REC-1/ENT-1/CON-3-RR:IT:EC 114394 GOB
Category: Entry
Joseph F. Donohue, Jr., Esq.
Donohue and Donohue
26 Broadway
New York, N.Y. 10004
RE: U.S. Virgin Islands; Recordkeeping; 19 U.S.C. 1508, 1509;
Material transfer form; Exportation; Importation; Entry
Dear Mr. Donohue:
This is in response to your submission of July 2, 1998 on
behalf of Amerada Hess Corporation ("Hess") and its wholly-owned
subsidiary, Hess Oil Virgin Islands Corp. ("HOVIC").
FACTS:
You describe certain of the facts as follows:
HOVIC operates a petroleum refinery in St. Croix, U.S.
Virgin Islands. It imports materials to be used in the
refining operation as well as equipment and supplies
needed for operation and maintenance of the refinery
and the supporting facilities. In some instances the
imports are from foreign countries and in other
instances from the United States. Equipment received
from the United States is periodically returned to the
United States for maintenance or repair, or because it
is no longer needed at the refinery.
ISSUES:
1. Do the laws with respect to recordkeeping (19 U.S.C.
1508) and the examination of books and witnesses (19 U.S.C. 1509)
apply to imports into the U.S. Virgin Islands?
2. When U.S. goods are shipped to the U.S. Virgin Islands
and returned to the United States, what documentation should be
filed to ensure duty-free treatment? When equipment is returned
to the U.S. for maintenance, repair or some purpose other than
sale, will the material transfer form that accompanies the
shipment be acceptable in lieu of an invoice or pro forma invoice
for entry and recordkeeping purposes?
LAW AND ANALYSIS:
Issue One
19 CFR 101.1 provides, in pertinent part:
Customs territory of the United States. "Customs
territory of the United States" includes only the
States, the District of Columbia, and Puerto Rico.
General Note 2 of the Harmonized Tariff Schedule of the
United States ("HTSUS") provides that "[t]he term "customs
territory of the United States", as used in the tariff schedule,
includes only the States, the District of Columbia and Puerto
Rico." [Emphasis in the original.]
19 CFR 7.2 provides, in pertinent part:
7.2 Insular possessions of the United States other
than Puerto Rico.
(a) Insular possessions of the United States other
than Puerto Rico are also American territory but,
because those insular possessions are outside the
customs territory of the United States ... The
principal such insular possessions are the U.S. Virgin
Islands ...
...
(d) The Secretary of the Treasury administers the
customs laws of the U.S. Virgin Islands through the
United States Customs Service. The importation of
goods into the U.S. Virgin Islands is governed by
Virgin Islands law; however, in situations where there
is no applicable Virgin Islands law or no U.S. law
specifically made applicable to the Virgin Islands,
U.S. laws and regulations shall be used as a guide and
be complied with as nearly as possible. Tariff
classification of, and rates of duty applicable to,
goods imported into the U.S. Virgin Islands are
established by the Virgin Islands legislature.
[Emphasis supplied.]
19 U.S.C. 1508(a) provides:
1508. Recordkeeping
(a) Requirements
Any-
(1) owner, importer, consignee, importer of
record, entry filer, or other party who-
(A) imports merchandise into the customs
territory of the United States, files a
drawback claim, or transports or stores
merchandise carried or held under bond, or
(B) knowingly causes the importation or
transportation or storage of merchandise
carried or held under bond into or from the
customs territory of the United States;
(2) agent of any party described in paragraph (1);
or
(3) person whose activities require the filing of
a declaration or entry, or both;
shall make, keep, and render for examination and
inspection records (which for purposes of this section
include, but are not limited to, statements,
declarations, documents and electronically generated or
machine readable data) which-
(A) pertain to any such activity, or to the
information contained in the records required by
this chapter in connection with any such activity;
and
(B) are normally kept in the ordinary course of
business.
[Emphasis supplied.]
As the underlined language of 19 U.S.C. 1508(a) indicates,
the primary thrust of the recordkeeping provisions is with
respect to the importation of merchandise into the customs
territory of the United States. 19 CFR 101.1 and 7.2(a) make
clear that the customs territory of the United States does not
include the U.S. Virgin Islands.
Accordingly, with respect to the customs laws of the United
States, we find that 19 U.S.C. 1508 and 1509 are not applicable
with respect to imports into the U.S. Virgin Islands.
We call your attention to 19 CFR 7.2(d), supra. We note
that the U.S. Virgin Islands may have its own recordkeeping
requirements with respect to importations into the U.S. Virgin
Islands, and that it may choose to adopt 19 U.S.C. 1508 and 1509
as its recordkeeping statutes. In this regard, we are not able
to advise what action the U.S. Virgin Islands may have taken.
For such information you will have to contact the U.S. Virgin
Islands directly.
Issue Two
HOVIC receives U.S. origin equipment for use at its
refinery. The equipment often returns to the United States for
repair or maintenance or because HOVIC has completed its use of
the equipment.
You state that while there is a regulation with respect to
the duty-free return of U.S. origin goods exported to foreign
countries and returned to the U.S. (19 CFR 10.1; see also
subheading 9801.00.10, HTSUS, which provides for duty-free
treatment for "[p]roducts of the United States when returned
after having been exported, without having been advanced in value
or improved in condition by any process of manufacture or other
means while abroad."), and there is a regulation with respect to
the duty-free treatment of previously imported foreign goods
shipped to and returned from U.S. insular possessions (19 CFR
7.3), there is no provision for duty-free treatment of U.S.
origin goods shipped to and returned from U.S. insular
possessions.
"Exportation" is defined in 19 CFR 101.1 as "a severance of
goods from the mass of things belonging to this country with the
intention of uniting them to the mass of things belonging to some
foreign country."
In Ruling 560827 dated February 25, 1998, we stated:
Based upon the foregoing, we find that in the instant
case there will be no exportation of the samples, as
Guam is not considered a foreign country. Thus, these
articles will not be eligible for the duty exemption
under subheading 9801.00.10, HTSUS, upon return of the
merchandise to the U.S. However, inasmuch as no
exportation has taken place in this instance, the
subject articles transported to Guam are not considered
imported when returned to the U.S. In order to support
the determination that an exportation did not occur,
documentation will be required to verify that the
returning articles are the same articles transported to
Guam.
In Ruling 225339 dated January 10, 1995, we found that oil
spill equipment temporarily sent to the U.S. Virgin Islands was
not exported. We stated:
Inasmuch as no exportation has taken place in this
instance, the subject equipment and supplies are not
imported when returned to the U.S. However, in order
to support the determination that an exportation did
not occur, documentation will be required to verify
exactly which equipment and supplies are initially sent
to the spill and that these same equipment and supplies
are returned to the point of origin.
In CSD 79-77, we stated:
Insofar as articles exported to Guam being eligible for
drawback, there is no legal authority for the allowance
of drawback on such articles which are shipped to
Puerto Rico, the Virgin Islands, American Samoa, Wake
Island, Midway Islands, Kingman Reef, Guam, Canton
Island, Enderbury Island, Johnston Island, or Palmyra
Island. The Customs Court has specifically held that
for the purposes of the drawback and temporary
importation under bond laws, Guam is not a foreign
country and that goods shipped there from the United
States are not "exported." Mitsubishi International
Corp. et al v. United States, 55 Cust. Ct. 319, C.D.
2593 (Dec. 8, 1965).
In Ruling 114291 dated May 7, 1998, we stated:
Longstanding judicial and administrative precedent
holds that merchandise sent from the United States to
Guam is not exported. See John Rothschild & Co. v.
United States, 16 Ct. Cust. Appls. 442, 446, T.D. 43190
(1929); Mitsubishi International Corp. et al v. United
States, 55 Cust. Ct. 310, 325, C.D. 2597 (1965); C.S.D.
79-77; and Headquarters Ruling Letter HQ 221414, dated
April 11, 1990. If an article leaves the United States
but is not deemed to be exported, then there is no
importation upon its return to the United States. In
accordance with General Note 1 of the Harmonized Tariff
Schedule of the United States, only those goods that
are imported into the customs territory of the United
States are subject to duty... Furthermore, Customs
entry requirements pertain only to merchandise which
has been imported. 19 U.S.C. 1484; 19 CFR 141.4.
Applied here, sales samples sent to Guam from the
United States would not be subject to duty or entry
requirements upon their return from Guam to this
country.
Based upon the above authorities, we make the following
findings. Merchandise shipped to the U.S. Virgin Islands is not
an exportation, as that term is defined in 19
CFR 101.1. Thus, there is no importation when the merchandise
is returned to the U.S. from the U.S. Virgin Islands. Under this
circumstance, the filing of an entry is not required. A properly
completed CF 3311 constitutes acceptable documentation to support
the claim that entry is not required because the merchandise has
not been exported.
We find that the documentation used to evidence duty-free
admission in this situation (i.e., documentation to establish
that the merchandise being returned to the U.S. is the same
merchandise which was previously sent from the U.S. to the U.S.
Virgin Islands) is not a record described in 19 U.S.C.
1509(a)(1)(A) because it is not "required by law or regulation
for the entry of the merchandise." However, we note that it
would be prudent for a party to retain such documentation in
order to support the claim that entry is not required.
You state that the material transfer form rather than a
commercial invoice is used when certain merchandise is returned
to the U.S. for repair or maintenance. A commercial invoice is
not used because there is no sale. You state that the material
transfer form contains substantially all of the information
required by 19 CFR 141.86; the exception is that a value rather
than a purchase price is provided on the material transfer form.
We find that a material transfer form may be used in lieu of
a commercial invoice under the facts presented, i.e., there is no
commercial invoice because there is no sale and the material
transfer form contains all of the information required by 19 CFR
141.86 with the exception that a value rather than a purchase
price is provided.
HOLDINGS:
1. With respect to the customs laws of the U.S., 19 U.S.C.
1508 and 1509 are not applicable with respect to imports into the
U.S. Virgin Islands.
2. Merchandise shipped to the U.S. Virgin Islands is not an
exportation, as that term is defined in 19 CFR 101.1. Thus,
there is no importation when the merchandise is returned to the
U.S. Under this circumstance, the filing of an entry is not
required. A CF 3311 constitutes acceptable documentation to
support the claim that entry is not required because the
merchandise has not been exported. A material transfer form may
be used in lieu of a commercial invoice under the facts
presented, i.e., there is no commercial invoice because there is
no sale and the material transfer form contains all
of the information required by 19 CFR 141.86 with the exception
that a value rather than a purchase price is provided.
Sincerely,
Jerry Laderberg
Chief,
Entry Procedures and Carriers
Branch