OT:RR:CTF:VS H142395 BGK
Mr. James E. King
Customs Consultant
Affiliated Customs Brokers USA, Inc.
193 West Service Road
Champlain, NY 12919
RE: Eligibility of certain reclaimed timbers for preferential tariff treatment under subheading 9801.00.10, Harmonized Tariff Schedule of the United States
Dear Mr. King:
This is in response to your request for a binding ruling on behalf of Goodfellow Inc., concerning the eligibility of certain reclaimed timbers for preferential tariff treatment under subheading 9801.00.10, Harmonized Tariff Schedule of the United States (HTSUS). You also inquired about the classification of the timbers and the potential applicability of the U.S./Canadian Softwood Lumber Agreement. Those inquiries will be answered under separate cover.
FACTS:
According to your submission, the subject timbers are Douglas fir, and have been “salvaged from buildings in the USA that are believed to be 100 years old or more.” The timbers will then be exported to Canada “for grading and to determine a purchase price; no work of any kind will be done to the timbers while in Canada.” You further note that once the timbers are imported into Canada, “the salvaged lumber will be held in a separate area at Goodfellow Inc. and will not be commingled with any other timber.” Following the grading/pricing process in Canada, the timbers will be shipped back to the United States. The importer indicates that a U.S. Customs and Border Protection (CBP) Form 4455, “Certificate of Registration”, will be completed upon exportation of the goods from the U.S. to Canada.
The importer proposed five scenarios; only three of which present Chapter 98, HTSUS, issues and will be discussed herein.
Scenario One – The importer recommends classification in subheading 9801.00.1095, HTSUS, wherein the salvage company will provide an Affidavit of Manufacture indicating the location of the building the timber was salvaged from (at least by city and state), the completed CBP Form 4455 will be provided, and a Declaration of Foreign Shipper will be provided.
Scenario Two – The importer recommends classification in subheading 9801.00.1095, HTSUS, wherein an Affidavit of Manufacture is not available. The NAFTA Certificate of Origin for the import into Canada, the Canadian B3 entry, the completed CBP Form 4455, and the Declaration of Foreign Shipper will be provided.
Scenario Three – The importer recommends classification in subheading 9801.00.10, HTSUS, wherein the completed CBP Form 4455 and the Declaration of Foreign Shipper will be provided.
It is noted that the original origin of the Douglas fir timbers is either not know, or has not been provided.
ISSUE:
Are the reclaimed timbers described above eligible for preferential tariff treatment under subheading 9801.00.10, HTSUS, upon reimportation into the U.S.?
LAW AND ANALYSIS:
Subheading 9801.00.10, HTSUS, provides that “products 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” may be entered duty-free, provided that the documentary requirements of 19 C.F.R. § 10.1 are satisfied.
I. Requirements of subheading 9801.00.10, HTSUS
The first question presented is whether the timbers are considered products of the United States.
Pursuant to 19 C.F.R. § 134.1(b):
“Country of origin” means the country of manufacture, production, or growth of any article of foreign origin entering the United States. Further work or material added to an article in another country must effect a substantial transformation in order to render such other country the “country of origin” within the meaning of this part….
A substantial transformation occurs when a new and different article of commerce emerges from a process with a new name, character or use different from that possessed by the article prior to processing. United States v. Gibson-Thomsen Co., 27 C.C.P.A. 267, C.A.D. 98 (1940). CBP looks to the extent of the operations performed and whether the parts lose their identity and become an integral part of the new article. The issue of whether a substantial transformation occurs is determined on a case-by-case basis.
In this case, while the origin of the timbers is not known, the timbers are being reclaimed from buildings in the U.S. that are believed to be over 100 years old. If the timbers were not originally of U.S. origin, the assembly of the timbers in constructing the building would have resulted in a substantial transformation. In Headquarters Ruling Letter (HRL) 557075, dated May 5, 1993, (discussing HRL 556483), CBP found that I beams were substantially transformed when the following operations occurred: “1) assembling the rafter section and column by means of welding the I-beam and end plates together (in some instances, also welding tabs), 2) painting the completed rafter section and column, and 3) performing quality control and testing.” This can be analogized to the processes that would have occurred in using timbers in the construction of a building. Therefore, the timbers underwent a substantial transformation in the U.S. when they were used in the construction of the buildings. As such, the reclaimed timbers are products of the United States.
The second issue is whether the operations in Canada constitute an advancement in value or improvement in condition. While some change in the condition of the product while it is abroad is permissible, operations which either advance the value or improve the condition of the exported product render it ineligible for duty-free treatment upon reimportation into the U.S.
In Border Brokerage Company, Inc. v. United States, 314 F. Supp. 788 (1970), the court held that tomatoes of American origin were entitled to duty free entry under item 800.00, Tariff Schedules of the United States (TSUS) (the predecessor to subheading 9801.00.10, HTSUS). The tomatoes were shipped to Canada where they were unloaded, unpacked, sorted, graded by color and size, and repacked. The court stated that the test to be applied in item 800.00 cases is whether the merchandise of
American origin has itself (apart from its container) been the object of advancement in value or improvement in condition while abroad. In John V. Carr & Son, Inc. v. United States, 69 Cust. Ct. 78 (1972), the court held that U.S.-origin fish hooks sent to Hong Kong to be sorted and packaged into tin containers were eligible for subheading 9801.00.10, HTSUS, treatment. The court emphasized that there was no alteration or change in the fish hooks; they were merely sorted and packaged.
In this case, the timber is only being graded and priced in Canada. This is similar to the tomatoes in Border Brokerage that were sorted, graded, and repacked. Therefore, the timber is not being advanced in value or improved in condition while in Canada. If the document requirements of 19 C.F.R. § 10.1 are able to be satisfied, the timber will be eligible for preferential tariff treatment under subheading 9801.00.10, HTSUS.
II. Documentary Requirements of 19 C.F.R. § 10.1
19 C.F.R. § 10.1(a) requires that, unless otherwise provided for, a declaration by the foreign shipper and a declaration by the owner, importer, consignee, or agent having knowledge of the facts must be filed in connection with the entry of articles in a shipment valued over $2,000 and claimed to be duty-free under subheading 9801.00.10, HTSUS.
19 C.F.R. § 10.1(b) states:
In any case in which the value of the returned articles exceeds $2,000 and the articles are not clearly marked with the name and address of the U.S. manufacturer, the port director may require, in addition to the declarations required in paragraph (a) of this section, such other documentation or evidence as may be necessary to substantiate the claim for duty-free treatment. Such other documentation or evidence may include a statement from the U.S. manufacturer verifying that the articles were made in the United States, or a U.S. export invoice, bill of lading or airway bill evidencing the U.S. origin of the articles and/or the reason for the exportation of the articles.
Although we have not been provided with any information on the value of your shipments, we assume for purposes of your inquiry that they are valued at over $2,000, and that the allegedly returned articles are not marked with the name and address of a U.S. manufacturer.
Also relevant is 19 C.F.R. § 10.1(d), which provides that “[i]f the port director is reasonably satisfied, because of the nature of the articles or production of other evidence, that the articles are imported in circumstances meeting the requirements of subheading 9801.00.10, HTSUS, [ . . . the port director] may waive the requirements for producing the documents specified in [19 C.F.R. § 10.1(a)].”
In all three scenarios, it is stated that a declaration by the foreign shipper will be provided, in addition to CBP Form 4455. However, you have not commented on whether a declaration by the owner, importer, consignee, or agent will be provided. This is required pursuant to 19 C.F.R. § 10.1(a)(2). The declaration of the owner, importer, consignee, or agent must be in substantially the following format:
I, --------------, declare that the (above) (attached) declaration by the foreign shipper is true and correct to the best of my knowledge and belief, that the articles were manufactured by ---------------- (name of manufacturer) located in ---------------- (city and state), that the articles were not manufactured or produced in the United States under subheading 9813.00.05, HTSUS, and that the articles were exported from the United States without benefit of drawback.
___________________________ (Date)
___________________________ (Address)
___________________________ (Signature)
___________________________ (Capacity)
19 C.F.R. § 10.1(a)(2). CBP Form 4455 also requires the signature of the owner or agent and importer, and the importer must attest to the fact that the articles are being reimported after having been exported without the benefit of drawback. This is similar to the importer’s declaration. Therefore, it can be assumed that the importer will be able to provide at least some of the information required for the importer’s declaration.
In scenario one, the importer is also able to provide an Affidavit of Manufacture, indicating the location of the building where the timber was salvaged from by city and state. Therefore, in scenario one, as an Affidavit of Manufacture will be submitted, provided the importer will be able to fill out the importer’s declaration, we find the documentary requirements will be satisfied.
In scenario two, the importer will be able to provide a NAFTA Certificate of Origin and Canadian B3 entry. In HRL 563132, dated January 15, 2005, CBP held that “. . . a NAFTA Certificate of Origin, as opposed to a manufacturer’s affidavit, may be accepted as proof of origin for purposes of obtaining preferential treatment under subheading 9801.00.10, HTSUS, provided the port director is reasonably satisfied that the certificate substantiates the importer’s claim that certain goods are products of the United States.” Therefore, provided the importer will be able to complete an importer’s declaration, the available documentation should be sufficient to prove eligibility for subheading 9801.00.10, HTSUS, treatment.
In scenario three, the only documents that will be provided are CBP Form 4455 and the Declaration of Foreign Shipper. It does not appear the importer will be able to provide the necessary information to complete the importer’s declaration. While the documentary requirements for proving preferential treatment remain in the discretion of the port director, it does not appear the importer will be able to satisfy the requirements in scenario three.
In all three scenarios, you have stated that a CBP Form 4455 will be provided. While CBP does not object to the use of CBP Form 4455, this form is not a substitute for documentation required under 19 C.F.R. § 10.1, including any documentation the port director may require pursuant to 19 C.F.R. § 10.1(b). HRL H028001, dated July 14, 2008.
While the documents listed in 19 C.F.R. § 10.1(a) are required, it is ultimately within the discretion of the port director whether he or she is reasonably satisfied that the evidence presented substantiates the importer’s claim that the goods are products of the United States. In scenarios one and two, provided an importer’s declaration is produced, it is our opinion that the documentary requirements will be satisfied. It does not appear the importer will be able to meet the burden of proof in scenario three.
HOLDING:
Provided that the documentary requirements of 19 C.F.R. § 10.1 may be complied with to the satisfaction of the port director, the reclaimed timber in scenarios one and two will be eligible for preferential tariff treatment under subheading 9801.00.10, HTSUS. It does not appear likely that the timber in scenario three will be eligible for preferential tariff treatment.
A copy of this ruling letter should be attached to the entry documents filed at the time this merchandise is entered. If the documents have been filed without a copy, this ruling should be brought to the attention of the Customs officer handling the transaction.
Sincerely,
Monika R. Brenner
Chief, Valuation & Special Programs Branch