CLA-2 CO:R:C:S 556336 WAW
TARIFF NO: 9801.00.10
U.S. Customs Service
District Director
Minneapolis, MN
RE: Application for Further Review of Protest No. 3501-1-100336
on the applicability of duty exemption available under
HTSUSA subheading 9801.00.10 to printed circuit board
assemblies and a Servo Encoder Assembly; 19 CFR 10.1(a);
Border Brokerage Co.; A.E. Coppersmith
Dear Sir:
The above-referenced protest was forwarded to this office
for further review. The protestant, DataCard Coporation (DCC),
contests the denial of duty-free treatment under subheading
9801.00.10, Harmonized Tariff Schedule of the United States
Annotated (HTSUSA), to printed circuit board assemblies and a
servo encoder assembly device. Our decision follows.
FACTS:
The protestant alleges that the printed circuit board
assemblies (PCBA's) and servo encoder assembly subject to this
protest are the growth, product, or manufacture of the U.S. which
were exported from the U.S. to various foreign countries and then
returned to the U.S. without having been advanced in value or
improved in condition by any process of manufacture while abroad.
The protestant states that the PCBA's and servo encoder
assembly were designed, developed and assembled by DCC in the
U.S. DCC incoporated the PCBA's into its card personalizing
equipment, which is primarily designed to emboss, encode and
input data onto plastic cards. After the equipment was produced
in the U.S., it was subsequently shipped to various foreign
countries. However, due to defects in the PCBA's and servo
encoder assembly, it was necessary to return these items to DCC's
service organization in the U.S. for repair or replacement.
ISSUE:
Whether the PCBA's and servo encoder assembly are entitled
to duty-free treatment under subheading 9801.00.10, HTSUSA.
LAW AND ANALYSIS:
Subheading 9801.00.10, HTSUSA, provides for the free entry
of U.S. products that are exported and returned without having
been advanced in value or improved in condition by any means
while abroad, provided the documentary requirements of section
10.1, Customs Regulations (19 CFR 10.1), are met. While some
change in the condition of the product while it is abroad is
permissible, operations which either advance the value or improve
the condition of the exported product render it ineligible for
duty-free entry upon return to the U.S. See Border Brokerage
Company Inc. v. United States, 65 Cust. Ct. 50, C.D. 4052, 314 F.
Supp. 788 (1970), appeal dismissed, 58 CCPA 165 (1970).
Compliance with section 10.1(a) is mandatory and a condition
precedent to recovery unless compliance has been waived or is
impossible. Maple Leaf Petroleum, Ltd. v. United States, 25 CCPA
5, T.D. 48976 (1937). The basis for waiver of the required
documentation is predicated on the district director being
satisfied by the production of other evidence as to the American
origin of the merchandise and its eligibility under 9801.00.10,
HTSUSA.
In the instant case, the record clearly shows that your
office was not satisfied that the defective merchandise imported
by DCC was of U.S. origin. Information submitted by your office
indicates that on March 19, 1991, import specialists visited DCC
at their premises to verify the country of origin of their
merchandise and to examine the merchandise for classification
purposes. Upon examination of the merchandise, the import
specialists determined that a large quantity of the parts that
DCC imported for the embossing machines were improperly
classified under subheading 8473.30, HTSUSA, duty-free, rather
than under subheading 8473.40, HTSUSA, dutiable at 3.9 percent.
At the time of the meeting, the import specialists requested that
DCC provide additional information necessary to classify the
merchandise, as well as documentary evidence to support a claim
for duty-free treatment under subheading 9801.00.10, HTSUSA.
After a month passed with no response from DCC, the subject
entries were rate advanced under the provision for parts of
embossing machines under subheading 8473.40.40, HTSUSA, dutiable
at 3.9 percent ad valorem. According to your office, the protest
and attachments thereto constitute insufficient documentation to
support a claim for duty-free treatment under subheading
9801.00.10, HTSUSA.
The record in this case does not reflect that the
Certificate of Exportation required by 19 CFR 10.1(a)(3) was
filed in connection with the entries covered by this protest.
The courts have held that, to receive duty-free treatment under
this tariff provision, the merchandise must be positively
identified as having been previously exported American goods, and
it must be shown that no allowance of drawback was made upon
exportation. Border Brokerage Co. v. United States, 59 Cust. Ct.
289, C.D. 3143 (1967). Moreover, it has been held that
merchandise is not entitled to free entry as American goods
returned where the Certificate of Exportation has not been filed
or its production waived or proved impossible and the evidence
offered in substitution thereof is insufficient. A.E.
Coppersmith v. United States, 50 Cust. Ct. 8, C.D. 2381 (1963).
In this case, compliance with the documentary requirements
of 19 CFR 10.1(a) was not waived by your office, the protestant
has not established impossibility of compliance, and the evidence
submitted in support of the protest does not conclusively
identify the merchandise as having been manufactured in the U.S.
Therefore, we find that the PCBA's and servo encoder assembly are
not entitled to free entry under subheading 9801.00.10, HTSUSA.
HOLDING:
In view of the insufficient evidence submitted by the
protestant and the fact that the documentary requirements of 19
CFR 10.1 have not been satisfied nor waived, the PCBA's and servo
encoder asembly devices do not qualify for the duty exemption
available under subheading 9801.00.10, HTSUSA. Accordingly, the
protest should be denied. A copy of this decision should be
attached to Customs Form 19 and mailed to the protestant as part
of the notice of action on the protest.
Sincerely,
John Durant, Director
Commercial Rulings Division