Newly Released CBP HQ Rulings Dec. 15
The Customs Rulings Online Search System (CROSS) was updated on Dec. 15 with the following headquarters rulings (ruling revocations and modifications will be detailed elsewhere in a separate article as they are announced in the Customs Bulletin):
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H324085: Application for Further Review of Protest No. 4196-22-107960; Denial of Preferential Tariff Treatment; United States-Korea Free Trade Agreement Eligibility of Men’s Apparel
| Ruling: The Canine Q-zips and Azalea polos are ineligible for preferential tariff treatment under the UKFTA. |
| Issue: Whether the Canine Q-zips and Azalea polos imported from South Korea are eligible for preferential tariff treatment under the United States-Korea Free Trade Agreement, or UKFTA. |
| Item: Rhoback's men’s pullovers and polo shirts |
| Reason: The invoices and declarations of origin for both the Canine Q-zips and Azalea polos are insufficient to substantiate that the spandex yarns were wholly formed and finished in South Korea. The documentation provided does not support that the elastomeric yarns, i.e., the spandex yarns, are wholly formed and finished in South Korea. |
| Ruling Date: Oct. 7, 2025 |
H337689: Application for Further Review of Protest No. 2704-23-164798; Dreamwear Inc.; First Sale Valuation; Transaction Value
| Ruling: The protest should be denied. Appraisement of the merchandise should be based upon the price paid by the importer. |
| Issue: Whether certain entry lines based upon the transaction value between the Protestant and a third-party unrelated vendor were erroneously rate advanced; and whether the Protestant submitted sufficient evidence to support the use of transaction value of the entered merchandise based upon the sales between the middleman vendor and its related factory seller under the “first sale” principle of appraisement set forth in 19 U.S.C. § 1401a(b). |
| Item: Ten entries of clothing that were entered between Jan. 4, 2019, and April 23, 2019, by Dreamwear and liquidated on Aug. 26, 2022. The entries at issue all involve clothing produced in China, some of which were also subject to multi-tiered transactions. |
| Reason: While Dreamwear did provide CBP with a variety of documents, it did not meet its burden of providing a complete paper trail as required by T.D. 96-87. Accordingly, it is impossible to determine whether the transactions between the various middleman vendors (Wuxi Xinhexin, Lucky Zone, Windus, and All Success), and the corresponding factory sellers (Wuxi Sanxing, DongGuan Lucky Zone, Jiangyin Jinze, and Brilliant HK) constitute bona fide sales for exportation upon which transaction value may be based. As for arm’s length transactions, Dreamwear failed to meet its burden in demonstrating via documentary evidence that the transactions between Lucky Zone and DongGuan Lucky Zone, as well as the transactions between Wuxi Xinhexin and Wuxi Sanxing as related parties, were negotiated at arm’s length. Dreamwear provided an organizational chart describing the functions of the middleman vendors and the factory sellers, but this chart falls far short of setting forth detailed descriptions of the roles of each of the parties involved in the multi-tiered transactions. Moreover, according to Dreamwear, Lucky Zone and DongGuan Lucky are related to one another through common family ownership, which raises further concerns regarding arm’s length transactions. Furthermore, the documentation submitted by Dreamwear does not substantiate that the price was adequate to ensure the recovery of all costs plus a profit equivalent to the firm’s overall profit realized over a representative period of time. Also, under the circumstances of the sales approach, Dreamwear did not provide any other evidence indicating that the relationship between Lucky Zone and DongGuan Lucky Zone and the relationship between Wuxi Xinhexin and Wuxi Sanxing did not affect the price paid or payable. |
| Ruling Date: Oct. 6, 2025 |