HQ 545721: Application for Further Review of Protest No. 1101-93- 100211; MerchandiseProcessing Fee; Foreign Trade Zone; 19 USC 81c, 1484(a)(1)(A); 19 CFR 24.23, 141.4,146.43(b), 146.62, 146.63(a)

Native CBP ruling rendition. Applicability is fact-specific; modification/revocation relationships and original publisher date are retained. Publisher sentinel year0001 means unknown date, not a historical legal adoption.

                           HQ 545721

                       February 27, 1995

VAL CO:R:C:V 545721 LPF

CATEGORY: Valuation/Entry

District Director
U.S. Customs Service
2nd and Chestnut Streets
Room 102
Philadelphia, PA 19106-2999

RE:  Application for Further Review of Protest No. 1101-93-      100211; Merchandise
Processing Fee; Foreign Trade Zone; 19  USC 81c, 1484(a)(1)(A); 19 CFR 24.23, 141.4,
146.43(b),     146.62, 146.63(a)

Dear Sir:

     This is a decision on an application for further review of a protest filed April 8, 1993,
against your decision concerning the assessment of merchandise processing fees on motor
vehicles.  The entry was liquidated on February 26, 1993.  We regret the delay in responding.

FACTS:

     On March 27, 1989 motor vehicles were transferred from the foreign trade subzone (FTZ)
of Chrysler Motor Corporation, the importer, and entered for consumption.  It is our
understanding, based on worksheets included in the file, that foreign vehicle parts such as engine
assemblies, radios, starters, oxygen sensors, and alternator assemblies were admitted to the
subzone for manufacture of the vehicles.  The worksheets include values for the various parts.

     You assessed the merchandise processing fee (MPF) on the total zone value of the motor
vehicles produced in the FTZ, which included the value of domestic status merchandise and other
U.S. origin value added in the FTZ.  The protestant submits that the MPF should not be assessed
on the total zone value.

ISSUE:

     Whether it was appropriate to assess the MPF on the total zone value of the merchandise.

LAW AND ANALYSIS:

     Under the Foreign Trade Zones Act of 1934, as amended (19 U.S.C. 81c), when the
foreign vehicle parts are sent from a zone into the U.S. Customs territory, they are subject to the
laws and regulations of the U.S. affecting imported merchandise.  In this case, the laws and
regulations concerning the assessment of merchandise processing fees are at issue.

     Although the vehicles contain domestic status merchandise, because they are composed in
part of foreign status merchandise they must be entered for consumption in the Customs territory
via formal entry.  Section 484(a)(1)(A), Tariff Act of 1930, as amended (19 U.S.C.
1484(a)(1)(A)); sections 141.4, 146.62, 146.63(a), Customs Regulations (19 CFR 141.4, 146.62,
146.63(a)).
In particular, section 146.43(b), Customs Regulations (19 CFR 146.43(b)) provides that domestic
status merchandise mixed or combined with merchandise in another zone status may not be
transferred from the zone into the Customs territory without a permit.  Accordingly, the foreign
status vehicle parts combined with the domestic status merchandise would not be exempt from
formal entry.  See section 141.4, Customs Regulations (19 CFR 141.4).

     Section 24.23(b)(1)(i)(A), Customs Regulations (19 CFR 24.23(b)(1)(i)(A)) provides, in
pertinent part, that merchandise that is formally entered or released is subject to the payment of an
ad valorem fee, which shall be based on the value of the merchandise as determined under section
402 of the Tariff Act of 1930, as amended by the Trade Agreements act of 1979 (TAA), codified
at 19 U.S.C. 1401a.  Although several kinds of merchandise are exempt from the MPF, no
exemption is provided for domestic merchandise comprising articles manufactured in FTZs
containing both domestic and foreign merchandise.  Such an article entered for consumption from
an FTZ is subject to the MPF, based upon the appraised value of both the domestic and foreign
merchandise.

HOLDING:

     Because formal entry is required for the motor vehicles due to its foreign status portion,
the MPF is properly assessed on the total zone value of the merchandise.  You are directed to
deny the protest.  A copy of this decision with the Form 19 should be sent to the protestant. 


   In accordance with Section 3A(11)(b) of Customs Directive 099 3550-065, dated August 4,
1993, Subject: Revised Protest Directive, this decision should be mailed by your office 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,
the Office of Regulations and Rulings will take steps to make the decision available to Customs
personnel via the Customs Rulings Module in ACS, and to the 
public via the Diskette Subscription Service, the Freedom of Information Act and other public
access channels.

                                   Sincerely,



                                   John Durant, Director
                                   Commercial Rulings Division