CLA–2 OT:RR:CTF:VSP H270377 tmf
Lynn Mayne, North American Trade Compliance Manager
Federal Mogul Motorparts Corporation
27300 West Eleven Mile Road
Southfield, Michigan 48034-6147
RE: Modification of New York Ruling Letters (NY) N260230, dated December 30, 2014 and N263924, dated May 5, 2015; Applicability of subheading 9801.00.20, HTSUS, to foreign automobile parts re-packaged in Mexico
Dear Ms. Mayne:
This letter is to inform you that U.S. Customs and Border Protection (CBP) has reconsidered New York Ruling Letters (NY) N263924, dated May 5, 2015 and N260230, dated December 30, 2014. In both rulings, CBP determined that various automobile parts were eligible for duty-free treatment under subheading 9801.00.20, Harmonized Tariff Schedules of the United States (HTSUS). On March 9, 2016, pursuant to section 625(c)(1), Tariff Act of 1930 (19 U.S.C. § 1625(c)(1), as amended by section 623 of title VI, notice of the proposed action was published in the Customs Bulletin, Vol. 50, No. 10. No comments were received in response to this notice.
FACTS:
In NY N260230, Federal Mogul Motorparts Corporation (FMM) purchased automobile parts, such as tire rods, slip sleeves, oil seals, brake pads and hub assemblies and paid duty thereon, or purchased them from U.S. distributors who had already paid the respective duties. FMM shipped the parts to Mexico, and then reimported the packaged various automobile parts back into the United States. In NY N263924, components of brake pad hardware manufactured in either China, Taiwan, South Korea, Denmark or Germany were imported in bulk by FMM. Similarly, the ruling states that “[e]ither FMM pays customs duties on these articles or it purchases them from U.S. distributors who have already paid the respective duties.” The ruling also states that “N263924 differs from NY N260230, due to the fact that even though the same process is being performed, following importation or purchase, FMM will export the various components, in-bond, to a warehouse in Juarez, Mexico where the goods will be packed into retail packaging for a different product line.”
In both rulings, CBP found the goods were previously imported, duty was paid where applicable, and there was no advancement in value or improvement in condition by any process or manufacture while in Mexico. In addition, both rulings noted that the requester stated that the goods would be exported from Mexico under conditions that would constitute exportation under a lease or similar use agreement, and FMM would be the importer, exporter and reimporter of the merchandise.
ISSUE: Whether the merchandise described in NY N263924 and NY N260230 qualifies for duty-free treatment under subheading 9801.00.20, HTSUS.
LAW AND ANALYSIS:
Subheading 9801.00.20, HTSUS, provides duty-free treatment for:
[a]rticles, previously imported, with respect to which the duty was paid upon such previous importation or which were previously free of duty pursuant to the Caribbean Basin Economic Recovery Act (CBERA) or Title V of the Trade Act of 1974 (Generalized System of Preferences)(GSP), if (1) reimported, without having been advanced in value or improved in condition by any process of manufacture or other means while abroad, after having been exported under lease or similar use agreements, and (2) reimported by or for the account of the person who imported it into, and exported it from, the United States [emphasis added].
Section 10.108 of the U.S. Customs and Border Protection (“CBP”) Regulations, 19 C.F.R. § 10.108, provides that free entry shall be accorded under subheading 9801.00.20, HTSUS, whenever it is established to the satisfaction of the port director that the article for which free entry is claimed was duty paid on a previous importation, is being reimported without having been advanced in value or improved in condition by any process of manufacture or other means, was exported from the United States under a lease or similar use agreement, and is being reimported by or for the account of the person who previously imported it into, and exported it from the United States. It should be noted that CBP has denied subheading 9801.00.20, HTSUS, treatment in situations where such evidence was not provided. See, e.g., Headquarters Ruling Letters (“HQ”) H232917, dated June 27, 2013 (denying protest and finding insulated concrete mold was not entitled to duty-free entry under subheading 9801.00.20, HTSUS because no evidence was provided to establish the previous importation and subsequent importation were by or for the account of the same person).
Under the CBP Regulations, an “importer” is “the person primarily responsible for the payment of any duties on the merchandise, or an authorized agent acting on his behalf.” 19 CFR § 101.1. Every importer is required to have an importer identification number. See 19 CFR § 24.5. We reviewed NY N263924 and N260230 and conclude that both decisions are not in conformity with the requirements of 19 C.F.R. § 10.108. The facts in each ruling state that either FMM pays the customs duties on the articles, or FMM purchases the goods from U.S. distributors who have already paid the respective duties. The rulings do not indicate that a U.S. distributor acted as an agent “by or for the account of FMM.” Subheading 9801.00.20, HTSUS, clearly requires that the re-importation must be by or for the account of the person or entity that imported it into, and exported it from the U.S. Therefore, based on the facts in both rulings, the U.S. distributor is the party who imported the parts in the first instance, and this does not satisfy the requirement that the parts are reimported by, or for the account of FMM. See HQ H232917, (citing to HQ 560256, dated July 23, 1997, and HQ 561005, dated Aug. 5, 1998). In sum, since both rulings failed to provide evidence that the previous importation or subsequent importation is “by or for the account of FMM”, we find the requirements of subheading 9801.00.20, HTSUS, and 19 C.F.R. § 10.108 are not met, to the extent that the parts are acquired by FMM from a U.S. distributor.
HOLDING:
The merchandise described in New York Ruling Letters (NY) N263924 and N260230 is not entitled to duty-free entry under subheading 9801.00.20, HTSUS, to the extent that the parts are acquired by FMM from a U.S. distributor.
EFFECT ON OTHER RULINGS:
New York Ruling Letters N263924, dated May 5, 2015 and N260230, dated December 30, 2014, are hereby MODIFIED.
Sincerely,
Myles B. Harmon, Director
Commercial and Trade Facilitation Division