CLA-2 CO:R:C:S 555529 CW
District Director of Customs
300 South Ferry Street
Terminal Island
San Pedro, California 90731
RE: Protest 2704-8-001150, contesting denial of item 851.10
and 851.20, TSUS, treatment for drawings, sculptures and
a watercolor
Dear Sir:
The above-referenced protest concerns the applicability
of the duty-free provisions of items 851.10 and 851.20, Tariff
Schedules of the United States (TSUS) (now subheadings
9810.00.30 and 9810.00.40, Harmonized Tariff Schedule of the
United States (HTSUS)), to certain imported drawings,
sculptures, and a watercolor imported for examination and
possible purchase by a museum. Specifically, protestant
contests the assessment of the merchandise processing user fee
against the imported articles.
FACTS:
Drawings, sculptures and a watercolor were imported by a
museum "on loan for study and examination for possible
purchase." The importer, a nonprofit institution established
for educational purposes or for encouragement of the fine
arts, entered the articles under items 851.10 and 851.20,
TSUS, which provide for the free entry of drawings and
sculptures imported for "the use" of this type of institution.
Articles classifiable under these provisions are exempt from
the merchandise processing user fee imposed by the Omnibus
Budget Reconciliation Act of 1986 (Pub. L. 99-509), as amended
(19 U.S.C. 58c(a)(9)).
Your office determined that the drawings and sculptures
were not entitled to classification under items 851.10 and
851.20, TSUS, because they were not imported for "the
encouragement of the fine arts." Therefore, the articles were
classified, free of duty, under items 765.03 and 765.15, TSUS,
and the appropriate user fees were assessed.
- 2 -
Protestant contends that (1) the articles are properly
classified under items 851.10 and 851.20, TSUS, and (2) the
assessment of user fees several weeks after liquidation of the
entries subject to this protest was "improper, illegal, null
and void." By letter of February 4, 1991, counsel for the
protestant withdrew the second claim.
ISSUE:
Are the drawings, sculptures and watercolor imported by
the qualified institution for examination and approval before
exhibition or purchase entitled to classification under items
851.10 and 851.20, TSUS, with an exemption from the
merchandise processing user fee?
LAW AND ANALYSIS:
With certain exceptions not applicable to this case,
articles provided for in Schedule 8, TSUS (now Chapter 98,
HTSUS), are exempt from the merchandise processing user fee.
19 U.S.C. 58c(a)(9). Accordingly, articles properly
classifiable under items 851.10 or 851.20, TSUS, would be
exempt from the fee. Classification under these items is
conditioned upon the articles being imported for "the use" of
the qualified nonprofit institution. The question involved
here is whether importation for study and approval before
purchasing can be considered to be for "the use" of the
institution.
In Headquarters Ruling Letter (HRL) 555657 dated May 14,
1990 (copy enclosed), we considered whether a sculpture to be
imported by the protestant under the same circumstances as
exist in this case is entitled to classification under
subheading 9810.00.40, HTSUS (formerly item 851.20, TSUS).
For the reasons set forth in HRL 555657, we concluded that a
sculpture imported by a qualified institution for study and
approval prior to exhibition or purchase may be treated as
imported for "the use" of the institution.
Consistent with the holding in HRL 555657, we find that
the drawings and sculptures subject to this protest are
entitled to classification under items 851.10 and 851.20,
TSUS. However, as neither of these provisions encompasses
paintings, the watercolor is ineligible for tariff treatment
under these provisions.
- 3 -
HOLDING:
Drawings and sculptures imported for examination and
approval prior to purchase by a qualified nonprofit
institution are considered to be for "the use" of the
institution within the meaning of items 851.10 and 851.20,
TSUS. Therefore, the drawings and sculptures subject to this
protest are entitled to duty-free treatment under these
tariff provisions without the assessment of the merchandise
processing user fee. However, as neither item 851.10 or
851.20, TSUS, encompasses paintings, the watercolor subject to
this protest is ineligible for classification under either of
these provisions and is subject to the user fee.
Accordingly, the protest should be allowed in part and
denied in part in accordance with this decision. 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
Enclosure 6cc: A.D., NY Seaport
2cc: Chief, CIE
1cc: Reg. Comm. L.A., CA.
ARNOLD:lw 2/7/90