CON-9-04-RR:IT:EC 227077 GEV
Alfred R. De Angelus
De Angelus, Schaffer & Associates
1455 Pennsylvania Avenue, N.W.
Suite 1150
Washington, D.C. 20004
RE: Printed Lottery Material from Canada; Headings 4811, 4911,
HTSUS; TIB; FTZ;
19 U.S.C. 1305
Dear Mr. De Angelus:
This is in response to your letter dated June 27, 1996, on
behalf of BABN Technologies, Inc. ("BABN"), requesting a ruling
on the treatment of printed paper materials imported from Canada
to be further processed into lottery tickets in the United States
for export to Russia and other countries. Our ruling on this
matter is set forth below.
FACTS:
On November 7, 1995, the U.S. Customs Service seized
approximately 13,000 feet of paper rolls at Champlain, New York,
which BABN attempted to import into the United States from
Canada. BABN received notice of the seizure on November 15,
1995, for an alleged violation of 19 U.S.C. 1305. The seized
merchandise was invoiced as "aluminum printed rolls" and
consisted of sheets of printed aluminum combined with paper. The
merchandise was subsequently released and returned to Canada.
At the time of seizure, the merchandise had only undergone
the first of four operations necessary for the processing of
material into completed lottery tickets (i.e., the printing of a
graphic background on the material). The three remaining
operations (i.e., the printing of images and other variable
information such as the game identification and security codes,
the application of a latex scratch-off gum on the variable
information, and the cutting of the sheets and packaging into
ticket booklets) were to be performed in the United States.
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It is the position of BABN that notwithstanding the
prohibitions set forth in 19 U.S.C.
1305, the subject merchandise should be allowed entry into the
United States under subheadings 4811.39.2000 and 4811.90.2000,
Harmonized Tariff Schedule of the United States (HTSUS), or
subheading 4911.99.8000, HTSUS. In the alternative, it is
contended that this merchandise be admitted under a Temporary
Importation Bond or into a Foreign Trade Zone.
ISSUE:
Whether the importation into the United States from Canada
of printed paper materials for further processing into lottery
tickets is prohibited by 19 U.S.C. 1305.
LAW AND ANALYSIS:
Section 305 of the Tariff Act of 1930, as amended (19 U.S.C.
1305), generally provides that the importation into the United
States of certain articles deemed to be immoral, including
lottery material from any country, is prohibited. The Customs
regulation promulgated pursuant to 19 U.S.C. 1305 is found at
title 19, Code of Federal Regulations, 145.51 (19 CFR
145.51).
On January 2, 1988, the United States and Canada entered
into a bilateral reciprocal free trade area agreement called the
United States-Canada Free-Trade Agreement ("CFTA"). The CFTA
became law on September 28, 1988, pursuant to the United States-Canada Free-Trade Agreement Implementation Act of 1988 (the
"Act"), Pub. L. 100-449, 102 Stat. 1851. Section 206 of the Act
provided that, effective January 1, 1993, 305(a) of the Tariff
Act of 1930 (19 U.S.C. 1305(a)) was amended to provide that
this section shall not apply to any lottery ticket, printed paper
that may be used as a lottery ticket, or advertisement of any
lottery, that is printed in Canada for use in connection with a
lottery conducted in the United States. Pursuant to Treasury
Decision (T.D.) 92-80, published in the Federal Register on
August 20, 1992 (57 FR 37702), 19 CFR 145.51 was amended to
conform to 19 U.S.C. 1305, so that, effective January 1, 1993,
this regulatory provision will not prohibit the importation of
certain lottery matter printed in Canada for use in connection
with a lottery conducted in the United States.
Accordingly, in view of the fact that the above-cited
statutory and regulatory authority does not prohibit the
importation of certain lottery material imported from Canada for
use in connection with a lottery conducted in the United States,
it is our position that such authority does not bar the
importation of the printed lottery material under consideration
which will be exported subsequent to final processing into
lottery tickets in the United States. In this regard we note
that Customs has previously allowed the importation of partially
printed lottery tickets from Canada pursuant to the CFTA without
regard to the prohibitions set forth in 19 U.S.C. 1305.
(Headquarters Ruling letter 953232, dated April 20, 1993)
With respect to the alternative methods by which you suggest
the subject merchandise may enter the United States, we offer the
following comments.
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The classification of merchandise under the HTSUS is
governed by the General Rules of Interpretation (GRIs). GRI 1
requires that classification be determined first according to the
terms of the headings of the tariff and any relative section or
chapter notes and, unless otherwise required, then according to
the remaining GRIs, taken in order.
In the instant case, there exists two chapters in which the
goods may be potentially classified: to wit, chapter 48 and
chapter 49. Chapter 48 provides for, among other things, printed
paper. The general notes to the Explanatory Notes to chapter 48
state, among other things, that "[t]his [c]hapter includes
printed papers...provided that the printing is merely incidental
to the use of the paper for wrapping, writing, etc., and that the
goods do not constitute printed matter of [c]hapter 49..."
Within chapter 48, heading 4811 provides for, among other things,
rolls of printed paper, coated or covered with plastics. The
Explanatory Notes to heading 4811 state that this heading
includes, among other things, "[p]aper...printed with motifs,
characters or pictorial representations merely incidental to
their primary use and not constituting printed matter of Chapter
49..." On the other hand, chapter 49 provides for printed
matter. The general notes to the Explanatory Notes to chapter 49
state, in part, that "this [c]hapter covers all printed matter of
which the essential nature and use is determined by the fact of
its being printed with motifs, characters or pictorial
representations...[with the exception of]...goods...in which the
printing is merely incidental to their primary use..."
The lack of a detailed description of the subject
merchandise in your letter and/or the lack of a sample precludes
us from rendering a definitive ruling at this time as to its
classification under the above-discussed provisions of the HTSUS.
Should you seek such a ruling, you should direct your request to
the Chief, Textiles Branch, Office of Regulations and Rulings, at
Customs Headquarters, providing the aforementioned description
and/or sample.
With respect to the admission of this merchandise
temporarily under bond, 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 on approval and that it is exported in a
timely manner. (See U.S. Note 1(a) of Subchapter XIII, Chapter
XXII, HTSUS, and 19 CFR 10.37. The processing can be a
relatively minor procedure or extensive enough to be considered a
manufacture or production. 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))
Accordingly, since the entry of the subject merchandise is
not restricted as discussed above, its admission into the United
States temporarily under bond is a viable alternative provided
there is compliance with the applicable Customs procedures. (See
19 CFR 10.31, 10.37-10.40) Likewise, the use of a foreign
trade zone (FTZ) in bringing this merchandise into the United
States is also feasible as long as there is adherence to the
Customs regulations governing FTZs set forth in 19 CFR Part 146.
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HOLDING:
The importation into the United States from Canada of
printed paper materials for further processing into lottery
tickets is not prohibited by 19 U.S.C. 1305.
Sincerely,
Chief
Entry and Carrier Rulings Branch