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HQ 961890

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September 17, 1998

CLA-2 RR:CR:GC 961890K

CATEGORY: CLASSIFICATION

TARIFF NO.: 2401.20.83 and 2401.30.23

Port Director
U.S. Customs Service
700 Doug Davis Drive
Atlanta, Georgia 30354

RE: Protest 1704-98-100033; Tobaccos; Actual Use in the United States

Dear Port Director:

The following is our decision regarding Protest 1704-98-100033, concerning your action in classifying and appraising duty on tobaccos under the Harmonized Tariff Schedule of the United States (HTSUS).

FACTS:

The consumption entry covering the imported merchandise is reported to have been liquidated on December 29, 1997, and a timely protest under 19 U.S.C. 1514 was received on March 27, 1998. Two line items in the consumption entry covered certain tobaccos that were liquidated under provisions of the HTSUS, for tobaccos to be used in the manufacture of cigarettes and subject to tariff rate quotas. The protestant requested reliquidation of the entry covering the two line items under provisions in the HTSUS, for tobaccos to be used in products other than cigarettes, not subject to tariff rate quotas. The protestant asserts that the tobaccos from Greece were shipped from England to the United States, for blending, casing, and flavoring processes and then return to England for testing and in the manufacture of cigarettes.
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ISSUE:

The issue is whether the intended use of merchandise under an actual use provision of the HTSUS, is governed by the intended use in a foreign country as well as in the United States.

LAW AND ANALYSIS:

Unmanufactured flue-cured tobacco, threshed or similarly processed, to be used in products other than cigarettes, is classified in subheading 2401.20.83, HTSUS (1997), with a general rate of duty of 39.7 cents per kg. Such tobacco to be used in the manufacture of cigarettes, is classified in subheading 2401.20.85, HTSUS (1997), with a general rate of duty at 40.8 cents per kg, if within the quantitative limitation as described in additional U.S. note 5 to Chapter 24, and, if the quantitative limitation has been reached, the tobacco is classified in subheading 2401.20.87, HTSUS, with a general rate of 350 percent ad valorem.

Tobacco refuse, from flue-cured stems, not cut, not ground and not pulverized, to be used in products other than cigarettes, is classified in subheading 2401.30.23, HTSUS (1997), with a general free rate of duty. Such tobacco to be used in the manufacture of cigarettes, is classified in subheading 2401.30.33, HTSUS (1997), if within the quantitative limitation as described in additional U.S. note 5 to Chapter 24, HTSUS (1997), with a general free rate of duty, and if the quantitative limitation has been reached, the tobacco is classified in subheading 2401.30.70, HTSUS (1997), with a general rate of 350 percent ad valorem.

These provisions of the tariff are actual use provisions. See Customs Headquarters Ruling 959492, dated August 13, 1996. Additional U.S. Rule of Interpretation, 1(b), HTSUS, defines the term "actual use" as follows;

A tariff classification controlled by the actual use to which the imported goods are put in the United States is satisfied only if such use is intended at the time of importation, the goods are so used and proof thereof is furnished within 3 years after the date the goods are entered. (Emphasis added.)

The protestant is correct in the claim that it is the intended use of the imported goods in the United States and not the intended use of the goods in a foreign country that is required for an actual use provision of the tariff. The imported tobaccos were entered by the importer under the applicable provisions for tobaccos to be used in products other than cigarettes and thereby satisfied the intent requirement under the applicable Customs Regulations, sections 10.131-139, for actual use provisions. However, the port did not accept the claim because the tobaccos would be used ultimately, albeit, in a foreign country, in the production of cigarettes, and liquidated the entry of the tobaccos in provisions subject to the tariff quota rates.

The protestant has not filed with the port the appropriate proof of use certificates within three years after the entry of the tobaccos. The protestant requests reliquidation of the entry under non tariff quota rate provisions and the opportunity to timely submit certificates of actual use within the three year time limitation after the date the goods were entered as required by law and regulations.

HOLDING:

An actual use provision of the HTSUS, is controlled by the intended use of the goods at the time of importation and the actual use the imported goods are put in the United States and not the intended and actual use of the goods in a foreign country.

The protestant filed a timely protest. Therefore, you are instructed to withhold action on the protest pending the receipt of satisfactory certificates of actual use of the goods in the United States timely filed within the three year time limitation. If the satisfactory certificates are timely filed, you are further instructed to allow the protest and reliquidate the entry of the tobaccos under the provisions not subject to tariff rate quotas, and, if timely certificates are not filed, you are instructed to deny the protest.

Comment 1. An actual use provision concerns the actual use to which the imported goods are put in the United States, and does not require the exportation of the processed product. However, you may want to consider, if necessary, proof of exportation with the filing of the certificates of actual use that the imported tobaccos processed in the United States for the manufacture of cigarettes in a foreign country were, in fact, exported.

Comment 2. Due to the unusual circumstances in this case, Section 3A(11)(b) of Customs Directive 099 3550-065, Revised Protest Directive, dated August 4, 1993, is not applicable, in part, and a copy of this decision should be immediately provided to the protestant to allow for the opportunity to submit timely certificates of actual use. However, we will take steps within 60 days to make this conditional 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
Commercial Rulings Division
Office of Regulations and Rulings


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See also:

• Tariff No.: 2401.20.83 - Tobacco, partly or wholly stemmed/stripped, threshed or similarly processed, not from cigar leaf , not oriental or turkish, not for cigarett
• Tariff No.: 2401.20.85 - Tobacco, partly or wholly stemmed/stripped, threshed or similarly processed, not from cigar leaf , described in addl US note 5 to chap 24
• Tariff No.: 2401.20.87 - Tobacco, partly or wholly stemmed/stripped, threshed or similarly processed, not from cigar leaf , not oriental or turkish, other nesi
• Tariff No.: 2401.30.23 - Tobacco refuse, from other tobacco, other than for cigarettes, tobacco stems, not cut, ground or pulverized
• Tariff No.: 2401.30.33 - Tobacco refuse, from other tobacco, for cigarettes, described in addl US note 5 to chap 24, tobacco stems, not cut, ground or pulverized
• Tariff No.: 2401.30.70 - Tobacco refuse, from other tobacco, for cigarettes, other nesi