CON-9-04/LIQ-4-01-R:C:E 225700 JRS

Lisa Levaggi Borter, Esq.
Adduci, Mastriani, Schaumberg, Meeks & Schill, L.L.P.
330 Madison Avenue, 39th Floor
New York, NY 10017

RE: Temporary Importation Under Bond (TIB); Aramid yarn subject to an antidumping duty order; "Processing"; Subheading 9813.00.05, HTSUS; Inapplicability of cash deposit of antidumping duties at entry to TIB entries ; HQ 223491; HQ 224187

Dear Ms. Borter:

This is in response to your ruling request dated September 14, 1994, on behalf of your client, Hexcel Corporation, regarding the applicability of the TIB procedure under subheading 9813.00.05, HTSUS, for the processing of aramid yarn from the Netherlands which is subject to an antidumping duty order, and of the posting of a bond to cover the antidumping duties instead of cash deposit.

FACTS:

Hexcel imports Twaron aramid filament yarn type 1000, 3360 dtex, which is within the scope of the Antidumping Duty Order for Aramid Fiber Formed of Poly-phenylene Terephthalamide From the Netherlands (A-421-805, May 2, 1994). Upon importation, a specific lot number is assigned to the shipment at Hexcel's manufacturing facility in Texas, which follows the imported yarn through the various stages of manufacture of the yarn into a woven fabric. Hexcel has provided documentation tracking the imported yarn through the processes performed on the yarn.

The first step of production sets up the warp for weaving the finished fabric. As the material is woven into fabric, batch numbers and roll numbers are assigned and this information, as well as the weights of the fabric and any scrap are logged. Upon completion of the weaving process, Hexcel calculates the gross and net weight of the materials before production, the amount used in production and the amount left over, which is used to fill the next customer order for exportation. The amount of yarn used is adjusted by the moisture content of the stock and the finished fabric. A waste record of the scrap created at the several stages of the weaving process is maintained by TIB lot number and the scrap is held for either exportation or destruction under Customs supervision.

Next, the woven fabric, with batch numbers, number of rolls and weights, is forwarded to Hexcel's subcontractor in the United States under a toll charge arrangement for further processing. Title to the imported merchandise remains with Hexcel throughout the time the material is in the United States. The subcontractor subjects the fabric to a resin impregnation process. This process consists of coating the fabric with a controlled quantity of an uncured thermoset plastic resin. During this process, the subcontractor maintains records of the amount of material received from Hexcel using tracking numbers which enables Hexcel to account for imported yarn in finished, resin-impregnated batches of fabric. After quality testing of the finished coated fabric, the resulting resin-impregnated woven fabric product is delivered directly to Hexcel's freight forwarder for exportation to the customer in Brazil within one year of the date the yarn was originally received in the United States..

ISSUE:

(1) Whether the above-described process qualifies the aramid yarn for duty-free entry under TIB provision, subheading 9813.00.05, HTSUS.

(2) Whether the antidumping duties applicable to the aramid yarn need to be deposited in cash at entry.

LAW AND ANALYSIS:

Under subheading 9813.00.05, HTSUS, articles to be repaired, altered or processed (including processes which result in articles manufactured or produced in the United States) may be entered temporarily free of duty, under bond, for exportation within one year from the date of importation. This period may be extended for one or more additional periods, which when added to the initial period does not exceed three years. U. S. Note 1(a) of Subchapter XIII, Chapter 98, HTSUS. In order to qualify under this provision, the merchandise imported may not be imported for the purpose of a sale or sale on approval. Id. However, any processing that amounts to a manufacture or production of articles must include a complete accounting to the Customs Service for all articles, wastes, or irrecoverable losses resulting from the processing, and all articles and valuable wastes resulting from such processing must be exported or destroyed under Customs supervision within the bonded period. See U.S. Note 2(b) of Subchapter XIII, Chapter 98, HTSUS.

In your letter, you state that Hexcel retains title to the merchandise at all times until the merchandise is exported. Merchandise which is to be sold in the United States for export to a foreign purchaser is not considered imported for sale or sale on approval within the meaning of the TIB regulations. C.S.D. 79-96; T.D. 54640 (25).

It is apparent from the documentation submitted that Hexcel has sufficient inventory tracking from importation to exportation which appear to satisfy Customs requirement for the processing and tracking of all articles and wastes within the fixed time periods.

On the basis of the presented facts detailed in your submission, a significant transformation of the imported yarn has occurred. Weaving of imported yarn into fabric is clearly a manufacture which qualifies as a "processing" under subheading 9813.00.05, HTSUS. Likewise, the subsequent impregnation of that fabric with plastic resin also qualifies as a "processing" which is a permissible operation under subheading 9813.00.05, HTSUS.

Customs has consistently held that antidumping duties are not applicable to TIB entries since a TIB entry is not an entry for consumption. See HQ 223491, dated March 30, 1992; HQ 224187, dated February 23, 1993; 19 CFR 10.31(f) and 19 CFR 141.0a(f). These rulings are incorporated herein by reference. Therefore, while a bond is required to include potential antidumping duties if TIB export requirements are not met (see 19 CFR 10.31(f)), the importer is not required to pay the antidumping duty which would be due on a consumption entry of the same merchandise.

HOLDING:

The operation performed on the aramid yarn is a manufacture which qualifies as a "processing" under subheading 9813.00.05, HTSUS, for temporary duty-free entry. No cash deposits of antidumping duties are required at entry; however, a bond is required to be posted at entry which includes the estimated antidumping duties.

Sincerely,

John Durant, Director Commercial Rulings Division