United States International Trade Commision Rulings And Harmonized Tariff Schedule
faqs.org  Rulings By Number  Rulings By Category  Tariff Numbers
faqs.org > Rulings and Tariffs Home > Rulings By Number > 1998 HQ Rulings > HQ 227421 - HQ 545690 > HQ 227976

Previous Ruling Next Ruling
HQ 227976




July 16, 1998

CON-9-04 RR:CR:DR 227976 SMC

CATEGORY: ENTRY

Mr. Gerhard Grob
President
JAGRO
Customs Brokers and International
Freight Forwarders Inc.
290 Nye Avenue
Irvington, NJ 07111

RE: Temporary Importation under Bond (TIB); rolled aluminum foil; Subheading 9813.00.05, HTSUS; U.S. Note 2(b) of Subchapter XIII of Chapter 98, HTSUS

Dear Mr. Grob:

This is in response to your letter of April 9, 1998, on behalf of Danisco Flexible Schupbach AG (Danisco) of Burgdorf, Switzerland, wherein you requested a ruling on the eligibility for duty free entry of aluminum foil.

FACTS:

Danisco will be importing aluminum foil in rolls holding 7,500 bags that are pre-printed with ingredients of soup mix, backed, and decorated with a design and pattern to be further processed. This processing will involve the aluminum foil being rolled out, cut to size, folded, filled with a dried soup mix, and sealed after which the filled bags will be re-packed into cartons and exported.

ISSUES:

Does the above described aluminum foil qualify for entry under a temporary importation under bond provision; specifically, does the processing qualify as an alteration or process for purposes of entry under Subheading 9813.00.05 of the Harmonized Tariff Schedule of the United States (HTSUS).

LAW AND ANALYSIS:

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, including processes which result in articles manufactured or produced in the United States (emphasis added). This provision requires that the imported merchandise be exported or destroyed within one year from the date of importation. See Subchapter XIII, U.S. Note 1(a), HTSUS.

Note 2(b) of Subchapter XIII states that if any processing of such merchandise results in an article manufactured or produced in the United States, such merchandise may be admitted into the United States under subheading 9813.00.05, HTSUS, only on the condition that (i) a complete accounting will be made to Customs of all articles, wastes and irrecoverable losses resulting from such processing; and (ii) all articles, valuable wastes and by-products resulting from such processing will be exported or destroyed under Customs supervision within the bond period; except, that in lieu of exportation or destruction of valuable waste, duties may be tendered on such waste at the rate of duty in effect for such waste at the time of exportation.

As previously emphasized, a processing that results in articles manufactured or produced would qualify as a permissible operation under subheading 9813.00.05, HTSUS. Whether a process constitutes a manufacture or production is often at issue in drawback operations under title 19, United States Code, section 1313, since it is a statutory requirement. Customs has consistently relied on court decisions where there is the question of whether a processing constitutes a manufacture or production for purposes of drawback. In Anheuser-Busch Brewing Association v. United States, 207 U.S. 556, 28 S. Ct. 204 (1907), it was held that a "...manufacture implies a change, but every change is not manufacture, and yet every change in an article is the result of treatment, labor, and manipulation. But something more is necessary... [T]here must be transformation; a new and different article must emerge, having a distinctive name, character, or use."

The issue of duty-free importation of bags or containers for the sole purpose of filling with merchandise has been considered on numerous occasions by Customs and all provisions of law possibly applicable thereto have been carefully examined. It has been consistently held that there is no way that empty bags or containers may be imported into the United States merely for the purpose of being filled with merchandise for exportation, without the assessment of duty on such containers. In a Headquarters decision dated May 8, 1958, DB 516.6, it was held that bags and cartons imported to be filled with potato chips would not qualify under a temporary importation under bond provision nor would the processing qualify as a manufacture or production under a drawback provision. The issue of whether containers could be imported to be painted, labelled and then filled with chemicals under a temporary importation provision for articles to be altered or processed was the subject of C.I.E. 963/65 of July 1, 1965. It was held that since the primary purpose for importing the containers was for the filling of the containers with chemicals, the filling is not an alteration or processing of the container itself and therefore the temporary provision was not applicable. See also Customs Service Decision (C.S.D.) 81-65 of September 4, 1980, wherein it was held that the filling of imported polypropylene bags with agricultural commodities does not qualify as a manufacture or production under the drawback law.

We find that the processing at issue however is not just the mere filling of a bag or container that is actually pre-made prior to importation as is the case in the previously cited decisions. The processing, in this case, involves the cutting and folding of rolled aluminum foil into bags which are filled with a dried soup mix and then sealed. The beginning merchandise is rolled aluminum foil not pre-formed foil bags. The exported merchandise is packaged soup mix. The processing involves a change in the name, character and use of the imported aluminum foils, thus resulting in articles that are manufactured or produced.

In a very similar case involving the importation of polyethylene roll stock, bags were formed and filled with french fries in one sequential operation. See B/L 207173 dated December 30, 1976. In this case the polyetheylene roll stock was cut to size, folded and sealed on three sides during the packaging operation. While as previously stated it has been held that the packing, packaging, wrapping and mere filling of pre-made bags does not constitute a manufacture or production for drawback purposes, where the package itself is a new and different product having a different name, character, and use from the imported material, the package is an article manufactured or produced within the meaning of the drawback statute and the operation would qualify thereunder. It was further held in the same decision that it would make no difference whether the package itself is filled with merchandise in the same operation in which it was made, or whether it is formed around the merchandise it contains.

In the case at hand, the imported rolled aluminum foil which is processed by its cutting, folding, filling and sealing results in articles manufactured or produced in the United States. The operation would therefore qualify as a "processing" under subheading 9813.00.05, HTSUS. There must be a complete accounting to Customs of all articles and wastes resulting from the processing.

HOLDING:

Aluminum foil in rolls holding 7,500 bags that are pre-printed, backed, and decorated with a design and pattern is eligible for temporary importation under bond pursuant to subheading 9813.00.05, HTSUS, when imported for a processing consisting of cutting, folding, filling and sealing thereby resulting in articles manufactured or produced.

Sincerely,

Director
Commercial Rulings Division


Previous Ruling Next Ruling

See also: