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HQ 114394




August 4, 1998

REC-1/ENT-1/CON-3-RR:IT:EC 114394 GOB

Category: ENTRY

Joseph F. Donohue, Jr., Esq.
Donohue and Donohue
26 Broadway
New York, N.Y. 10004

RE: U.S. Virgin Islands; Recordkeeping; 19 U.S.C. 1508, 1509; Material transfer form; Exportation; Importation; Entry

Dear Mr. Donohue:

This is in response to your submission of July 2, 1998 on behalf of Amerada Hess Corporation ("Hess") and its wholly-owned subsidiary, Hess Oil Virgin Islands Corp. ("HOVIC").

FACTS:

You describe certain of the facts as follows:

HOVIC operates a petroleum refinery in St. Croix, U.S. Virgin Islands. It imports materials to be used in the refining operation as well as equipment and supplies needed for operation and maintenance of the refinery and the supporting facilities. In some instances the imports are from foreign countries and in other instances from the United States. Equipment received from the United States is periodically returned to the United States for maintenance or repair, or because it is no longer needed at the refinery.

ISSUES:

1. Do the laws with respect to recordkeeping (19 U.S.C. 1508) and the examination of books and witnesses (19 U.S.C. 1509) apply to imports into the U.S. Virgin Islands?

2. When U.S. goods are shipped to the U.S. Virgin Islands and returned to the United States, what documentation should be filed to ensure duty-free treatment? When equipment is returned to the U.S. for maintenance, repair or some purpose other than sale, will the material transfer form that accompanies the shipment be acceptable in lieu of an invoice or pro forma invoice for entry and recordkeeping purposes?

LAW AND ANALYSIS:

Issue One

19 CFR 101.1 provides, in pertinent part:

Customs territory of the United States. "Customs territory of the United States" includes only the States, the District of Columbia, and Puerto Rico.

General Note 2 of the Harmonized Tariff Schedule of the United States ("HTSUS") provides that "[t]he term "customs territory of the United States", as used in the tariff schedule, includes only the States, the District of Columbia and Puerto Rico." [Emphasis in the original.]

19 CFR 7.2 provides, in pertinent part:

? 7.2 Insular possessions of the United States other than Puerto Rico.

(a) Insular possessions of the United States other than Puerto Rico are also American territory but, because those insular possessions are outside the customs territory of the United States ... The principal such insular possessions are the U.S. Virgin Islands ...
...
(d) The Secretary of the Treasury administers the customs laws of the U.S. Virgin Islands through the United States Customs Service. The importation of goods into the U.S. Virgin Islands is governed by Virgin Islands law; however, in situations where there is no applicable Virgin Islands law or no U.S. law specifically made applicable to the Virgin Islands, U.S. laws and regulations shall be used as a guide and be complied with as nearly as possible. Tariff classification of, and rates of duty applicable to, goods imported into the U.S. Virgin Islands are established by the Virgin Islands legislature.

[Emphasis supplied.]

19 U.S.C. 1508(a) provides:

? 1508. Recordkeeping

(a) Requirements

Any-

(1) owner, importer, consignee, importer of record, entry filer, or other party who-

(A) imports merchandise into the customs territory of the United States, files a drawback claim, or transports or stores merchandise carried or held under bond, or

(B) knowingly causes the importation or transportation or storage of merchandise carried or held under bond into or from the customs territory of the United States;

(2) agent of any party described in paragraph (1); or

(3) person whose activities require the filing of a declaration or entry, or both;
shall make, keep, and render for examination and inspection records (which for purposes of this section include, but are not limited to, statements, declarations, documents and electronically generated or machine readable data) which-

(A) pertain to any such activity, or to the information contained in the records required by this chapter in connection with any such activity; and

(B) are normally kept in the ordinary course of business.

[Emphasis supplied.]

As the underlined language of 19 U.S.C. 1508(a) indicates, the primary thrust of the recordkeeping provisions is with respect to the importation of merchandise into the customs territory of the United States. 19 CFR 101.1 and 7.2(a) make clear that the customs territory of the United States does not include the U.S. Virgin Islands.

Accordingly, with respect to the customs laws of the United States, we find that 19 U.S.C. 1508 and 1509 are not applicable with respect to imports into the U.S. Virgin Islands.

We call your attention to 19 CFR 7.2(d), supra. We note that the U.S. Virgin Islands may have its own recordkeeping requirements with respect to importations into the U.S. Virgin Islands, and that it may choose to adopt 19 U.S.C. 1508 and 1509 as its recordkeeping statutes. In this regard, we are not able to advise what action the U.S. Virgin Islands may have taken. For such information you will have to contact the U.S. Virgin Islands directly.

Issue Two

HOVIC receives U.S. origin equipment for use at its refinery. The equipment often returns to the United States for repair or maintenance or because HOVIC has completed its use of the equipment.

You state that while there is a regulation with respect to the duty-free return of U.S. origin goods exported to foreign countries and returned to the U.S. (19 CFR 10.1; see also subheading 9801.00.10, HTSUS, which provides for duty-free treatment for "[p]roducts 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."), and there is a regulation with respect to the duty-free treatment of previously imported foreign goods shipped to and returned from U.S. insular possessions (19 CFR 7.3), there is no provision for duty-free treatment of U.S. origin goods shipped to and returned from U.S. insular possessions.

"Exportation" is defined in 19 CFR 101.1 as "a severance of goods from the mass of things belonging to this country with the intention of uniting them to the mass of things belonging to some foreign country."

In Ruling 560827 dated February 25, 1998, we stated:

Based upon the foregoing, we find that in the instant case there will be no exportation of the samples, as Guam is not considered a foreign country. Thus, these articles will not be eligible for the duty exemption under subheading 9801.00.10, HTSUS, upon return of the merchandise to the U.S. However, inasmuch as no exportation has taken place in this instance, the subject articles transported to Guam are not considered imported when returned to the U.S. In order to support the determination that an exportation did not occur, documentation will be required to verify that the returning articles are the same articles transported to Guam.

In Ruling 225339 dated January 10, 1995, we found that oil spill equipment temporarily sent to the U.S. Virgin Islands was not exported. We stated:

Inasmuch as no exportation has taken place in this instance, the subject equipment and supplies are not imported when returned to the U.S. However, in order to support the determination that an exportation did not occur, documentation will be required to verify exactly which equipment and supplies are initially sent to the spill and that these same equipment and supplies are returned to the point of origin.

In CSD 79-77, we stated:

Insofar as articles exported to Guam being eligible for drawback, there is no legal authority for the allowance of drawback on such articles which are shipped to Puerto Rico, the Virgin Islands, American Samoa, Wake Island, Midway Islands, Kingman Reef, Guam, Canton Island, Enderbury Island, Johnston Island, or Palmyra Island. The Customs Court has specifically held that for the purposes of the drawback and temporary importation under bond laws, Guam is not a foreign country and that goods shipped there from the United States are not "exported." Mitsubishi International Corp. et al v. United States, 55 Cust. Ct. 319, C.D. 2593 (Dec. 8, 1965).

In Ruling 114291 dated May 7, 1998, we stated:

Longstanding judicial and administrative precedent holds that merchandise sent from the United States to Guam is not exported. See John Rothschild & Co. v. United States, 16 Ct. Cust. Appls. 442, 446, T.D. 43190 (1929); Mitsubishi International Corp. et al v. United States, 55 Cust. Ct. 310, 325, C.D. 2597 (1965); C.S.D. 79-77; and Headquarters Ruling Letter HQ 221414, dated April 11, 1990. If an article leaves the United States but is not deemed to be exported, then there is no importation upon its return to the United States. In accordance with General Note 1 of the Harmonized Tariff Schedule of the United States, only those goods that are imported into the customs territory of the United States are subject to duty... Furthermore, Customs entry requirements pertain only to merchandise which has been imported. 19 U.S.C. ?1484; 19 CFR ?141.4. Applied here, sales samples sent to Guam from the United States would not be subject to duty or entry requirements upon their return from Guam to this country.

Based upon the above authorities, we make the following findings. Merchandise shipped to the U.S. Virgin Islands is not an exportation, as that term is defined in 19

CFR 101.1. Thus, there is no importation when the merchandise is returned to the U.S. from the U.S. Virgin Islands. Under this circumstance, the filing of an entry is not required. A properly completed CF 3311 constitutes acceptable documentation to support the claim that entry is not required because the merchandise has not been exported.

We find that the documentation used to evidence duty-free admission in this situation (i.e., documentation to establish that the merchandise being returned to the U.S. is the same merchandise which was previously sent from the U.S. to the U.S. Virgin Islands) is not a record described in 19 U.S.C. 1509(a)(1)(A) because it is not "required by law or regulation for the entry of the merchandise." However, we note that it would be prudent for a party to retain such documentation in order to support the claim that entry is not required.

You state that the material transfer form rather than a commercial invoice is used when certain merchandise is returned to the U.S. for repair or maintenance. A commercial invoice is not used because there is no sale. You state that the material transfer form contains substantially all of the information required by 19 CFR 141.86; the exception is that a value rather than a purchase price is provided on the material transfer form.

We find that a material transfer form may be used in lieu of a commercial invoice under the facts presented, i.e., there is no commercial invoice because there is no sale and the material transfer form contains all of the information required by 19 CFR 141.86 with the exception that a value rather than a purchase price is provided.

HOLDINGS:

1. With respect to the customs laws of the U.S., 19 U.S.C. 1508 and 1509 are not applicable with respect to imports into the U.S. Virgin Islands.

2. Merchandise shipped to the U.S. Virgin Islands is not an exportation, as that term is defined in 19 CFR 101.1. Thus, there is no importation when the merchandise is returned to the U.S. Under this circumstance, the filing of an entry is not required. A CF 3311 constitutes acceptable documentation to support the claim that entry is not required because the merchandise has not been exported. A material transfer form may be used in lieu of a commercial invoice under the facts presented, i.e., there is no commercial invoice because there is no sale and the material transfer form contains all
of the information required by 19 CFR 141.86 with the exception that a value rather than a purchase price is provided.

Sincerely,

Jerry Laderberg
Chief,

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