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HQ 557477




August 4, 1994

CLA-2 CO:R:C:S 557477 DLD

CATEGORY: CLASSIFICATION

District Director
U.S. Customs Service
9 N. Grand Avenue
Nogales, Arizona 85621

RE: Decision on Application for Further Review of Protest No.2609-93-100002.

Dear Sir:

This protest was filed against your decision to liquidate as dutiable the entry of an inductively coupled plasma mass spectrometer for the University of Arizona.

FACTS:

The University of Arizona, on April 2, 1992, ordered an inductively coupled plasma mass spectrometer and laser ablation system for use with the mass spectrometer, both on Purchase Order P202411. They were ordered from Turner Scientific of the United Kingdom through Kurt J. Lesker Company of Clairton, Pennsylvania. On May 11, 1992, Dr. Joaquin Ruiz of the University of Arizona applied for duty-free entry under subheading 9810.00.60 of the Harmonized Tariff Schedule of the United States (HTSUS) for the inductively coupled plasma mass spectrometer. On May 12, 1992, a separate duty-free application for the laser ablation sampler for the mass spectrometer was filed. Customs Headquarters denied both applications on June 22, 1992, under separate denial letters 556726 and 556728. The denial was made on the basis that there was the intent to use the devices for commercial purposes, contrary to subsection 301.4(a)(3) of the joint regulations of the Department of Commerce and the Department of the Treasury (15 CFR 301.4(a)(3)). Specifically, the denial letters stated:

The "Terms & Conditions of Sale" of January 2, 1992, which is part of the quotation on the system, contains the following paragraph:

Special Consideration:
a. Subject to the purchase of the TS 'SOLA' ICP-MS and Laser Ablation system quoted here, Turner Scientific intends to support a student in Dr. Ruiz laboratory in the amount of $10,000 per year for two years in return for co-operative work on instrument design and measurement techniques.
Inasmuch as the system was purchased by the University of Arizona, it is evident that the University agreed to this arrangement. Such a "quid pro quo" agreement is considered a "commercial use" of the instrument of the application pursuant to subsection 301.4(a)(3) of the joint regulations of the Department of Commerce and the Department of the Treasury (15 CFR 301.4(a)(3)). Collaboration or "cooperative work on instrument design" between the manufacturer, Turner Scientific, and your laboratory in return for a valuable consideration to you of $20,000, renders the importation ineligible for duty-free entry under subheading 9810.00.60, HTSUS.

The mass spectrometer entered the U.S. on August 14, 1992, under entry number 052-9201131-8. It was liquidated as dutiable on January 8, 1993. A protest containing an application for further review (Customs Form 19) under 19 CFR Part 174 was timely filed on February 23, 1993. The present letter is Customs Headquarters' response to the request for further review of the protest.

ISSUE:

Whether a mass spectrometer imported by the University of Arizona is eligible for duty-free entry under subheading 9810.00.60, HTSUS.

LAW AND ANALYSIS:

The protest argues that duty-free entry should be allowed for the mass spectrometer on the following grounds:

1. The "co-operative work on instrument design and measurement techniques" only applies to the laser ablation system.. The mass spectrometer is a standard instrument for which no research, cooperative design or measurement work is needed or desired. As evidence for this, the U.S. distributor, Kurt J. Lesker Company's quotation of January 2, 1992, states that Lesker would pay the duty on the laser ablation system. Lesker did not offer to pay the duty on the mass spectrometer.

2. The Kurt J. Lesker Company affirmed in a letter of July 29, 1992, that it offered to pay the duty on the laser ablation system because it knew "U.S. Customs' feelings on research work for industry", and "knew that Customs would require payment of import duty for the laser ablation system" because of the intended collaborative development of it by the University of Arizona and the manufacturer.

3. In a telephone conversation on September 28, 1993 with a member of my staff, Dr. Ruiz stated that this mass spectrometer is an established instrument in the U.S. and that there was no intention nor need to develop or test this instrument, but only the laser ablation system. He also stated that the $10,000 for a student for two years applies only to the laser ablation system. He said there is no documentation for this, it was a gentleman's agreement. He acknowledged that the laser ablation system cannot operate by itself but must be run with the mass spectrometer and that there was an agreement between the manufacturer and him to develop the laser ablation technique.

On October 27, 1993, Customs asked Dr. Ruiz to affirm the above information in writing, which he did in a letter dated November 4, 1993.

Supporting the initial Customs determination that the mass spectrometer is also dutiable are the following points:

1. The University of Arizona does not contest Customs contention that the laser ablation system is dutiable by virtue of intended commercial use, and that the laser ablation system, ordered on the same purchase order as the mass spectrometer, must be operated with it. The mass spectrometer, however, can be operated without the laser ablation system. Thus, the collaborative work to develop the laser ablation technique cannot be accomplished without the simultaneous use of both devices.

2. The quotation, cited previously, states that the student support offered by the manufacturer, which was the reason for the denial of duty-free treatment, is subject to the purchase of both the mass spectrometer and the laser ablation system.

3. Although the manufacturer offered to pay the duty on the laser ablation system and not on the mass spectrometer and claims are made that this demonstrates that the monetary support for the collaboration does not extend to the mass spectrometer, the University of Arizona nevertheless applied for duty-free treatment for both items.

HOLDING:

The Customs Service accepts the statements of the protestant that the collaborative research was only intended for the laser ablation system. Further, although the laser ablation system was ordered together with the mass spectrometer and cannot operate without it, Customs does not insist that the non-eligibility of the laser ablation system due to commercial use extends to the mass spectrometer.

Accordingly, on reconsideration of this issue we find that the mass spectrometer which is the subject of the protest is considered to satisfy the Customs criteria for duty-free entry under 15 CFR 301 (subheading 9810.00.60, HTSUS). Therefore the protest is approved. In consequence thereof, the Customs Service has approved the application for duty-free entry of the mass spectrometer (Docket no. 94-014, approved February 10, 1994). The Department of Commerce subsequently approved the application and the official notice of this approval was published in the Federal Reqister on June 23, 1994 (p.32418).

In accordance with Section 3A(ll)(b) of Customs Directive 099 3550-065, dated August 4, 1993, Subject: Revised Protest Directive, this decision should be attached to the Customs Form 19 and mailed by your office to the protestant no later than 60 days from the date of this letter. Any reliquidation of the entry in accordance with the decision must be accomplished prior to mailing of the decision. Sixty days from the date of the decision the Office of Regulations and Rulings will take steps to make the decision available to Customs personnel via the Customs Ruling Module in ACS and the public via the Diskette Subscription Service, LEXIS, Freedom of Information Act and other public access channels.

Sincerely,

John Durant, Director
Commercial Rulings Division


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