CON-9-04 RR:CR:DR 227976 SMC
Mr. Gerhard Grob
President
JAGRO
Customs Brokers and International
Freight Forwarders Inc.
290 Nye Avenue
Irvington, NJ 07111
RE: Temporary Importation under Bond (TIB); rolled aluminum foil; Subheading
9813.00.05, HTSUS; U.S. Note 2(b) of Subchapter XIII of Chapter 98,
HTSUS
Dear Mr. Grob:
This is in response to your letter of April 9, 1998, on behalf of
Danisco Flexible Schupbach AG (Danisco) of Burgdorf, Switzerland, wherein you
requested a ruling on the eligibility for duty free entry of aluminum foil.
FACTS:
Danisco will be importing aluminum foil in rolls holding 7,500 bags that
are
pre-printed with ingredients of soup mix, backed, and decorated with a design
and pattern to be further processed. This processing will involve the
aluminum foil being rolled out, cut to size, folded, filled with a dried soup
mix, and sealed after which the filled bags will be re-packed into cartons and
exported.
ISSUES:
Does the above described aluminum foil qualify for entry under a
temporary importation under bond provision; specifically, does the processing
qualify as an alteration or process for purposes of entry under Subheading
9813.00.05 of the Harmonized Tariff Schedule of the United States (HTSUS).
LAW AND ANALYSIS:
Subheading 9813.00.05, HTSUS, provides for temporary duty-free entry,
under bond, for merchandise imported into the United States for the purpose of
repair, alteration or processing, including processes which result in articles
manufactured or produced in the United States (emphasis added). This
provision requires that the imported merchandise be exported or destroyed
within one year from the date of importation. See Subchapter XIII, U.S. Note
1(a), HTSUS.
Note 2(b) of Subchapter XIII states that if any processing of such
merchandise results in an article manufactured or produced in the United
States, such merchandise may be admitted into the United States under
subheading 9813.00.05, HTSUS, only on the condition that (i) a complete
accounting will be made to Customs of all articles, wastes and irrecoverable
losses resulting from such processing; and (ii) all articles, valuable wastes
and by-products resulting from such processing will be exported or destroyed
under Customs supervision within the bond period; except, that in lieu of
exportation or destruction of valuable waste, duties may be tendered on such
waste at the rate of duty in effect for such waste at the time of exportation.
As previously emphasized, a processing that results in articles
manufactured or produced would qualify as a permissible operation under
subheading 9813.00.05, HTSUS. Whether a process constitutes a manufacture or
production is often at issue in drawback operations under title 19, United
States Code, section 1313, since it is a statutory requirement. Customs has
consistently relied on court decisions where there is the question of whether
a processing constitutes a manufacture or production for purposes of drawback.
In Anheuser-Busch Brewing Association v. United States, 207 U.S. 556, 28 S.
Ct. 204 (1907), it was held that a "...manufacture implies a change, but
every change is not manufacture, and yet every change in an article is the
result of treatment, labor, and manipulation. But something more is
necessary... [T]here must be transformation; a new and different article must
emerge, having a distinctive name, character, or use."
The issue of duty-free importation of bags or containers for the sole
purpose of filling with merchandise has been considered on numerous occasions
by Customs and all provisions of law possibly applicable thereto have been
carefully examined. It has been consistently held that there is no way that
empty bags or containers may be imported into the United States merely for the
purpose of being filled with merchandise for exportation, without the
assessment of duty on such containers. In a Headquarters decision dated May
8, 1958, DB 516.6, it was held that bags and cartons imported to be filled
with potato chips would not qualify under a temporary importation under bond
provision nor would the processing qualify as a manufacture or production
under a drawback provision. The issue of whether containers could be
imported to be painted, labelled and then filled with chemicals under a
temporary importation provision for articles to be altered or processed was
the subject of C.I.E. 963/65 of July 1, 1965. It was held that since the
primary purpose for importing the containers was for the filling of the
containers with chemicals, the filling is not an alteration or processing of
the container itself and therefore the temporary provision was not applicable.
See also Customs Service Decision (C.S.D.) 81-65 of September 4, 1980,
wherein it was held that the filling of imported polypropylene bags with
agricultural commodities does not qualify as a manufacture or production under
the drawback law.
We find that the processing at issue however is not just the mere
filling of a bag or container that is actually pre-made prior to importation
as is the case in the previously cited decisions. The processing, in this
case, involves the cutting and folding of rolled aluminum foil into bags
which are filled with a dried soup mix and then sealed. The beginning
merchandise is rolled aluminum foil not pre-formed foil bags. The exported
merchandise is packaged soup mix. The processing involves a change in the
name, character and use of the imported aluminum foils, thus resulting in
articles that are manufactured or produced.
In a very similar case involving the importation of polyethylene roll
stock, bags were formed and filled with french fries in one sequential
operation. See B/L 207173 dated December 30, 1976. In this case the
polyetheylene roll stock was cut to size, folded and sealed on three sides
during the packaging operation. While as previously stated it has been held
that the packing, packaging, wrapping and mere filling of pre-made bags does
not constitute a manufacture or production for drawback purposes, where the
package itself is a new and different product having a different name,
character, and use from the imported material, the package is an article
manufactured or produced within the meaning of the drawback statute
and the operation would qualify thereunder. It was further held in the same
decision that it would make no difference whether the package itself is filled
with merchandise in the same operation in which it was made, or whether it is
formed around the merchandise it contains.
In the case at hand, the imported rolled aluminum foil which is
processed by its cutting, folding, filling and sealing results in articles
manufactured or produced in the United States. The operation would therefore
qualify as a "processing" under subheading 9813.00.05, HTSUS. There must be
a complete accounting to Customs of all articles and wastes resulting from the
processing.
HOLDING:
Aluminum foil in rolls holding 7,500 bags that are pre-printed, backed,
and decorated with a design and pattern is eligible for temporary importation
under bond pursuant to subheading 9813.00.05, HTSUS, when imported for a
processing consisting of cutting, folding, filling and sealing thereby
resulting in articles manufactured or produced.
Sincerely,
Director
Commercial Rulings Division