HQ 556654: Protest No. 4501-91-100097 concerning the eligibility of artificial flowers from Macau for duty-free treatment under the GSP

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 556654

                         October 1, 1992

CLA-2 CO:R:C:S  556654  WAW

CATEGORY:  Classification

District Director
U.S. Customs Service
Suite 625
7911 Forsythe Blvd
St. Louis, MO 63105

RE:  Protest No. 4501-91-100097 concerning the eligibility of
     artificial flowers from Macau for duty-free treatment under
     the GSP

Dear Sir:

     This is a decision on an Application for Further Review of the
above-referenced protest filed by Sharretts, Paley, Carter &
Blauvelt, on behalf of K Mart, against the assessment of duties on
artificial flowers imported into the U.S. from Macau.  We have
considered the protest and our decision follows.

FACTS:

     The protestant claims that the subject artificial flowers
should be entitled to duty-free treatment under the Generalized
System of Preferences (GSP) (19 U.S.C. 2461-2466) since they are
manufactured by the "Luen Fat" factory located in Macau and are
classifiable under a GSP eligible provision.  In the protestant's
declaration of the manufacturing and/or processing operations of
the artificial flowers, the protestant states that Macau is the
country where these operations took place.  The entry which is the
subject of this protest was filed on August 7, 1990, and 
liquidated duty-free on October 11, 1991, under the GSP as a
product of Macau.  Your office, however, subsequently amended the
entry summary to reflect a change in the country of origin of the
artificial flowers and consequently reliquidated the entry dutiable
at 9 percent ad valorem.

ISSUE:

     Whether the artificial flowers from Macau are entitled to
duty-free treatment under the GSP.
 LAW AND ANALYSIS:

     Under the GSP, eligible products the growth, product or
manufacture of a designated beneficiary developing country (BDC)
which are imported directly into the U.S. qualify for duty-free
treatment if the sum of (1) the cost or value of the materials
produced in the BDC, plus (2) the direct costs involved in
processing the eligible article in the BDC, is not less than 35%
of the appraised value of the article at the time it is entered
into the U.S.  See section 10.176(a), Customs Regulations (19 CFR
10.176(a)).

     Protestant's request for further review may be summarily
disposed of.  The scope of review in this protest is on the
administrative record, and protestant has not presented any
evidence in support of its assertions.  The Customs Service will
not grant further review of a blanket protest.  Protestant must
comply with the statutory and regulatory requirements.  Under 19
U.S.C. section 1514(c)(1), a protest of a decision must set forth
distinctly and specifically each decision as to which protest is
made.  See generally, United States v. Parksmith Corp., 514 F.2d
1052, 62 C.C.P.A. 76 (1975); American Commerce Co. v. United
States, 173 F. Supp. 812 (Cust. Ct. 1959); United States v. E.H.
Bailey & Co., 32 C.C.P.A. 89 (1945).

     Pursuant to INV 8-02 CO:TO:C JRD, dated October 31, 1991, the
Assistant Commissioner of Commercial Operations instructed the
Regional Commissioners that all entries of artificial flowers
claimed to be manufactured in Macau by any of the named factories
listed in the memorandum should be denied GSP treatment and
instead, should be rate advanced via the issuance of a Proposed
Notice of Action (CF 29).  The Luen Fat factory is one of the
factories which has been precluded from receiving duty-free
treatment under the GSP pursuant to this memorandum.  In addition,
the memorandum states that the SCR/Hong Kong has also issued
reports of investigation concerning the alleged transshipment of
PRC-origin artificial flowers via Macau, which indicate that the
named factories were either "not manufacturing artificial flowers
in Macau, or were incapable of manufacturing them in the quantities
exported to the U.S."  Therefore, the Assistant Commissioner
instructed all Regional Commissioners that in the absence of
"compelling evidence" to the contrary, protests filed on the
liquidation of entries from any of the factories enumerated in the
memorandum should be denied.   The Assistant Commissioner also
recommended that any evidence submitted on behalf of an importer
of artificial flowers from Macau must be forwarded to the
Commercial Compliance Branch for their analysis and review before
any action is taken.

     We are of the opinion that the protestant has not submitted
sufficient independent evidence to your office in support of its
contention that the artificial flowers produced in the Luen Fat
factory should be granted duty-free treatment under the GSP. 
Protestant simply asserts that the importer relied on the
supplier's representations and the GSP Form A to show that the
merchandise was manufactured in Macau.  By letter dated July 8,
1992, we requested counsel for protestant to provide specific
information concerning the manufacturing operations performed at
the Luen Fat factory as well as the direct costs of processing
relating to the shipment.  Counsel has been unable to provide this
information.

     We, however, note that the report of the Customs'
investigation into the manufacturing processes of the Luen Fat
factory, indicates that artificial flowers were neither produced
by Luen Fat in their Macau factory, nor assembled in the PRC from
components produced in Macau.  Specifically, it was reported that
some of the machines in Luen Fat had been installed for a very
short period of time and were either non-operational or showed
little or no sign of recent use.  Additionally, the Senior Customs
Representative/Hong Kong received information from employees of
flower factories in Macau stating that shipments of finished
artificial flowers were delivered to the Macau factories from the
PRC for repackaging before they were shipped to the U.S.  It was
decided that the only manufacturing process being performed in
Macau was the cutting of the imported fabric into shapes, and that
the remainder of the manufacturing operations, such as texturizing,
coloring, plastic extrusion, formation of stems, and the final
assembly of the flowers, were performed in the PRC.  

     In sum, without sufficient evidence to confirm that the
artificial flowers in the instant case were manufactured in Macau
by the Luen Fat factory, we cannot determine whether the materials
imported into Macau and used in the production of the artificial
flowers have undergone a double substantial transformation, so that
the cost or value of these materials may be included in the GSP 35%
value-content requirement.  Therefore, in view of the absence of
compelling evidence to rebut the findings in reports of
investigation on Luen Fat, the artificial flowers in this case will
not be eligible for duty-free treatment under the GSP.
 
HOLDING:

     Therefore, based on the foregoing discussion, this protest
should be denied in full.  A copy of this decision should be
attached to the Customs Form 19 to be returned to the protestant
as part of the notice of action on the protest.

                                   Sincerely,




                                   John Durant, Director
                                   Commercial Rulings Division