CON-9-04 CO:R:C:E 223899 C
Chief, Branch 1
National Import Specialist Division
New York Seaport Area
U.S. Customs Service
6 World Trade Center, Room 423
New York, New York 10048
RE: Applicability of TIB procedures under 9813.00.05, HTSUS, to
the processing of Canadian softwood lumber; application of
countervailing duty to TIB entries from Canada
Dear Sir:
This responds to your memorandum regarding a request for a
ruling submitted by Rosboro Lumber Company concerning temporary
importation under bond (TIB) for Canadian softwood lumber. We
have reviewed all relevant materials and our response follows.
FACTS:
Rosboro Lumber Company proposes to enter lumber from Canada
under TIB provisions. The lumber is described as a special
laminating grade of Canadian Spruce/Pine, and it will undergo a
procedure in the United States whereby it will be made into an
"Export Structural Glulam Product meeting metric standards for
European Structural Timbers." You have indicated that the lumber
is properly classifiable under 4407.10.00, HTSUS, and that it is
subject to a preliminary countervailing duty order imposing
additional duties of 14.48% ad valorem. The procedure will take
place, and exportation will be accomplished, within one year from
the date of importation. The company requests a ruling on the
applicability of subheading 9813.00.05 of the Harmonized Tariff
Schedule of the United States (HTSUS).
In your memorandum, you have expressed the view that the
lumber in question may be eligible for TIB treatment under the
subheading. The company intimates that under TIB procedures, the
14.48% countervailing duty would not have to be paid on its
imports. You have expressed the view that merchandise entered
under TIB provisions would not be subject to duty, including
countervailing duty. In apparent support of that proposition,
you cite Headquarters Letter 221495, dated July 11, 1989,
concerning applicability of TIB procedures to red cedar shakes,
where a presidential proclamation declaring special duties on red
cedar shakes was involved.
ISSUE:
On the facts of this case, can the lumber in question be
entered under TIB procedures? Would the countervailing duty be
imposed upon TIB entry from Canada?
LAW AND ANALYSIS:
Subheading 9813.00.05, HTSUS, provides for duty-free
importation under bond for merchandise to be repaired, altered,
or processed in the United States, provided it is not imported
for sale or sale on approval and that it is exported (or
destroyed) in a timely manner (see U.S. Note 1(a) of Subchapter
XIII, Chapter XXII, HTSUS, and 19 C.F.R. 10.37). The processing
can be anywhere from relatively minor to extensive enough to be
considered a manufacture or production. The processing operation
here involves the production of structural timber beams, called
"timbers," from imported "dimension lumber." Dimension lumber is
lumber in pieces between one inch and two-and-a-half inches
thick, with varying lengths. To make a timber, dimension lumber
is glued together, finished, re-sized (or cut) to specifications,
trimmed to proper length, and packed for shipment. This
procedure falls within the meaning of "processing" under
9813.00.05, HTSUS, and qualifies for TIB treatment.
As you pointed out in your memorandum, U.S. Note 2(b) of
Subchapter XIII (Chapter XXII, HTSUS) requires that any
processing that amounts to a manufacture or production of
articles must include an accounting for all articles, wastes, or
irrecoverable losses resulting from the processing. All such
articles and valuable wastes shall be exported or destroyed under
Customs supervision; alternatively, duties may be paid on
valuable wastes at the rate applicable to such wastes at the time
of importation of the entered merchandise.
In addition to qualification for TIB entry, you have raised
the question, somewhat indirectly, as to whether or not the
lumber in question can be entered without payment of the
applicable CVD duties. You stated your belief that these duties
would not have to be paid. You also pointed out that TIB entries
from Canada do not require a bond.
Ordinarily, CVD duties are charged against the TIB bond and
do not have to be deposited at entry. This is so because TIB
entries are not considered consumption entries for TIB purposes
(see Headquarters Ruling Letter 223491, March 30, 1992, copy
attached). In the instant case, however, the imported
merchandise is from Canada, and a TIB bond is not required for
TIB entries from Canada (see Customs Ruling Letter 221508, July
5, 1989, copy attached). Under these precedents, it is clear
that the CVD duties applicable to the lumber in question do not
have to be deposited at entry, nor will they have to be charged
to a TIB bond. (We merely note that Customs Ruling letter 221495
did not address the issue of applicability of a special duty
imposed by presidential proclamation to TIB entries of red cedar
shakes. Therefore, it is not precedential authority for the
proposition you appear to have had in mind when citing it; to
wit, that the CVD duty in the instant case should not apply to
the TIB entries of lumber.)
In summary, we conclude that the imported lumber may be
entered under TIB procedures, provided that all pertinent
statutory and regulatory requirements are met (including those
mentioned above). The applicable CVD duties need not be
deposited at entry nor charged against a bond.
HOLDING:
The operation in question, as applied to the imported
lumber, qualifies as "processing" under 9813.00.05, HTSUS, and
the lumber in question can be entered under TIB procedures. The
countervailing duty applicable to these lumber imports from
Canada need not be deposited at entry nor charged to a TIB bond.
Sincerely,
John Durant, Director
Commercial Rulings Division