H328382

 HQ H328382 April 5, 2024 OT:RR:CTF:VS: H328382 RSD CATEGORY: Origin Center Director U.S. Customs and Border Protection Petroleum, Natural Gas and Minerals 2350 N. Sam Houston Pkwy, Ste. 1000 Houston, TX 77032 Attn: Tiffany D. Hemmes, Import Specialist RE: Application for Further Review of Protest No. 3302-18-100018; NAFTA Eligibility of Natural Gas Imported from Canada; NAFTA Certificates of Origin; Demonstration of Producers and Production Records for Imported Natural Gas Dear Center Director: This is in response to the Application for Further Review of Protest Number 3302-18-100018 timely filed on December 20, 2018, by Livingston International (Livingston) on behalf of Sierra Pacific Power Co. concerning whether importations of natural gas from Canada were eligible for preferential tariff treatment under the North American Free Trade Agreement (“NAFTA”). Our decision follows. FACTS: The Protestant, Sierra Pacific Power Co., imported a series of shipments of natural gas into the United States from Canada through pipelines. This protest concerns the liquidation of five entries of natural gas shipments imported from Canada and the denial of the claims for NAFTA benefits on these entries. The five specific protested entries concern the importations of natural gas that crossed at Kingsgate, British Columbia and Eastport, Idaho via the NOVA Gas Transmission Limited Pipeline. The five entries of natural gas were originally imported into the United States on the following dates: September 8, 2017, October 10, 2017, November 9, 2017, December 8, 2017, and January 10, 2018. All the imported merchandise was entered through a broker and were classified in subheading 2711.21.00, Harmonized Tariff Schedule United States (“HTSUS”), as “Natural Gas,” with a free rate of duty, as NAFTA-eligible. The record shows that the five entries of natural gas involved in this protest were imported via the NOVA Gas Transmission Limited Pipeline from four suppliers: Enstor, IGI (BP), Powerex, and EDF. CBP received two certificates of origin from the suppliers, Enstor and IGI (BP ). Certificates of origin were not received for the suppliers Powerex and EDF. The supplier certificates of origin received by CBP do not provide any information regarding the producer of the natural gas. On March 1, 2018, U.S. Customs and Border Protection (“CBP”) in the port of entry, at Pembina, issued a Customs Form (CF) 28, Request for Information, requesting documents necessary to support the importer’s claim for NAFTA for the importation of November 9, 2017. Specifically, CBP requested: (1) a copy of the entry summary and commercial invoices for the entry, (2) descriptive literature substantiating the use of HTSUS classification 2711.21.00, and (3) the CF 434 NAFTA Certificate of Origin used to substantiate the claim. A response to this request was tendered by the importer on April 2, 2018, which included all the requested documents. On April 2, 2018, CBP initiated a NAFTA verification via a CF 28, Request for Information. In this instance, the importer did not provide a response. Therefore, on May 3, 2018, CBP issued a CF 29 Notice of Action (Proposed), again requesting that the importer submit information and documentation supporting their claim for NAFTA. On June 4, 2018, on behalf of the importer, its representative, Livingston, provided invoices between the four suppliers and the importer, a NOVA Gas Transmission Ltd pipeline report, and a certificate of origin completed by the supplier Enstor. The certificate states “No-1” in the producer field and Country of Origin USA. The response includes the statement that neither the importer nor the supplier was the producer of the merchandise in question. Therefore, the importer did not have access to the following requested information: who was the producer of the natural gas; information and evidence where the natural gas was brought from underground up to the wellhead; a manufacturing process flow chart and narrative, lab analysis and gauger reports; information where the field processing was accomplished; where the complete processing took place; and bills of materials for the subject merchandise. On June 26, 2018, CBP issued a CF 29 Notice of Action (Taken) stating that CBP was denying NAFTA eligibility of the merchandise on the one entry and rate advancing with a charge of the Merchandise Processing Fee (MPF). Specifically, CBP stated that the response to the CF 29 Notice of Action (Proposed) from May 3, 2018, did not provide a sufficient response to verify NAFTA eligibility, because the importer did not provide information related to the producer’s name, wellhead locations (extraction location), manufacturing process flow chart. In addition to the CF 29 Notice of Action (Taken) against the entry denying NAFTA eligibility, on June 26, 2018, CBP issued a CF 29 Notice of Action (Proposed) against the other four entries. This CF 29 Notice of Action (Proposed) stated that, based upon the findings from the previous NAFTA verification (including the fact that the producer names, wellhead locations, and manufacturing flow chart associated with the goods were not provided), CBP concluded that NAFTA did not apply to the merchandise on these entries as well. On July 26, 2018, Livingston again provided a NAFTA Certificates of Origin from Enstor and another one from IGI (completed by BP) stating the origin as Canada, which Livingston claimed covered most of the imported natural gas. Acknowledging that not all supplier certificates had been obtained, Livingston also provided reconstructed entries, in excel format, calculating the actual MPF owed. On August 10, 2018, CBP issued a CF 29 Notice of Action (Taken) against the four entries. Additionally, CBP provided an email explanation of the CF 29 Notice of Action (Taken), which stated that because the importer did not provide producer names, wellhead locations, and manufacturing process flow charts, NAFTA eligibility cannot be verified. A protest was timely filed on December 20, 2018. In connection with the protest, the importer once again provided the same NAFTA Certificates of Origin for two of the four suppliers. In the protest, the protestant states that the importer incorrectly completed the NAFTA Certificates of Origin by mistakenly completing the producer field as “No-1”, when it should have indicated it as “No-3.” ISSUE: Whether the entries of imported natural gas from Canada were eligible for preferential tariff treatment under NAFTA. LAW AND ANALYSIS: Under NAFTA, goods produced in Canada, Mexico, or the United States wre eligible for preferential tariff treatment upon importation into one of the three countries if they satisfied certain rules. General Note (GN) 12, HTSUS (2018). The corresponding regulations are set out in Part 181 of the CBP Regulations (19 C.F.R. Part 181). With respect to the NAFTA Certificate of Origin, Section 181.21(a) of the CBP Regulations (19 C.F.R. § 181.21(a)) states, in pertinent part, that: In connection with a claim for preferential tariff treatment, or for the exemption from the merchandise processing fee, for a good under the NAFTA, the U.S. importer must make a formal declaration that the good qualifies for such treatment . . . the declaration must be based on a complete and properly executed original Certificate of Origin, or copy thereof, which is in the possession of the importer and which covers the good being imported. In the instant case, whether the importer possessed a NAFTA Certificate Origin at the time the claim for NAFTA was made is not at issue. However, pursuant to GN 12, HTSUS, for an article to be eligible for NAFTA preference, two criteria must be satisfied. First, the article in question must be “originating” under the terms of GN 12, and second, the article must qualify to be marked as a good of a NAFTA country under the NAFTA Marking Rules contained in 19 C.F.R. § 102.20. Regarding the first criteria, GN 12(b) provides, in pertinent part, a

Under NAFTA, goods produced in Canada, Mexico, or the United States wre eligible for preferential tariff treatment upon importation into one of the three countries if they satisfied certain rules. General Note (GN) 12, HTSUS (2018). The corresponding regulations are set out in Part 181 of the CBP Regulations (19 C.F.R. Part 181). With respect to the NAFTA Certificate of Origin, Section 181.21(a) of the CBP Regulations (19 C.F.R. § 181.21(a)) states, in pertinent part, that:In connection with a claim for preferential tariff treatment, or for the exemption from the merchandise processing fee, for a good under the NAFTA, the U.S. importer must make a formal declaration that the good qualifies for such treatment . . . the declaration must be based on a complete and properly executed original Certificate of Origin, or copy thereof, which is in the possession of the importer and which covers the good being imported.In the instant case, whether the importer possessed a NAFTA Certificate Origin at the time the claim for NAFTA was made is not at issue. However, pursuant to GN 12, HTSUS, for an article to be eligible for NAFTA preference, two criteria must be satisfied. First, the article in question must be “originating” under the terms of GN 12, and second, the article must qualify to be marked as a good of a NAFTA country under the NAFTA Marking Rules contained in 19 C.F.R. § 102.20. Regarding the first criteria, GN 12(b) provides, in pertinent part, as follows:For purposes of this note, goods imported into the customs territory of the U.S. are eligible for the tariff treatment and quantitative limitations set forth in the tariff schedule as goods originating in the territory of a NAFTA party only if they are goods wholly obtained or produced in the territory of Canada, Mexico and/or the U.S.; or they have been transformed in the territory of Canada, Mexico, and/or the U.S. so that each of the non-originating material used in the production of such goods undergoes a chang