H315391

 HQ H315391 August 6, 2021 OT:RR:CTF:VS H315391 AP CATEGORY: Classification Center Director Industrial & Manufacturing Materials CEE U.S. Customs and Border Protection 726 Exchange Street, Suite 400 Buffalo, NY 14210 Attn.: Nicholas Bishop, CBP Import Specialist RE: Application for Further Review of Protest Number 0401-20-102492; GSP; AMPET; PET Resin Chips; Double Substantial Transformation Dear Center Director: The following is our decision regarding the Application for Further Review (“AFR”) of Protest Number 0401-20-102492, timely filed on October 22, 2020, on behalf of Ravago Americas LLC d/b/a Burcham International (“importer”). The AFR concerns the eligibility of crystallized polyethylene terephthalate (“PET”) resin chips imported from Pakistan for duty-free treatment under the Generalized System of Preferences (“GSP”). You have asked that certain information submitted in connection with this AFR be treated as confidential. Inasmuch as this request conforms to the requirements of 19 C.F.R. § 177.2(b)(7), the request for confidentiality is approved. The information contained within brackets in italics and all attachments to this AFR, forwarded to our office, will not be released to the public and will be withheld from published versions of this decision. FACTS: The merchandise at issue consists of crystallized PET resin chips, also known as Gatronova SSP Homopolymer IV 1.00 VIS GTE 78 LTE, Gatronova A-66 SSP Homopolymer Polyester Chips, or PET Resin Chips with an intrinsic viscosity of 0.63 or higher, which were imported directly from Pakistan. These PET resin chips are used in the production of thermoplastic products such as thermoforming sheets and strapping sheets. The PET resin chips were manufactured in Pakistan from pure terephthalic acid (“PTA”) from countries A, B, and C [ ]; mono ethylene glycol (“MEG”) from country D [ ]; diethylene glycol from country E [ ]; catalyst from country A [ ]; ortho phosphoric acid from country F [ ]; and blue and red toner from country G [ ]. The PTA and the MEG were the primary ingredients. A melt-phase polymerization treatment created uncrystallized amorphous PET resin chips (“AMPET” or “amorphous chips”) with an intrinsic viscosity equal or below 0.63 deliciters per gram used to manufacture bottle grade PET resin, PET resin chips, and biaxially oriented PET films for packaging. The amorphous chips were created through a controlled chemical reaction between PTA and MEG in a melt-phase polymerization process involving paste preparation, esterification, pre-polycondensation, final polycondensation, and chips production. The amorphous chips could be bagged for sale to customers or converted into the instant merchandise (crystallized PET resin chips with an intrinsic viscosity of 0.63 deciliters per gram or higher). To convert the AMPET into PET resin chips, the AMPET were heated in large cylindrical reaction towers. The steps involved, as described by the importer, were: “heating the [amorphous] resin chips in a gravimetric feeder unit, circulating nitrogen for fluidization and heating of the chips, separating the dust from the circulating nitrogen by means of a twin cyclone, passing the dedusted chips into the reactor where the solid-state polycondensation takes place, removing the reaction products and volatile impurities, mixing gas stream coming from the reactor and first crystallizer with nitrogen, burning the hydrocarbon by-products, drying, heating and recycling the nitrogen to the reactor and cooling the PET resin chips by means of circulation of cooling water and conveying the PET resin chips to storage silos.” From July 23, 2019 through November 28, 2019, the PET resin chips were entered under subheadings 3907.69.0050 and 3907.61.0050, Harmonized Tariff Schedule of the United States Annotated (“HTSUSA”), which are GSP eligible provisions containing the Special Program Indicator (“SPI”) “A” in the Special Rate of Duty column. On July 17 and 31, 2020, the Industrial and Manufacturing Materials Center of Excellence and Expertise (“CEE”) concluded that the submitted documentation did not establish a double substantial transformation and denied GSP treatment to the entries upon liquidation. On June 9, 2021, the U.S. Customs and Border Protection (“CBP”) New York Laboratory advised that, “AMPET is the starting material” for the production of the PET resin chips and that the final product “has a higher molecular weight and unlike AMPET, is crystalline in structure. This makes their PET a separate and distinct product than their starting material, AMPET.” On June 10, 2021, the CBP New York Laboratory further explained that, “[T]here is a change in appearance of the product (transparent chips – AMPET to opaque chips (CPET)), a change in form since the short chain length or molecular weight (low molecular weight) increases when you further process a melt phase product by a secondary solid state polymerization which is reflected by the increased [i]ntrinsic viscosity needed for PET bottles manufacturing and other products. There is no change in name – both are considered PET, however descriptors can sometimes be used such as AMPET (amorphous PET) and CPET (crystalline PET). When using the term crystalline it does not infer a fully crystalline product, just an increase in the level of crystallinity (semi crystalline).” ISSUE: Whether the imported PET resin chips are eligible for preferential tariff treatment under the GSP. LAW AND ANALYSIS: We note that the matter protested is protestable under 19 U.S.C. § 1514(a)(1) as a decision on the value of merchandise. The protest was timely filed, within 180 days of liquidation for the entry. See Miscellaneous Trade and Technical Corrections Act of 2004, Pub. L. 108-429, § 2103(2)(B)(ii)-(iii) (codified as amended at 19 U.S.C. § 1514(c)(3) (2006)). Further review of this protest is properly accorded to the importer pursuant to 19 C.F.R. § 174.24(b) because the issues protested involve questions of law or fact, which have not been ruled upon. Under the GSP, eligible articles, which are the growth, product, or manufacture of a designated beneficiary developing country (“BDC”) and are imported directly into the customs territory of the U.S. from a BDC, may receive duty-free treatment if the sum of: (1) the cost or value of materials produced in the BDC, plus (2) the direct costs of the processing operations performed in the BDC, is equivalent to at least 35 percent of the appraised value of the article at the time of entry into the U.S. See 19 U.S.C. § 2463(a)(2)(A). Pursuant to General Note 4(a), HTSUS, Pakistan is a designated BDC for GSP purposes and may be afforded preferential treatment if the imported merchandise is classified in a GSP-eligible provision containing SPI Code A. As indicated above, the PET resin chips were classified under subheadings 3907.69.0050 and 3907.61.0050, HTSUSA, which are GSP eligible provisions. The goods satisfy the “imported directly” requirement because they were imported into the United States directly from Pakistan. The first issue is whether the subject PET resin chips are a “product of” Pakistan. To receive duty-free treatment under the GSP, an article must be a “product of” the BDC. A good is considered to be a “product of” a BDC if it is wholly the growth, product, or manufacture of a BDC, or has been substantially transformed in the BDC into a new or different article of commerce. See 19 U.S.C. § 2463(a)(3); 19 C.F.R. § 10.176(a). A substantial transformation occurs “when an article emerges from a manufacturing process with a name, character, or use which differs from those of the original material subjected to the process.” Torrington Co. v. United States, 764 F.2d 1563, 1568 (Fed. Cir. 1985) (citing Anheuser-Busch Brewing Ass’n v. United States, 207 U.S. 556, 562 (1908) and Texas Instruments v. United States, 69 CCPA 151, 681 F.2d 778 (1982)). In Headquarters Ruling Letter (“HQ”) 560321, dated Dec. 31, 1997, melamine mono

We note that the matter protested is protestable under 19 U.S.C. § 1514(a)(1) as a decision on the value of merchandise. The protest was timely filed, within 180 days of liquidation for the entry. See Miscellaneous Trade and Technical Corrections Act of 2004, Pub. L. 108-429, § 2103(2)(B)(ii)-(iii) (codified as amended at 19 U.S.C. § 1514(c)(3) (2006)). Further review of this protest is properly accorded to the importer pursuant to 19 C.F.R. § 174.24(b) because the issues protested involve questions of law or fact, which have not been ruled upon.Under the GSP, eligible articles, which are the growth, product, or manufacture of a designated beneficiary developing country (“BDC”) and are imported directly into the customs territory of the U.S. from a BDC, may receive duty-free treatment if the sum of: (1) the cost or value of materials produced in the BDC, plus (2) the direct costs of the processing operations performed in the BDC, is equivalent to at least 35 percent of the appraised value of the article at the time of entry into the U.S. See 19 U.S.C. § 2463(a)(2)(A).Pursuant to General Note 4(a), HTSUS, Pakistan is a designated BDC for GSP purposes and may be afforded preferential treatment if the imported merchandise is classified in a GSP-eligible provision containing SPI Code A. As indicated above, the PET resin chips were classified under subheadings 3907.69.0050 and 3907.61.0050, HTSUSA, which are GSP eligible provisions. The goods satisfy the “imported directly” requirement because they were imported into the United States directly from Pakistan.The first issue is whether the subject PET resin chips are a “product of” Pakistan. To receive duty-free treatment under the GSP, an article must be a “product of” the BDC. A good is considered to be a “product of” a BDC if it is wholly the growth, product, or manufacture of a BDC, or has been substantially transformed in the BDC into a new or different article of commerce. See 19 U.S.C. § 2463(a)(3); 19 C.F.R. § 10.1