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HQ 559417




RR:TC:SM 559417 DLD
December 18, 1995

CATEGORY: CLASSIFICATION

Port Director
U.S. Customs Service
200 St. Paul Place
28th Floor
Baltimore, MD 21202

RE: Decision on Application for Further Review of Protest No. 1303-95-100275. Subheading 9810.00.60, (HTSUS). Duty Free Treatment of Scientific Instruments.

Dear Sir:

This protest was filed against your decision in the liquidation as dutiable of a radiation therapy simulator imported by the University of North Carolina Hospitals, Chapel Hill, North Carolina.

FACTS:

The University of North Carolina Hospitals placed an order for a radiation therapy simulator with Oldelft BV of Holland on December 21, 1993. The university applied to Customs Headquarters for duty-free entry for the simulator under subheading 9810.00.60, HTSUS. The application was received at Customs on June 20, 1995. On July 20, 1995, Customs asked the applicant, Dr. Joel E. Tepper, for additional information. One of the questions pertained to a statement in the Revised Quotation No. 93-0916B, (Note 1), namely, that the "University of North Carolina agrees to act as a Beta Site for item no. 10 [Digital Image Merge and Beams Eye Projection]. This includes assistance in determining clinical requirements and allowing for potential Oldelft Customers to visit on a reasonable basis." Dr. Tepper was asked: "Did the University of North Carolina Hospitals agree to be a Beta Test site as indicated in Note 1, Revised Quotation No. 93-0916B?" Inasmuch as no response to this inquiry was received within the allowed 60 day period, the application for duty-free entry was closed administratively on September 1, 1995.

The entry pertaining to this importation (Baltimore entry no. 916-0385146-9) had liquidated on March 24, 1995. A protest had been timely filed on June 21, 1995. A response to the Customs inquiry of July 20, 195l, was received by Customs on September 26, 1995. Accordingly, the duty-free application could be reconsidered. The response stated, in part, that "[w]ith regard to the BETA Agreement covered in Note (1) of our revised proposal from the vendor, #93-0915B [sic], we will create such an agreement when the vendor has the device ready to be BETA-tested."

ISSUE:

Does a radiation therapy simulator imported by the University of North Carolina Hospitals qualify as a scientific instrument or apparatus under subheading 9810.00.60, HTSUS?

LAW AND ANALYSIS:

The protest can be approved if and only if the application for duty-free entry is approved by both the Customs Service and the Department of Commerce. Acting as a BETA test site for a manufacturer of an instrument for which an application for duty-free entry under subheading 9810.00.60, HTSUS, has been filed precludes approval of the application by Customs. This is considered "commercial use" of the imported device 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)). In addition, this subsection specifies, as an example of commercial use, "use of the instrument for demonstration purposes in return for a fee or other valuable consideration." (A BETA test agreement between a manufacturer and its customer entails a quid pro quo arrangement containing some valuable consideration for the customer.)

HOLDING:

The protest is denied in full. The application for duty-free entry under subheading 9810.00.60, HTSUS, is denied because there is commercial use of the instrument of the application within the meaning of 15 CFR 301.4(a)(3) of the regulations. Accordingly, the protest cannot be approved inasmuch as the application for duty-free entry has not been approved by Customs and Commerce.

In accordance with Section 3A(11)(b) of Customs Directive 099 3550-065, dated August 4, 1993, Subject: Revised Protest Directive, a copy of this decision should be attached to the Customs Form 19 and mailed by your office to the protestant as part of the notice of action on the protest 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 Rulings Module in ACS and the public via the Diskette Subscription Service, Freedom of Information Act and other public access channels.

Sincerely,

John Durant, Director
Tariff Classification Appeals

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