CLA-2 RR:CR:TE 962499 PR
Elizabeth Vann, Esquire
600 Sunland Park Drive, Suite 2-100
El Paso, Texas 79912
RE: Revocation of, and treatment relating to, the classification of bank checks sent to Mexico, endorsed, processed, and returned to the United States
Dear Ms. Vann:
This is in reply to your request, on behalf of Electronic Data Management International, Inc. (hereafter referred to as EDM), to reconsider Headquarters Ruling Letter (HQ) 114440, dated October 1, 1998. That ruling held that the classification of bank checks sent to Mexico where they are endorsed, processed, and then returned to the United States, was under the provision for other printed matter not elsewhere provided for, in subheading 4911.99.80, Harmonized Tariff Schedule of the United States (HTSUS). Our ruling on the matter follows.
Pursuant to section 625(c), Tariff Act of 1930, as amended (19 U.S.C. 1625(c)), notice of the proposed modification of HQ 114440 was published on December 29, 1999, in the Customs Bulletin, Volume 33, Number 52. One comment was received.
The facts, as stated in HQ 114440, are:
EDM, through its Mexican subsidiary, EDM del Norte, S. de R.L. de C.V., Cd. Juarez, Chih., Mexico, provides data processing services to various companies located throughout the United States, including remittance processing of payments made to EDMs customers ("Payees") by the Payees various customers. In connection with such data processing services, EDM proposes to export bank checks from El Paso to its Mexican subsidiary's facility in Cd. Juarez for processing and then return them to the United States through the Port of El Paso, Texas, after processing.
Specifically, EDM will receive from Payees (for whom EDM provides data processing services) unopened letters containing customer account statements and payment checks drawn on U.S. banks by customers of Payees and made out to Payees. EDM will transport the unopened letters to Mexico for processing after which the bank checks will be returned to the United States. Some of these letters may also contain correspondence and/or cash, although cash payments should be rare and for small amounts. Such correspondence and/or cash also would be returned to the United States after processing.
In Mexico, the letters will be opened and payment amounts data-entered and posted electronically to the customers [sic] accounts. Copies (i.e., electronic images) of the checks will also be made by means of an electronic scanning process. The original checks will be endorsed in Mexico "For deposit only to the account of [name and account number of the appropriate Payee]." The endorsed checks will then be returned to the U.S. for deposit into Payees' bank accounts and for Federal Reserve System clearance.
You stated telephonically that the subject checks are not endorsed when they are sent to Mexico.
In your request for reconsideration, you submitted what is described as a revised factual description. Not included in the facts set out above, is the following pertinent information.
1. EDM proposes to export, process, and return, in addition to bank checks, including personal checks and cashier's checks, traveler's checks, money orders, and minor amounts of cash.
2. A magnetic ink character recognition (micr) label will be placed on the lower right hand corner of instrument to allow faster, more efficient processing in the United States.
Please note that a revocation of a prior Customs ruling will, barring unusual circumstances, be limited to the goods ruled upon in the prior ruling. HQ 114440 only concerned bank checks and, therefore, Customs will not expand this ruling to cover other goods not expressly dealt with in HQ 114440.
In HQ 114440, Customs ruled that the indorsed bank checks being returned to the United States were not monetary instruments and that they were not classifiable under the duty-free provision for banknotes; check forms; and stock, share or bond certificates and similar documents of title, in heading 4907, HTSUS. The proper classification was determined to be under the dutiable provision for other printed matter, in subheading 4911.99.80, HTSUS.
The issue presented is under which heading, 4907 or 4911, are endorsed bank checks classifiable.
LAW AND ANALYSIS:
Heading 4907.00.00, HTSUS, provides:
4907 Unused postage, revenue or similar stamps of
current or new issue in the country to which they
are destined; stamp-impressed paper; banknotes;
check forms; stock, share or bond certificates and
similar documents of title.
Heading 4911, HTSUS, provides:
4911 Other printed matter, including printed pictures
Clearly, if the goods in question fall within the purview of heading 4907, they do not qualify for classification under heading 4911 because "other" means goods which are not classifiable under any of the preceding headings.
Additional U.S. Note 2 to chapter 49 provides, in pertinent part:
2. Currency in current circulation in any country imported for monetary purposes and securities and similar evidences of value provided for in heading 4907 shall be admitted without formal customs consumption entry or the payment of duty. (italics added)
Pursuant to Note 2, U.S. currency returning to the United States is neither dutiable nor subject to Customs entry requirements. That leaves the question of whether the language of heading 4907, "stock, share or bond certificates and similar documents of title", include endorsed bank checks. After fully reconsidering the matter, Customs answer to that question is in the affirmative.
Stocks and shares (e.g. mutual fund shares) are both evidences of ownership and evidences of cash values due to the owner thereof. Bonds and banknotes are evidences of sums certain due the owner. All are documents showing that the owner has a legal entitlement to a sum of money. Customs perceives little difference between endorsed bank checks and the types of instruments named in heading 4907.00.00. Accordingly, such checks are "similar documents of title" within the purview of that heading.
In regard to that portion of HQ 114440 which ruled that endorsed bank checks were not "monetary instruments" within the purview of 31 U.S.C. 5312(a)(3) and 31 CFR 103.11(u), we have been informed that the Department of the Treasury Financial Crimes Enforcement Network (FINCEN) has been delegated the authority to address ruling requests related to the Bank Secrecy Act, including determinations of which instruments constitute "monetary instruments." Since FINCEN has the responsibility concerning determinations made pursuant to the Bank Secrecy Act and the regulations promulgated thereunder, Customs did not have authority to rule whether the goods described in HQ 114440 were monetary instruments. Accordingly, that portion of HQ 114440 is void ab initio.
HQ 114440 dated October 1, 1998, is hereby revoked. In accordance with 19 U.S.C. 1625(c), this ruling will become effective 60 days after its publication in the Customs Bulletin.
Endorsed bank checks, as described above, imported into the United States are properly classifiable under heading 4907.00.00, HTSUS, duty-free, and, pursuant to Additional Note 2, not subject to Customs entry requirements.
Requests for rulings falling within the purview of 31 U.S.C. 5312, and its implementing regulations, should be directed to the Office of Compliance and Regulatory Enforcement, Financial Crimes Enforcement Network, U.S. Department of the Treasury, ATTN.: Franklin Court Building, 2070 Chain Bridge Road, Suite 200, Vienna, Virginia 22182.
John Durant, Director
Commercial Rulings Division