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NY A86348




September 06, 1996

CLA-2-84:RR:NC:MA:104 A86348

CATEGORY: CLASSIFICATION

TARIFF NO.: 8480.71.9010; 9801.00.2000

Mr. James E. Grieger
SEAL Trade Services
22310 85th Place
Salem, WI 53168-9353

RE: The tariff classification of a plastic injection mold from Portugal and eligibility for 9801.00.2000 treatment upon exportation under lease to foreign manufacturer in Mexico and reimportation to the United States

Dear Mr. Grieger:

In your letter dated July 24, 1996 on behalf of Sage Products, Inc. you requested a tariff classification ruling.

A steel mold to be used in a plastic injection molding machine was originally imported by Sage Products, Inc. ("Sage") in 1989. The mold was manufactured in Portugal by Simoldes of Codex. Subsequent to this transaction, the mold was exported to Mexico to be used by Hycoplastic De Mexico Y CIA ("Hycoplastic") in the manufacture of disposable medical containers. Upon completion of this manufacturing contract, the mold will be reimported into the United States.

In your letter, you inquire as to whether the mold would be eligible for a duty exemption under subheading 9801.00.2000, Harmonized Tariff Schedule of the United States, (HTS), when returned to the United States. Section 141.2, Customs Regulations (19 CFR 141.2) states that "Dutiable merchandise imported and afterwards exported even though duty thereon may have been paid on the first importation, is liable to duty on every subsequent importation into the Customs territory of the United States" unless specifically exempted therefrom under the HTSUS. Subheading 9801.00.20, HTS, provides duty-free treatment for "articles previously imported, with respect to which the duty was paid upon such previous importation or which were previously free of duty pursuant to the Caribbean Basin Economic Recovery Act or Title V of the Trade Act of 1974, if (1) reimported, without having been advanced in value or improved in condition by any process of manufacture or other means while abroad, after having been exported under lease or similar use agreements, and (2) reimported by or for the account of the person who imported it into, and exported it from, the United States.".

To support your claim, you have submitted copies of the C.F. 7501 and the commercial invoice from the initial importation of the Portuguese plastic injection mold in 1989 showing Sage to be the original importer. As you indicate mold will not be returned to the United States until some point later this year, no documentation pertaining to its reimportation [such as C.F. 7501 for the reimportation transaction showing that mold being reimported by Sage, declaration by person abroad who received and is returning the mold containing description/serial number of mold, verification (e.g., by serial number) that the same mold exported is being reimported, etc.] was submitted.

Also included in your submission is a copy of a purchase order between Sage and Hycoplastic which you indicate serves as the "contract" between the two parties concerning this transaction. The purchase order states that Sage will furnish the mold to Hycoplastic and that said mold will "...remain the property of Sage Products and will be returned in supplied crates with necessary rust and corrosion protection. Mold maintenance if required should be authorized by Sage Mold Engineering. Molds cannot remain in Mexico beyond the time allowed on the temporary permit.". Hycoplastic will procure the necessary amount of raw material and furnish the labor and overhead to produce the containers. Hycoplastic will charge Sage a predetermined per unit rate for the containers Hycoplastic produces. This predetermined amount is to cover Hycoplastic's cost of raw materials, labor, overhead and margin.

Section 10.108, Customs Regulations (19 CFR 10.108), provides, in relevant part, that free entry shall be accorded under subheading 9801.00.20, HTSUS, whenever it is established to the satisfaction of the district director that the article for which free entry is claimed was exported from the United States under a lease or similar use agreement. One has to consider whether or not the submitted contract cited above is a "similar use agreement". Originally, free entry under item 801.00, TSUS, was restricted to articles that had been exported under lease to a foreign manufacturer. Said provision was amended by The Trade and Tariff Act of 1984 (Public Law 98-573) which extended the exemption to situations where the articles had been exported under lease or similar use agreements to entities other than foreign manufacturers. According to Black's Law Dictionary 800 (5th ed. 1979), the word "lease" means "a contract by which one owning such property grants to another the right to possess, use and enjoy it for a specified period of time in exchange for periodic payment of a stipulated price referred to as rent". In this instance, there is an absence of a payment. The purchase order is more in the form of a "use agreement" or bailment. According to Black's Law Dictionary 179 (5th ed. 1979), a bailment is "a delivery of goods of personal property, by one person to another, in trust for the execution of a special object upon or in relation to such goods, beneficial to either to the bailor or bailee or both, and upon a contract, express or implied, to perform the trust and carry out such object, and thereupon either to redeliver the goods to the bailor or otherwise dispose of the same in conformity with purpose of the trust.".

As noted in Headquarters Ruling 222863 dated July 1, 1991, "...There is nothing in the law or legislative history, either expressed or implied, that suggests the application of 9801.00.20 hinged upon a transaction involving a payment.". Therefore, Sage by supplying the purchase order has met the requirement of the submission of a "lease or similar use agreement".

Documentation supplied states that drawback is not claimed at time of export to Mexico. In addition, data indicates that the Portuguese mold will not be advanced in value or improved in condition by any process of manufacture or other means while in Mexico. It is assumed that the mold maintenance (if any) referred to in the purchase order will not be to such an extent that it advances the value or improves the condition of the mold.

The applicable subheading for the plastic injection mold will be 8480.71.9010, HTS, which provides for Molding boxes for metal foundry; mold bases; molding patterns; molds for metal (other than ingot molds), metal carbides, glass, mineral materials, rubber or plastics: Molds for rubber or plastics: Injection or compression types: Other...Injection type. The rate of duty will be 3.6 percent ad valorem.

Articles classifiable under subheading 9801.00.2000, HTS, upon which duty was previously paid, not having been advanced in value or improved in condition while abroad and reimported by the party who exported the mold from the United States under a lease or a similar use agreement are entitled to duty free treatment upon compliance with all applicable regulations.

This ruling is being issued under the provisions of Part 177 of the Customs Regulations (19 C.F.R. 177).

A copy of the ruling or the control number indicated above should be provided with the entry documents filed at the time this merchandise is imported. If you have any questions regarding the ruling, contact National Import Specialist Robert Losche at 212-466-5670.

Sincerely,

Roger J. Silvestri
Director

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