Union Rail Car (Partnership); Subheading 9813.00.05, HTSUS; Temporary Importation under Bond; semi-finished carbody shells; processing for exportation

HQ 224052 September 25, 1992 CON-9-04-CO:R:C:E 224052 CB CATEGORY: Entry Ned M. Marshak, Esq. Sharretts, Paley, Carter & Blauvelt 67 Broad Street New York, NY 10004 RE: Union Rail Car (Partnership); Subheading 9813.00.05, HTSUS; Temporary Importation under Bond; semi-finished carbody shells; processing for exportation Dear Mr. Marshak: This is in response to your letter of July 7, 1992, on behalf of Union Rail Car (Partnership), U.S.A. ("URC"), wherein you requested a binding ruling concerning the temporary importation under bond of certain semi-finished carbody shells. FACTS: URC will import 132 semi-finished carbody shells to Yonkers and will subsequently export to Taiwan 120 finished rail vehicles, and 12 vehicles which will be exported in knock-down condition for further assembly into finished vehicles in Taiwan. The initial six imported carbody shells will contain, at time of importation, the vast majority of components required to produce a complete carbody shell. Upon arrival at URC's manufacturing facility at Yonkers, these shells will be subjected to certain processing operations set forth in your letter. These operations include, but are not limited to: replacement of trip parking brake hoses, installation of emergency boxes, installation of reactor sensors and their wiring, and replacement of speed sensors. In addition, the shells will be assembled together with trucks (which will be imported separately). The various systems of the completed rail vehicles will be fine- tuned and the vehicles will be subjected to running tests. Prior to exportation, the trucks will be detached from the finished carbody, and rubber trucks will be attached for shipping purposes. The completed rail vehicles will be shipped to Taiwan. The remaining 126 carbody shells will be imported in a significantly lesser state of completion. As is the case with the initial six importations, the finished carbody shells will be exported to Taiwan, along with trucks which will be assembled with the shells upon arrival in Taiwan. The final 12 rail vehicles will be exported in a "knock-down" condition. The -2- carbody shells for these vehicles will be imported in the same condition as the 126 carbody shells described above. These shells will be subjected to the same operations in Yonkers as the other shells. ISSUE: Whether the subject carbody shells and above-described operation are eligible for temporary importation under bond? LAW AND ANALYSIS: Subheading 9813.00.05, of the Harmonized Tariff Schedule of the United States (HTSUS), provides for the importation into the United States temporarily free of duty under bond, of articles to be repaired, altered or processed. The latter may include processing that transforms an article into one that is considered manufactured or produced in the United States. The provision requires that the imported merchandise be exported or destroyed within one year of the date of importation. This period may be extended for one or more periods which, when added to the initial one year, do not exceed a total of three years. In order to qualify for this duty-free treatment, merchandise cannot be imported for the purpose of sale (or sale on approval). This limitation pertains to sales in the United States. (See U.S. Note 1(a), Subchapter XIII, Chapter 98, HTSUS.) It is clear that the operations described above qualify as a process under the subheading. However, you must meet all of the accountability requirements under the U.S. Notes of Subchapter XIII, HTSUS and the applicable Customs regulations, which may be found at 19 CFR 10.31 through 10.40. Section 10.31(f) states that a bond shall be given on Customs Form (CF) 301 in an amount equal to double the duties which it is estimated would accrue (or such larger amount as the district director shall state in writing to the entrant is necessary to protect the revenue) had all the articles covered by the entry been entered under an ordinary consumption entry. The basis for the computation of the amount of a temporary importation bond is estimated duties determined in accordance with sections 141.90 and 141.103 of the Customs Regulations (19 CFR 141.90 and 19 CFR 141.103). To this amount is added any other duties that the district director ascertains may become due on the articles so entered and, as well, estimated expenses of reimbursable supervision such as may arise, for instance, when the articles are not properly marked. - 3 - HOLDING: Based on the foregoing, we conclude that the above-described assembly process constitutes a "processing" under subheading 9813.00.05, HTSUS, and the imported merchandise is entitled to temporary importation under bond so long as all other requirements are met to the satisfaction of the District Director. Sincerely, John A. Durant, Director Commercial Rulings Division