HQ 556638: Application for Further Review of Protest No. 4909-91- 100154; 807.00, TSUS; footwear uppers of leather; 19 CFR 10.24(a); 19 CFR 10.24(e); transaction value; computed value

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 556638

                           February 3, 1993

CLA-2 COR:C:S 556638 BLS

CATEGORY: Classification

TARIFF NO: Item 807.00, TSUS

District Director of Customs
La Puntilla #1
Old San Juan, Puerto Rico 00903

RE:  Application for Further Review of Protest No. 4909-91-
     100154; 807.00, TSUS; footwear uppers of leather;
     19 CFR 10.24(a); 19 CFR 10.24(e); transaction value; computed
     value

Dear Sir:

     The above-referenced protest concerns the eligibility of
footwear uppers for the partial duty exemption under item 807.00,
Tariff Schedule of the United States (TSUS), and the correct basis
of appraisement for the imported merchandise.

FACTS:

     The footwear uppers at issue were assembled in the Dominican
Republic with leather parts, including vamps, plugs, collars,
eyestays, backstays, vamp lining, laces, thread, eyelets, and
rubber/plastic parts such as collar foam, tongue foam, and heel
foam.  All were stated to be U.S. origin components.

     In the Dominican Republic, the assembly operations consisted
of attaching the various upper parts by machine sewing and hand
sewing, punching holes, inserting eyelits and rawhide laces.  In
addition, the uppers were soaked, dried, and placed on a last for
hand sewing operations.  

     The merchandise was entered under the duty-free provisions of
the Generalized System of Preferences (GSP) at a value of
$14.34/pair.  However, GSP treatment was denied and the merchandise
was liquidated fully dutiable under the computed value basis of
appraisement at $16.88/pair.

   Protestant now seeks reliquidation under item 807.00, TSUS, with
a duty allowance for the U.S. origin components assembled in the
Dominican Republic, although the required documentation supporting
this claim not been submitted.  Protestant also argues that
transaction value is the correct basis of appraisement, at
$14.34/pair, the price stated to be paid to the foreign assembler 

                               - 2 -




for the imported merchandise.


ISSUE:

     1) Whether the footwear uppers of leather are entitled to a
partial duty exemption under item 807.00, TSUS.       

     2) Whether transaction value is the correct basis of
appraisement, at the entered value of $14.34/pair.

LAW AND ANALYSIS:

 1) Allowance Under Item 807.00

     Item 807.00, TSUS, provides a partial duty exemption for:

     [a]rticles assembled abroad in whole or in part of
     fabricated components, the product of the United
     States, which (a) were exported in condition ready for
     assembly without further fabrication, (b) have not lost
     their physical identity in such articles by change in form,
     shape, or otherwise, and (c) have not been advanced in value
     or improved in condition abroad except by being assembled   

     and except by operations incidental to the assembly process,
     such as cleaning, lubrication, and painting.

All three requirements of item 807.00, TSUS, must be satisfied
before a component may receive a duty allowance.  An article
entered under this tariff provision is subject to duty upon the
full appraised value of the imported assembled article, less the
cost or value of the U.S. components assembled therein, upon
compliance with the documentary requirements of section 10.24,
Customs Regulations (19 CFR 10.24).  
     
     Pursuant to 19 CFR 10.24, the required documentation shall
include an assembler's declaration describing the fabricated
components, that they are of U.S. origin, and other pertinent
information, and an endorsement by the importer certifying the
accuracy of the declaration. (19 CFR 10.24(a).)  The district
director may waive the production of either or both of these
documents, or any of the information required, if he is satisfied
that unusual circumstances exist which make the production of such
documents or information impractical, and he is satisfied that the
requirements of the statute (and legal notes) have been met. (19
CFR 10.24(e).)  

                               


                               - 3 -

     


     While the required documentation has not been submitted,
Protestant contends, nevertheless, that a waiver for the production
of such documents should be granted, pursuant to 19 CFR 10.24(e). 
Protestant notes that in three Customs documents (audit report,
report of investigation, pre-penalty notice), findings were made
by Customs officials that the components were produced in Puerto
Rico, and that this acknowledgement of U.S. origin should warrant
granting the waiver.  Protestant states that the Company cannot now
obtain the assembler's declaration due to litigation between the
parties.  

     The granting of a waiver under 19 CFR 10.24(e) by the district
director is based on establishing to his/her satisfaction that
essentially, all of the requirements of the statute have been met
without submission of the documentation.  Therefore, even if
Customs finds in another proceeding that the components involved
in this protest were produced in Puerto Rico, such a finding would
be relevant for only one of the several criteria for partial duty
allowance under item 807.00, TSUS, i.e., the requirement that the
components be of U.S. origin.  You believe that the facts in this
case establish that protestant has not satisfied the statutory
requirements and that accordingly, a waiver of the documentary
requirements of 19 CFR 10.24(a) is not warranted.

     In a similar case, where Customs had not waived documentary
requirements, the court in Green Giant Co. v. United States, C.D.
4715, 79 Cust. Ct. 61 (1977), stated:

       Since compliance with all applicable regulations
       is mandatory, and an absolute precondition to
       recovery in this court, plaintiff's failure to
       satisfy [the regulations on documentary requirements]
       bars its claim under item 807.00.

     Accordingly, we find in this case that the articles are not
eligible for the partial duty exemption under item 807.00, TSUS,
since Protestant has not complied with the regulatory requirements
of 19 CFR 10.24(a).

Appraised Value

     Protestant contends that the merchandise was erroneously
appraised under computed value, at $16.88/pair.  Protestant argues
that transaction value is the proper basis of appraisement, at
$14.38/pair, the price charged by the exporter.  This price
consists of $12.60 for the components and materials, which includes
cutting in the U.S. and transportation, and $1.74 for assembly in
the Dominican Republic.     

                               - 4 -     




     The transaction value of imported merchandise is defined as
the price paid or payable for the merchandise when sold for
exportation to the U.S., plus certain other additions not here
applicable.  (19 U.S.C. 1401a(b).)  If a transaction value cannot
be determined, a different basis of appraisement must be used,
based on the order of the statutory scheme.  

     Based on the audit report prepared by the Regulatory Audit
Division, Southwest Region, dated June 27, 1990, Timberland, the
parent corporation, paid for the imported merchandise by sending
lump-sum payments to the assembler which included payment for the 
merchandise along with advances for payroll and other expenses.  
The auditors further stated that, in the transfers examined, there
was always an unexplained balance.  Therefore, the transaction
value method of appraisement was rejected in favor of the computed 
value method.  We believe that there is insufficient information
to support the contention that the merchandise should have been
appraised under transaction value rather than computed value.  As
a result, there is no basis to conclude that the appraisement was
in error.  

     
HOLDING:

     1) Protestant has failed to establish the eligibility of the
merchandise for the partial duty exemption under item 807.00, TSUS.

     2) Protestant has failed to overcome the presumption of
correctness attached to the import specialist's determination that
the transaction value method of appraisement is inapplicable and
that computed value is the proper basis of appraisement, at
$16.88/pair.

     Under the circumstances, the protest is denied in full.

                            Sincerely,



                            John Durant, Director
                            Commercial Rulings Division













 












        

  




of such documentation.