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HQ 224211


October 20, 1992

CON-9-04-CO:R:C:E 224211 AJS

CATEGORY: ENTRY

TARIFF NO.: 8518.90.30; 9813.00.05

Mr. Jose G. Flores
Attorney in Fact
Matsushita Electric of P.R., Inc.
P.O. Box 2695
San Juan, P.R. 00902-2695

RE: Temporary importation under bond for merchandise processed and exported; speaker parts; General Note 1; Subchapter XIII, U.S. note 1(a); HQ 221572; HQ 219823; Subchapter XIII, U.S. note 2(b); 19 CFR 10.31(f); 19 CFR 141.90; 19 CFR 141.103.

Dear Mr. Flores:

Your letter of August 19, 1992, on behalf of your client Matsushita Electric of P.R., requesting a ruling on the assembly of foreign speaker parts with domestic parts into a complete speaker unit, has been referred to this office for reply.

FACTS:

Matsushita intends to import speaker parts number EAS 25KH35D-T (i.e, tweeter), EAS10PM342T (i.e, midrange), EAS30PL30IT (i.e, woofer) and EAS30PL300T (i.e., woofer) into the port of San Juan, P.R. These parts will be assembled with alleged domestic parts into a complete speaker unit. After testing, the speaker unit will be packed and exported to Japan, Canada and South Africa.

ISSUE:

Whether the subject speaker parts qualify for treatment as articles admitted temporarily free of duty, under bond, within subheading 9813.00.05, Harmonized Tariff Schedule of the United States (HTSUS).

LAW AND ANALYSIS:

All merchandise imported into the United States is subject to duty unless specifically exempted therefrom. General Note 1, HTSUS. Subheading 9813.00.05, HTSUS, provides for temporary
duty-free entry, under bond, for merchandise imported into the United States for the purpose of repair, alteration or processing. The latter may include processing that transforms an article into one that is considered manufactured or produced in the United States. This provision requires that the imported merchandise be exported or destroyed within one year of the date of importation. Subchapter XIII, U.S. note 1(a). This period may be extended for one or more further periods which, when added to the initial one year, do not exceed a total of three years. Subchapter XIII, U.S. note 1(a). In order to qualify for this duty-free treatment, merchandise cannot be imported for the purpose of sale or sale on approval. Subchapter XIII, U.S. note

In this instance, certain speaker parts will be imported through the port of San Juan and assembled with domestic parts into a complete speaker unit. After assembly, the speaker unit will be exported to Japan, Canada and South Africa. This type of assembly would appear to be a "processing" within the meaning of subheading 9813.00.05, HTSUS. We have previously ruled that component parts imported for the purpose of assembly with other parts into a finished article constitute a "processing." HQ 221572 (08/02/89) and HQ 219823 (11/03/87). Accordingly, the subject speaker parts are entitled to temporary duty-free entry, under bond, as articles to be processed.

Subchapter XIII, U.S. note 2(b) requires that if any processing of merchandise admitted under subheading 9813.00.05, HTSUS, results in an article manufactured or produced in the United States: (i) a complete accounting will be made to the Customs Service for all articles, wastes and irrecoverable losses resulting from such processing; 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 waste, duties may be tendered on such wastes at rates of duties in effect for such wastes at the time of importation. The assembly of the subject component parts with other parts to produce a complete speaker unit is a processing which results in an article manufactured or produced in the United States. Consequently, your client is subject to all the above accountability requirements of U.S. note 2(b).

The applicable Customs regulations for temporary importations under bond may be found at 19 CFR 10.31 through 10.40. Section 10.31(f) states that a bond shall be given on Customs Form 301 in an amount equal to double the duties which it is estimated would accrue (or such larger amount as the district director shall state in writing to the entrant is necessary to protect the revenue) had all the articles covered by the entry
been entered under an ordinary consumption entry. The basis for the computation of the amount of a temporary importation bond is estimated duties determined in accordance with sections 141.90 and 141.103 of the Customs Regulations (19 CFR 141.90 and 19 CFR 141.103). To this amount is added any other duties that the district director ascertains may become due on the articles so entered and, as well, estimated expenses of reimbursable supervision such as may arise, for instance, when the articles are not properly marked.

Heading 8518, HTSUS, provides for loudspeakers and parts thereof. As stated previously, the subject components are parts of speaker units. These speaker units are a type of loudspeaker. Accordingly, the subject speaker parts satisfy the terms of this heading. More specifically, they are described within subheading 8518.90.30, HTSUS, which provides for parts of loudspeakers.

HOLDING:

Entry is permitted in this instance temporarily free of duty, under bond, within subheading 9813.00.05, HTSUS, which provides for articles to be processed. The importer must meet all the accountability requirements under the U.S. Notes of Subchapter XIII to the satisfaction of the District Director.

The subject speaker parts are classifiable within subheading 8518.90.30, HTSUS, which provides for parts of loudspeakers, currently dutiable at the General Column 1 rate of 4.9 percent ad valorem.

Sincerely,

John Durant, Director
Commercial Rulings Division


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