CLA-2 RR:CR:SM 561347 RSD
Tariff No. 9802.00.60
Port Director
United States Customs Service
1210 Corbin Street
Sealand Building
Elizabeth, New Jersey 07201
RE: Application for Further Review of Protest Number 1001-98-101547 concerning the claim for a partial duty exemption under subheading 9802.00.60, Harmonized Tariff Schedule of the United States (HTSUS) for aluminum sheets imported from Japan
Dear Director:
This is in response to your memorandum dated April 8, 1999, regarding the application for Further Review of Protest Number 1001-98-101547 filed on behalf of Itochu International, by Circle International Inc. (customs brokers), on June 1, 1998 contesting your decision to deny the partial duty exemption under subheading 9802.00.60, HTSUS, to aluminum sheets imported from Japan.
FACTS:.
The record indicates that on June 30, 1997, Itochu International Corporation, (Itochu) entered a shipment of aluminum sheets in coils from Japan through the port of Newark. The aluminum sheets were manufactured in Japan by Furukawa Electric Co. Ltd. (Furukawa). The record contains a declaration from Furukawa which indicates that the aluminum sheets were produced using 30,317 pounds of 99% pure aluminum ingots of U.S. origin manufactured by Meiko America Inc. A Certificate of Registration (Customs Form 4455) further indicates that the ingots were shipped to Japan by Mitsui Co. USA on October 20, 1990. Furukawa issued a statement to Customs explaining that it received the U.S.-origin aluminum ingots on December 13, 1990, and that they were part of a large shipment of such merchandise from Mitsui & Co (U.S.A.) Inc., exported from United States aboard the vessel “Ever given”.
The aluminum ingots were not processed for a period of seven years. Furukawa states that while a period of seven years is not the norm, it is not uncommon for goods to be kept in inventory for several years. While the goods were being held, Furukawa maintains that they were segregated by both origin and grade. Furukawa also explains that among the factors that contribute to delays in processing such ingots are: the grade of material required by customers; the vagaries of the market; the amount of identical merchandise held in inventory; the physical location of the goods (accessibility); and the desire to retain a substantial portion of U.S.-origin merchandise for U.S. importers, in order that they may claim duty benefits upon import of the processed product.
After importation into the U.S., the aluminum sheets were sold to Anocoil Corp. for further processing. Anocoil used the aluminum sheets in making lithographic sheets for the printing industry. The U.S. processing of the aluminum sheets consisted of unpacking, uncoiling, graining, anodizing (via an electrolytic process), coating to establish photosensitivity, and cutting to size to produce the lithographic sheets.
In a letter to the Office of Regulations and Rulings dated August 13, 1999, John F. McManus of Itochu’s customs department, stated that at the time of entry, Itochu’s customhouse broker neglected to file the proper documents which demonstrated that Itochu was entitled to a duty exemption. Mr. McManus stated that among the documents that were eventually submitted to your office to verify eligibility for subheading 9802.00.60, HTSUS, treatment were: (1) a declaration from the foreign processor, (2) a declaration by the importer, (3) a Certificate of Registration (CF4455) evidencing export from the United States, and (4) a separate statement from Furukawa explaining that all such imports of U.S. origin are separated prior to processing. Mr. McManus also indicated that since Itochu is a direct competitor of the U.S. exporter of the aluminum ingots, Mitsui, there is little likelihood of securing further verification of their U.S. origin.
Accompanying Mr. McManus’ letter was an affidavit from Tsuguyoshi Nakatani, the manager of the non-ferrous Metal Department of the Metal and Mineral Division of Itochu in N.Y. In his affidavit, Mr. Nakatani stated that to the best of his knowledge and belief the aluminum sheets were processed in Japan from aluminum ingots of U.S. origin. Mr. Nakatani states that the basis of his statement “is the intent of parties to the transaction, the statements, both oral and written, of the processor in Japan (Furukawa) and other documentary evidence which already has been supplied to U.S. Customs.”
ISSUE:
Whether the aluminum sheets imported from Japan are eligible for the partial duty exemption under subheading 9802.00.60, HTSUS.
LAW AND ANALYSIS:
Subheading 9802.00.60, HTSUS, provides a partial duty exemption for any article of metal (as defined in U.S. note 3(d) of this subchapter) manufactured in the United States or subjected to a process of manufacture in the United States, if exported for further processing, and if the exported article as processed outside the United States, or the article which results from the processing outside the United States, is returned to the United States for further processing.
This tariff provision imposes a dual "further processing" requirement on eligible articles of metal one foreign, and when returned, one domestic. Metal articles satisfying these statutory requirements may be classified under this tariff provision with duty only on the value of such processing performed outside the U.S., provided there is compliance with the documentary requirements of section 10.9, Customs Regulations (19 CFR 10.9).
Eligible articles of metal are defined in U.S. note 3(d), subchapter II, Chapter 98, HTSUS, which provides that:
[f]or purposes of subheading 9802.00.60, the term "metal" covers (1) the base metals enumerated in additional U.S. note 3 to section XV;
(2) arsenic, barium, boron, calcium, mercury, selenium, silicon, strontium, tellurium, thorium, uranium, and the rare earth elements; and (3) alloys of any of the foregoing.
Base metals are further enumerated in additional U.S. note 3, section XV, HTSUS, which provides that:
[f]or the purposes of the tariff schedule, the term "base metals" embraces aluminum, antimony, beryllium, bismuth, cadmium, chromium, cobalt, copper, gallium, germanium, hafnium, indium, iron and steel, lead, magnesium, manganese, molybdenum, nickel, niobium (columbium), rhenium, tantalum, thallium, tin, titanium, tungsten, vanadium, zinc and zirconium.
First, we note that the applicable tariff classification for the imported merchandise is subheading 7606.11.3060 HTSUS, as aluminum plates sheets, and strip of a thickness of 6.3 mm or less. Because aluminum is a base metal which is specifically enumerated in additional U.S. Note 1, Section XV, HTSUS, the imported merchandise is an eligible article of metal for purposes of subheading 9802.00.60, HTSUS. In addition, it is our understanding that your office does not dispute that the processing performed in Japan and the additional processing done in the U.S. upon return of the articles satisfy the dual processing requirements for entry under subheading 9802.00.60. We concur.
Consequently, the only remaining question that must be resolved is whether the aluminum ingots that were exported to Japan for further processing into aluminum sheets were “manufactured in the U.S. or subjected to a process of manufacture in the U.S.” Section 10.9 of the Customs Regulations, 19 CFR 10.9, sets forth the documentary requirements of 9802.00.60 HTSUS. 19 CFR 10.9 requires that a declaration from the person who performed the processing abroad be filed. It is also requires that the owner, importer, consignee, or agent having knowledge of pertinent facts provide a declaration that the processor’s declaration is true and correct. As was pointed out in Mr. McManus’ letter, Itochu has furnished to Customs the following documents in support of the subheading 9802.00.60, HTSUS, claim (1) a declaration from the foreign processor (2) a declaration by the importer (3) a Certificate of Registration on CF 4455 filed by the exporter and producer of the ingots “Mitsui & Co. (USA) Inc. c/o Meiko America Inc.” evidencing export from the United States; and (4) a separate statement from Furukawa Electric Co. Ltd. explaining that all such imports of U.S. origin are segregated from foreign ingots in Japan prior to processing. Itochu also furnished an affidavit from one of its managers, Tsuguyoshi Nakatani, stating that to the best of his knowledge, the aluminum sheets were processed from U.S. origin aluminum ingots.
We note that the record contains no statement from the U.S. manufacturer of the ingots, attesting to the U.S. origin of the exported ingots. However, the Certificate of Registration filed by Mitsui upon exportation of the ingots indicates that the articles were exported for processing abroad consistent with a subsequent claim for a partial duty exemption under subheading 9802.00.60, HTSUS, when returned to the U.S. We also note that no evidence or other information has been presented which would indicate that the exported ingots were produced from other than U.S.-origin scrap. Therefore, in consideration of the fact that protestant has fully complied with the documentation requirements of 19 CFR 10.9, we find that, on balance, the evidence supports a finding that the ingots exported to Japan were manufactured in the U.S. Therefore, we conclude that the imported aluminum sheets are entitled to the partial duty exemption under subheading 9802.00.60, HTSUS.
HOLDING:
On the basis of the information submitted, Customs finds that the protestant has established that the requirements of subheading 9802.00.60, HTSUS, have been satisfied. Accordingly, the articles are entitled to entry under HTSUS subheading 9802.00.60, with duty assessed only on the cost or value of the foreign processing of the aluminum ingots. Therefore, this protest should be granted in full.
In accordance with Section 3A(11)(b) of Customs Directive 099 3550 065, dated August 4, 1993, Subject: Revised Protest Directive, this decision should be mailed by your office to the Protestant 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, Director
Commercial Rulings Division