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 > 2008 HQ Rulings > HQ 560274 - HQ H015873 > HQ H009110

Previous Ruling Next Ruling
HQ H009110




August 27, 2007

CLA-02 OT:RR:CTF:VS H009110 FP

CATEGORY: CLASSIFICATION

TARIFF NO.: 9801.00.10

Mr. George R. Tuttle, III
Law Office of George Tuttle
Three Embarcadero Center, Suite 1160
San Francisco, California 94111

RE: Request for Advice; Subheading 9801.00.10, HTSUS; Documentary evidence; 19 CFR 10.1(b)

Dear Mr. Tuttle:

This is in response to your request of March 25, 2007, on behalf of Credence Systems Corporation ("Credence"), seeking clarification of section 10.1(b) of the Customs Regulations (19 CFR 10.1(b)), and the obligation to produce records to substantiate claims of returning U.S. goods.

FACTS:

The heart of the matter at issue is Credence's eligibility for subheading 9801.00.10, Harmonized Tariff Schedule of the United States ("HTSUS") and the documentation required therefore.

Credence, of Milpitas, California, is a producer and exporter of automatic test equipment ("ATE") for the semiconductor industry. In addition to directly exporting ATE systems, Credence also sells this equipment to other companies in the United States, who may resell to their customers in foreign countries.

Credence's ATE components frequently need to be returned to the U.S. for replacement, repair, refurbishment, or recalibration. Many of these products are returned to Credence from abroad from the ultimate customers of the semiconductor manufacturing equipment.

You state that, regardless of whether Credence is the exporter of record or not, it does not have backwards traceability from the import of the returned component to its original export. The export documentation Credence has available does not have identifying information on the component that was being returned. Furthermore, you claim that Credence does not have access to the relevant export records when it is not the exporter of record.

ISSUE:

Is an importer filing a claim of returning U.S. goods under subheading 9801.00.10, HTSUS, obligated to produce the records listed in 19 CFR § 10.1(b) in addition to complying with the requirements of 19 CFR § 10.1(a)?

LAW AND ANALYSIS:

Subheading 9801.00.10, HTSUS, provides for the free entry of products of the United States that have been exported and returned without having been advanced in value or improved in condition by any process of manufacture or other means while abroad, provided the documentary requirements of section 10.1, Customs Regulations (19 CFR 10.1), are met. Some change in the condition of the product while it is abroad is permissible. However, operations that either advance the value or improve the condition of the exported product render it ineligible for duty free entry upon return to the United States. Border Brokerage Company, Inc. v. United States, 314 F. Supp. 788 (1970), appeal dismissed, 58 CCPA 165 (1970).

Section 10.1(a), Customs Regulations (19 CFR § 10.1(a)) provides in part that a declaration by the foreign shipper and a declaration by the owner, importer, consignee, or agent shall be filed in connection with the entry or articles in a shipment valued over $2,000 and claimed to be free under subheading 9801.00.10 or 9801.00.20, HTSUS.

Section 10.1(b), CBP Regulations (19 CFR § 10.1(b)) provides:

In any case in which the value of the returned articles exceeds $2,000 and the articles are not clearly marked with the name and address of the U.S. manufacturer, the port director may require, in addition to the declarations required in paragraph (a) of this section, such other documentation or evidence as may be necessary to substantiate the claim for duty free treatment. Such other documentation or evidence may include a statement from the U.S. manufacturer verifying that the articles were made in the United States, or a U.S. export invoice, bill of lading or airway bill evidencing the U.S. origin of the articles and/or the reason for the exportation of the articles.

(Emphasis supplied.)

You argue that the term "or" in 19 CFR § 10.1(b) evidences the intent of the regulations to permit flexibility to a claimant to produce one or the other forms of evidence of origin, but does not obligate the production of both a statement from the U.S. manufacturer verifying that the articles were made in the United States and a U.S. export invoice, bill of lading or air waybill evidencing exportation. We find that this argument has no merit.

In Headquarters Ruling Letter (HRL) 563394, dated October 11, 2006, Customs considered the evidentiary requirements of 19 CFR § 10.1. Customs stated that:

In order for a good to qualify for duty free treatment under subheading 9801.00.10, HTSUS, the importer must satisfy [Customs] that the conditions of this subheading are met through documentation. The word "only" does not appear in 19 CFR 10.1(a). The regulatory language of 19 CFR 10.1 is clear that the port director must be satisfied that the requirements of subheading 9801.00.10 are met and may require additional information as ... necessary to substantiate the claim. An export invoice is listed in 19 CFR 10.1(b) as an example of documentation that may be requested. We find that the Port Director may require any documentation that would reasonably substantiate a claim under subheading 9801.00.10, HTSUS, including export invoices.

We understand that the merchandise involved was being returned to Varian under warranty from overseas. If Varian has a database that lists the serial number of the good and the U.S. location where it was originally produced, this information could be considered as evidence of the U.S. origin of the merchandise. Further, Varian should also be able to establish that the good was shipped to an overseas customer. If Varian could establish that the good was made in the U.S. and shipped overseas prior to being imported, the original export documents would not be required to establish that the goods were eligible for duty free entry under subheading 9801.00.10, HTSUS.

It is clear from the regulatory language of 19 CFR § 10.1 that in certain circumstances (where the value of the returned articles exceeds $2,000 and the articles are not clearly marked with the name and address of the U.S. manufacturer) the port director may require additional information to substantiate a subheading 9801.00.10 claim. 19 CFR § 10.1(b). It is also clear that the port director may waive the requirements for producing the documents specified in 19 CFR § 10.1(a) if he is reasonably satisfied that the articles meet the requirements of subheading 9801.00.10, HTSUS. 19 CFR § 10.1(d). Neither of these provisions is mandatory, i.e., the action described in these provisions is at the discretion of the port director.

If Credence does not have backwards traceability from the import of the returned components to their original export, there may not be sufficient information to establish that the subject articles were made in the United States. Thus, the port director must be satisfied that the requirements of subheading 9801.00.10 are met and may require additional information as reasonably necessary to substantiate the claim.

HOLDING:

Consistent with our previous rulings, we find that the Port Director may require any documentation that would reasonably substantiate a claim under subheading 9801.00.10, HTSUS.

A copy of this ruling letter should be attached to the entry documents filed at the time this merchandise is entered. If the documents have been filed without a copy, this ruling should be brought to the attention of the Customs official handling the transaction.

Sincerely,

Monika R. Brenner, Chief

Previous Ruling Next Ruling

See also: