CON 9-04/FOR-2-03 RR:CR:DR 228151 CB
Port Director
U.S. Customs Service
1500 Port Boulevard
Miami, FL 33132
RE: Temporary Importation Under Bond; Subheading 9813.00.05, HTSUS; Transfer of Merchandise from a Foreign Trade Zone; Right to Make Entry; HQ 222020
Dear Sir or Madam:
This is in response to a letter dated August 25, 1998, from Kuehne & Nagel, Inc. on behalf of BAF Communications, Inc. (“BAF”), requesting a binding ruling on a temporary importation under bond. In view of the fact that the request concerned an ongoing transaction, we are treating said ruling request as an internal advice and are forwarding our comments to you directly. We have considered the points raised and our decision follows.
FACTS:
The requester states that BAF constructs mobile news vans. News agencies contract BAF to build to suit a particular vehicle. BAF supplies the vehicle chassis, and the purchaser supplies the components they want installed (i.e., video tape recorders, closed circuit cameras, antennae, etc.). The component articles are usually shipped by the purchaser (or their supplier) to BAF, who acts as importer of record on the Customs entry. The component articles are then installed in the vehicle which is subsequently exported.
In this particular instance, a news agency in Columbia purchased materials from Sony Broadcast Export Corporation (“SOBEC”). The merchandise was imported by SOBEC into their foreign trade zone in Miami, Florida. Upon completion of the sale to the Colombian news agency, SOBEC withdrew the merchandise from the zone on an Immediate Transportation entry and moved the merchandise in-bond to Orlando, Florida. According to the broker, the broker was instructed by BAF to make a temporary importation under bond (“TIB”) entry on this merchandise since it was to be installed in the news van and then exported. During a telephone conversation with Mr. Chris Garcia, we asked Mr. Garcia who was the importer of record
originally when the merchandise was admitted into the FTZ. Mr. Garcia confirmed that SOBEC had been the importer of record and had also withdrawn the merchandise from the zone. The merchandise was to be delivered to BAF which would be performing the actual installation process. It was intended that BAF would be the importer on the TIB entry.
In its ruling request, the broker further states that it inquired from Customs in Orlando as to which date would be considered the actual “date of importation” (i.e., the date of the original importation or the date it was withdrawn from the FTZ). The Orlando office referred the broker to the Office of Field Operations at Headquarters where the broker was informed that the importation date, for purposes of the TIB, would be the date the merchandise originally arrived in Miami. The broker further states that it was informed by Customs that although the material was going to be installed in the van and exported, it did not qualify for TIB under subheading 9813.00.0520, Harmonized Tariff Schedule of the United States (HTSUS).
According to the Miami Customs office, on July 16, 1998, Customs officers at the Miami Free Zone (FTZ #32) approved two transportation entries (CF 7512s) for Sony Broadcast Export Corporation. These documents reflect two Immediate Transportation (“IT”) entries: no. 44XXXX14 consisting of two pages of video and recording equipment and no. 44XXXX10 consisting of similar recording equipment. The zone documentation indicates that Tally Out no. XXXX48 (which corresponds to entry no. XX14) was issued and consisted of 50 pieces of non-privileged foreign (“NPF”) merchandise, and 46 pieces of domestic status merchandise. The documentation further indicates that Tally Out no. XXXX48A (which corresponds to entry no. XX10) was issued for one piece of domestic status and one piece of NPF merchandise. According to Mr. Garcia, the domestic status merchandise would not be included in the TIB. That portion of the merchandise, thus, is not subject to this ruling request. Further, Mr. Garcia informed this office that all of the merchandise has been re-admitted into the zone pending the outcome of this ruling request.
ISSUES:
1. Does the video equipment that is to be installed in the mobile news van qualify for entry under a TIB? If yes, then what is the date of importation for purposes of the TIB?
2. Can BAF enter the merchandise under a TIB?
LAW AND ANALYSIS:
Issue 1
U.S. Note 2(b), Subchapter XIII, Chapter 98, HTSUS, states that if any processing of merchandise entered under a TIB 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 waste and by-products resulting from such processing will be exported or destroyed under Customs supervision within the bonded 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 importation.
Previously, the Customs Service has held that the incorporation of an imported article into a domestic or foreign article, is a processing operation which falls under subheading 9813.00.05, HTSUS. See HQ 209773, dated December 5, 1978 (airplane parts imported for installation on or into aircraft) and HQ 221488, dated May 15, 1991 (imported roller bearings incorporated into various parts of machines). Likewise, we have previously concluded that the assembly of imported component parts with other parts into a finished article constitutes a “processing.” See HQ 221572, dated August 2, 1989; HQ 219823, dated November 3, 1987; HQ 224211 dated October 20, 1992 (imported speaker parts assembled with domestic parts into a complete speaker unit); and HQ 224682 dated July 13, 1993 (automated insertion process for printed wire boards). Accordingly, the subject imported video parts are entitled to temporary duty-free entry, under bond, as articles to be processed. As stated in the FACTS portion, the installation of the electronic equipment on or into the van constitutes a processing for TIB purposes.
Merchandise entered under a TIB must be exported within one year from the date of importation unless additional extensions are obtained. The Customs Service has previously determined that merchandise may be removed from a foreign trade zone by a TIB. See Customs Service Decision (C.S.D.) 79-454. In C.S.D. 81-213 it was determined that merchandise admitted into a zone in privileged foreign status cannot be withdrawn from the zone under a TIB. In the instant case, the merchandise was admitted in the zone in non-privileged foreign status. Therefore, the subject merchandise can be withdrawn from the zone under a TIB. In C.S.D. 79-454 Customs determined that, for purposes of the TIB, the date of importation is the date on which the merchandise arrived in the customs territory of the United States. Thus, in the instant case, the one year period provided for under the TIB would start running from the date the merchandise was originally imported into the United States. The one year period would not commence on the date the merchandise was withdrawn from the FTZ.
Issue 2
As stated in the FACTS section of this decision, the merchandise was imported and placed in the zone by SOBEC. While the merchandise was in the zone it was sold to the Colombian news agency. Thereafter, it was withdrawn from the zone by SOBEC. Once withdrawn from the zone and moved in bond, the intent was for BAF to enter the merchandise under a TIB. It is our understanding that BAF’s role in this transaction is solely to install the component parts into the news van. BAF is not the buyer and does not have title to the goods. The question then becomes, who has the right to enter the merchandise from the zone under the TIB?
Under 19 C.F.R. §146.61(a) the person making entry shall file the applicable Customs form. Under subparagraph (b), of the same regulation, it states that the person with the right to make entry shall submit the necessary supporting documentation and information to support the admissability of the merchandise. See 19 C.F.R. §146.61(b). The Foreign Trade Zones Manual provides that only the “importer of record” has the right to make entry. See U.S. Customs Service Foreign Trade-Zones Manual, §9.7(a)(6), p. 147. “Importer of record” is defined as the owner or purchaser of the goods, or when designated by the owner, purchaser, or consignee, a licensed customhouse broker. The owner or purchaser is any party with a financial interest in the transaction, including, but not limited to the actual purchaser of the goods, the actual owner of the goods, a person or firm who imports the goods for repair or alteration, etc. See Customs Directive 3530-02, dated November 6, 1984. The Custom Directive states that, for purposes of a TIB, the person importing such merchandise will have an interest in the goods beyond a nominal consignee and, therefore, may be listed as importer of record.
Based on the above discussion and for the reasons set forth hereinafter, we conclude that either the Colombian news agency or BAF may withdraw the merchandise from the zone and enter it under the TIB. There is no question that the Colombian news agency qualifies as the importer of record for TIB purposes. It is the owner of the merchandise entered under the TIB having purchased the same from SOBEC. Regarding BAF’s right to make entry, in HQ 222020 (dated August 1, 1990) we held that a manufacturer who imported raw sugar pursuant to a “tolling” agreement, but who did not own the sugar, had a sufficient financial interest in the sugar to qualify as importer of record. The ruling enumerated the different elements which demonstrated a financial interest, i.e., the right to enforce a mechanic’s lien, an advance of payment on the tolling agreement, etc. Thus, we conclude that the same reasoning would apply in the instant case if BAF can prove its financial interest in the transaction.
Having said the above, the question then becomes: if the merchandise was placed in the zone by one importer (SOBEC), can it be entered under a TIB by another importer (BAF or the purchaser). Once the merchandise was sold by SOBEC to the Colombian news agency, the right to enter the merchandise under the TIB was transferred to the Colombian news agency or BAF.
HOLDING:
The imported components (i.e., video tape recorders, closed circuit cameras, antennae, etc.) are processed when they are incorporated into a mobile communication vehicle, and accordingly may be imported temporarily free of duty, under bond, pursuant to subheading 9813.00.05, HTSUS. The importer must meet all of the accounting requirements under U.S. Note 2(b). The date of importation, for purposes of the TIB, is the date the merchandise was originally imported into the United States.
You are to mail this decision to the internal advice applicant no later than 60 days from the date of this letter. On that date, the Office of Regulations and Rulings will make the decision available to Customs personnel, and to the public on the Customs Home Page on the World Wide
Web at www.customs.ustreas.gov, by means of the Freedom of Information Act, and
other methods of public distribution.
Sincerely,
John Durant, Director
Commercial Rulings Division