HQ 0224025 - IA 31/92; Internal Advice request concerning free entry of tractors under the Canada-U.S. Free Trade Agreement that have previously been exported from the U.S. and have received drawback. - United States International Trade Commision Rulings

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HQ 224025

October 22, 1992

CLA-2-CO:R:C:E 224025 SR

CATEGORY: CLASSIFICATION

Tariff No.: 9801.00.80

District Director
Pembina, North Dakota 58271

RE: IA 31/92; Internal Advice request concerning free entry of tractors under the Canada-U.S. Free Trade Agreement that have previously been exported from the U.S. and have received drawback.

Dear Sir:

This is in reference to your request of May 4, 1992, concerning the re-entry of tractors, that have previously been exported from the U.S. and received drawback, under the U.S.- Canadian Free Trade Agreement under subheading 9801.00.80, Harmonized Tariff Schedule of the United States (HTSUS). Our decision follows.

FACTS:

Tractor parts of Canadian origin were imported into the U.S. where they were made into tractors. The completed tractors were exported back to Canada and drawback in the amount of $561.00 has been paid on the parts. The importer now wishes to reimport the tractors into the U.S. free of duty according to the terms of the Canadian Free Trade Agreement under subheading 9801.00.80, HTSUS, which allows Canadian articles that were previously exported from the U.S. to be admitted free of duty. The tractors are crawler or track-laying tractors classifiable under subheading 8701.30.50, HTSUS.

ISSUE:

Whether the tractors which were previously exported from the U.S. with drawback paid may be reimported to the U.S. free of duty under subheading 9801.00.80, HTSUS.

LAW AND ANALYSIS:

Subheading 9801.00.80, HTSUS, provides as follows:

Articles previously exported from the United States which-- except for U.S. note 1 of this subchapter--would qualify for
free entry under one of the foregoing items and are not otherwise free of duty . . .

U.S. note 1 of the subchapter states that the provisions in the subchapter (except subheadings 9801.00.70 and 9801.00.80) shall not apply to any article that is exported with the benefit of drawback.

Concerning the requirements of subheading 9801.00.80, HTSUS, the merchandise at issue has been previously exported from the United States and, except for U.S. note 1 of the subchapter, would qualify for free entry under the foregoing subheading 9801.00.1087, HTSUS. Subheading 9801.00.1087, HTSUS, provides for products of the United States when returned after having been exported, without having been advanced in value or improved in condition by any process of manufacture or other means while abroad, other, articles provided for in chapter 87.

Subheading 9801.00.80, HTSUS, also states that the articles must be "not otherwise free of duty". Since it is assumed that the tractors at issue meet the requirements of the Canadian Free Trade Agreement rules of origin then the tractors would be free of duty under heading 8701.30.50, HTSUS. If they are free of duty under heading 8701.30.50, HTSUS, then they do not meet the qualifications of subheading 9801.00.80, HTSUS, and would be classifiable under the appropriate subheading under heading 8701.30.50, HTSUS. The only U.S.-Canada Free Trade Agreement goods that would qualify for a free rate under 9801.00.80, HTSUS, are originating goods which are not yet reduced to duty-free under the current rate for the specific tariff rate subheading.

Generally, merchandise for which duty drawback has been paid cannot also be reimported as articles exported and returned without repayment of the drawback. The terms of the Canadian Free Trade Agreement allows this for qualifying merchandise. Therefore, if the tractors do not meet the requirements of the Canadian Free Trade Agreement, and are not otherwise free of duty, then they may be classified under subheading 9801.00.80, HTSUS. However, they will be assessed a duty (in lieu of any other duty or tax) equal to the sum of any duty and internal- revenue tax imposed upon the importation of like articles not previously exported, but in no case in excess of the sum of (a) any customs drawback proved to have been allowed upon such exportation of the article, and (b) any internal revenue tax imposed, at the time such article is entered, upon the importation of like articles not previously exported.

HOLDING:

If the tractors meet the requirements of the U.S.-Canada Free Trade Agreement and are therefore free of duty under the appropriate tractor classification heading, then they cannot be entered under subheading 9801.00.80, HTSUS, and must be entered under subheading 8701.30.50, HTSUS. If the tractors do not meet the requirements of the U.S.-Canada Free Trade Agreement the tractors may be entered under subheading 9801.00.80, HTSUS, with repayment of the drawback.

Sincerely,

John Durant, Director

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