OT:RR:CTF:CPM H285599 RGR
Michael Knight
F.E. Knight Inc.
120 Constitutional Blvd.
Franklin, MA 02038
Re: Tariff classification of uncured silicone rubber; Subheading 9801.00.10, HTSUS
Dear Mr. Knight:
This is in response to your request, dated February 24, 2017, on behalf of F.E. Knight (the “Company”) for a ruling regarding the proper classification of certain strips and sheets of uncured silicone rubber under the Harmonized Tariff Schedule of the United States (“HTSUS”) and the applicability of section 9801.00.10, HTSUS.
FACTS:
The Company manufactures certain strips and sheet of uncured silicone rubber (“rubber compound”) in regular rectangular shapes. The rubber compound is manufactured in the United States. The Company states that the rubber compound is used to produce flexible rubber molds for the jewelry casting industry. The Company explains that it ships the rubber compound to its distributor in Thailand, where it would be manufactured in to jewelry molds. The Company submitted a purchase order, invoice, packing list, banking records, and shipping records, showing that the Company shipped over 5,000 kilograms (‘kg”) of the rubber compound, classified under subheading 3910.00.00, Harmonized Tariff Schedule of the United States (“HTSUS”), to its distributor in Thailand.
However, the Company explains that one of its distributors in Thailand inspected the rubber compound and found it to be defective, preventing the jewelry mold to be manufactured from the rubber compound. The Company submitted correspondence with the distributor, describing the issue that was found with the rubber compound that was preventing the manufacture of the jewelry mold.
While a small quantity of these jewelry molds were vulcanized upon inspection, the remaining rubber compound was unvulcanized and unused. The Company explains that vulcanized jewelry molds were destroyed in Thailand. Accordingly, it seeks to return the unvulcanized and uncured silicone rubber compound that it exported to the distributor back into the United States. The Company states that the rubber compound that will be returned to the United States was not used or changed after exportation from the United States. The Company requests this ruling to determine the classification of the rubber compound as well as its eligibility for duty-free treatment under subheading 9801.00.10, HTSUS.
ISSUES:
Whether the subject uncured silicone rubber compound is an article of subheading 3910 or 3920, HTSUS.
Whether the subject uncured silicone rubber compound is eligible for duity-free treatment under subheading 9801.00.10, HTSUS.
LAW AND ANALYSIS
Classification
Classification under the HTSUS is made in accordance with the General Rules of Interpretation (“GRIs”). GRI 1 provides that the classification of goods shall be determined according to the terms of the headings of the tariff schedule and any relative section or chapter notes. In the event that the goods cannot be classified solely on the basis of GRI I, and if the headings and legal notes do not otherwise require, the remaining GRIs 2 through 6 may then be applied in order.
The HTSUS headings under consideration are the following:
3910 Silicones in primary forms
* * *
3920 Other plates, sheets, film, foil and strip, of plastics, noncellular and not reinforced, laminated, supported or similarly combined with other materials:
* * * *
Note 6 to Chapter 39 states:
In headings 3901 to 3914, the expression “primary forms” applies only to the following forms:
Liquids and pastes, including dispersions (emulsions and suspensions) and solutions;
Blocks of irregular shape, lumps, powders (including molding powders), granules, flakes and similar bulk forms.
Pursuant to this definition of “primary forms” in Note 6 of Chapter 39, HTSUS, strips and sheets of the rubber compound in rectangular shapes do not meet this definition.
Note 10 to Chapter 39 states:
[i]n headings 3920 and 3921, the expression “plates, sheets, film, foil and strip” applies only to plates, sheets, film, foil and strip (other than those of chapter 54) and to blocks of regular geometric shape, whether or not printed or otherwise surface-worked, uncut or cut into rectangles (including squares) but not further worked (even if when so cut they become articles ready for use).
Based on photographs and a sample submitted of the product, these strips and sheets of uncured silicone rubber compound appear to be perfect rectangles and have not been further worked. Accordingly, we find that the subject rubber compound is classified under subheading 3920.99.50, HTSUS.
Eligibility under subheading 9801.00.10, HTSUS
Section 904(b) of the Trade Facilitation and Trade Enforcement Act of 2015 (Pub. L. 114-125, February 24, 2016) amended subheading 9801.00.10, HTSUS, to include any products which are returned within 3 years after having been exported. Previously, subheading 9801.00.10, HTSUS, only applied to products of the United States. Subheading 9801.00.10, HTSUS, now provides for the duty-free treatment of:
Products of the United States when returned after having been exported, or any other products when returned within 3 years after having been exported, without having been advanced in value or improved in condition by any process of manufacture or other means while abroad.
Prior to the amendment, only “[p]roducts of the United States when returned after having been exported” were eligible for duty-free treatment. The amendment to subheading 9801.00.10, HTSUS, now allows “any other products when returned within 3 years after having been exported” to be eligible for duty-free treatment. Therefore, the amendment no longer requires articles to be products of the United States in order to be eligible for 9801.00.10, HTSUS. As a result, foreign materials that are imported into the United States and then exported from the United States, may be eligible for duty-free treatment under the amended subheading 9801.00.10, HTSUS, if they are retuned within 3 years of their exportation date from the United States.
In this case, the Company indicates that the rubber compound is a product of the United States. Additionally, the Company has provided records showing that the rubber compound was exported from the United States to Thailand on June 3, 2016. As a result, the subject rubber compound may be eligible for duty-free treatment under subheading 9801.00.10, HTSUS, either as a product of the United States, depending on the substantiation of this claim by the company, or as a product returned within 3 years after having been exported since it was exported on June 3, 2016, after the amendment became effective on April 24, 2016.
To be eligible as a product of the United States, Section 10.1, Customs Regulations (19 C.F.R. § 10.1), sets forth the requirements for entry under subheading 9801.00.10, HTSUS. These requirements include a statement that the articles were manufactured in the United States, and permit the port director to request other documentation or evidence as may be necessary to substantiate that an article is a product of the United States. In this case, the Company has submitted photographs showing the Company’s employees manufacturing the rubber compound with various machinery at the Company’s factory. However, there is no description of the manufacturing process or bill of materials demonstrating the materials used to make the rubber compound, as well as the origin of the materials. Based on the photographs alone, we do not have sufficient evidence to determine whether the rubber compound is a product of the United States. Therefore, the Company should be prepared to submit further documentation to substantiate this claim should this be requested by the port upon the return of the rubber compound to the United States.
To be eligible as a product returned with 3 years after having been exported, we note that CBP has not yet amended the regulations to implement the change to subheading 9801.00.10, HTSUS. Nonetheless, while portions of the regulations are no longer pertinent, some portions of 19 C.F.R. § 10.1 still remain valid. For example, 19 C.F.R. § 10.1(a)(1) requires the foreign shipper to declare the following information with regard to articles in a shipment valued over $2,500: the port of exportation, the date of exportation, the quantity, the description of the merchandise, the value of the merchandise, the date of the declaration, and whether the articles were advanced in value or improved in condition by any process of manufacture or other means. Under 19 C.F.R. § 10.1(b), the port director may require such other documentation or evidence as may be necessary to substantiate the claim for duty-free treatment including a U.S. export invoice, bill of lading or airway bill evidencing the exportation of the articles from the United States, and/or the reason for the exportation of the articles demonstrating that the same items were returned within 3 years. In contrast, documents showing the U.S.-origin of the articles re-imported to the United States would not be necessary when there is sufficient documentation to show that the articles were re-imported within 3 years of their date of exportation from the United States. See Headquarters Ruling Letter (“HQ”) H278564, dated September 8, 2016. Additionally, 19 C.F.R. § 10.1(a)(2) requires: the owner, importer, consignee, or agent having knowledge of the facts regarding the claim for free entry to declare that the foreign shipper’s statement is true; that the articles were not manufactured or produced in the United States under subheading 9813.00.05, HTSUS; and that the articles were exported without benefit of drawback. Therefore, importers re-importing foreign articles under subheading 9801.00.10, HTSUS, within 3 years of their exportation date from the United States must follow the applicable requirements set forth in 19 C.F.R. § 10.1.
To this extent, if the rubber compound exported to Thailand is not considered a product of the United States, it may still be eligible for duty-free treatment under subheading 9801.00.10, HTSUS, provided: the rubber compound is re-imported into the United States within 3 years of the exportation date from the United States (i.e., imported back into the United States by June 3, 2019); the documentary requirements of 19 C.F.R. § 10.1, except with regard to documents showing U.S.-origin, are satisfied; and the party re-importing the materials is an owner, importer, consignee, or agent having knowledge of the facts regarding the claim for free entry as required by 19 C.F.R. § 10.1(a)(2).
Under either case, whether a product of the United States or a product returned within 3 years after having been exported, the importer must ensure that any articles entering under subheading 9801.00.10, HTSUS, were neither advanced in value nor improved in condition while abroad. While some change in 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 United States. See Border Brokerage Co. v. United States, 314 F. Supp. 788 (1970), appeal dismissed, 58 CCPA 165 (1970). In United States v. John V. Carr & Sons, Inc., 69 Cust. Ct. 78, C.D. 4377 (1972), the court held that for purposes of meeting the statutory requirements of item 800.00, Tariff Schedules of the United States (“TSUS”) (precursor to subheading 9801.00.10, HTSUS), the determinative factor is whether there has been an alteration to the product itself that advances its value or improves its condition. In determining whether an advancement in value or improvement in condition exists at the time of importation, the overall value and condition of the article at the time it was exported from the United States shall be compared with its overall value and condition at the time of return to the United States. See HQ 558723, dated December 22, 1994. However, each case must be decided on its own facts. Id. In various rulings, CBP has previously held that U.S.-origin products exported abroad in a new condition, and then processed abroad to maintain them in operable and serviceable condition, would still be entitled to duty-free treatment under this provision when returned to the United States. See HQ 054097, dated January 15, 1978 (holding that ordinary maintenance and minor repairs to automobiles would not preclude the applicability of item 800.00, TSUS). See also HQ H154439, dated May 10, 2011 (noting that the sterilization of fruit cups did not advance their value or improve their condition in a “commercial sense” for purposes of eligibility under subheading 9801.00.10, HTSUS).
In this case, the Company states in an email dated July 19, 2017, that there was a small quantity of the rubber compound that was vulcanized upon inspection for contamination. However, this quantity of rubber will not be exported to the United States and was destroyed in Thailand. Therefore, all of the uncured and unvulcanized rubber compound that was shipped to the distributor in Thailand was not used or changed after exportation from the United States. Thus, the uncured and unvulcanized rubber compound that will be re-imported into the United States would be considered neither advanced in value nor improved in condition while abroad. Accordingly, assuming the information presented was accurate, the uncured and unvulcanized rubber compound that will be re-imported into the United States is eligible for duty-free treatment under subheading 9801.00.10, HTSUS, provided it is shown that the rubber compound is a product of the United States or a product returned within 3 years after having been exported.
HOLDING:
Based on the information presented, the uncured and unvulcanized silicone rubber compound is classified in subheading 3920.99.5000, HTSUS. In addition, the uncured and unvulcanized silicone rubber compound that is not used or changed after exportation from the United States is considered neither advanced in value nor improved in condition while in Thailand, and is therefore, eligible for duty-free treatment under subheading 9801.00.10, HTSUS, either as a product of the United States or as a product returned within 3 years after having been exported, depending on substantiation of these claims by the Company as may be needed by the port.
A copy of this ruling should be attached to entry documents filed at the time this merchandise is entered. If the documents have been filed without a copy, this ruling should be brought to the attention of the CBP officer handling the transaction.
Sincerely,
Allyson R. Mattanah, Acting Chief
Chemicals, Petroleum, Metals and Miscellaneous Branch