TRA 1
OT:RR:CTF:ER
H297979 KF
Cecelia Rothrock
Crane Worldwide Logistics, LLC 1500 Rankin Road Houston, TX 77073
Re: Temporary importation under bond (“TIB”); 19 C.F.R. § 10.31
Dear Ms. Rothrock,
This is in response to your letter that we received on June 14, 2018, on behalf of Thermal Engineering Intl. (“TEi”). TEI seeks a binding ruling confirming that tubes imported for processing and exportation qualify for duty free entry under subheading 9813.00.05, Harmonized Tariff Schedule of the United States (“HTSUS”).
FACTS:
TEi proposes to import stainless steel Moisture Separator Reheater (“MSR”) low finned u-bend tubes. Prior to importation, the tubes are welded in conformity with standards promulgated by the American Society of Mechanical Engineers, with a centerline radius that ranges from 1.5 to 17.75 inches. The tube dimensions are sized specifically to fit into MSR bundle cage structures (“bundles”), and for effective heat transfer.
After importation, TEi proposes to integrate the tubes into bundles, for utilization within custom-designed MSR vessels after exportation. The integration process requires the tubes to be “inserted through tube support plates and subjected to seal welding and mechanical expansion into a tube sheet that holds the tubes in place for specific resistance tube side operating pressure.” The integration process enables TEi to install, expand, and weld the tubes into bundles arranged into various shapes and sizes. TEi states that no waste or scrap is expected to be produced during the integration process, as extra materials are used to create spare parts. TEi states that in the event waste or scrap is produced, it will consult with a customs broker to properly account for such materials.
The bundles produced by TEi will be exported to an MSR vessel manufacturing facility, along with any spare parts that may have been created. TEi explains that MSR vessels are installed at nuclear power plants for purposes of removing water condensation from steam turbines.
TEi maintains that the integration process the tubes are subjected to, and their ultimate exportation, entitle the tubes for temporary duty free entry under bond. TEi seeks confirmation that it can import the tubes under subheading 9813.00.05, HTSUS.
ISSUE:
Whether the tubes qualify for TIB under subheading 9813.00.05, HTSUS.
LAW AND ANALYSIS:
Pursuant to General Note 1 of the HTSUS, all goods imported into the customs territory of the United States are subject to duty unless exempted. An exemption from duty is accorded to articles entered temporarily under bond, under subheading 9813.00.05, HTSUS, “to be repaired, altered or processed (including processes which result in articles manufactured or produced in the United States).” See 19 C.F.R. § 10.31(a); U.S. Note 1(a), Chapter 98, Subchapter XIII (“articles described in the provisions of this subchapter, when not imported for sale or for sale on approval, may be admitted into the United States without the payment of duty, under bond for their exportation within 1 year from the date of importation, which period, in the discretion of the Secretary of the Treasury, may be extended, upon application”).
To qualify for TIB under subheading 9813.00.05, HTSUS, the subject tubes must be imported by TEi for repair, alteration, or processing. We note that TEI must satisfy additional requirements to preserve the duty exemption under this subheading, but for purposes of this ruling we determine only whether TEi’s proposed integration of the tubes into bundles constitutes processing. See e.g. 19 C.F.R. §§ 10.31-10.40; CBP.gov, ACE Entry Summary Business Rules and Process Document (Version 9.25), Part 10.0 (July 2018).
CBP has determined that “processing can be a relatively minor procedure or extensive enough to be considered a manufacture or production.” HQ 224661 (January 11, 1994). Processing has been found to include: production of “welded tubing from imported titanium strip[s],” bending pipes to form a particular shape, assembly of parts into a completed speaker, installing roller bearings into machines, and assembly of a drive unit by attaching various parts to one another. HQ 230286 (April 12, 2004); HQ H270737 (March 1, 2017); HQ 224211 (October 20, 1992); HQ 221488 (May 15, 1991); HQ 226904 (May 29, 1996). These processes include or resemble components of the integration process described by TEi: inserting tubes “through tube support plates and subjected to seal welding and mechanical expansion into a tube sheet that holds the tubes in place” to produce bundles of various shape and size. Accordingly, we find that TEi’s integration process constitutes processing within the purview of subheading 9813.00.05, HTSUS. The tubes thus qualify for TIB, to be processed into bundles which are exported in conformity with all applicable statutes and regulations.
We note that if merchandise imported under subheading 9813.00.05, HTSUS, is so processed as to result in the manufacture or production of an article:
A complete accounting will be made to the Customs Service for all articles, wastes and irrecoverable losses resulting from such processing;
and
All articles and valuable wastes resulting from such processing will be exported or destroyed under customs supervision within the bonded period; except that in lieu of the exportation or destruction of valuable wastes, duties may be tendered on such wastes at rates of duties in effect for such wastes at the time of importation.
U.S. Note 2(b), Subchapter XIII, Chapter 98, HTSUS. Careful documentation of the integration process, and any waste or scrap which may or may not be produced as a result, “is an essential requirement of qualifying for duty-free entry under a TIB.” HQ H198355 (March 7, 2013). Although TEi does not expect scrap or waste to be produced from its integration process, the above requirements apply in such an event.
HOLDING:
Based on the information provided, we find that: integrating tubes into bundles constitutes a “process” which qualifies the tubes for TIB under subheading 9813.00.05, HTSUS.
Please note that 19 C.F.R. § 177.9(b)(1) provides that “[e]ach ruling letter is issued on the assumption that all of the information furnished in connection with the ruling request and incorporated in the ruling letter, either directly, by reference, or by implication, is accurate and complete in every material respect.” If any fact in the transaction varies from the facts stipulated to herein, this decision shall not be binding on CBP, as provided for in 19 C.F.R. § 177.9(b).
Sincerely,
Gail G. Kan, Chief
Entry Process and Duty Refunds Branch