RR:TC:SM 559728 DLD
Port Director
U.S. Customs Service
1717 East Loop
Room 401
Houston, TX 77029
RE: Decision on Application for Further Review of Protest No.
5301-5-100092. Subheading 9810.00.60, HTSUS: Duty Free
Treatment of Scientific Instruments.
Dear Sir:
This protest was filed against your decision in the
liquidation as dutiable of a transmission electron microscope
(model JEM-2010 manufactured by JEOL in Japan) with analytical
and digital imaging accessories imported by the University of
Texas at Austin.
FACTS:
The University of Texas at Austin placed an order on
September 30, 1993, with a Japanese manufacturer for a
transmission electron microscope and accessories. On December 7,
1993, Professor Llewllyn K. Rabenberg applied to Customs
Headquarters for duty-free entry of the transmission electron
microscope under Subheading 9810.00.60, HTSUS. The application
was denied on March 24, 1994. The denial letter stated as the
basis for the denial:
It is our determination that the transmission
electron microscope is not eligible for duty-free
treatment under subheading 9810.00.60, HTSUS, inasmuch
as there is the intention to use the instrument for
commercial purposes within the meaning of the governing
regulations. Pursuant to subsection 301.4(a)(3) of the
joint regulations of the Department of Commerce and the
Department of the Treasury (15 CFR 301.4(a)(3)), the
instrument which is the subject of the duty-free
application must be intended for the exclusive use of
the applicant institution and must not be intended to
be used for commercial purposes. Commercial uses
include any use by, or for the benefit of, any
commercial entity.
In the response to application item 7.c., it is
stated that "[t]his instrument will be part of the
research facilities of the University of Texas at
Austin Center for Materials Science and Engineering. It
will contribute to a variety of Materials Science
research activities for federal, state, and local
agencies as well as for private industry. Results of
these projects are normally disseminated to the
public." The intention to use the electron microscope
for private industry precludes approval for duty-free
treatment under this program. In addition, we question
whether the research results, for example those for the
research on high-temperature superconducting, mentioned
in application item 7.a.(3), will be disseminated to
the public. Because of the above intended use for
industry, the transmission electron microscope is not
eligible for duty-free entry under this provision.
The microscope entered the Customs Territory of the U.S. on
February 22, 1994. The entry was liquidated as dutiable on
January 5, 1995. A protest was timely filed on February 21, 1995.
The protest was subsequently forwarded to Customs Headquarters
for further review pursuant to 19 CFR 174.24(c). This is the
response of Customs Headquarters to the protest.
ISSUE:
Does a transmission electron microscope imported by the
University of Texas at Austin qualify as a scientific instrument
or apparatus under subheading 9810.00.60, HTSUS?
LAW AND ANALYSIS:
The relevant portion of the regulations pertaining to the
denial was 15 CFR 301.4(a)(3), which states that in determining
the eligibility of the instrument of the application for duty-free entry under subheading 9810.00.60, HTSUS, the following
criteria shall be used by the Commissioner of Customs or his
designee. Customs shall determine:
Whether the instrument which is the subject of the
application is intended for the exclusive use of the
applicant institution and is not intended to be used for
commercial purposes. For the purposes of this section,
commercial uses would include, but not necessarily be
limited to: Distribution or sale of the instrument by the
applicant institution; any use by, or for the primary
benefit of, a commercial entity: or use of the instrument
for demonstration purposes in return for a fee or other
valuable consideration. In making the above determination,
the Commissioner may consider, among other things, whether
the results of any research to be performed with the
instrument will be fully and timely made available to the
public. For the purposes of this section, use of an
instrument for the treatment of patients is considered
noncommercial. If any of the Commissioner's determinations
is in the negative, the application shall be found to be
outside the scope of the Act [Public Law 89-651] and shall
be returned to the applicant with a statement of the
reason(s) for such findings." [Emphasis added.]
The protest argues that the transmission electron microscope
should be eligible for duty-free entry with regard to Customs
criteria for the following reasons:
I. "Private contract work is expressly prohibited by
the Board of Regents of the University of Texas."
II "Results from university research are disseminated
to the public through the usual channels, including
publication in learned journals, preparation of theses
and dissertations, and oral presentations."
III. "Customs Headquarters Ruling 044875, dated April
1, 1976 .... stated that the fact that a commercial
firm may derive an incidental benefit [from research
funded in part by the firm] would not require a finding
that [there is commercial use] ." IV. "The instrument
will only be used by students, faculty and University
personnel."
V. "Grant donations from private industry do not result
in any control over the instrument by non-University
entities."
VI. "The JEM-2010 Electron Microscope...will not be
used... for the primary benefit of a commercial entity.
Contrary to the contention of the protest, private contract
work is not "expressly prohibited" by the University. The
Regents' Rules quoted in Dr. Rabenberg's letter of June 6, 1994,
included with the protest, make it clear that contract: work is
allowed if permission is requested and granted in advance.
In the denial letter of March 24, 1994, Customs had
questioned whether the research results, for example those for
the research on high-temperature superconducting, mentioned in
application item 7.a.(3), would be disseminated to the public.
The availability of the results of any research to be performed
with the instrument is a factor which weighs toward approval of
the application (15 CFR 301.4(a)(3)). On July 12, 1996, Customs
asked Dr. Rabenberg to submit any material pertaining to the
publication of the results of his research performed with the
'instrument of the application, especially any material on high-temperature superconducting.
Dr. Rabenberg replied on August 1, 1996, by submitting four
items:
1. An article by Dr. Rabenberg and others published in
November 1995 in the Journal of Materials Research.
2. An article by Dr. Rabenberg and another, accepted
for publication in Acta Crystallographica B.
3. An article by others at the University of Texas at
Austin pertaining to research on high-temperature
superconducting which utilized a transmission electron
microscope. This article, in which Dr. Rabenberg is
thanked for the use of his instrument(s), has been
submitted to the journal Physica C.
4. An abstract of the dissertation of a Ph.D. candidate
supervised by Dr. Rabenberg whose research "made
extensive use" of the JEM-2010 of the application.
The Customs Headquarters letter (044875 of April 1, 1976)
cited by the protest as evidence that a research program
partially funded by a commercial entity is not grounds for denial
of the application is not a "ruling" as stated in the protest. It
was an interagency opinion from Customs to the Department of
Commerce office which administers half of this duty-free program.
As such, it carries no weight as a precedent.
It is irrevelant that the microscope will only be used by
students, faculty and University personnel. What is at issue is
whether this microscope will be used for the primary benefit of a
commercial entity. The protest says that the microscope will not
be used for the "primary benefit" of a commercial entity but is
only of "incidental benefit" to commercial entities. In view of
the evidence submitted by Dr. Rabenberg in his letter dated
August 1, 1996, that the research results, including those
pertaining to high-temperature superconductivity, are made
available to the public, Customs is now satisfied that the
electron microscope will not be used by, or for the benefit of, a
commercial entity. Accordingly, on August 1, 1996, the
application was assigned Docket Number 96-088 and forwarded to
the Department of Commerce for their processing. The Department
of Commerce approved the application and the approval notice was
published in the Federal Register on October 30, 1996.
HOLDING:
The subject instrument is not intended for commercial
purposes, and the application is now approved by both the Customs
Service and the Department of Commerce. Accordingly, the protest
should be allowed in full.
In accordance with Section 3 A(11)(b) of Customs Directive
099 3550-065, dated August 4, 1993, Subject: Revised Protest
Directive, a copy of this decision should be attached to the
Customs Form 19 and mailed by your office to the protestant as
part of the notice of action on the protest no later than 60 days
from the date of this letter. Any reliquidation of the entry in
accordance with the decision must be accomplished prior to
mailing of the decision. Sixty days from the date of the decision
the Office of Regulations and Rulings will take steps to make the
decision available to Customs personnel via the Customs Rulings
Module in ACS and the public via the Diskette Subscription
Service, Freedom of Information Act and other public access
channels.
Sincerely,
John Durant
Tariff Classification Appeals Division