HQ 0223230 - Toshiba sanctions; importation of merchandise manufactured by Toshiba; spare parts exception; Public Law 100-418; 19 CFR 12.141, 142 & 143 - United States International Trade Commision Rulings

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HQ 223230

June 20, 1991

ENT-1-07-CO:R:C:E 223230 GG

CATEGORY: ENTRY LIQUIDATION

Timothy C. Berndt
Supervisor - Purchasing
Allied-Signal Inc.
Westwood Road
P.O. Box 697
Pottsville, PA 17901

RE: Toshiba sanctions; importation of merchandise manufactured by Toshiba; spare parts exception; Public Law 100-418; 19 CFR 12.141, 142 & 143

Dear Mr. Berndt:

This is in response to your letters, dated April 22 and May 14, 1991, in which you request that the U.S. Customs Service issue a binding ruling on the admissibility of spare parts manufactured by Toshiba Machine Company, which you are attempting to procure through Unitika Ltd. of Osaka, Japan. Our decision follows.

FACTS:

Allied-Signal Inc. ("Allied"), is attempting to import parts for the proper servicing and maintenance of its plastic film manufacturing equipment. The parts are procured through Unitika Ltd. of Osaka, Japan, but are manufactured by the Toshiba Machine Company of Japan ("Toshiba"). Products of Toshiba are currently subject to import sanctions. The parts are:

Purchase Order # Items

79-68000 001 Oilless bearing
79-68000 002 O-ring
79-68000 003 Oil seal
79-70741 001 T-die side plates
79-23249 001 Heater
79-22620 001 Heater cartridge
79-22557 002 Adjust bolt
79-22557 003 Collar
79-22557 004 Taper pin
79C-71366 T-die type TDS-1680
79C-71366 Polymer line
79C-72817 Filter elements for polymer transfer line
79C-72817 Filter element spacers
79C-72817 Filter element gaskets
79C-72817 Filter element hollow o-ring

Allied states that because of the proprietary design of the equipment that uses the Toshiba parts, it has been unable to obtain the parts from another supplier. The company also notes that a failure to acquire these parts would jeopardize its ability to continue operating in the event of a problem.

ISSUE:

Whether the spare parts Allied seeks to import fall under an exception to the prohibition on imports of products manufactured by Toshiba?

LAW AND ANALYSIS:

Executive Order 12661 of December 27, 1988, implemented the Omnibus Trade and Competitiveness Act of 1988 (P.L. 100-418, 102 Stat. 1107) ("Omnibus Trade Act"). Section 2443(a)(2) of the Omnibus Trade Act imposed import sanctions on products of the Toshiba Machine Company (Toshiba) and Kongsberg Trading Company (Kongsberg) for a period of three years following December 28, 1988. To minimize the collateral impact of sanctions on U.S. companies, several exceptions to the import prohibition were made; among these was an exception for spare parts. See Section 2443(c)(2)(B) of the Omnibus Trade Act. The Customs Service adopted regulations, found in 19 CFR 12.140 - 12.143, to implement the import prohibition and to provide the necessary definitions and procedures whereby parties can import products exempted from the sanctions. The spare parts exception is listed in 19 CFR 12.141(b).

The term "spare part" means any individual piece, part, or subassembly which is intended for the logistic support or repair of a finished product and not as a finished product itself. 19 CFR 12.142(c). Allied's statement that the various parts are necessary for the proper servicing and maintenance of the company's plastic film manufacturing equipment places these items within this definition. None of the listed parts is intended to be used, by itself, as a finished product. Accordingly, Allied's parts qualify as spare parts whose importation is not, per se, prohibited.

The ability to import merchandise under an exception to the sanctions is conditioned upon the importer filing with the U.S. Customs Service, at the time of making entry, a declaration stating that the merchandise is being imported under a particular exception. See 19 CFR 12.143. Allied therefore must file a signed declaration with each entry stating that it is importing the parts under the spare parts exception (19 CFR 12.141(b)). In addition, the company may file only formal entries on these importations and must submit a copy of the contract for the merchandise to Customs prior to its release from Customs' custody. All documents and statements are subject to verification by the U.S. Customs Service at the port of entry.

HOLDING:

Merchandise manufactured by the Toshiba Machine Company and intended for use as spare parts may be imported pursuant to the spare parts exception to the import prohibition imposed on products of that company, subject to the the procedures set forth in 19 CFR 12.143.

Sincerely,

John Durant, Director
Commercial Rulings Division

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