MESSAGE NO: 4181115 DATE: 06 30 1994
CATEGORY: CVD TYPE: INF
REFERENCE: REFERENCE DATE:
CASES: C - 122 - 816 - -
- - - -
- - - -

PERIOD COVERED: 06 30 1994 TO

LIQ SUSPENSION DATE:

TO: REGIONAL DIRECTORS, COMMERCIAL OPERATIONS
DISTRICT DIRECTORS, AREA AND PORT DIRECTORS

FROM: DIRECTOR, TRADE COMPLIANCE DIVISION

RE: SAMPLE SCENARIOS TO ASSIST IN THE PROPER APPLICATION OF
COUNTERVAILING DUTIES ON SOFTWOOD LUMBER FROM CANADA
(C-122-816)

CANADIAN SOFTWOOD LUMBER
CVD


INSTRUCTIONS TO CLARIFY THE APPLICATION OF THE COUNTERVAILING
DUTY ORDER ON SOFTWOOD LUMBER FROM CANADA (C-122-816)


In response to many inquiries from the public and Customs field
offices, the following specific scenarios have been prepared to
clarify the application of CVD to Canadian softwood lumber. This
document was prepared by the National Import Specialist, Paul
Garretto, and reviewed by the Department of Commerce, International
Trade Administration.


1. Canadian Softwood Lumber Imported from a Third Country


a. Lumber is sold and shipped from Canada to a third
country. Subsequently, the lumber is sold and shipped
to the U.S.

### CVD is applicable.




b. Canadian lumber is imported to the U.S. and CVD is paid.
The lumber is then sold to a third country. Later, the
lumber is returned to the U.S. in the same condition.

## Identification of the lumber exported and reimported
is critical. Generally, there is nothing identifying
the lumber, e.g. I.D. numbers, special markings, etc.
which can clearly establish the identity of the
lumber.

## Documentation presented at entry only establishes
quantity and not identity.

### CVD is applicable.


On a case by case basis, if at time of entry summary, the
importer can show that the identity of the lumber was
maintained and show that substitution was not possible,
CVD would not apply.


2. Planed Lumber

a. Lumber is planed by the manufacturer. It is then sold to
a second mill in Canada where it is remanufactured.
During the remanufacturing process, the lumber is planed
again.

### Since the manufacturing mill has planed the lumber,
the manufacturing mill is the first mill for CVD
value determination.

b. Lumber is planed by the manufacturer and follows the same
scenario as in "a" above.

However, in this case, the planing is performed in a
manner which is not within the accepted industry
standards. In addition, the planing has no reasonable
purpose other than to influence the value used in
calculating the CVD.

### In this case, the remanufacturing mill is the planing
mill; therefore, the remanufacturing mill is the
first mill for CVD value determination.




3. Kiln-Drying

The principals applicable to planing are also applicable to/
kiln-drying. Kiln-drying is part of the "first mill FOB
price."



4. Exempt Provinces

NOTE: The province exemption does not apply to lumber
manufactured in the Maritime Provinces from
provincially-owned timber harvested in other provinces.

a. Lumber is produced in an exempt province. It is sold and
shipped directly to the U.S. by a seller located in the
exempt province.

### No CVD applies.

b. Lumber is produced in an exempt province. The lumber is
shipped directly to the U.S. from the exempt province,
but it is sold by a company located outside the exempt
province.

### No CVD applies.

c. Lumber produced in an exempt province is sold to the U.S.
However, it is transhipped via a non-exempt province and

1. through bill of lading has been submitted,

2. diversion is not possible according to the
conditions of the sale,

3. the commercial invoice clearly shows the
conditions of he sale.


### No CVD applies if the proper documentation is
presented at entry summary time. Bonding for
appropriate documents is not permissible.

d. Lumber is produced in an exempt province.The lumber is
shipped from the exempt province to a non-exempt
province. In the non-exempt province, the lumber is
warehoused for a period of time . Later it is sold and
shipped to the U.S.

### CVD applies because the identity of the lumber
can not be unequivocally determined.



On a case by case basis, if at time of entry summary, the
importer can show that the identity of the lumber was
maintained and show that substitution was not possible,
CVD would not apply.


e. Lumber is shipped from an exempt province to a
non-exempt province where it is remanufactured or
processed. After processing, the lumber is sold and
shipped to the U.S.

### CVD applies.

5. Exempt Companies

NOTE: a) The exempt company must be the lumber
manufacturer.

b) It assumed that the exempt company continues to
meet the criteria originally presented to the
Department of Commerce in the exclusion request.

a. Lumber is manufactured, sold, and shipped directly to
the U.S. by an exempt company.

### No CVD applies.

b. Lumber is manufactured by an exempt company and sold to
a second company in Canada. The second company takes
ownership of the lumber and sells it to the U.S. The
lumber is shipped directly to the U.S. from the exempt
company.

### No CVD applies.

c. Lumber is manufactured by an exempt company and sold to
a second company in Canada. The second company takes
possession of the lumber and warehouses it in Canada.
At a later time, the second company sells and ships the
lumber to the U.S.

### CVD applies; the identity of the lumber cannot
be maintained and substitution is possible.

d. Lumber is manufactured by an exempt company and sold to
a second company in Canada. The second company
remanufactures or processes the lumber. the lumber is
then sold and shipped to the U.S.

### CVD applies.




6. American Goods Returned

a. U.S. lumber is sold and-or shipped to Canada. At a
later time, the lumber is returned to the U.S. No
processing was done in Canada. The lumber was not
advanced in value or improved in condition.

# Identification of the lumber exported and reimported
is critical. Generally, there is nothing
identifying the lumber, e.g. I.D. numbers, special
markings, etc. which can clearly establish the
identity of the lumber.

Documentation presented at entry summary only
establishes quantity and not identity.

### CVD applies; the identity of the lumber can not
be maintained and substitution is possible.

On a case by case basis, if at time of entry summary,
the importer can show that the identity of the lumber
was maintained by the use of special markings, numbers,
etc. and show that substitution was not possible, CVD
would not apply.

b. U.S. lumber is sold and/or shipped to Canada. In Canada
it undergoes a processing. After being processed, the
lumber is returned to the U.S.

### CVD applies on the full value of the lumber (in
condition as returned to the U.S.)

7. "First Mill's FOB Price-Remanufactured Lumber

(i)"First mill's FOB price": the price charged by the
manufacturing mill, or if the manufacturing mill
does not plane the lumber, the price charged by the
planing mill.

(ii) Remanufactured lumber: lumber which has been
processed as follows:

1) cutting to length (does not include
trimming),

2) cutting to width,

3) edge working, e.g., tongue and groove.





a. A Canadian mill produces and remanufactures lumber. The
mill sells the lumber directly to the U.S.

### The mill's price to the U.S. is the "first
mill's FOB price." ªNo deduction for
remanufacturing is allowed.þ

b. A lumber manufacturer sells rough lumber to a second
Canadian mill. The second mill planes the lumber and
sells to the U.S.

### The second mill is the planing mill. Therefore
the second mill's FOB price to the U.S. is
considered the "first mill's FOB price."

c. A lumber manufacturer sells rough lumber to a second
Canadian mill. The second mill planes and remanufactures
the lumber. The second mill then sells the lumber to the
U.S.

### The second mill is the planing mill. Therefore
the second mill's FOB price to the U.S. less the
cost for the remanufacturing is considered the
"first mill's FOB price."

d. A mill manufactures, planes, kiln-dries, trims, grades,
stickers, and packs lumber. The mill sells the lumber to
a Canadian wholesaler. The wholesaler sells the lumber
to the U.S. in the same condition.


### The manufacturing mill is also the planing mill.
Therefore, the manufacturing mill's price to the
wholesaler, less any included freight, is
considered the "first mill's FOB price."

e. The same scenario as "d"; in addition the lumber is
further processed by tongue and groove along the edges.


### Since the manufacturer is also the planing mill,
the price to the wholesaler is considered the
"first mill's FOB price." If the
remanufacturing is done by the wholesaler, the
cost of the remanufacturing and any included
freight should be deducted, otherwise only the
included freight should be deducted.


#########



It is the responsibility of the shipper-importer to clearly
present to Customs all the facts in a claim for CVD exemption or
on the value to be used to calculate CVD. The required
information and documentation must be presented at the time of
entry summary.

If the required information and supporting documents are not
present with the entry summary, CVD is applicable.





NANCY MCTIERNAN