H320722

HQ H320722 September 10, 2024 OT:RR:CTF:FTM H320722 BJK CATEGORY: Classification TARIFF NO.: 5211.49.00, 5407.51.00, 5407.52.20, 5407.53.20, 5407.73.20, 5407.81.00, 5407.82.00, 5407.83.00, 5407.91.20, 5407.92.20, 5407.93.20, 5516.11.00, 5516.21.00, 5516.23.00, 6006.31.00, 6006.33.00, 9999.00.54, 9999.00.55 Mr. Eric Batt Center Director Apparel, Footwear, and Textiles Center of Excellence and Expertise U.S. Customs and Border Protection 33 New Montgomery Street San Francisco, California 94105 ATTN: Marchele Wilson, Supervisory Import Specialist RE: Application for Further Review of Protest No. 0708-20-100609; NAFTA TPL Eligibility Dear Center Director, The following is our decision regarding the Application for Further Review (“AFR”) of Protest No. 0708-20-100609, timely filed on December 16, 2020, by Delmar International on behalf of Rayonese Textile, Inc. (“Rayonese” or “Protestant”), concerning the eligibility of certain textile fabrics imported from Canada for duty free treatment under the Trade Preference Level (“TPL”) provisions under the North American Free Trade Agreement (“NAFTA”). FACTS: The textile fabrics at issue were entered as eleven different entries into the United States, between December 11, 2019 and December 23, 2019, within headings 5211, 5407, 5516, and 6006, of the Harmonized Tariff Schedule of the United States (HTSUS). Additionally, the imports included the subheadings 9999.00.54 and 9999.00.55, HTSUS, as “Goods described in additional U.S. Note 4(a) to section XI” and “Goods described in additional U.S. Note 4(c)(i) to section XI,” respectively. At the time of entry, between December 11, 2019 and December 23, 2019, Protestant exhausted its company allowance of the TPL quota for the imported fabrics as provided by the Canadian Government for the 2019 year. While some of the entries possessed Tariff Preference Level Certificates of Eligibility (“TPL Certificates”) issued by the Canadian Department of Foreign Affairs, Trade, and Development (“Global Affairs Canada” or “Canadian authorities”), other entries did not. According to Protestant, every year the Canadian government reallocates quota from companies that did not use their full allotment to companies that used all of its quota and had shipments that were not covered by TPL Certificates. Protestant was a recipient of the reallocated unused quotas by the Canadian Government and received TPL Certificates to cover entries that at the time of importation did not contain TPL Certifications. While CBP received TPL Certificates for some entries on December 24, 2019, the reallocated unused quota and subsequent TPL Certificates for the remaining entries were filed with CBP on February 25, 2020. Thus, as of February 25, 2020, CBP was in receipt of TPL Certificates covering all eleven of Protestant’s December 2019 entries. Consequently, Protestant contends that there was an overpayment of duties, as the December 2019 entries that were previously outside of the company’s quota are now all covered by a TPL Certificate issued by the Canadian Government. Upon review of Protestant’s eleven entries and its supporting documents, CBP contacted Protestant to discuss the TPL Certificates. In correspondence with Protestant, CBP noted that post-summary corrections (“PSC”) would require opening the closed 2019 quota and modifying of those records. As such, CBP requested the dates of when the final batch of TPL Certificates was received from Canada. In response, Protestant explained that the TPL certificates for the eleven entries were issued on February 19, 2020 and signed on February 25, 2020. Protestant detailed that in the regular course of its business, it typically utilizes the allotment of their TPL quota by early December. However, after the end of the quota year, the Canadian authorities reallocate TPL quota that companies have not used to companies that exhausted its allotted TPL. Protestant noted that under this “retroactive” TPL quota it can apply for refunds on its full-duty December shipments, which were imported after the exhaustion of initial TPL quota and before the end of the quota year. In support of its claims, Protestant provided CBP with Customs Directives from December 2003 and December 2006 discussing TPL and TPL claims that are allowed and valid under NAFTA. ISSUE: Whether the subject entries are eligible for preferential tariff treatment under the NAFTA TPL provisions. LAW AND ANALYSIS: Initially, we note that the matter is protestable under 19 U.S.C. § 1514(a)(2) as a decision on the rate of duty. The protest was timely filed within 180 days of liquidation of the entry made on November 6 and November 13, 2020. 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 the protest is warranted pursuant to 19 C.F.R. §§ 174.24(a) and 174.25, as the protest is alleged to be inconsistent with a ruling of the Commissioner of Customs or his/her designee, or with a decision made at any port with respect to the same or substantially similar merchandise. The North American Free Trade Agreement Implementation Act (Pub. L. 103-182, 107 Stat. 2057) was enacted on December 8, 1993. The law implemented the provisions of NAFTA. Within NAFTA were provisions referred to as tariff preference levels or TPLs that allowed the importation of non-originating textile and apparel goods that met specified production requirements within the NAFTA parties. These TPLs were implemented in the additional U.S. Notes to Section XI of the HTSUS and were limited in the amount of goods that may utilize the TPLs. Once a TPL quota applicable to a NAFTA country’s exports to another NAFTA country were reached, any further exports of goods of that TPL category to the same NAFTA country during that year were not accorded NAFTA preferential tariff treatment, but rather were subject to duty at the normal trade relation rate. See 19 C.F.R. § 102.25 (previously 19 C.F.R. § 12.132); see also 60 FR 58518 (Nov. 28, 1995) (U.S. Customs Service final rule implementing the submission of TPL Certificates for textile and apparel goods.). In order for a garment to be dutiable at the NAFTA tariff rate, based on the TPL, three conditions must be met: first, the good must meet the requirements of the TPL definition in Section XI, Additional U.S. Notes 3 through 6, HTSUS; second, the good must be accompanied by a TPL Certificate in proper form; and, third, the yearly amount under the TPL must not have been filled prior to the presentation of the TPL Certificate. See 19 C.F.R. § 102.25. If any of these three conditions are not met, then the good does not qualify under the TPL. Id. Classification of the textile fabrics is not at issue, as both Protestant and CBP agree on the classification of the subject merchandise under the headings 5211, 5407, 5516, and 6006, HTSUS, including subheadings 9999.00.54 and 9999.00.55, HTSUS. For those entries under subheading 9999.00.54, HTSUS, Section XI, Additional U.S. Note 4(a) provides: The rate of duty in the “Special” subcolumn of rates of duty column 1 followed by the symbol “CA” in parentheses shall apply to imports from Canada, up to the annual quantities specified in subdivision (c) of this note, of cotton or man-made fiber fabric and cotton or man-made fiber made-up textile goods provided for in chapters 52 through 55 (excluding goods containing 36 percent or more by weight of wool or fine animal hair), 58, 60 and 63, that are woven or knit in the territory of a NAFTA party from yarn produced or obtained outside the territory of one of the NAFTA parties, or knit in the territory of a NAFTA party from yarn spun in the territory of a NAFTA party from fiber produced or obtained outside the territory of one of the NAFTA parties, and to goods of subheading 9404.90 that are finished and cut and sewn or otherwise assembled from fabrics of subheadings 5208.11 through 5208.29, 

Initially, we note that the matter is protestable under 19 U.S.C. § 1514(a)(2) as a decision on the rate of duty. The protest was timely filed within 180 days of liquidation of the entry made on November 6 and November 13, 2020. 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 the protest is warranted pursuant to 19 C.F.R. §§ 174.24(a) and 174.25, as the protest is alleged to be inconsistent with a ruling of the Commissioner of Customs or his/her designee, or with a decision made at any port with respect to the same or substantially similar merchandise. The North American Free Trade Agreement Implementation Act (Pub. L. 103-182, 107 Stat. 2057) was enacted on December 8, 1993. The law implemented the provisions of NAFTA. Within NAFTA were provisions referred to as tariff preference levels or TPLs that allowed the importation of non-originating textile and apparel goods that met specified production requirements within the NAFTA parties. These TPLs were implemented in the additional U.S. Notes to Section XI of the HTSUS and were limited in the amount of goods that may utilize the TPLs. Once a TPL quota applicable to a NAFTA country’s exports to another NAFTA country were reached, any further exports of goods of that TPL category to the same NAFTA country during that year were not accorded NAFTA preferential tariff treatment, but rather were subject to duty at the normal trade relation rate. See 19 C.F.R. § 102.25 (previously 19 C.F.R. § 12.132); see also 60 FR 58518 (Nov. 28, 1995) (U.S. Customs Service final rule implementing the submission of TPL Certificates for textile and apparel goods.). In order for a garment to be dutiable at the NAFTA tariff rate, based on the TPL, three conditions must be met: first, the good must meet the requirements of the TPL definition in Section XI, Additional U.S. Notes 3 through 6, HTSUS; second, the good