CON-9-04/LIQ-4-01-R:C:E 225700 JRS
Lisa Levaggi Borter, Esq.
Adduci, Mastriani, Schaumberg, Meeks & Schill, L.L.P.
330 Madison Avenue, 39th Floor
New York, NY 10017
RE: Temporary Importation Under Bond (TIB); Aramid yarn subject
to an antidumping duty order;
"Processing"; Subheading 9813.00.05, HTSUS; Inapplicability of
cash deposit of antidumping duties at entry to TIB entries
; HQ 223491; HQ 224187
Dear Ms. Borter:
This is in response to your ruling request dated September
14, 1994, on behalf of your client, Hexcel Corporation, regarding
the applicability of the TIB procedure under subheading
9813.00.05, HTSUS, for the processing of aramid yarn from the
Netherlands which is subject to an antidumping duty order, and of
the posting of a bond to cover the antidumping duties instead of
cash deposit.
FACTS:
Hexcel imports Twaron aramid filament yarn type 1000, 3360
dtex, which is within the scope of the Antidumping Duty Order for
Aramid Fiber Formed of Poly-phenylene Terephthalamide From the
Netherlands (A-421-805, May 2, 1994). Upon importation, a
specific lot number is assigned to the shipment at Hexcel's
manufacturing facility in Texas, which follows the imported yarn
through the various stages of manufacture of the yarn into a
woven fabric. Hexcel has provided documentation tracking the
imported yarn through the processes performed on the yarn.
The first step of production sets up the warp for weaving
the finished fabric. As the material is woven into fabric, batch
numbers and roll numbers are assigned and this information, as
well as the weights of the fabric and any scrap are logged. Upon
completion of the weaving process, Hexcel calculates the gross
and net weight of the materials before production, the amount
used in production and the amount left over, which is used to
fill the next customer order for exportation. The amount of yarn
used is adjusted by the moisture content of the stock and the
finished fabric. A waste record of the scrap created at the
several stages of the weaving process is maintained by TIB lot
number and the scrap is held for either exportation or
destruction under Customs supervision.
Next, the woven fabric, with batch numbers, number of rolls
and weights, is forwarded to Hexcel's subcontractor in the United
States under a toll charge arrangement for further processing.
Title to the imported merchandise remains with Hexcel throughout
the time the material is in the United States. The subcontractor
subjects the fabric to a resin impregnation process. This
process consists of coating the fabric with a controlled quantity
of an uncured thermoset plastic resin. During this process, the
subcontractor maintains records of the amount of material
received from Hexcel using tracking numbers which enables Hexcel
to account for imported yarn in finished, resin-impregnated
batches of fabric. After quality testing of the finished coated
fabric, the resulting resin-impregnated woven fabric product is
delivered directly to Hexcel's freight forwarder for exportation
to the customer in Brazil within one year of the date the yarn
was originally received in the United States..
ISSUE:
(1) Whether the above-described process qualifies the
aramid yarn for duty-free entry under TIB provision, subheading
9813.00.05, HTSUS.
(2) Whether the antidumping duties applicable to the aramid
yarn need to be deposited in cash at entry.
LAW AND ANALYSIS:
Under subheading 9813.00.05, HTSUS, articles to be repaired,
altered or processed (including processes which result in
articles manufactured or produced in the United States) may be
entered temporarily free of duty, under bond, for exportation
within one year from the date of importation. This period may be
extended for one or more additional periods, which when added to
the initial period does not exceed three years. U. S. Note 1(a)
of Subchapter XIII, Chapter 98, HTSUS. In order to qualify under
this provision, the merchandise imported may not be imported for
the purpose of a sale or sale on approval. Id. However, any
processing that amounts to a manufacture or production of
articles must include a complete accounting to the Customs
Service for all articles, wastes, or irrecoverable losses
resulting from the processing, and all articles and valuable
wastes resulting from such processing must be exported or
destroyed under Customs supervision within the bonded period.
See U.S. Note 2(b) of Subchapter XIII, Chapter 98, HTSUS.
In your letter, you state that Hexcel retains title to the
merchandise at all times until the merchandise is exported.
Merchandise which is to be sold in the United States for export
to a foreign purchaser is not considered imported for sale or
sale on approval within the meaning of the TIB regulations.
C.S.D. 79-96; T.D. 54640 (25).
It is apparent from the documentation submitted that Hexcel
has sufficient inventory tracking from importation to exportation
which appear to satisfy Customs requirement for the processing
and tracking of all articles and wastes within the fixed time
periods.
On the basis of the presented facts detailed in your
submission, a significant transformation of the imported yarn has
occurred. Weaving of imported yarn into fabric is clearly a
manufacture which qualifies as a "processing" under subheading
9813.00.05, HTSUS. Likewise, the subsequent impregnation of that
fabric with plastic resin also qualifies as a "processing" which
is a permissible operation under subheading 9813.00.05, HTSUS.
Customs has consistently held that antidumping duties are
not applicable to TIB entries since a TIB entry is not an entry
for consumption. See HQ 223491, dated March 30, 1992; HQ 224187,
dated February 23, 1993; 19 CFR 10.31(f) and 19 CFR 141.0a(f).
These rulings are incorporated herein by reference. Therefore,
while a bond is required to include potential antidumping duties
if TIB export requirements are not met (see 19 CFR 10.31(f)), the
importer is not required to pay the antidumping duty which would
be due on a consumption entry of the same merchandise.
HOLDING:
The operation performed on the aramid yarn is a manufacture
which qualifies as a "processing" under subheading 9813.00.05,
HTSUS, for temporary duty-free entry. No cash deposits of
antidumping duties are required at entry; however, a bond is
required to be posted at entry which includes the estimated
antidumping duties.
Sincerely,
John Durant, Director Commercial Rulings Division