CON-9-04/DRA-2-01-RR:CR:DR 228512 MM
Mr. J. M. Altieri
Senior Customs Broker
Fast Transportation Services, Inc.
P. O. Box 4430
Carolina, Puerto Rico 00984-4430
Re: Temporary Importation Under Bond (TIB); Imazaquin (Scepter®
Technical); Subheading 9813.00.05, HTSUS; Process; Manufacture or
Production; U.S. Note 2(b), Subchapter XIII, Chapter 98, HTSUS; U.S.
Note 1(d), Subchapter II, Chapter 98, HTSUS; 19 CFR §10.31(a)(1)(ii)
Dear Mr. Altieri:
This is in response to your letter of July 1, 1999 on behalf of Cyanamid Agricultural de Puerto Rico, Inc. in which you submitted additional information in response to our information letter to you dated May 13, 1999. You request a ruling on the process in which the chemical Imazaquin (Scepter® Technical) is converted to Scepter® 70 DG under subheading 9813.00.05, Harmonized Tariff Schedule of the United States (HTSUS).
FACTS:
Imazaquin (Scepter® Technical) is produced by Cyanamid Brazil, exported to Cyanamid Argentina then exported to Cyanamid Puerto Rico to be used in the production of Scepter® 70 DG which is subsequently exported to Cyanamid Brazil.
The Imazaquin (Scepter® Technical) entries were initially submitted as consumption entries N36-XXXX133-7 and N36-XXXX134-5 dated February 12, 1998. A petition was made under 19 CFR 10.31(g) to change the consumption entries to TIB. A statement was made in the petition that the merchandise would be processed into articles manufactured in the United States for exportation. A subsequent request was made to waive redelivery for examination. In this request it was stated that the Imazaquin was imported to make “U.S.A. products” for export. Customs San Juan requested a statement of use in accordance with 19 CFR 10.31(a)(1)(ii). This information was not provided and the petition was denied.
In response to a petition to reconsider the acceptance of the two entries as TIB entries Customs San Juan accepted the entries as TIB on the condition that a ruling was requested to determine whether the process applied to the Imazaquin (Scepter® Technical) in Puerto Rico qualifies as a manufacturing process and not merely a blending process under subheading 9813.00.05, Harmonized Tariff Schedule of the United States (HTSUS).
The initial ruling request did not provide a sufficient description of the process performed on the Imazaquin (Scepter® Technical) to enable us to make this decision. Cyanamid Puerto Rico has now provided a more detailed description of the process in which bulk Imazaquin (Scepter® Technical) is shown to be converted into an agricultural form of Imazaquin (Scepter® 70 DG) through dilution, mixing with processing agents and pelletizing for end user application.
ISSUE:
Whether the above-described operation qualifies as a blending process under subheading 9813.00.05, HTSUS or a manufacture/production and if a manufacture/production whether the Imazaquin (Scepter® Technical) has been substantially transformed into a product of the United States.
LAW AND ANALYSIS
Pursuant to General Note 1, HTSUS, all merchandise imported into the United States is subject to duty unless specifically exempted therefrom. Under subheading 9813.00.05, HTSUS, articles to be repaired, altered or processed (including processes which result in articles manufactured or produced in the United States) may be entered temporarily free of duty under bond for exportation within one year from the date of importation. This period may be extended for one or more additional periods, which when added to the initial period does not exceed three years.
A process under subheading 9813.00.05 may include a process not amounting to a manufacture or it may include a manufacture. However, Customs must be able to ascertain whether or not an operation results in an article manufactured or produced in the United States. Section 10.31(a)(3)(ii) of the Customs Regulations requires a statement of the use to be made of the articles in sufficient detail to enable the port director to determine whether they are entitled to entry as claimed.
U.S. Note 2(b) of Subchapter XIII, Chapter 98, HTSUS, provides that merchandise may be admitted into the United States under subheading 9813.00.05 only on condition that:
If any processing of such merchandise results in an article . . .
manufactured or produced in the United States:
A complete accounting will be made to the Customs
Service for all articles, wastes and irrecoverable losses
resulting from such processing; and
All articles and valuable waste resulting from such
processing will be exported or destroyed under Customs supervision within the bonded period; except in lieu of the exportation or destruction of valuable wastes, duties may be tendered on such wastes or rates of duties in effect for such wastes at the time of importation.
U.S. Note 1(c), Subchapter I and U.S. Note 1(d), Subchapter II, Chapter 98, HTSUS provides that articles manufactured in the United States under subheading 9813.00.05, HTSUS, are ineligible for duty free treatment as American goods if the articles are returned to the United States.
A manufacture has been defined by the Supreme Court as a transformation from which a new article emerges having a distinctive name, character or use. See Anheuser-Busch Brewing Association v. United States, 207 U.S. 556, 562 (1908).
The process of converting Imazaquin (Scepter® Technical) into Scepter® 70DG is a typical process in which a bulk concentrate form of a chemical of Chapter 29 is diluted, mixed with processing agents (emulsifiers, wetting agents) and pelletized for end user application. In most instances the products are classified in Chapter 38, or in the case of pharmaceuticals, the end user form is classified in Chapter 30. Analogous to this process is the pharmaceutical process in which bulk aspirin is converted into the dilute tablet form used by consumers. The bulk form, classified in Chapter 29, is highly toxic in concentrated form and must be mixed with excipients and tabletizing agents to convert it to dilute user form. In this case the finished form of Scepter® 70 DG is to be applied directly to foliage while Imazaquin (Scepter® Technical) is an intermediate product whose sole use is to be further processed into different forms of end use Scepter®. Accordingly, Scepter® 70 DG is considered an article manufactured in the United States for TIB purposes.
Section 10.12(e) of the Customs Regulations provides:
Product of the United States. A “product of the United States” is
an article manufactured within the Customs territory of the United
States and may consist wholly of United States components or
materials, of United States and foreign components or materials,
or wholly of foreign components or materials. If the article consists
wholly or partially of foreign components or materials, the
manufacturing process must be such that the foreign components
or materials have been substantially transformed into a new and
different article, or have been merged into a new and different article.
In U.S. v. Murray, 621 F.2d. 1163, 1169, (1st Cir., 1980); cert. denied 101 S. Ct. 112, the court defines “transformation” as a fundamental change, not a mere alteration, in the form, appearance, nature, or character of an article. As a modifier of “transformation” “substantial” is defined as a very great change in the article’s real worth and value.
Although Imazaquin (Scepter® Technical) is somewhat changed by the blending process, the end product is still considered “Scepter®” though in dilute, application form. Therefore, the conversion of Imazaquin (Scepter® Technical) into a usable agricultural form of Imazaquin (Scepter® 70 DG) is not considered a substantial transformation of the imported product.
HOLDING:
The conversion of Imazaquin (Scepter® Technical) into Scepter® 70 DG is a manufacture/production for TIB purposes but the process does not substantially transform the imported product.
Sincerely,
John A. Durant
Director
Commercial Rulings Division