CLA-2 OT:RR:CTF:VS H125106 HkP
Ms. Rosalinda Ramos
Loera Customs Brokerage, Inc.
5845 East 14th Street
Brownsville, TX 78521
RE: Documentary Requirements for Subheading 9801.00.10, HTSUS; Mill Test Report; American Goods Returned; Articles of Steel
Dear Ms. Ramos:
This is in response to your request submitted on August 19, 2010, on behalf of Shaw Rio Grande Valley Fabrication and Manufacturing, LLC (Shaw), for a binding ruling on the documentary evidence required to enter a good under subheading 9801.00.10, Harmonized Tariff Schedule of the United States (HTSUS). Your request was forwarded to our office for a response.
FACTS:
According to the information submitted, Shaw exports from the United States goods such as steel pipes, beams, flanges, fittings, and elbows, which are claimed to be of U.S. origin, to its plant (Shaw Matamoros Fabrication and Manufacturing, S. de R.L. de C.V.) in Mexico to be used in the manufacture of prefabricated piping spools and steel structures. These finished products are then imported into the U.S. However, sometimes the goods exported from the U.S. are returned to the U.S. in the same condition as which they were exported because they do not meet specifications or because of excess inventory at the Mexican plant.
You have asked us to address whether a Mill Test Report (or Certificate) (MTR) can be used to substantiate a claim of American goods returned under subheading 9801.00.10, HTSUS.
An MTR is a quality assurance document from a testing facility that outlines the chemical makeup and physical properties of materials required to meet certain industry codes (such as ASME, ASTM or API code). The report is usually provided by the mill, metal foundry or manufacturer that produces the materials, but can also be issued by an independent testing facility. See generally www.milltestreports.com. At our request, examples of completed MTRs for your products were submitted for our review. You have informed us that each of the three MTRs was completed by the manufacturer of the products, although we note that in one instance an MTR was completed by a steel distribution company rather than by a manufacturer. In addition to certifying product specifications, each of the three MTRs certifies that the material being tested was manufactured in the United States. None of the sample MTRs were issued by Shaw.
ISSUE:
Whether a Mill Test Report can be used to satisfy the documentary requirements for subheading 9801.00.10, HTSUS.
LAW AND ANALYSIS:
Subheading 9801.00.10, HTSUS, provides a duty exemption for:
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 any other means while abroad.
Articles entered under this provision are exempt from customs duty upon compliance with the documentation requirements of section 10.1 of the U.S. Customs and Border Protection (CBP) Regulations (19 C.F.R. § 10.1). Some change in the condition of the product while it is abroad is permissible. However, operations which either advance the value or improve the condition of the exported product render it ineligible for duty-free entry upon return to the United States. Border Brokerage Company, Inc. v. United States, 314 F. Supp. 788 (1970), appeal dismissed, 58 CCPA 165 (1970).
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 free of duty under subheading 9801.00.10, HTSUS.
19 C.F.R. § 10.1(b) states that in any case in which the value of the returned articles exceeds $2000 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 Shipper’s and Owner’s Declarations, such other documentation or evidence 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 (a Manufacturer’s Affidavit), 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 enquiry that they are valued at over $2000, and that the allegedly returned articles are not marked with the name and address of a U.S. manufacturer.
Also relevant for our purposes is 19 C.F.R. § 10.1(d), which provides that if 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).
Under the provisions of 19 C.F.R. § 10.1(b), the port director is not required to request that any specific document be used to substantiate a claim of duty-free entry under subheading 9801.00.10, HTSUS. Accordingly, it is within the discretion of the port director to decide on a case-by-case basis what documents are acceptable. Based on the sample MTRs submitted for our review, the name and location of the U.S. manufacturer is provided and it is signed by a representative of the facility that manufactures or tests the goods. We find that in instances where an MTR is issued by a U.S. manufacturer who certifies that the goods were made in the U.S. by that manufacturer, that Shaw may submit the MTR to the port director in lieu of a Manufacturer’s Affidavit to substantiate that the U.S. is the country of origin of the goods. This is subject to the port director being reasonably satisfied that the MTR substantiates the importer’s claim that the goods are products of the United States. In situations where the port director is reasonably satisfied of the foregoing, we note that the other criteria of subheading 9801.00.10, HTSUS, must also be satisfied before preferential treatment may be granted.
However, we are also of the view that an MTR issued by a distributor may only be an acceptable substitute for a Manufacturer’s Affidavit if the distributor satisfies the port director that the product is of U.S. origin. CBP has previously found information other than a Manufacturer’s Affidavit to be acceptable evidence to support claims of U.S. origin for purposes of obtaining duty-free entry under subheading 9801.00.10, HTSUS, when the documents and other evidence relied upon were prepared by the producer of the goods or by the exporter with knowledge of the relevant facts. In HQ 563132 (Jan. 13, 2005), CBP found that a NAFTA Certificate of Origin prepared by the exporter, or by its agent having knowledge of the relevant facts, was acceptable proof of country of origin for purposes of subheading 9801.00.10, HTSUS, treatment. In HQ H007668 (June 20, 2007), we recommended that software records maintained by the producer that provided location of manufacture information be accepted by the ports. Our
recommendation was subject to the provisos that the importer demonstrate to the port officials how the information was provided, and that the pertinent information be provided to CBP in a clear and intelligible manner. In this case, it will ultimately be within the port director’s discretion whether to accept an MTR issued by a distributor as proof of U.S. origin of the products. The port director must be reasonably satisfied that the evidence presented substantiates the importer’s claim that the goods are products of the United States.
HOLDING:
A Mill Test Report may satisfy the requirements of 19 C.F.R. § 10.1(b) and be submitted in lieu of a Manufacturer’s Affidavit when making a claim for duty-free entry under subheading 9801.00.10, HTSUS. However, the port director has the discretion to decide, on a reasonable and case-by-case basis, whether to accept the MTR being used to substantiate country of origin claims made by the importer. In situations in which the port director is reasonably satisfied of the foregoing, the other criteria of subheading 9801.00.10, HTSUS, must also be satisfied before preferential treatment may be granted.
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 CBP officer handling the transaction.
Sincerely,
Monika R. Brenner, Chief
Valuation and Special Programs Branch