CLA-2 CO:R:C:V 555413 GRV
District Director of Customs
Chicago, Illinois 60603
RE: Application for Further Review of Protest No. 3901-8-000726,
concerning denial of TSUS item 806.20 treatment to
refurbished telephones.F.W. Myers & Co.;H.F. Keeler;Pacific
Customs Brokerage Co;Zemansky;Coastwise Steamship;19 CFR
10.8;compliance with regulations;proof of identity
Dear Sir:
The above-referenced protest contests your denial of the
partial duty exemption under item 806.20, Tariff Schedules of the
United States (TSUS) (now subheading 9802.00.40, Harmonized
Tariff Schedule of the United States (HTSUS) (repairs or
alterations performed pursuant to warranty) and subheading
9802.00.50 (other repairs or alterations)), to used telephones
imported from Taiwan following repairs.
FACTS:
The record reflects that certain used, previously-imported
phones (dealer and customer returns) were exported during the
period 1987-1988 to Taiwan for repairs to be made to their
electrical connections. The phones, encompassing some 30
different model types, were returned pursuant to a 2-year
warranty arrangement between the distributor (protestant) and
manufacturer. A Certificate of Registration (Customs Form 4455),
signed by a Customs officer on August 24, 1987, shows that
certain articles, identified by model numbers only, were exported
for repairs. (Although new phones of the same model numbers were
also imported, they were imported separately from the refurbished
phones).
The nature of the foreign repair operation consisted of
refurbishing the phones by replacing, as needed, broken phone
cords, the plastic handset back, the memory door, selected power
adaptors, uniformly replacing handset cords, cleaning the
exterior of the phone units, and individually repackaging the
units for return to the U.S.
Repair Declarations prepared by the foreign manufacturer,
while acknowledging receipt of particular shipments of phones for
the purpose of repairs and attesting that no substitution of the
exported merchandise was made, do not explain the nature of the
foreign repair operations performed or describe the identity of
the phones, other than by stating the number of units and
cartons in the particular shipment.
Upon return of the phones to the U.S., the importer sought
partial duty exemption under TSUS item 806.20 for 22 entries of
phones. Your office denied the exemption for the following
reasons:
(1) the phones were not registered by serial number,
thereby presenting Customs with a verification dilemma
as to whether the returned phones were, in fact, the
same phones that were exported;
(2) no repair affidavits were presented with the entries
describing the alleged repairs;
(3) the refurbished phones were in a condition indistin-
guishable from new phones of the same model; and,
(4) it was unclear whether the phones became defective
after they where imported or whether they were
defective when originally imported.
Regarding the issue of serial numbers, protestant states
that it received a Request for Information (CF 28, dated April
15, 1987) inquiring whether the phones had serial numbers, and
that on May 15, 1987, it responded that only two models--ST-660
and ST 662--had such numbers. However, upon Customs inspection
of one of the imported shipments, it was found to contain a
different model--ST-600--which also bore serial numbers.
Protestant contends that Customs gave no indication that its
practice of listing only the model numbers of the phones it was
exporting on the CF 4455 was unacceptable until one year after
the initial CF 28 was issued, and that it had a right to rely on
Customs unchallenged acceptance of the manner in which it
exported the phones.
ISSUE:
Whether the phones imported into the U.S. are entitled to
the partial duty exemption under HTSUS subheading 9802.00.40.
LAW AND ANALYSIS:
TSUS item 806.20 provides a partial duty exemption to
articles returned to the U.S. after having been exported to be
advanced in value or improved in condition by repairs or
alterations. Such articles are dutiable only upon the value of
the foreign repairs or alterations, provided the documentary
requirements of section 10.8, Customs Regulations (19 CFR 10.8),
are satisfied.
The duty exemption provided under TSUS item 806.20 is a
privilege, and it is well settled that compliance with mandatory
regulations is a condition precedent to recovery and that the
burden of proof thereof rests on the protestant. See, F.W.
Myers & Co., v. United States, C.D. 4515, 72 Cust.Ct. 133, 374
F.Supp. 1395 (1974); H.F. Keeler v. United States, C.D. 1842, 38
Cust.Ct. 48 (1957); and, Pacific Customs Brokerage Co. v. United
States, T.D. 48887, 71 Treas.Dec. 530 (1937).
In 1972, the regulations applicable to repaired/altered
merchandise were revised. T.D. 72-119, 6 Cust.Bull. 209. These
regulations, published at 19 CFR 10.8, provide that there shall
be filed, (1) prior to exportation of the articles to be repaired
or altered, a Certificate of Registration (Customs Form 4455) to
permit the district director to examine such articles before they
are exported; and, (2) in connection with an entry, a repair
declaration from the person who performed the repairs or
alteration in substantially the form set forth at subsection (e),
the Certificate of Registration, and a declaration, made by the
owner, importer, consignee, or agent having knowledge of the
facts, that the articles entered in their repaired or altered
condition are the same articles covered by the Certificate of
Registration. The information sought by the documentary
requirements of 19 CFR 10.8 is designed to enable Customs to
verify that the articles returned are the same as the articles
exported and that they were repaired/altered within the meaning
of TSUS item 806.20. Thus, compliance with these documentary
requirements is essential to establish the identity of the
articles returned and their eligibility for the partial duty
exemption provided. See, Zemansky v. United States, T.D. 39663,
11 Ct.Cust.Appls. 515 (1923) (difficulty in obtaining proof of
identity is not to be charged to the Government; it is the
misfortune of the importer who seeks to take advantage of the
privilege granted him). Cf., United States v. Coastwise
Steamship & Barge Co., T.D. 38047, 36 Treas.Dec. 501, 9 Ct.Cust.
Appls. 216 (1919) (the regulations for the identity of goods
returned prescribed by the Secretary of the Treasury are
applicable only so far as practicable, and, if it is impossible
from the beginning to identify the article in accordance with the
regulations, its identity may be established by satisfactory
evidence other than that prescribed by the Secretary).
The form the required repair declaration is to follow
embraces two broad elements: (1) it requires identifying
information from the person performing the repairs in the format
of a recital containing five substantive clauses; and, (2) it
requires the person performing the repairs to provide information
concerning the nature of the repairs effected and the identity of
the articles repaired based on personal observation. The
descriptive information required is more detailed than the
information required on a CF 4455, as it requires identification
marks and numbers, where available, in addition to a general
description of the merchandise which is common to both forms.
While the repair declarations belatedly submitted in this
case include all of the obligatory recital "clauses," they do not
contain any descriptive information regarding the nature of the
repairs performed (no description other than "repairs" is on the
declarations) or the particular articles repaired sufficient
enough for Customs to adequately identify the phones imported as
those that were exported. In fact, the repair declarations
provide less descriptive information concerning the merchandise
to be repaired than was contained on the CF 4455. Your office
has stated that it has been unable to verify that the entered
phones are the same articles that were exported, as they
apparently are virtually indistinguishable from the new phones
being imported for the first time. Moreover, the information in
the record does not establish to our satisfaction that the
imported phones are the same articles as were exported. We note
that the record also does not reflect that the declaration of the
owner, importer, consignee, or agent, attesting that the articles
entered were the same articles covered by the Certificate of
Registration, was filed in connection with any of the affected
entries. Under these circumstances, we believe that protestant
has failed to adequately comply with the documentary
requirements of 19 CFR 10.8.
Regarding protestant's contention that it had a right to
rely on Customs prior acceptance of documents filed in regard to
other entries, Customs must be satisfied of the identity of the
returned articles and the acceptability of the repairs on an
entry-by-entry basis. We are not satisfied in regard to the
entries covered by this protest. Accordingly, as protestant has
failed to carry its burden showing compliance with mandatory
regulations, the returned phones are ineligible for the partial
duty exemption available under TSUS item 806.20.
HOLDING:
On the basis of the record in this protest, as protestant
has failed to adequately comply with the documentary requirements
of 19 CFR 10.8 so as to establish to Customs satisfaction that
the phones imported are the same as those exported, we conclude
that the phones are not entitled to TSUS item 806.20 treatment.
Accordingly, you are directed to deny the protest in full. A
copy of this decision should be attached to the Form 19, Notice
of Action, to be sent to the protestant.
Sincerely,
John Durant, Director
Commercial Rulings Division