CLA-2-39:OT:RR:NC:N4:421
Mr. Sven Knaack
Evonik Industries AG
Rellinghauser Strasse 1-11
Essen, Germany 45128
RE: The tariff classification of cast acrylic sheets from China
Dear Mr. Knaack:
In your letter dated January 11, 2013, you requested a tariff classification ruling.
You describe the merchandise as cast acrylic sheets. The sheets are made using methyl methacrylate (MMA) in liquid form that is produced in the United States. MMA is shipped either as a sold item or an assist to China, where it is used to produce cast acrylic sheets. The sheets are shipped back to the United States. Classification depends on whether the sheets, in the dimensions as imported, are flexible or not flexible. Flexible sheets are those that can be bent so that one side of the sheet touches the other side without cracking or permanently creasing the sheet.
The applicable subheading for the acrylic sheets that are flexible will be 3920.51.1000, Harmonized Tariff Schedule of the United States (HTSUS), which provides for other plates, sheets, film, foil and strip, of plastics, noncellular and not reinforced, laminated, supported or similarly combined with other materials: of acrylic polymers, of poly(methyl methacrylate): flexible. The rate of duty will be 6 percent ad valorem.
The applicable subheading for the acrylic sheets that are not flexible will be 3920.51.5000, HTSUS, which provides for other plates, sheets, film, foil and strip, of plastics, noncellular and not reinforced, laminated, supported or similarly combined with other materials: of acrylic polymers, of poly(methyl methacrylate): other. The rate of duty will be 6.5 percent ad valorem.
Duty rates are provided for your convenience and are subject to change. The text of the most recent HTSUS and the accompanying duty rates are provided on World Wide Web at http://www.usitc.gov/tata/hts/.
You ask whether the merchandise is eligible for treatment in subheading 9802.00.50 of the HTSUS. Subheading 9802.00.50, HTSUS, provides a partial duty exemption for articles returned to the United States after having been exported to be advanced in value or improved in condition by means of repairs or alterations. Articles entitled to this partial duty exemption are dutiable only upon the cost or value of the foreign repairs or alterations, provided the documentary requirements of section 10.8, Customs Regulations (19 CFR 10.8), are satisfied.
The application of this tariff provision is precluded in circumstances where the operations performed abroad destroy the identity of the articles or create new or commercially different articles. See A.F. Burstrom v. United States, 44 CCPA 27, C.A.D. 631 (1957) and Guardian Industries Corporation v. United States, 3 CIT 9 (1982). Treatment under subheading 9802.00.50, HTSUS, is also precluded where the exported articles are incomplete for their intended use and the foreign processing operation is a necessary step in the preparation or manufacture of the finished article. Alterations are made only to completed articles and do not include intermediate operations which are performed in the manufacture of finished articles. See Dolliff and Company, Inc. v. United States, 66 CCPA 77, C.A.D. 1225, 599 F.2d 1015 (1979).
Producing cast acrylic sheets from liquid MMA produces such changes in characteristics and use as to exceed an alteration. The processing in China creates a new and commercially different article from the good exported from the United States. Moreover, the exported polymer is incomplete for its intended use and the casting operation performed in China is a necessary step in the manufacture of the imported merchandise. Accordingly, the imported cast acrylic sheets are not eligible for tariff treatment under the provisions of subheading 9802.00.50, HTSUS, and would be subject to duty on the full value.
You ask whether there are other options for excluding the cost of the MMA from the cost of the finished product. You also ask whether it is necessary to sell the MMA to the manufacturer or whether it can be supplied as an assist.
Merchandise imported into the United States is appraised in accordance with section 402 of the Tariff Act of 1930, as amended by the Trade Agreements Act of 1979 (TAA; 19 U.S.C. §1401a). The preferred method of appraisement is transaction value, which is defined as “the price actually paid or payable for the merchandise when sold for exportation to the United States,” plus five enumerated additions, if such amounts are not otherwise included within the price actually paid or payable. See 19 U.S.C. §1401a(b)(1).
One of the enumerated statutory additions to the price actually paid or payable is an “assist.” An “assist” is defined in 19 U.S.C. §1401a(h)(1) as including materials, components, parts, and similar items incorporated in the imported merchandise if supplied directly or indirectly, and free of charge or at reduced cost, by the buyer of imported merchandise for use in connection with the production or the sale for export to the United States of the merchandise. Furthermore, the TAA Statement of Administrative Action (“SAA”) and section 152.103(d)(1), Customs Regulations (19 CFR §152.103(d)(1)), set forth the manner in which assists are to be valued. In particular, section 152.103(d)(1) states that if the assist consists of materials, components, parts, or similar items incorporated in the imported merchandise, or items consumed in the production of the imported merchandise, acquired by the buyer from an unrelated seller, the value of the assist is the cost of its acquisition. If the assist was produced by the buyer or a person related to the buyer, its value would be the cost of its production. In either case, the value of the assist would include transportation costs to the place of production.
Noting the above, the cost of the MMA must be included in the cost of the finished product. It is not necessary to sell the material to the manufacturer, but if it is supplied as an assist, the value of the MMA, which includes the costs to transport it to the place of production, is part of the dutiable value of the imported cast acrylic sheets.
This ruling is being issued under the provisions of Part 177 of the Customs Regulations (19 C.F.R. 177).
A copy of the ruling or the control number indicated above should be provided with the entry documents filed at the time this merchandise is imported. If you have any questions regarding the ruling, contact National Import Specialist Joan Mazzola at (646) 733-3023.
Sincerely,
Thomas J. Russo
Director
National Commodity Specialist Division