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 > 2000 HQ Rulings > HQ 115073 - HQ 228254 > HQ 228013

Previous Ruling Next Ruling
HQ 228013




April 13, 2000

CON-9-04 RR:CR:DR 228013 LLW

CATEGORY: BONDS

Port Director of Customs
Regulatory Audit Division
U.S. Customs Service
N. Sam Houston Parkway East
Suite 1000
Houston, Texas 70032
ATTN: William P. Mohalley
Assistant Field Director, Regulatory Audit

RE: Internal Advice Request, Port of Houston; Temporary Importation Bond (TIB) provisions concerning sales; Harmonized Tariff Schedule of the United States, subheading 9813.00.0540.

Dear Mr. Mohalley:

This office has reviewed the above-referenced request for internal advice initiated by your letter dated May 8, 1999. We have considered the request and have made the following decision.

FACTS:

The pertinent evidence relating to the export sales, which was provided by your office, is contained in two sets of documents: the first set concerns Mitsui Tubular Products, Inc. (MTPI)—T.I.B. entry numbers 913-xxxx7275, 7044, 7267, 7390, 7382, and 7549. The second set concerns Kanematsu USA, Inc.—T.I.B. entry number 913-xxxx9131.

913-xxxx7275

MTPI purchase order confirmation to Rxxxxx for 16,0000 feet of seamless tool jointed drill pipe that was to be plastic coated by Txxxxxxxx and then shipped to Holland. (9/13/95)

MTPI contract number 170337 to Mitsui Tokyo via telex for tool-jointed, hard-banded, drill pipe. The order indicates that the customer is Rxxxxx/WC. (9/14/95)

MTPI contract to Riteco confirmation referencing Riteco’s purchase order number R095506. Shipment was to be made ETA Holland late first to second early quarter of 1996. (9/14/95)

Sales contract between MTPI and Mitsui Tokyo referencing contract number 170337 to be shipped to Houston, Texas for buyer Westcoast/Riteco. (12/4/95)

MTPI’s memo to Dynamic Ocean Services International, Inc. (DOSI), a customs broker, requesting arrangements for merchandise referenced in contract number 170337—particularly to handle the TIB and ground transportation to Tuboscope. (2/7/96)

DOSI invoice referencing the above delivery to Tuboscope. (2/20/96)

MTPI interoffice memo with TIB entry packet (CF 7501, CF 3461, and various shipping documents. A handwritten note on the memo indicates that Riteco will need export documents. The CF 7501 indicates that the merchandise was entered on March 5, 1996, at the Port of Houston, that the importer of record was MTPI, and that the pipe would be inspected and then coated. (3/5/96)

MTPI invoice number 960190 to Riteco Supply listing terms of sale for purchase order #R095506. F.O.B. Houston. (3/6/96)

D.J. Pipe Service invoice to Riteco Supply for inspection services. Invoice indicates the merchandise will be exported by Jarvis International, Houston. (3/7/96)

MTPI memo to DOSI redirecting them to deliver the merchandise to Jarvis International, leaving the merchandise in MTPI’s name but tagged for Riteco supply. (3/7/96)

Dynamic Trucking Invoice to MTPI for transporting steel to Jarvis International. Delivery date: March 11, 1996.

MTPI receipt for payment from Riteco for invoice number 960190. (3/14/96)

A bill of lading showing Offshore Rentals Limited as the exporter and consignee of 53 joints of drill pipe. Merchandise is to be forwarded by Jarvis International. Final destination is Port Rashid Dubae, United Arab Emirates (UAE). (3/19/96)

Offshore Rentals Shipper’s Export Declaration exporting, in part, 53 joints of drill pipe the UAE and shipping invoice. (3/20/96)

913-xxxx7044

MTPI contract number 20315400 to Amoco Trinidad Oil Company (ATOC) FOB Houston, Texas. The contract had not been signed by ATOC. (May 15, 1995)

Sales contract between MTPI and Mitsui Tokyo referencing contract number 20315400 for seamless steel casing. The contract indicates that the buyer is ATOC and that it will delivered to Houston, Texas. (August 4, 1995)

Mitsui Tokyo invoice to MTPI for 1,050 feet of steel casing. The shipping mark is ATOC. (12/26/95)

Bill of Lading showing Mitsui Tokyo as shipper MTPI as consignee. Amoco Trinidad indicated as the shipping mark (December 24, 1995).

MTPI’s memo to Dynamic Ocean Services International (DOSI), requesting arrangements for merchandise referenced in contract number 20315400. Particularly to handle the TIB and ground transportation to ICO Tubular yard. (1/15/96)

Customs Form 7501 indicates that the merchandise was entered on February 4, 1996. ACS records indicate that entry occurred on 1/30/96.

MTPI updates Amoco Trinidad’s contract to put order 20315400 into another order (#20430700) for sale to complete a shipment. (5/8/97)

Invoice from ICO to MTPI for external coating services. Invoice indicates that the service was ordered on May 15, 1997 and the service was completed on May 30, 1997 per Amoco’s specs. (5/30/97)

Bill of Lading showing Daher Co. on behalf of ATOC as shipper and ATOC as consignee. Destination is Galeota Point, Trinidad. Handwritten note that TIB entry 913-xxxx704-4 was on board. (6/7/97)

MTPI invoice to ATOC Houston, which includes reference to a handwritten note to TIB entry 913-xxxx7044. Point of discharge noted as Houston, Texas. (7/11/97)

Amoco Production Company, Tulsa’s payment to MTPI referencing contract no. 20430700. (8/21/97)

913-xxxx7267

Riteco’s purchase order (#RO95522) confirmation to Mitsui for Drill pipe with internal plastic coating. C.I.F. Antwerp. (10/12/95)

MTPI purchase order (#170440) to Mitsui Tokyo for drill pipe. P.O. indicates that the customer is Riteco/ West Coast C.I.F. Houston and that the final destination would be Holland. (10/12/95)

Mitsui Tokyo contract (L01381) referencing MTPI P.O. 170440. Contract indicates that Riteco/West Coast as the buyer. CIF Houston and final destination as Rotterdam, Netherlands. (12/20/95)

MTPI memo to DOSI instructing them to deliver merchandise to arrange for the TIB, indicating the final destination as Rotterdam, Netherlands; and deliver the merchandise to Tuboscope, tagging the merchandise in Riteco’s name. (2/16/96)

MTPI invoice to Riteco referencing P.O. 1704400. Terms of shipment—West Coast Holland as consignee, point of discharge Holland.

MTPI receipt voucher indicating payment by Riteco for P.O. 1704400. (4/26/96)

W.M. Dewey invoice to MTPI. Invoice indicates that MTPI shipped the merchandise from Tuboscope to Omsco Industries. Handwritten note states that the invoice was faxed to RuleWave, Inc. for payment. (5/11/96)

Azure Shipping Corporation’s export document showing MTPI as the shipper, Rulewave, Inc. Houston as the forwarder, and Rulewave, B.V. Rotterdam as the consignee. The port of discharge is Antwerp, Belgium. (5/12/96)

Rulewave, Inc. invoice to MTPI for trucking charges and shipping expenses from Houston to Antwerp, Belgium. The invoice indicates that the consignee is West Coast International. (5/29/96)

Entries 913-xxxx7390 & 913-xxxx7382

Superior Tube, Ltd. (Canada) bills of lading and shipping invoices to MTPI for 395 pieces of drill pipe on two shipments. (3/4-3/7/96)

Superior Tube invoice to MTPI for purchase order #170456 for 395 pieces of drill pipe. FOB Tuboscope for coating. (3/8/96)

MTPI invoice to Associated Petroleum Services, Inc. (APSI) for 394 pieces of drill pipe referencing contract #170456. One pipe was ordered scrapped and destroyed on March 18, 1996. Point of discharge Houston. (3/25/96)

MTPI disbursement slip showing payment to Superior Tube. (3/22/96)

Export document showing that the shipper was APSI, the consignee as Petroproduction (El Salvador). The port of discharge is Ecuador. (3/29/96)

APSI invoice to Intairdril, Ltd. Quito, Ecuador. (4/2/96)

MTPI receipt voucher showing payment by APSI. (4/26/96).

913-xxxx7549

Mitsui’s contract with MTPI (MTPI no. 20350701; Mitsui Tokyo no. L0200-1; Statoil no. T.11996/270012) for 45,413 feet of seamless steel tubing. CIF Houston and final destination as Norway. The customer is listed as Statoil. (February 29, 1996)

Mitsui Tokyo invoice to MTPI referencing the foregoing contracts. Customer listed as Statoil and final destination listed as Norway. (4/3/96)

MTPI interoffice memo regarding broker instructions. Instructions include entering 1,067 pieces of tubing under a TIB. (5/2/99) MTPI memo to DOSI instructing the same. (5/19/96)

MTPI invoice (#96773) to Mitsui Norway for 461 pieces of pipe. Point of discharge- Antwerp, Belgium. (9/24/99) Bill of Lading showing that merchandise was marked Statoil Vestbase and laden on September 3, 1996. The bill of lading further shows that MTPI was the shipper. The packing list indicates that the merchandise is consigned to Den Norske Sta Oljeselskakp, Norway and references Statoil P.O. T.11996/270012.

MTPI invoice (#970419) to Mitsui Norway for 570 pieces of pipe. Point of Discharge – Scotland. (5/16/97) Bill of Lading showing that merchandise was marked Statoil Vestbase and laden on April 22, 1997. The shipper was MTPI and the packing list indicates that the merchandise is consigned to Den Norske Sta Oljeselskakp, Norway.

MTPI invoice (#980122) to Mitsui Norway for 86 pieces of pipe. Point of Discharge-Antwerp, Belgium. (2/02/98) Bill of Lading showing that merchandise was marked Statoil Vestbase and laden on January 26, 1998. The shipper was MTPI and the packing list indicates that the merchandise is consigned to Den Norske Sta Oljeselskakp, Norway.

913-xxxx8489

MTPI price quote to Associated Petroleum Services (APS) for drill pipe. (10/15/96)

APS purchase order (ONJ-011603-01-O) to MTPI for 2, 500 feet of drill pipe. P.O names MTPI as subcontractor. (10/17/96)

Grant Prideco (Houston) order acknowledgment to MTPI for 2, 446 feet of drill pipe. (10/31/96)

Bill of Lading showing Grant Prideco/Superior Tube (Canada) as shipper and MTPI as consignee. The BOL indicates that 79 pieces of steel drill pipe were laden on November 1, 1996.

MTPI invoice to APS for 2, 501 feet of drill pipe. Point of discharge: Houston, Texas. (11/12/96)

Bill of Lading indicating that the shipper was APS and that the consignee was Japex Oman, Ltd. (Oman) Laden on board November 30, 1996.

913-xxxx9131

Industrias Gobar purchase order to Kanematsu USA for zinc-plated steel coil delivery to be made to Brownsville, Texas. The purchase order letterhead indicates that Gobar has a Matamoras, Mexico address and a Brownsville, Texas address.

Kanematsu Japan’s invoice JA14/A296 to Kanematsu USA for 30.99 M-tons of coil. Invoice indicates that the merchandise will be shipped to Houston. (3/1/97)

Customs Form 7512 indicating the importer as Kanematsu, USA, Mexico as the final destination of the merchandise, and the consignee as Gobar Systems c/o Corrigan Dispatch, Brownsville, Texas. The CF 7512 also indicates that the merchandise was exported to Mexico by truck on April 18, 1997. (4/1/97)

Handy Warehousing’s warehouse receipt indicating Kanematsu as owner of the merchandise and Gobar Systems, Brownsville as the consignee. A handwritten note references TIB entry 910-xxxx913-1. (4/9/97)

Handy Warehousing service invoice to Kanematsu USA for slitting the coils. (4/9/97)

Kanematsu USA’s invoices to Gobar Systems, Brownsville, Texas for 45, 090 pounds of slitted coil. The merchandise was to be shipped to Brownsville. (4/10/97)

Customs Form 7501 indicating the coils were entered on April 3, 1997, and that the coils would be cut into smaller coils.

Letter from Valley Trucking, Inc. to Kanematsu. The indicates the procedures used to handle Gobar Systems’ products. In pertinent part, the letter indicates that they export steel into Mexico for Gobar. (4/8/98)

Letter from Industrias Gobar indicating that it is a subsidiary of Gobar Systems, Inc. (4/15/98)

TIB summary report from Dynamic Ocean Services International (DOSI) indicating the date of import as April 3, 1997. (6/20/97)

ISSUES:

1. Whether the proscription against sale or offer for sale in subchapter XIII, Chapter 98, HTSUS is violated when a person in the U.S. purchases the T.I.B. goods, and later sends those goods to an overseas customer.

2. Whether a T.I.B. importer is in breach of the T.I.B. for failure to process the merchandise pursuant to subchapter XIII, Chapter 98, HTSUS, subheading 9813.00.0540.

LAW AND ANALYSIS:

The proscription against sale or offer for sale on temporarily imported goods is in chapter note 1(a), subchapter XIII, Chapter 98, HTSUS. The proscription has existed since the Tariff Act of 1913. The proscription was contained in the proviso to Section IV, paragraph J, subsection 4 of that Act. It was continued in Section 308 of the Tariff Act of 1922, Section 308 of the Tariff Act of 1930 and Headnote 1(a), subpart 5C, Schedule 8, TSUS.

The courts and Customs have interpreted the provision. In Louise & Co. v. United States, 8 Ct. Cust. Appls. 430, T.D. 37669 (1918), the court interpreted the 1913 Act provision. The decision dealt with two companies: Louise & Co. and La Mode Importing Co. However, only the facts of La Mode were discussed. La Mode imported gowns for use as manufacturing models. After that use, La Mode sold the gowns to Robinson & Co. of Winnipeg, Canada. Pursuant to that sale, the gowns were sent to the Canadian buyer, although the details of the sale and the shipment to Canada were not reported in this decision or the decision of the Board of General Appraisers, T.D. 37590 (1918). The Board of General Appraisers held that any sale came within the proscription. That holding was reversed by the appellate court. The appellate court held that if the sale was to effect or complete the exportation, the sale was outside the proscription. That is, if a sale is the means by which the goods are carried out of the country and exported, there is no violation.

In Grab Fashion Co. et al v. U.S., 10 Ct. Cust. Appls. 42, T.D. 38262 (1920), the court again interpreted the provision in the 1913 Act. The court affirmed the Board’s decision that a proscribed sale and offer for sale occurred notwithstanding the fact that some of the goods were exported. The court found that “when the garments were received in New York, they were immediately placed upon inspection for sale or rent to other manufacturers of women’s garments.” The court noted that “Notices in writing or by telephone were promptly sent to numerous customers of the importers advising them of the receipt of the garments and commending the articles as desirable models of the season’s styles, and also requesting that the customers call without delay to inspect them.” See 10 Ct. Cust. Appls. at 42.

Customs, in a series of decisions, which were published as abstracts, followed the courts’ interpretations. For example,T.D. 54624(25)(1958) states that merchandise which is to be sold in the United States for exportation to a foreign purchaser is not imported for sale or sale on approval within the meaning of section 308(the then TIB provision).

In Headquarters Ruling 227512 Customs determined whether two domestic sales of the Oregon Metallurgical Corporation (Oremet) were in violation of the statutory proscription against the sale of T.I.B. goods. The first sale involved KBK, Inc. and Oremet. KBK, Inc., a U.S. based subsidiary of KBK Tokyo, purchased titanium alloy from Oremet that was to be shipped to KBK in Tokyo, Japan. Customs held pursuant to Louise & Co., that Oremet was not in violation of the prohibition after finding that Oremet sold the TIB merchandise to a U.S. based subsidiary of a foreign company and that the purchase order, which indicated that the final destination was Japan, coupled with the shipping documents which indicated that the goods went from Oremet’s plant in Albany, Oregon to Los Angeles, and then by ship to the recipient in Japan, showed that the purpose of the sale was to effect the exportation.

The second sale involved Oremet and Trahide Co. Trahide purchased titanium sponge from Oremet FOB Portland, Oregon which was subsequently exported to Peru. Customs found that although the merchandise was exported, the evidence failed to support that the sale was incident to the exportation inasmuch as Trahide’s purchase order and Oremet’s invoice showed no foreign destination. Further, the movement of goods started almost one month after Trahide purchased the merchandise as evidenced by Oremet’s bill of lading. Customs held pursuant to Grab Fashion Co., that the Oremet-to-Trahide sale violated the proscription against the sale of T.I.B. goods.

The following analysis will discuss each entry in seriatim.

913-xxxx7275

1. Domestic Sale

The evidence provided for entry 913-xxxx7275 supports a finding that MTPI’s sale to Riteco, a domestic corporation, was to effect exportation. The contract between MTPI and Riteco, was executed prior to entry, hence, distinguishable from the circumstances in Grab Fashion Co. where the importer held goods out for sale after the goods were imported. Further, the foregoing contract and MTPI’s purchase order confirmation to Riteco indicate that the final destination was Holland which supports that the sale between Riteco and MTPI was to effect exportation. See Louise & Co., T.D. 37669.

However, the bill of lading shows that the goods were exported to Offshore Rentals, a company not party to the MTPI-Riteco pre-entry contract, which gives the appearance that MTPI may have held the goods out for sale or sold the goods to Offshore Rentals subsequent to entry. MTPI asserts that Riteco’s client, Westcoast Holland, could not take delivery of the merchandise; therefore, Riteco sold the goods to Offshore Rentals. To support this assertion, MTPI provided this office with a copy of Riteco’s invoice to Offshore Rentals dated March 6, 1996. The foregoing evidence shows that MTPI did not sell the merchandise to Offshore Rentals, and therefore, outside the circumstances in Grab Fashion Co.

An issue was also raised as to whether the Riteco-Offshores Rental contract violated the T.I.B. Inasmuch as Riteco is not the importer of record/bondholder, and based on the evidence, its actions cannot be imputed to MTPI, it cannot be in breach of the T.I.B.

Based on the evidence presented by the port and MTPI, MTPI’s sale to Riteco does not constitutes a violation of the proscription against the sale of T.I.B. goods.

2. Failure to Process

Subchapter XIII, Chapter 98, HTSUS, subheading 9813.00.0540 and 19 C.F.R. § 10.31(f) set the conditions for entry by T.I.B. The T.I.B. importer, by posting bond to guarantee its performance, binds itself to the conditions set forth in 19 C.F.R. § 113.62. Subsection (h)(1) provides:

If the principal enters or withdraws any merchandise, without payment of duty and tax, or at a reduced rate of duty and tax, as permitted under the law, the principal agrees:

(1) To use and handle the merchandise in the manner and for the purpose entitling it to duty-free treatment[.]

The record reflects that the merchandise arrived on March 5, 1996. Two days later, MTPI instructed DOSI to enter the merchandise under a T.I.B. and arrange to have it delivered by Dynamic Trucking to Jarvis International, the forwarding agent for the foreign recipient, Offshore Rentals. There were no instructions regarding processing the pipe. Dynamic Trucking delivered the pipe to Jarvis International on March 11, 1996 and the bill of lading indicates that the pipe was laden on board on March 19, 1996.

The entry papers, CF 3461 and CF 7501, show that the pipe was imported and released from Customs custody on March 5,1996. The Entry Summary, CF 7501, was filed March 19,1996. However, the signature block on the CF 7501 indicates that the filer prepared the form on February 19,1996, and did not make any changes to the form when it was filed.

The facsimile transmittal from MTPI to the filing broker dated March 7, 1996, show that there was a significant change in circumstances that affected the classification of the pipe. Under 19 U.S.C. § 1484, the making of an entry may be a two-step process. After imported merchandise is presented to Customs for release, an importer completes the entry by classifying the merchandise and filing that information with Customs. The statute requires the importer to use reasonable care in the determination of the classification. A similar obligation is imposed on brokers by 19 U.S.C. § 1641. The purpose of providing the entry information is to insure that information needed by Customs to properly assess duties and collect accurate statistics is provided.

The change in shipping instructions of March 7,1996, shows that no processing of the pipe was contemplated as a result of the sale between MTPI’s customer, Riteco, and Riteco’s customer, Offshore Rentals on March 6,1996. The change in shipping instructions shows that MTPI and its broker were aware of the changed circumstances. Goods which are not to be processed in the U.S. are not entitled to be imported under the benefit provided by subheading 9813.00.05, HTSUS. The foregoing principle is illustrated in United States v. Border Brokerage, 48 CCPA 10 (1960). In Border Brokerage, bags that were imported to be filled and sewn closed were held to be not entitled to be entered under 19 U.S.C. § 1308(1), a predecessor provision to subheading 9813.00.05, HTSUS. Because the pipe entered by Mitsui was subject to dumping duties, a T.I.B. entry provided a benefit over a consumption entry and drawback in view of the limitation set by 19 U.S.C. § 1677h. See Titanium Metals Corp. v. United States, 901 F. Supp. 362 (CIT 1995).

This does not involve a situation in which Mitsui started to process the shipment and did not complete the processing of the entire shipment before exportation. Here, none of the imported merchandise was processed because there was a change of intent before the entry was completed. Hence, the issue is not whether Mitsui breached the T.I.B. for failure to process the merchandise, but whether Mitsui exercised reasonable care or responsible supervision when it filed the T.I.B. Based on the foregoing circumstances, the filing of the Entry Summary with a classification for which the pipe was not eligible does not appear to show the exercise of reasonable care or responsible supervision.

913-xxxx7044

The evidence supporting entry 7044, MTPI’s sale to Amoco Trinidad Oil Company (ATOC), comes within the court’s interpretation in Louise & Co. v. U.S., supra. The contract between MTPI and ATOC, the intended foreign recipient, was executed prior to the entry of the prospective T.I.B. goods; hence, distinguishable from the circumstances surrounding the offer for sale of goods in Grab Fashions. Neither the contract nor MTPI’s invoice to ATOC indicate a foreign destination, rather, the port of discharge was F.O.B. Houston, Texas. However, the foregoing evidence coupled with the bill of lading, which indicates the merchandise was exported to Galeota Point, Trinidad, is sufficient to support a finding that the sale was to effect exportation. Therefore, the sale is does not violate the statutory proscription against the sale of T.I.B. goods.

913-xxxx7267

The evidence provided for entry 7267 supports a finding that MTPI’s sale of T.I.B. goods to Riteco, a domestic corporation, was to effect exportation. MTPI’s purchase order to Mitsui Tokyo, and the contract between Mitsui Tokyo and MTPI, indicate that the buyer was Westcoast/Riteco. Riteco’s purchase order confirmation was sent to MTPI prior to entry; hence, distinguishable from the circumstances surrounding the offer for sale of goods in Grab Fashions. The purchase order confirmation also reflects that the goods would be shipped to Westcoast Holland in Antwerp. Based on the foregoing facts, MTPI’s sale to Riteco was to effect exportation and, therefore, within the court’s interpretation in Louise & Co. MTPI’s sale to Riteco does not constitute a violation of the proscription against the domestic sale of T.I.B. goods.

913-xxxx7390, 913-xxxx7382, & 913-xxxx8489

The evidence in the foregoing entries involving two sales between MPTI and Associated Petroleum Services, Inc. (APSI), show that the sales were incident to exportation. MTPI provided this office with a copy of the contracts between MTPI and APSI for the foregoing entries, The contracts are file copies, which have not been signed by either party. MTPI asserted in a meeting with this office, that it has the original executed contracts. and each indicating that the execution dates were prior to the entry date of the goods, hence, distinguishable from the circumstances surrounding the offer for sale of goods in Grab Fashions. With regard to entries 7390 and 7392, the contract shows that the goods were being exported to Ecuador. With regard to entry 8489, neither the contract nor the purchase order, on their face, indicate a foreign destination. However, MTPI asserted in its February 24, 2000, letter to this office, that that APSI’s purchase order code “ONJ” is representative of a customer located in Oman. Inasmuch as the ONJ code appears on the MTPI-APSI contract, purchase order, and bill of lading MTPI provided this office with the bill of lading as an attachment to its February 24, 2000, letter to this office., it appears that Oman was the intended foreign destination for the goods. The foregoing sales, being incident to exportation, are outside the statutory prohibition.

913-xxxx7549

Mitsui Tokyo’s contract with MTPI and Mitsui Tokyo’s invoice to MTPI, show that Statoil was the foreign recipient, and that the final destination was Norway. MTPI’s invoices to Mitsui Norway show the port of discharge was Antwerp, Belgium and a port in Scotland. The accompanying bills of lading verify such as well as show that the merchandise was marked for Statoil. The evidence shows that the intent of the foregoing transactions were to carry out the exportation, therefore, these transactions come within the court’s interpretation in Louise & Co. v. U.S., supra.

913-xxxx9131

The evidence presented for the foregoing entry, Kanematsu USA’s sale to Gobar Systems, Inc., supports a finding that the sale was to effect exportation. The evidence shows that Gobar Systems, Inc. is a U.S.-based subsidiary of Industrias Gobar, a Mexican corporation. Neither the order, which was placed prior to the entry of the goods, nor the invoice indicate that the merchandise was to be shipped to Mexico, rather, the shipment was to be delivered to Brownsville, Texas. While a letter addressed to Kanematsu from Valley Trucking indicates that it is customary for it to export steel to Mexico for Gobar, this letter does not hold any substantial weight inasmuch as it does not address the particular exportation in question and it is dated almost one year after the T.I.B. was closed. However, coupled with the CF 7512, which indicates that the particular goods were shipped from the Brownsville port to Mexico via Valley Trucking, the foregoing is sufficient to show that Kanematsu USA-Industrias Gobar transaction was to carry out exportation and therefore outside the statutory prohibition.

HOLDING:

1. A sale, in which the evidence shows was simply incident to the carrying out of the exportation does not violate the prohibition against sale in Chapter Note 1(a), Subchapter XIII, Chapter 98, HTSUS, following the holding in Louise & Co. v. U.S., 8 Ct. Cust. Appls. 430, T.D. 37669(1918).

2. A T.I.B. importer may have failed to exercise reasonable care or supervision when it files an Entry Summary with a classification for which the merchandise is not eligible. 19 U.S.C. § 1484.

The Office of Regulations and Rulings will take steps to make this decision available to Customs personnel via the Customs Rulings Module in ACS and the public via the Freedom of Information Act and other public access channels 60 days from the date of this decision.

Sincerely,
John Durant, Director
Commercial Rulings Division


Previous Ruling Next Ruling

See also: