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HQ 223303


October 2, 1991

CON-9-04-CO:R:C:E 223303 CB

CATEGORY: ENTRY

Mr. Billy J. Gwin
Geo. S. Bush & Co., Inc.
1400 Exchange Building
821 Second Avenue
Seattle, WA 98104

RE: Request for binding ruling concerning a TIB entry of raw hops

Dear Mr. Gwin:

This is in reply to your letter of June 19, 1991, wherein you requested a binding ruling on a prospective shipment of raw hops which are processed into hop pellets or hop extract.

FACTS:

According to your letter, the raw hops are made into pellets or extract and there is four percent waste with the processing of the raw pellets. Two percent is a weight loss from the packaging material and there is no weight record kept of this loss. The additional two percent loss is part evaporation of water and waste consisting of stones, metals, and other impurities. This waste is dumped automatically during processing into a dumpster, which is then discarded by a disposal service. Your request states that the loss in evaporation is impossible to measure. The pellets leave the pelletizing press at a temperature of 120- 130 F and thereafter are cooled with refrigerated air, or in the winter time, with cold outside air. The only way to prove this loss is to see the steam fumes leaving the exhaust shaft during cold winter days.

The importer proposes to enter the merchandise under a TIB entry. You have posed specific questions which you would like us to address.

ISSUE:

1) How will the Customs Service treat the loss during manufacture?

2) Will the importer have to pay double duty on the waste since duty is based on weight?

3) Will Customs accept the importer's weight loss of four percent?

4) If the loss has no value and is not recoverable does the importer have to pay the penalty of double duty?

LAW AND ANALYSIS:

In order to qualify for a temporary importation under bond (TIB) entry, an importer must meet all of the accountability requirements under subchapter XIII, chapter 98, U.S. note 2(b), HTSUSA, which provides that if any processing of merchandise entered under a TIB results in an article (other than an article described in (a) of this note) manufactured or produced in the United States: (i) a complete accounting will be made to the Customs Service for all articles; and (ii) all articles and valuable wastes resulting from such processing will be exported or destroyed under Customs supervision within the bonded period; except that in lieu of the exportation or destruction of valuable wastes, duties may be tendered on such wastes at rates of duties in effect for such wastes at the time of importation.

Regarding question #1, your client states that no weight record is kept of the loss during manufacture. The waste is dumped into a dumpster, which is then discarded by a disposal service. As we previously informed you, the Customs Service does require that the manufacturer submit evidence regarding the treatment of waste. Any evidence, satisfactory to the district director, that is sufficient to identify the valuable waste and show its description and quantity is adequate. Such evidence might be a statement of the importer, or other person having knowledge of the facts, setting forth the circumstances of the production of the valuable waste.

Concerning question #2, the importer states that the waste consists of stones, metals, and other impurities, as well as evaporation of water during pelletizing. The importer will not have to pay duty on the waste if the district director is satisfied that the waste has been adequately identified and measured. On question #3, the importer states that the loss in evaporation is impossible to measure. The district director must be satisfied of the claim of no value or irrecoverability. Headquarters can not make such a determination.

Regarding question #4, if the district director is satisfied that the "waste" is not an article and has no value or is irrecoverable, then the importer does not have to pay duty on the waste.

HOLDING:

Entry can be permitted in this case under a temporary importation under bond as a process under subheading 9813.00.05, HTSUS. However, in order to gain the benefit of duty-free treatment, the importer must meet all of the accountability requirements under the U.S. Notes of Subchapter XIII to the satisfaction of the District Director.

Sincerely,

William G. Rosoff

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