OT:RR:CTF:EPDR
H329790 MY
Alan Aprea, Center Director
Electronics Center of Excellence & Expertise
1 World Trade Center, Suite 741
Long Beach, CA 90831
RE: Temporary Importation under Bond (TIB); exportation; satellites launched into orbit.
Dear Center Director:
This is in reference to your request for internal advice, dated January 30, 2023, regarding
Temporary Importation under Bond (TIB) entry number XXX-XXXXX113. The entry was filed
by Maxar Space LLC (Maxar) for imported articles used to manufacture, produce, and test
satellites that are launched into outer space. You inquire whether the launch of a satellite into
outer space constitutes exportation for purposes of satisfying the requirement to export or destroy
merchandise entered under a TIB. Our decision follows.
FACTS:
On January 1, 2021, Maxar filed a TIB entry for inorganic oxygen compounds under
subheading 9813.00.05, Harmonized Tariff Schedule of the United States (HTSUS), and for
containers of compressed or liquified gases under subheading 9813.00.45, HTSUS. Maxar
imported such articles for the purpose of “manufacturing, producing, and testing of
telecommunications satellites in the United States.” Specifically, a satellite launched from Cape
Canaveral Air Force Station on June 6, 2021.
On December 31, 2021, documents were uploaded to U.S. Customs and Border
Protection’s (CBP) Automated Commercial Environment (ACE) intended to evidence the
exportation of the entered compounds and containers upon the launch of the satellite. The
satellite was launched into outer space by a rocket for an indefinite period of orbit and is not
intended to be returned the United States.
The uploaded documents were reviewed by CBP in April of 2022. A CBP Officer
determined that the launch of the satellite into orbit may not constitute exportation because
“[t]here was no indication that the merchandise was exported to a foreign country” although
“[t]here was no indication . . . that the goods were going to be returning from space once
launched.” The CBP Officer concluded that the launch of a satellite did not constitute an
exportation for purposes of a TIB. Subsequently, the CBP Officer identified several other TIB
entries filed for articles alleged to have been exported by the launch of a satellite.
CBP informed Maxar that it determined the articles in each of the identified entries were
not exported. In response, Maxar requested that CBP review Headquarters Ruling Letter (HQ)
H282698, dated February 24, 2017, which holds that a satellite may be deemed exported for
purposes of drawback. Your office reviewed HQ H282698 and determined that even if a satellite
may be deemed exported upon launch into outer space for purposes of drawback, this is not
dispositive for whether a satellite may be deemed exported for TIB purposes. Your office noted
that that drawback and TIB have distinct regulatory requirements and stressed that “[u]nder TIB
regulations ALL goods need to be exported to a foreign entity or destroyed.” Due to the
disagreement between your office and Maxar regarding whether launching a satellite into outer
space constitutes exportation for TIB purposes, your office sought internal advice.
ISSUE:
Whether launching a satellite into outer space constitutes exportation for purposes of
satisfying the requirement to export or destroy merchandise entered under a TIB.
ANALYSIS:
Pursuant to General Note 1 of the HTSUS all merchandise imported into the United
States is subject to duty unless specifically exempted. Such an exemption is accorded to
merchandise temporarily imported under bond, that is not imported for sale or for sale on
approval, on the condition that such merchandise is exported or destroyed within a year of
importation. See e.g. Notes 1-2 of Subchapter XIII, Chapter 98, HTSUS; 19 C.F.R. § 10.31. The
timeframe for this duty exemption, termed a TIB, may be extended up to three years from the
date of importation. See U.S. Note 1(a) of Subchapter XIII, Chapter 98, HTSUS; 19 C.F.R. §
10.37. Failure to export or destroy merchandise entered under a TIB within the applicable
timeframe may result in liquidated damages “equal to double the duties and fees, which it is
estimated would accrue . . . had all the articles covered by the entry been entered under an
ordinary consumption entry.” See 19 C.F.R. §§ 10.31(f); 10.39(d)(1). The requirements for
exporting or destroying merchandise entered under a TIB are detailed in Chapter 98 of the
HTSUS and CBP Regulations.
For merchandise entered under subheadings 9813.00.05 and 9813.00.45, HTSUS, the
relevant requirements are specified in U.S. Note 1 of Subchapter XIII, Chapter 98. Pursuant to
U.S. Note 1(a), the “articles described in the provisions of this subchapter . . . may be admitted
into the United States without the payment of duty, under bond for their exportation.” Pursuant to
U.S. Note 2(b)(ii), if an article entered under subheading 9813.00.05, HTSUS, is so processed as
to manufacture or produce a distinct article, this distinct article must be either “exported or
destroyed under customs supervision within the bonded period.” Accordingly, for both
subheadings 9813.00.05 and 9813.00.45, HTSUS, exportation is generally required as a
condition of obtaining duty-free treatment – unless a manufacture or production of a distinct
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article occurs under subheading 9813.00.05, HTSUS, in which case either exportation or
destruction of this distinct article is permitted.
Pursuant to 19 C.F.R. § 10.39(a), even in circumstances when exportation is generally
required, such merchandise may instead be “destroyed under Customs supervision” to satisfy the
conditions for duty-free treatment. This regulation specifies, in relevant part, that “[b]onds
covering articles entered under [a subheading other than 9813.00.30, HTSUS] shall not be
canceled upon proof of destruction . . . unless the articles are destroyed under Customs
supervision in accordance with section 557, Tariff Act of 1930, as amended.” Pursuant to 19
U.S.C. § 1557(c), “[m]erchandise entered under bond, under any provision of law, may . . . be
destroyed, at the request and at the expense of the consignee, within the bonded period under
customs supervision, in lieu of exportation.” (emphasis added); see also C.S.D. 84-43 (Dec. 1,
1983) (holding that “destruction in lieu of exportation for purposes of TIB cancellation pursuant
to 19 U.S.C. 1557(c)” is permitted by the terms of the statute). Consequently, for both
subheadings 9813.00.05 and 9813.00.45, HTSUS, exportation and/or destruction of the imported
merchandise is required to satisfy the applicable bond conditions for duty-free treatment. Such
exportation and/or destruction within the applicable timeframe must be substantiated to CBP in
order for the bond obligation to be cancelled. See e.g. 19 C.F.R. § 10.39.
“Charges against bonds taken pursuant to Chapter 98, Subchapter XIII, [HTSUS], may be
canceled in the manner prescribed in § 113.55 of this chapter” to substantiate exportation of
merchandise entered under a TIB. 19 C.F.R. § 10.39(a). Pursuant to 19 C.F.R. § 113.55(a)(1), a
“bond to assure exportation as defined in § 101.1 of this chapter may be cancelled” upon
submission of the following documents which specifically identify the exported merchandise:
outward manifest or outward bill of lading; inspector's certificate of lading; record of clearance
of the vessel or of the departure of the vehicle; and a foreign landing certificate if required by a
port director. Exportation, as defined in 19 C.F.R. § 101.1, requires “a severance of goods from
the mass of things belonging to this country with the intention of uniting them to the mass of
things belonging to some foreign country.” Accordingly, the outward manifest or bill of lading
substantiating exportation in accordance with 19 C.F.R. § 113.55(a)(1) must evidence that
merchandise entered under a TIB is destined for a foreign country because exportation requires:
(1) severing such merchandise from the mass of things belonging to the United States, and,
(2) intent to unite such merchandise with the mass of things belonging to a foreign country.
We address each of these elements in turn.
The first element, “severance . . . from the mass of things belonging to this country,”
requires the merchandise to have been “physically carried out of the country of exportation.” 19
C.F.R. § 101.1; National Sugar Refining Co. v. United States, 488 F. Supp. 907, 908 (Cust. Ct.
1980) (internal citations omitted). This element of exportation is satisfied by evidencing that the
merchandise has physically departed from the United States. Id.; HQ H213415 (July 8, 2014).
The second element, “intention of uniting . . . to the mass of things belonging to some foreign
country,” requires a “bona fide purpose to seek a foreign market or an actual diversion of the
merchandise into the commerce of an intermediate country.” 19 C.F.R. § 101.1; HQ H213415
(July 8, 2014) (quoting Nassau Distributing Co., Inc. v. United States, 29 Cust. Ct. 151, 154
(1952) (internal citations omitted)). This element of exportation is satisfied by evidencing that
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merchandise was intended to be, or actually, entered into the foreign country for consumption,
sale or use. Id. Both of these elements must be satisfied in order for merchandise to be exported.
Here, the merchandise Maxar entered under a TIB was launched into outer space upon
the launch of a satellite. Maxar argues that launching a satellite into indefinite orbit in outer
space, without any intention of returning the merchandise to the United States, constitutes
exportation. Maxar basis its argument on HQ H282698, dated February 24, 2017, in which CBP
determined that “the definition of exportation includes satellites that are launched into permanent
orbit from the territory of the United States” for purposes of drawback. In HQ H282698, a
private entity imported propellant for use in powering satellite thruster systems in orbit. The
entity sought to claim drawback on the propellant. Eligibility to claim drawback is, in part,
conditioned on the exportation or destruction of imported or substituted merchandise within an
applicable timeframe. In deciding whether the satellites were exported, CBP noted that “outer
space is not within the territory of any nation pursuant to the Treaty on Principles Governing the
Activities of States in the Exploration and Use of Outer Space, Including the Moon and Other
Celestial Bodies . . . ratified by the United States in 1967.” CBP stressed that pursuant to Article
II of the treaty, “[o]uter space…is not subject to national appropriation.” However, despite the
satellites not being destined for export to a foreign country, CBP determined that because the
satellites were “permanently removed from the United States” they were exported for purposes
of claiming drawback. Maxar contends this determination is also applicable to merchandise
entered under a TIB. Maxar’s contention is unsupported by case law.
In Treasury Decision (T.D.) 67-199(2), dated August 3, 1967, CBP specifically addressed
whether components entered under a TIB in order to manufacture a satellite intended to be
launched into orbit are exported or destroyed in order to comply with Headnotes 2(b)(i)-(ii) of
Schedule 8, Subpart 5C of the Tariff Schedule of the United States – the precursor to U.S. Notes
2(b)(i)-(ii) of Subchapter XIII, Chapter 98 of the HTSUS. CBP determined that launching a
satellite into orbit rendered the satellite “constructively destroyed” on the basis that after launch
the satellite “will not be recoverable and will ultimately disintegrate upon eventual reentry into
the earth’s atmosphere.” CBP thus concluded that launching a satellite into outer space
constituted destruction for TIB purposes, but not exportation.
CBP’s conclusion in T.D. 67-199(2) is consistent with the definition of exportation in 19
C.F.R. § 101.1, which requires not only a physical departure of merchandise from the United
States but also an intent to enter such merchandise into the commerce of a foreign country.
Although CBP has deemed exportation to occur if merchandise is not destined for a foreign
country for drawback purposes, we have not reached the same conclusion for TIB purposes. To
illustrate, in HQ 228304, dated June 2, 1999, CBP held that removing materials and equipment
entered under a TIB from the United States for installation onto an offshore drilling rig in
international waters did not constitute exportation. In its analysis, CBP stressed that “both the
element of severance and the element of intent must coincide in order to constitute an act of
exportation.” By contrast, for drawback purposes, both statute and regulation identify certain
circumstances that constitute “deemed exportations” allowing merchandise to be “considered to
be exported.” 19 C.F.R. § 190.2; 19 U.S.C. § 1309(b). Accordingly, we find that the holding of
HQ H282698 is limited to defining exportation for purposes of drawback.
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Here, the merchandise Maxar entered under a TIB was launched into outer space as part
of a satellite that was not destined for a foreign country because outer space, like international
waters, does not belong to any foreign country. Accordingly, we find that launching a satellite
into outer space does not constitute exportation for TIB purposes. However, akin to the satellite
in T.D. 67-199(2), this satellite was launched for an indefinite period of orbit and without any
intention of being returned to the United States - such that this satellite cannot be recovered and
will ultimately disintegrate upon reentry. Consequently, we find that the merchandise Maxar
entered under a TIB was constructively destroyed upon launch into outer space, and the
requirement to export or destroy merchandise entered under a TIB was thereby satisfied.
HOLDING:
Launching a satellite into outer space does not constitute exportation for purposes of
satisfying the requirement to export merchandise entered under a TIB but does constitute
constructive destruction. Accordingly, constructive destruction of a satellite upon launch into
outer space satisfies the requirement to destroy merchandise entered under a TIB.
You are instructed to provide this decision to the internal advice requester no later than
sixty (60) days from the date of the decision. Sixty days from the date of the decision, the Office
of Trade, Regulations and Rulings will make the decision available to CBP personnel, and to the
public on the Customs Rulings Online Search System (CROSS) at https://rulings.cbp.gov/ which
can be found on the U.S. Customs and Border Protection website at http://www.cbp.gov and
other methods of public distribution.
Sincerely,
Yuliya A. Gulis, Director
Commercial and Trade Facilitation Division
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