REC-1/CLA-1-RR:IT:EC 114440 GOB
Elizabeth Janie Vann, Esq.
600 Sunland Park Drive
Suite 2-100
El Paso, Texas 79912
RE: Bank checks; Monetary instruments; 31 U.S.C. 5316; General
Note 16(c), HTSUS; Business records; Subheading 4911.99.8000,
HTSUS; Subheading 9801.00.1010, HTSUS
Dear Ms. Vann:
This is in response to your ruling request of July 15, 1998,
which was received in this office on approximately July 28, 1998,
on behalf of Electronic Data Management International, Inc.
("EDM").
FACTS:
You describe the pertinent facts as follows:
EDM, through its Mexican subsidiary, EDM del Norte, S.
de R.L. de C.V., Cd. Juarez, Chih., Mexico, provides
data processing services to various companies located
throughout the United States, including remittance
processing of payments made to EDM's customers
("Payees") by the Payees' various customers. In
connection with such data processing services, EDM
proposes to export bank checks from El Paso to its
Mexican subsidiary's facility in Cd. Juarez for
processing and then return them to the United States
through the Port of El Paso, Texas, after processing.
Specifically, EDM will receive from Payees (for whom
EDM provides data processing services) unopened letters
containing customer account statements and payment
checks drawn on U.S. banks by customers of Payees and
made out to Payees. EDM will transport the unopened
letters to Mexico for processing after which the bank
checks will be returned to the United States. Some of
these letters may also contain correspondence and/or
cash, although cash payments should be rare and for
small amounts. Such correspondence and/or cash also
would be returned to the United States after
processing.
In Mexico, the letters will be opened and payment
amounts data-entered and posted electronically to the
customers [sic] accounts. Copies (i.e., electronic
images) of the checks will also be made by means of an
electronic scanning process. The original checks will
be endorsed in Mexico "For deposit only to the account
of [name and account number of the appropriate Payee]."
The endorsed checks will then be returned to the U.S.
for deposit into Payees' bank accounts and for Federal
Reserve System clearance.
You stated telephonically that the subject checks are not
endorsed when they are sent to Mexico.
ISSUES:
1. Whether the above-described bank checks are monetary
instruments subject to the reporting requirements of 31 U.S.C.
5316?
2. Whether the above-described bank checks are business
records within the meaning of General Note 16(c), Harmonized
Tariff Schedule of the United States ("HTSUS") or are otherwise
classified?
LAW AND ANALYSIS:
Issue One
31 U.S.C. 5316 provides for the filing of a report upon the
transportation of monetary instruments of more than $10,000 at
one time "from a place in the United States to or through a place
outside the United States; or to a place in the United States
from or through a place outside the United States."
31 U.S.C. 5312(a)(3) provides:
"Monetary instruments" means-
(A) United States coins and currency; and
(B) as the Secretary may prescribe by regulation,
coins and currency of a foreign country,
travelers' checks, bearer negotiable instruments,
bearer negotiable securities, bearer investment
securities, bearer securities, stock on which
title is passed on delivery, and similar material.
(C) as the Secretary of the Treasury shall provide
by regulation for purposes of section 5316,
checks, drafts, notes, money orders, and other
similar instruments which are drawn on or by a
foreign financial institution and are not in
bearer form.
31 CFR 103.11(u) provides:
Monetary instruments. (1) Monetary instruments
include:
(i) Currency;
(ii) Traveler's checks in any form;
(iii) All negotiable instruments (including personal
checks, business checks, official bank checks,
cashier's checks, third-party checks, promissory notes
(as that term is defined in the Uniform Commercial
Code), and money orders) that are either in bearer
form, endorsed without restriction, made out to a
fictitious payee (for the purposes of 103.23), or
otherwise in such form that the title thereto passes
upon delivery;
(iv) Incomplete instruments (including personal checks,
business checks, official bank checks, cashier's
checks, third-party checks, promissory notes (as that
term is defined in the Uniform Commercial Code), and
money orders) signed but with the payee's name omitted;
and
(v) Securities or stock in bearer form or otherwise in
such form that title thereto passes upon delivery.
It is our determination that the bank checks described in
this ruling (see the FACTS section) are not "monetary
instruments" as that term is defined in 31 U.S.C. 5312(a)(3) and
31 CFR 103.11(u) because they do not fall within any of the
categories described in those provisions. They are not bearer
negotiable instruments within the meaning of 31 U.S.C.
5312(a)(3)(B), nor are they negotiable instruments within the
meaning of 31 CFR 103.11(u)(1)(iii).
Accordingly, the above-described bank checks are not
reportable pursuant to 31 U.S.C. 5316.
Issue Two
General Note 16, HTSUS, provides in pertinent part:
Exemptions. For the purposes of general note 1-
...
(c) records, diagrams and other data with regard to any
business, engineering or exploration operation whether
on paper, cards, photographs, blueprints, tapes or
other media,
...
are not goods subject to the provisions of the tariff
schedule.
We find that the subject checks are not business records
within the meaning of General Note 16(c), and are therefore not
exempt from the requirement of entry or the payment of duty.
Uncashed checks do not constitute business records. Once the
checks are cashed, they become business records. Prior to their
being cashed, they are evidences of value. General Headnote 5 of
the Tariff Schedules of the United States (the predecessor to the
HTSUS) provided exemptions similar to those found in current
General Note 16. However, two of those exemptions were not
carried over into General Note 16: currency in current
circulation, and securities and similar evidences of value.
Heading 4907 pertains to:
Unused postage, revenue or similar stamps of current or
new issue in the country to which they are destined;
stamp-impressed paper; banknotes; check forms; stock,
share or bond certificates and similar documents of
title.
We find that the subject bank checks are not described by
any of the items contained in heading 4907. The Explanatory
Notes for heading 4907 state that check forms are blank forms.
Therefore, the subject checks are not check forms.
We find that the subject bank checks are classifiable under
subheading 4911.99.8000, HTSUS, which is a basket provision
providing for other printed matter. Subheading 4911.99.8000,
HTSUS, carries a column 1 general rate of duty of 2.9 percent.
We note that if the subject checks were printed in the
United States, and upon compliance with the documentation
requirements of 19 CFR 10.1, they would appear to be eligible for
duty-free treatment under subheading 9801.00.1010, HTSUS, which
pertains to:
Products of the United States when returned after
having been exported, without having been advanced in
value or improved in condition by any process of
manufacture or other means while abroad.....
Articles previously exported with intent to
reimport after temporary use abroad....
HOLDINGS:
1. The bank checks described in this ruling are not
"monetary instruments" as that term is defined in 31 U.S.C.
5312(a)(3) and 31 CFR 103.11(u).
2. The bank checks described in this ruling are not
business records within the meaning of General Note 16(c). They
are classifiable under subheading 4911.99.8000, HTSUS, at a
column 1 general rate of duty of 2.9 percent. If the bank checks
were printed in the U.S., they appear to be eligible for duty-free treatment under subheading 9801.00.1010, HTSUS, upon
compliance with the documentation requirements of 19 CFR 10.1.
Sincerely,
Jerry Laderberg
Chief,
Entry Procedures and Carriers
Branch