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HQ 222651


January 7, 1991

CON-9-03-CO:R:C:E 222651 PH

CATEGORY: TEMPORARY IMPORTATION BOND

Mr. Kevin Cinq-Mars
General Manager
520 Wellington Street, Suite 5
London, Ontario, Canada N6A 3R2

RE: Subheading 9813.00.50

Dear Mr. Cinq-Mars:

In your letter of July 4, 1990, to the District Director of Customs, Detroit, Michigan, you requested a ruling on the Customs treatment of the proposed operation by your company of its on- site shredding service in the United States. The District Director forwarded your letter to this office for direct reply to you. Our ruling follows.

FACTS:

You state that your company currently operates a confidential on-site shredding service in the Southwestern Ontario region. You plan to open a United States operation in August of 1991. In the meantime, you would like to service interested clients in the Detroit market area on a periodic basis. You state that you have discussed with Customs in Detroit the possibility of bringing the trucks with which you provide the service across the border for a day or two at a time and that it was recommended that you obtain a ruling on your situation.

You state that you provide clients with secure storage cabinets. When your trucks arrive at the clients' offices, the cabinets are unlocked and the document storage bags which are inside the cabinets are removed and sealed. The bags are then transported to the trucks where all of their contents are shredded. In addition, you provide the service of annually disposing of records as they are no longer required to be retained. In order to assist organizations with their disposal planning, your company provides stickers that are used to denote files, boxes, etc., that are to be destroyed. All of the paper which your company shreds is sold either to paper brokers or directly to paper recycling plants.

The trucks which your company uses to visit clients and which perform the shredding are called "Mobile Shredding Units." These trucks consist of a truck chassis with a custom dual compartment truck body and a shredder/compactor. Trucks similar to the ones under consideration, manufactured by the same manufacturer, have been classified under heading 8704, Harmonized Tariff Schedule of the United States Annotated (HTSUSA) (see rulings 083669 and 085900, copies enclosed).

You describe two possible scenarios for your company's temporary operation in the Detroit area. In the first scenario, a Mobile Shredding Unit (MSU) would enter the United States empty, provide on-site shredding services, dump the shredded paper in the United States with a suitable paper broker, and cross back into Canada with an empty MSU. Alternatively, if a suitable paper broker could not be found in the United States, the shredded paper would be returned to Canada for dumping there. You note that the possibility exists under each of these scenarios that the MSU might have shredded paper on board when it enters the United States because, for example, the MSU might have serviced clients in the Windsor, Ontario, area in the morning and crossed the border to service United States clients without first dumping the paper shredded in the Windsor area.

ISSUE:

May a mobile shredding unit, consisting of a truck with paper shredding and compacting equipment, be temporarily brought into the United States under subheading 9813.00.50, HTSUSA, to perform shredding services?

LAW AND ANALYSIS:

Subheading 9813.00.50, HTSUSA, provides for the free importation, under bond, of:

Professional equipment, tools of trade, repair components for equipment or tools admitted under this heading and camping equipment; all of the foregoing imported by or for nonresidents sojourning temporarily in the United States and for the use of such nonresidents.

Under U.S. Note 1(a) of Subchapter XIII, HTSUSA (subheading 9813.00.50 is found in this Subchapter) articles described in the tariff provisions in that Subchapter, when not imported for sale or sale on approval, may be admitted into the United States with- out the payment of duty, under bond for their exportation within 1 year from the date of importation. This U.S. Note provides that the 1 year period for exportation may be extended for one or more further periods which, when added to the initial year, do not exceed a total of 3 years. Under U.S. Note 1(b) of Subchap- ter XIII, HTSUSA, "[f]or articles admitted into the United States under [sub]heading 9813.00.50, entry shall be made by the nonres- ident importing the articles or by an organization represented by the nonresident which is established under the laws of a foreign country or has its principal place of business in a foreign country."

The Customs Regulations pertaining to temporary importations under bond are found in 19 CFR 10.31-10.40, copies enclosed. The Customs Regulations specifically pertaining to subheading 9813.00.50, HTSUSA, are found in 19 CFR 10.36 and the Customs Regulations providing for a bond for merchandise entered under subheading 9813.00.50, in the amount of 110 percent of the esti- mated duties, are found in 19 CFR 10.31. Under these provisions, in certain circumstances, merchandise entered under subheading 9813.00.50 may be entered on a baggage declaration in lieu of formal entry and examination and the required bond may be without surety or cash deposit.

On the basis of the information provided, we conclude that the MSU may qualify for duty-free treatment under subheading 9813.00.50, HTSUSA, provided that the conditions in the subhead- ing, in U.S. Note 1(a) and (b) of Subchapter XIII, HTSUSA, and in the applicable Customs Regulations are met. Also, the MSU must be intended for use by the nonresident making entry or for use under his or her supervision. In this latter regard, Customs has consistently held that entry under subheading 9813.00.50 and its predecessor (item 864.50, Tariff Schedules of the United States) is personal to the nonresident and is nontransferable and terminates when the nonresident ceases to use the merchandise imported under the tariff provision.

Whether or not the MSU has any shredded paper on board when it enters the United States would not affect the qualification of the MSU for treatment under subheading 9813.00.50, HTSUSA. However, such shredded paper would be subject to entry with Customs (see 19 CFR 141.4) and the requirements concomitant with such entry (see 19 CFR Parts 141 and 142; see also 19 CFR 24.23 and 19 U.S.C. 58c(a), as recently amended by the Omnibus Budget Reconciliation Act of 1990 (Public Law 101-650) and the Customs and Trade Act of 1990 (Public Law 101-382), under which the merchandise processing fee provided for by that statute may not be less than $21.00). Although you have not requested informa- tion on the classification of and duty applicable to shredded paper and this ruling does not purport to address that question, we are enclosing a copy of heading 4707, HTSUSA, which provides for the classification and duty of "[w]aste and scrap of paper or paperboard."

You should be aware that under the United States-Canada Free Trade Agreement (FTA), no bond is required for "goods originating in the territory of Canada," as that term is defined in the FTA (see General Note 3(c)(vii), HTSUSA), which are entered under subheading 9813.00.50, HTSUSA (see Annex 401.2-B, subheading 9813.00.50, on page 1660 of House Document 100-216, 100th Cong., 2d Sess., United States-Canada Free Trade Agreement). You should also be aware that the .17 percent merchandise processing fee provided for under 19 U.S.C. 58c(a)(10) is not applicable to the processing of any article provided for in subheading 9813.00.50 (see 19 U.S.C. 58c(b)(8)(B)(i)) and is reduced for "goods originating in the territory of Canada," as defined in the FTA (see 19 CFR 24.23(b)(5)).

HOLDING:

A mobile shredding unit (MSU), consisting of a truck with paper shredding and compacting equipment, may temporarily be brought into the United States under subheading 9813.00.50, HTSUSA, to perform shredding services, provided that the conditions in that subheading, in U.S. Note 1(a) and (b) of Subchapter XIII, HTSUSA, and in 19 CFR 10.31-10.41 are met and that the MSU is intended for use by the nonresident making entry or for use under his or her supervision. Whether or not the MSU has any shredded paper on board when it enters the United States would not affect the qualification of the MSU for treatment under subheading 9813.00.50, although such shredded paper would be subject to normal entry requirements.

Sincerely,

John Durant, Director

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