B., Inc. The protest is
against Customs and Border Protection's (CBP) denial of preferential
tariff treatment under the North American Free Trade Agreement (NAFTA)
for five entries of men's and women's jackets, vests, coveralls,
overalls and hoods. In addition to the arguments and documentation
presented with the protest, we have given consideration to additional
submissions dated Match 7, 2007 and March 30, 2007.

FACTS:

Between August 1, 2005 and September 28, 2005, protestant entered the
subject merchandise in headings 6201, 6202, 6203 and 6217 of the
Harmonized Tariff Schedule of the United States ( HTSUS)[^1]. The
entries claimed duty free treatment under the NAFTA as Mexican
originating merchandise. On May 4, 2006, CBP issued a CBP Form 28,
"Request for Information", and a CBP Form 446, "NAFTA Verification
Questionnaire", to the Mexican exporter named in the Country of Origin
Certificate. Based on exporter's failure to respond, on June 7, 2006,
CBP issued a proposed "Notice of Action", CBP Form 29, to both the
exporter and the protestant. The proposed Notice of Action advised that
preferential treatment would be denied for the merchandise due to a lack
of sufficient information to complete the verification of the
merchandise's origin pursuant to 19 CFR 181.72 of the CBP Regulations.
The notice further advised that the "documentation provided was
insufficient and irreconcilable" and "production records (cutting/sewing
tickets) were not provided, export documents were illegible, and no
documents to substantiate the fabric/yarn were originating were
provided." On June 22, 2006, the protestant submitted documentation in
response to the proposed Notice of Action. On July 12, 2006, CBP issued
a final Notice of Action to both the protestant and the exporter denying
preferential treatment. The notice stated the country of origin
"verification revealed that the goods do not qualify for preferential
treatment pursuant to General Note 12(ii & t), HTSUS\[,\] specifically,
\[ \], because no response was provided by the exporter after various
attempts were made by this office to communicate with them (via phone,
fax and registered mail)." The entries were liquidated on September 1,
2006, as NAFTA ineligible and subject to duties. On December 13, 2006,
protestant filed a protest and application for further review. The
protest was timely filed. On March 27, 2007, protestant's AFR request
and protest were denied. On April 18, 2007, protestant filed a request
to set aside the denial of further review and void denial of the protest
pursuant to 19 U.S.C. 1515(c). On May 1, 2007, CBP granted protestant's
request.

The merchandise at issue consists of twelve styles of men's, women's and
unisex jackets, vests, coveralls, overalls and hoods. Style WT34NVB/3400
is a men's 100% cotton jacket. Style WT32NVB/3200 is a men's 100% cotton
jacket. Style Q435NVB/4351 is a men's 3-in-1 jacket composed of 65%
polyester and 35% cotton. Style WT35NVB/3500 is a women's jacket
composed of 65% polyester and 35% cotton. Style WT62NVB/6200 is a
women's 100% cotton jacket. Style TA 3001 is a 100% nylon unisex jacket.
Style WT84NVB/8400 are unisex overalls composed of 65% polyester and 35%
cotton. Style WT80NVB/8000 are unisex coveralls composed of 65%
polyester and 35% cotton. Style WT77NVB/7700 is a hood composed of 65%
polyester and 35% cotton. Style WT70NVB/7000 is a 100% cotton hood.
Style WT33NVB/3300 is a 100% cotton men's vest. Style WT94NVB/9400 is a
100% cotton women's vest.

The merchandise was manufactured by Multiconfecciones de Jalapa and
Industria Maquiladora de los Tuxtlas S.A. de C.V. However, the garments
were exported by Industrias Casa Blanca de Tehuacan SA. The NAFTA
certificates stated that the exporter is the producer. However, the
protest indicates that Multiconfecciones de Jalapa and Industria
Maquiladora de los Tuxtlas S.A. de C.V were the producers. Though
protestant states Multiconfecciones de Jalapa is related to Industrias
Casa Blanca de Tehuacan SA, there is no evidence that Industria
Maquiladora de los Tuxtlas S.A. de C.V is related to any company.

ISSUE:

Whether the merchandise qualifies for NAFTA preferential duty treatment.

LAW AND ANALYSIS:

Article 401 of the NAFTA provides, in relevant part, that a good shall
originate in the territory of a Party where:

\* \* \* \*

> \(b\) each of the non-originating goods used in the production of the
> good undergoes an applicable change in tariff classification set out
> in Annex 401 as a result of production occurring entirely in the
> territory of one or more of the Parties, or the good otherwise
> satisfies the requirements of that Annex where no change in tariff
> classification is required\...\
> \
> General Note 12, HTSUS, incorporates Article 401 of NAFTA into the
> HTSUS.

General Note 12(b) provides, in pertinent part:

For the purposes of this note, goods imported into the customs territory
of the

> United States are eligible for the tariff treatment and quantitative
> limitations set forth in the tariff schedule as "[goods originating in
> the territory of a NAFTA party"]{.underline} only if---
>
> \(i\) they are goods wholly obtained or produced entirely in the
> territory of Canada, Mexico and/or the United States; or
>
> \(ii\) they have been transformed in the territory of Canada, Mexico
> and/or the United States so that---
>
> \(A\) except as provided in subdivision (f) of this note, each of the
> non-originating materials used in the production of such goods
> undergoes a change in tariff classification described in subdivisions
> (r), (s) and (t) of this note or the rules set forth therein, or
>
> \(B\) the goods otherwise satisfy the applicable requirements of
> subdivisions (r), (s) and (t) where no change in tariff classification
> is required, and the goods satisfy all other requirements of this
> note; or
>
> \(iii\) they are goods produced entirely in the territory of Canada,
> Mexico and/or the United States exclusively from originating
> materials.
>
> We note that the goods are classified in Chapter 62, HTSUS[^2].
> Protestant

claimed NAFTA preferential treatment in its certificate of origin
pursuant to Note 12(b)(ii) and Note 12(t). Note 12(t) for chapter 62,
HTSUS, requires a change to the relevant subheadings in Chapter 62,
HTSUS, from any other chapter, except from headings 5106 through 5113,
5204 through 5212, 5307 through 5308 or 5310 through 5311, chapter 54,
or headings 5508 through 5516, 5801 through 5802 or 6001 through 6006,
[provided]{.underline} that the good is both cut and sewn or otherwise
assembled in the territory of one or more of the NAFTA parties, and
where applicable, the visible lining satisfies the tariff change
requirements provided in chapter rule 1 for chapter 62.

> Protestant argues that the statutes and regulations do not require
> cutting and

sewing records as the only documents to support a NAFTA claim and it is
the totality of the evidence that must be considered. Although the
exporter named in the Certificate of Origin was not the manufacturer of
the garments, protestant states that the protestant contracted with the
two manufacturers to manufacture the garments and the exporter prepared
the Certificate of Origin because the manufacturers did not have export
licenses. Protestant further adds that the manufacturers and only in one
case the exporter were either partners or related companies. In support
of its NAFTA claim, protestant has submitted numerous documents
including affidavits, contracts, invoices, purchase orders, bills of
lading, employee payment records and certificates of origin. Cutting and
sewing records could not be obtained from the manufacturers as they are
no longer operating.

The merchandise was not manufactured by the exporter as shown in the
submitted Certificate of Origin. As such, the Certificate of Origin is
invalid. The submitted evidence does not show that the exporter named in
the Certificate of Origin and the manufacturers are related companies or
that they had an agreement to manufacture the merchandise. Because the
protestant has not submitted a corrected Certificate of Origin as
required in the regulations, CBP correctly denied preferential treatment
under NAFTA for the protestant's merchandise. We note that 19 CFR 181.23
provides that if the importer fails to submit a corrected Certificate of
Origin, the port director may deny preferential tariff treatment for the
imported good.

Moreover, assuming *arguendo* that the evidence regarding payments to
employees indicates that they may have sewn the goods in Mexico, one
cannot assume that the employees cut the fabric as well.

Furthermore, pursuant to Section 181.72, CBP is authorized to initiate a
verification process to determine whether the imported merchandise
qualifies as an originating good under NAFTA as stated in the
Certificate of Origin. Under section 181.71, CBP Regulations (19 CFR
181.71), CBP can deny a NAFTA claim only upon a determination following
an origin verification, except in certain specified cases. The
verification process under NAFTA is directed specifically at the
exporter or producer in Canada or Mexico. See 19 CFR 181.72(a). In the
verification process, if the exporter or producer that receives a
request for information from CBP does not respond within thirty days of
the initial request for information, CBP may then consider the goods not
to originate in a NAFTA country and may deny preferential treatment for
the goods. (19 CFR 181.72(d)). An importer has the right to protest the
chargeable rate of duty and thus submit additional documentation in
support of the protest. (19 CFR Part 174).

In the instant protest, protestant submitted a blanket Certificate of
Origin showing that the exporter and the producer in Mexico were the
same party and claiming that the goods were Mexican originating. CBP
Forms 28 and 446 were issued to the exporter pursuant to 19 CFR 181.71
requesting evidence that the merchandise had been cut and sewn or
otherwise assembled in Mexico as claimed in the Certificate of Origin. A
proposed Notice of Action was issued when the exporter failed to respond
to the CBP Form 28 and 446. In response to the proposed Notice of
Action, protestant submitted various documents including the Certificate
of Origin from the Mexican exporter, contracts for production of the
merchandise in Mexico, documents certifying the country of origin of the
fabric used in the manufacture of the merchandise and transportation
documents. However, protestant did not produce the cutting and sewing
records from the manufacturer as requested. While the regulations do not
mention cutting and sewing records, they likewise do not identify what
information should be considered relevant to an origin determination.

Nevertheless, CBP not only requested the cutting and sewing records but
also other documentation such as transportation and receiving records,
time cards and internal production orders. Only after taking into
consideration all of the evidence submitted by the protestant, which did
not show that the exporter manufactured the subject merchandise as
claimed in the Certificate of Origin, did CBP consider the lack of
cutting and sewing records insufficient. The lack of cutting and sewing
records in addition to the admission that the two other manufacturers
were the actual producers of the merchandise led the Port to reasonably
conclude in the Final Notice that the evidence was invalid, insufficient
and conflicting. The totality of the evidence indicates that the
merchandise was not manufactured by the exporter as indicated in the
Certificate of Origin. Inasmuch as the Certificate of Origin did not
correctly identify the manufacturer of the merchandise and because the
NAFTA claim made for the entries could not be verified as provided for
in the regulations, the merchandise is ineligible for NAFTA preferential
treatment.

HOLDING:

Pursuant to 19 CFR Part 181, the merchandise is not eligible for NAFTA
preferential treatment because the blanket Certificate of Origin
accompanying the entries was not correct and the verification conducted
by CBP did not show that the merchandise was manufactured by the
exporter as claimed in the Certificate of Origin.

The protest should be DENIED. In accordance with the Protest/Petition
Processing Handbook, (CIS HB, June 2002, pp 18 and 21), you are to mail
this decision, together with the CBP 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. No later than
sixty days from the date of this letter, 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 by other
methods of public distribution.

> Sincerely,
>
> Myles B. Harmon, Director
>
> Commercial and Trade Facilitation Division

[^1]: We note that the entry summaries indicate classification in
    headings 6201, HTSUS, 6202, HTSUS, 6203, HTSUS, and 6217, HTSUS.
    However, in protestant's application for further review, protestant
    now states that the merchandise is classified in headings 6201,
    HTSUS, 6202, HTSUS, 6204, HTSUS, 6211, HTSUS and 6505, HTSUS.
    Moreover, protestant entered some of the merchandise subject to the
    protest in subheadings 6201.92.1000, HTSUS, 6201.93.1000, HTSUS and
    6202.93.1000, HTSUS, under the provisions for down garments.
    Protestant claims that this merchandise was erroneously classified
    based on errors in identifying the fiber content. Accordingly,
    protestant has submitted a revised list of the entries with new
    proposed classifications.

[^2]: Our analysis will proceed under Chapter 62, HTSUS, inasmuch as it
    is the Chapter under which the merchandise was entered. We are
    cognizant, however that protestant now claims that some of the
    merchandise is classified in Chapter 65, HTSUS, as well.