CON-9-04-CO:R:C:E 224211 AJS
Mr. Jose G. Flores
Attorney in Fact
Matsushita Electric of P.R., Inc.
P.O. Box 2695
San Juan, P.R. 00902-2695
RE: Temporary importation under bond for merchandise processed
and exported; speaker parts; General Note 1; Subchapter XIII,
U.S. note 1(a); HQ 221572; HQ 219823; Subchapter XIII, U.S. note
2(b); 19 CFR 10.31(f); 19 CFR 141.90; 19 CFR 141.103.
Dear Mr. Flores:
Your letter of August 19, 1992, on behalf of your client
Matsushita Electric of P.R., requesting a ruling on the assembly
of foreign speaker parts with domestic parts into a complete
speaker unit, has been referred to this office for reply.
FACTS:
Matsushita intends to import speaker parts number EAS
25KH35D-T (i.e, tweeter), EAS10PM342T (i.e, midrange),
EAS30PL30IT (i.e, woofer) and EAS30PL300T (i.e., woofer) into the
port of San Juan, P.R. These parts will be assembled with
alleged domestic parts into a complete speaker unit. After
testing, the speaker unit will be packed and exported to Japan,
Canada and South Africa.
ISSUE:
Whether the subject speaker parts qualify for treatment as
articles admitted temporarily free of duty, under bond, within
subheading 9813.00.05, Harmonized Tariff Schedule of the United
States (HTSUS).
LAW AND ANALYSIS:
All merchandise imported into the United States is subject
to duty unless specifically exempted therefrom. General Note 1,
HTSUS. Subheading 9813.00.05, HTSUS, provides for temporary
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duty-free entry, under bond, for merchandise imported into the
United States 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. This provision requires that the imported
merchandise be exported or destroyed within one year of the date
of importation. Subchapter XIII, U.S. note 1(a). This period
may be extended for one or more further periods which, when added
to the initial one year, do not exceed a total of three years.
Subchapter XIII, U.S. note 1(a). In order to qualify for this
duty-free treatment, merchandise cannot be imported for the
purpose of sale or sale on approval. Subchapter XIII, U.S. note
1(a).
In this instance, certain speaker parts will be imported
through the port of San Juan and assembled with domestic parts
into a complete speaker unit. After assembly, the speaker unit
will be exported to Japan, Canada and South Africa. This type of
assembly would appear to be a "processing" within the meaning of
subheading 9813.00.05, HTSUS. We have previously ruled that
component parts imported for the purpose of assembly with other
parts into a finished article constitute a "processing." HQ
221572 (08/02/89) and HQ 219823 (11/03/87). Accordingly, the
subject speaker parts are entitled to temporary duty-free entry,
under bond, as articles to be processed.
Subchapter XIII, U.S. note 2(b) requires that if any
processing of merchandise admitted under subheading 9813.00.05,
HTSUS, results in an article manufactured or produced in the
United States: (i) a complete accounting will be made to the
Customs Service for all articles, wastes and irrecoverable losses
resulting from such processing; and (ii) all articles and
valuable wastes resulting from such processing will be exported
or destroyed under customs supervision within the bonded period;
except that in lieu of the exportation or destruction of valuable
waste, duties may be tendered on such wastes at rates of duties
in effect for such wastes at the time of importation. The
assembly of the subject component parts with other parts to
produce a complete speaker unit is a processing which results in
an article manufactured or produced in the United States.
Consequently, your client is subject to all the above
accountability requirements of U.S. note 2(b).
The applicable Customs regulations for temporary
importations under bond may be found at 19 CFR 10.31 through
10.40. Section 10.31(f) states that a bond shall be given on
Customs Form 301 in an amount equal to double the duties which it
is estimated would accrue (or such larger amount as the district
director shall state in writing to the entrant is necessary to
protect the revenue) had all the articles covered by the entry
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been entered under an ordinary consumption entry. The basis for
the computation of the amount of a temporary importation bond is
estimated duties determined in accordance with sections 141.90
and 141.103 of the Customs Regulations (19 CFR 141.90 and 19 CFR
141.103). To this amount is added any other duties that the
district director ascertains may become due on the articles so
entered and, as well, estimated expenses of reimbursable
supervision such as may arise, for instance, when the articles
are not properly marked.
Heading 8518, HTSUS, provides for loudspeakers and parts
thereof. As stated previously, the subject components are parts
of speaker units. These speaker units are a type of loudspeaker.
Accordingly, the subject speaker parts satisfy the terms of this
heading. More specifically, they are described within subheading
8518.90.30, HTSUS, which provides for parts of loudspeakers.
HOLDING:
Entry is permitted in this instance temporarily free of
duty, under bond, within subheading 9813.00.05, HTSUS, which
provides for articles to be processed. The importer must meet
all the accountability requirements under the U.S. Notes of
Subchapter XIII to the satisfaction of the District Director.
The subject speaker parts are classifiable within subheading
8518.90.30, HTSUS, which provides for parts of loudspeakers,
currently dutiable at the General Column 1 rate of 4.9 percent ad
valorem.
Sincerely,
John Durant, Director
Commercial Rulings Division