CON-9-04 CO:R:C:E 223003 C

T. Ohashi
Planning Manager
11 Maritine Avenue
White Plains, New York 10606

RE: Temporary importation under bond for merchandise subject to melting and other processes; TIB; melting; 19 C.F.R. 10.31

Dear Mr. Ohashi:

This responds to your February 7, 1991, letter, concerning your company's importation of merchandise and subsequent exportation of cocoa butter substitutes to Canada. You inquired as to whether or not the imported merchandise could be entered duty-free under subheading 9813.00.05 of the Harmonized Tariff Schedule of the United States (HTSUS), the temporary importation under bond provision (TIB) covering merchandise imported temporarily for repair, alteration, or processing. We have reviewed your inquiry and our answer follows.


Your company imports certain merchandise, subjects it to certain procedures, and exports it to Canada in the form of two distinct products. These products are cocoa butter substitutes: (1) PALMY, a cocoa butter equivalent which you describe as blended and fully refined sheanut stearin and palm stearin, and (2) PALKENA, a cocoa butter replacement described as fully refined palm kernel stearin. The procedure to produce PALMY employs five steps: (1) primary refining of sheanut oil and palm oil; (2) fractionation of the refined oils to produce intermediate products; (3) blending of two of the intermediate products; (4) final refining; and (5) blending of additives. The procedure to produce PALKENA is essentially the same, except that palm kernel oil is refined in step one and there is no step three because step two, fractionation, produces only one useful intermediate product.

PALMY is imported and transported, in a reduced temperature, solid or semi-solid state, to a melting station in New Jersey. There, the PALMY will be melted to a less viscous form and transferred to a tank truck for export to Canada. This is one of the procedures inquired about.

The other procedure inquired about involves the importation of the intermediate products used to produce both PALMY and PALKENA. Palm kernel stearin, the intermediate product for the production of PALKENA, is imported in a solid form. Sheanut and palm stearin, the intermediate products used to produce PALMY, are also imported in solid form. At a refinery in Savannah, Georgia, these intermediate products undergo the remaining production steps necessary to produce PALMY and PALKENA. Then, they are exported.

You inquire as to whether or not either or both of these procedures qualify as "processing" under subheading 9813.00.05, HTSUS.


Do the procedures described above qualify as "processing" within the meaning of subheading 9813.00.05, HTSUS, such that duty-free entry under TIB provisions is available to the imported merchandise?


Subheading 9813.00.05, HTSUS, provides for duty-free entry, under bond, for merchandise imported into the United States for a temporary period for the purpose of repair, alteration, or processing. The latter may include processing that transforms an article into one that is considered manufactured or produced in the United States. The provision requires that the imported merchandise be exported or destroyed within one year of the date of importation. This period may be extended for one or more periods which, when added to the initial one year, do not exceed a total of three years. In order to qualify for this duty-free treatment, merchandise cannot be imported for the purpose of sale (or sale on approval). This limitation pertains to sales in the United States. (See U.S. Note 1(a), Subchapter XIII, Chapter 98, HTSUS.)

It is clear that the second procedure described above qualifies as merchandise imported temporarily for processing. The intermediate products, after importation, are refined and then blended with necessary additives. (In the case of imported sheanut and palm stearin, an additional blending takes place prior to refining.) So long as other requirements are met, this procedure qualifies under the provision of 9813.00.05, HTSUS.

Regarding the melting procedure, we are persuaded that it qualifies as a process under the subheading. On May 13, 1963, we held that a freezing procedure qualified as a processing procedure under what was then section 308(1) of the Tariff Act of 1930, as amended (DB 200149). Fresh strawberries were imported in tins and then frozen. Later, they were exported. The melting procedure in the instant case is similar to the freezing procedure considered in the referenced case. If the latter is considered a "processing, we see no reason to conclude otherwise regarding the melting procedure. While mere repackaging operations are not considered "processing" under the subheading, the melting procedure here is not a simple repackaging.


Based on the foregoing, we conclude that both procedures described above, including the melting procedure as performed on the facts of this case, constitute a "processing" under subheading 9813.00.05, HTSUS, and the imported merchandise, so long as all other requirements are met, is entitled to temporary importation under bond.


John Durant, Director
Commercial Rulings Division