CON-9-04 CO:R:C:E 223003 C
T. Ohashi
Planning Manager
FUJI VEGETABLE OIL, INC.
11 Maritine Avenue
White Plains, New York 10606
RE: Temporary importation under bond for merchandise subject to
melting and other processes; TIB; melting; 19 C.F.R. 10.31
Dear Mr. Ohashi:
This responds to your February 7, 1991, letter, concerning
your company's importation of merchandise and subsequent
exportation of cocoa butter substitutes to Canada. You inquired
as to whether or not the imported merchandise could be entered
duty-free under subheading 9813.00.05 of the Harmonized Tariff
Schedule of the United States (HTSUS), the temporary importation
under bond provision (TIB) covering merchandise imported
temporarily for repair, alteration, or processing. We have
reviewed your inquiry and our answer follows.
FACTS:
Your company imports certain merchandise, subjects it to
certain procedures, and exports it to Canada in the form of two
distinct products. These products are cocoa butter substitutes:
(1) PALMY, a cocoa butter equivalent which you describe as
blended and fully refined sheanut stearin and palm stearin, and
(2) PALKENA, a cocoa butter replacement described as fully
refined palm kernel stearin. The procedure to produce PALMY
employs five steps: (1) primary refining of sheanut oil and palm
oil; (2) fractionation of the refined oils to produce
intermediate products; (3) blending of two of the intermediate
products; (4) final refining; and (5) blending of additives. The
procedure to produce PALKENA is essentially the same, except that
palm kernel oil is refined in step one and there is no step three
because step two, fractionation, produces only one useful
intermediate product.
PALMY is imported and transported, in a reduced temperature,
solid or semi-solid state, to a melting station in New Jersey.
There, the PALMY will be melted to a less viscous form and
transferred to a tank truck for export to Canada. This is one of
the procedures inquired about.
The other procedure inquired about involves the importation
of the intermediate products used to produce both PALMY and
PALKENA. Palm kernel stearin, the intermediate product for the
production of PALKENA, is imported in a solid form. Sheanut and
palm stearin, the intermediate products used to produce PALMY,
are also imported in solid form. At a refinery in Savannah,
Georgia, these intermediate products undergo the remaining
production steps necessary to produce PALMY and PALKENA. Then,
they are exported.
You inquire as to whether or not either or both of these
procedures qualify as "processing" under subheading 9813.00.05,
HTSUS.
ISSUE:
Do the procedures described above qualify as "processing"
within the meaning of subheading 9813.00.05, HTSUS, such that
duty-free entry under TIB provisions is available to the imported
merchandise?
LAW AND ANALYSIS:
Subheading 9813.00.05, HTSUS, provides for duty-free entry,
under bond, for merchandise imported into the United States for a
temporary period for the purpose of repair, alteration, or
processing. The latter may include processing that transforms an
article into one that is considered manufactured or produced in
the United States. The provision requires that the imported
merchandise be exported or destroyed within one year of the date
of importation. This period may be extended for one or more
periods which, when added to the initial one year, do not exceed
a total of three years. In order to qualify for this duty-free
treatment, merchandise cannot be imported for the purpose of sale
(or sale on approval). This limitation pertains to sales in the
United States. (See U.S. Note 1(a), Subchapter XIII, Chapter 98,
HTSUS.)
It is clear that the second procedure described above
qualifies as merchandise imported temporarily for processing.
The intermediate products, after importation, are refined and
then blended with necessary additives. (In the case of imported
sheanut and palm stearin, an additional blending takes place
prior to refining.) So long as other requirements are met, this
procedure qualifies under the provision of 9813.00.05, HTSUS.
Regarding the melting procedure, we are persuaded that it
qualifies as a process under the subheading. On May 13, 1963, we
held that a freezing procedure qualified as a processing
procedure under what was then section 308(1) of the Tariff Act of
1930, as amended (DB 200149). Fresh strawberries were imported
in tins and then frozen. Later, they were exported. The melting
procedure in the instant case is similar to the freezing
procedure considered in the referenced case. If the latter is
considered a "processing, we see no reason to conclude otherwise
regarding the melting procedure. While mere repackaging
operations are not considered "processing" under the subheading,
the melting procedure here is not a simple repackaging.
HOLDING:
Based on the foregoing, we conclude that both procedures
described above, including the melting procedure as performed on
the facts of this case, constitute a "processing" under
subheading 9813.00.05, HTSUS, and the imported merchandise, so
long as all other requirements are met, is entitled to temporary
importation under bond.
Sincerely,
John Durant, Director
Commercial Rulings Division