OT:RR:CTF:VS H239519 KSG
Port Director
U.S. Customs & Border Protection
P.O. Box 3130
Laredo, Texas 78044-3130
RE: Request for Internal Advice; 19 U.S.C. 1520(d)
Dear Port Director:
This is in response to your Request for Internal Advice dated February 25, 2013, asking whether steel piping spools, entered into the U.S. prior to June 30, 2012, are originating goods under the North American Free Trade Agreement (“NAFTA”), and whether they are eligible for preferential tariff treatment under subheading 9802.00.50 of the Harmonized Tariff Schedule of the United States (“HTSUS”).
FACTS:
This case was initiated by a request for a binding ruling from a customs broker on behalf of Shaw Rio Grande Valley Fabrication and Manufacturing, LLC (“Shaw”) dated June 30, 2012. In a letter dated August 7, 2012, the National Commodity Specialist Division of U.S. Customs and Border Protection (“CBP”) stated in a letter dated August 7, 2012, that since the entries involved were already completed, the importer should request Internal Advice through the relevant Port Director. Accordingly, we received the Request for Internal Advice through the Port of Laredo, Texas.
The importer did not make a claim for preferential treatment under the NAFTA, either at the time of entry or within one year as provided for in 19 U.S.C. 1520(d).
The pipe and fittings, which were manufactured in various countries, were exported from the U.S. to Mexico, where they were sand blasted, cut to the required length, and attachments (fittings, flanges or elbows) were welded onto the pipe. Additionally, there was a first fit, an auto weld, a second fit and a final weld. The piping spools were then x-rayed, sandblasted and painted. The finished piping spools were then inspected for quality control, packaged and loaded onto flatbeds.
ISSUES:
I. Whether certain imported steel piping spools, as described above, are eligible for preferential tariff treatment under the NAFTA.
II. Whether the steel piping spools are eligible for preferential tariff treatment under subheading 9802.00.50, HTSUS.
LAW AND ANALYSIS:
I. 19 U.S.C. 1520(d)
An importer can make a post-importation claim for preference under the NAFTA within one year of the date of importation pursuant to 19 U.S.C. 1520(d).
In Xerox Corporation v. United States, 423 F.3d 1356 (2005), the importer filed an entry summary without making a claim for preference and over one year later, in a protest of the liquidation, asserted a claim for preference under the North American Free Trade Agreement (“NAFTA”). The Federal Circuit determined that liquidation by CBP of the goods as entered, rather than at the preferential rate pursuant to NAFTA, was not a protestable decision under 19 U.S.C. 1514 because the issue of whether the merchandise was eligible for NAFTA preference was never timely placed before CBP. The Federal Circuit found that an importer may not circumvent the clear mandate of NAFTA and 19 U.S.C. 1520(d) that allows an importer only one year to file a claim in the first instance for NAFTA treatment.
The decision in Xerox is on point. There, as here, the importer did not make a claim under NAFTA either at the time of entry or within one year of the date of importation. The importer cannot now claim NAFTA preference for these entries. Therefore, the imported goods are not eligible for preferential tariff treatment under the NAFTA.
II. Subheading 9802.00.50, HTSUS
The processing in this case occurred in Mexico. Subheading 9802.00.50, HTSUS, provides a partial or full duty exemption for articles that are returned after having been exported to be advanced in value or improved in condition by means of repairs or alternations, provided the documentary requirements of 19 CFR 181.64 are met. For qualifying articles, duty is assessed only on the cost or value of the foreign processing.
A repair or alternation is defined in 19 CFR 181.64(a) as “restoration, addition, renovation, redyeing, cleaning, resterilizing, or other treatment which does not destroy the essential characteristics of, or create a new or commercially different good from the good exported from the United States.”
Entitlement to this tariff treatment is not available where the exported articles are incomplete for their intended purposes prior to their foreign processing and the foreign processing is a necessary step in the preparation or manufacture of the finished articles.
In this case, the exported articles are incomplete for their intended purposes prior to processing in Mexico Therefore, the steel piping spools would not be eligible for subheading 9802.00.50, HTSUS, treatment.
HOLDING:
The imported articles are not eligible for preferential tariff treatment under the NAFTA or under subheading 9802.00.50, HTSUS.
This decision should be mailed by your office to the party requesting Internal Advice no later than 60 days from the date of this letter. On that date, the Office of Regulations and Rulings will make the decision available to CBP personnel, and to the public on the CBP Home Page on the World Wide Web at www.cbp.gov, by means of the Freedom of Information Act, and other methods of public distribution.
Sincerely,
Monika R. Brenner, Chief
Valuation & Special Programs Branch