HQ 556768: Protest No. 1303-92-100086 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 556768

                          July 24, 1992

CLA-2 CO:R:C:S  556768  WAW

CATEGORY:  Classification

District Director
U.S. Customs Service
40 South Gay Street
Baltimore, MD  21202

RE:  Protest No. 1303-92-100086 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 Linda Wilder on behalf of
GB Stores 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 Golden Dragon 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
merchandise which is the subject of this protest was entered on
August 20, 1990, as duty-free under the GSP.  On December 27,
1991, your office, however, liquidated the entry as 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 of
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 material
produced in a 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 RG, dated January 22, 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 15 factories
which are listed in the memorandum should be denied GSP treatment
and, rather, should be rate advanced via the issuance of a
Proposed Notice of Action (CF 29).  The Golden Dragon 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.

     With regard to the instant case, the protestant has not
submitted any independent evidence to the District Director in
your office to substantiate his claim for duty-free treatment
pursuant to the GSP.  Protestant simply asserts that the importer
relied on the supplier's representations that the merchandise was
manufactured in Macau by the Golden Dragon factory.  Based on an
investigation conducted by the Senior Customs Representative,
Hong Kong (SCR/HK), Customs concluded that the Golden Dragon
factory was falsifying their production documents in an effort to
obtain duty-free treatment under the GSP.  Although there was
evidence that the Golden Dragon factory had some production
capabilities, Customs determined that this firm chose, for
financial reasons, to produce a portion or all of its components
in China.  

     Without sufficient information to confirm that the
artificial flowers in the instant case are manufactured in Macau
by the Golden Dragon factory (i.e., evidence of processes
performed in Macau such as cutting, dying, texturizing, and
injection molding), we cannot determine whether or not they are
"products of" Macau, or whether the materials imported into Macau
and used in the production of the artificial flowers underwent a
double substantial transformation, so that the cost or value of
these materials may be included in the GSP 35% value-content
requirement.  Therefore, absent compelling evidence to the
contrary, 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