CLA-2 CO:R:C:S 557477 DLD
District Director
U.S. Customs Service
9 N. Grand Avenue
Nogales, Arizona 85621
RE: Decision on Application for Further Review of Protest No.2609-93-100002.
Dear Sir:
This protest was filed against your decision to liquidate as
dutiable the entry of an inductively coupled plasma mass
spectrometer for the University of Arizona.
FACTS:
The University of Arizona, on April 2, 1992, ordered an
inductively coupled plasma mass spectrometer and laser ablation
system for use with the mass spectrometer, both on Purchase Order
P202411. They were ordered from Turner Scientific of the United
Kingdom through Kurt J. Lesker Company of Clairton, Pennsylvania.
On May 11, 1992, Dr. Joaquin Ruiz of the University of Arizona
applied for duty-free entry under subheading 9810.00.60 of the
Harmonized Tariff Schedule of the United States (HTSUS) for the
inductively coupled plasma mass spectrometer. On May 12, 1992, a
separate duty-free application for the laser ablation sampler for
the mass spectrometer was filed. Customs Headquarters denied both
applications on June 22, 1992, under separate denial letters
556726 and 556728. The denial was made on the basis that there
was the intent to use the devices for commercial purposes,
contrary to subsection 301.4(a)(3) of the joint regulations of
the Department of Commerce and the Department of the Treasury (15
CFR 301.4(a)(3)). Specifically, the denial letters stated:
The "Terms & Conditions of Sale" of January 2, 1992, which
is part of the quotation on the system, contains the
following paragraph:
Special Consideration:
a. Subject to the purchase of the TS 'SOLA' ICP-MS and
Laser Ablation system quoted here, Turner Scientific
intends to support a student in Dr. Ruiz laboratory in
the amount of $10,000 per year for two years in return
for co-operative work on instrument design and
measurement techniques.
Inasmuch as the system was purchased by the University of
Arizona, it is evident that the University agreed to this
arrangement. Such a "quid pro quo" agreement is considered a
"commercial use" of the instrument of the application
pursuant to subsection 301.4(a)(3) of the joint regulations
of the Department of Commerce and the Department of the
Treasury (15 CFR 301.4(a)(3)). Collaboration or "cooperative
work on instrument design" between the manufacturer, Turner
Scientific, and your laboratory in return for a valuable
consideration to you of $20,000, renders the importation
ineligible for duty-free entry under subheading 9810.00.60,
HTSUS.
The mass spectrometer entered the U.S. on August 14, 1992,
under entry number 052-9201131-8. It was liquidated as dutiable
on January 8, 1993. A protest containing an application for
further review (Customs Form 19) under 19 CFR Part 174 was timely
filed on February 23, 1993. The present letter is Customs
Headquarters' response to the request for further review of the
protest.
ISSUE:
Whether a mass spectrometer imported by the University of
Arizona is eligible for duty-free entry under subheading
9810.00.60, HTSUS.
LAW AND ANALYSIS:
The protest argues that duty-free entry should be allowed for
the mass spectrometer on the following grounds:
1. The "co-operative work on instrument design and
measurement techniques" only applies to the laser ablation
system.. The mass spectrometer is a standard instrument for which
no research, cooperative design or measurement work is needed or
desired. As evidence for this, the U.S. distributor, Kurt J.
Lesker Company's quotation of January 2, 1992, states that Lesker
would pay the duty on the laser ablation system. Lesker did not
offer to pay the duty on the mass spectrometer.
2. The Kurt J. Lesker Company affirmed in a letter of July 29,
1992, that it offered to pay the duty on the laser ablation system
because it knew "U.S. Customs' feelings on research work for
industry", and "knew that Customs would require payment of import
duty for the laser ablation system" because of the intended
collaborative development of it by the University of Arizona and
the manufacturer.
3. In a telephone conversation on September 28, 1993 with a
member of my staff, Dr. Ruiz stated that this mass spectrometer is
an established instrument in the U.S. and that there was no
intention nor need to develop or test this instrument, but only the
laser ablation system. He also stated that the $10,000 for a
student for two years applies only to the laser ablation system. He
said there is no documentation for this, it was a gentleman's
agreement. He acknowledged that the laser ablation system cannot
operate by itself but must be run with the mass spectrometer and
that there was an agreement between the manufacturer and him to
develop the laser ablation technique.
On October 27, 1993, Customs asked Dr. Ruiz to affirm the above
information in writing, which he did in a letter dated November 4,
1993.
Supporting the initial Customs determination that the mass
spectrometer is also dutiable are the following points:
1. The University of Arizona does not contest Customs
contention that the laser ablation system is dutiable by virtue
of intended commercial use, and that the laser ablation system,
ordered on the same purchase order as the mass spectrometer, must
be operated with it. The mass spectrometer, however, can be
operated without the laser ablation system. Thus, the
collaborative work to develop the laser ablation technique cannot
be accomplished without the simultaneous use of both devices.
2. The quotation, cited previously, states that the student
support offered by the manufacturer, which was the reason for the
denial of duty-free treatment, is subject to the purchase of both
the mass spectrometer and the laser ablation system.
3. Although the manufacturer offered to pay the duty on the
laser ablation system and not on the mass spectrometer and claims
are made that this demonstrates that the monetary support for the
collaboration does not extend to the mass spectrometer, the
University of Arizona nevertheless applied for duty-free
treatment for both items.
HOLDING:
The Customs Service accepts the statements of the protestant
that the collaborative research was only intended for the laser
ablation system. Further, although the laser ablation system was
ordered together with the mass spectrometer and cannot operate
without it, Customs does not insist that the non-eligibility of
the laser ablation system due to commercial use extends to the
mass spectrometer.
Accordingly, on reconsideration of this issue we find that
the mass spectrometer which is the subject of the protest is
considered to satisfy the Customs criteria for duty-free entry
under 15 CFR 301 (subheading 9810.00.60, HTSUS). Therefore the
protest is approved. In consequence thereof, the Customs Service
has approved the application for duty-free entry of the mass
spectrometer (Docket no. 94-014, approved February 10, 1994). The
Department of Commerce subsequently approved the application and
the official notice of this approval was published in the Federal
Reqister on June 23, 1994 (p.32418).
In accordance with Section 3A(ll)(b) of Customs Directive 099
3550-065, dated August 4, 1993, Subject: Revised Protest
Directive, this decision should be attached to the Customs Form
19 and mailed by your office to the protestant no later than 60
days from the date of this letter. Any reliquidation of the entry
in accordance with the decision must be accomplished prior to
mailing of the decision. Sixty days from the date of the decision
the Office of Regulations and Rulings will take steps to make the
decision available to Customs personnel via the Customs Ruling
Module in ACS and the public via the Diskette Subscription
Service, LEXIS, Freedom of Information Act and other public
access channels.
Sincerely,
John Durant, Director
Commercial Rulings Division