OT:RR:CTF:EPDR H332331 ND
Steven M. Stolarz, CHB
Global Transportation Manager
Boyd Corporation
Boca Raton, FL
Re: Bonded warehouse; manipulation; 19 U.S.C. § 1562; 19 C.F.R. § 19.8; 19 C.F.R. § 19.11
Dear Mr. Stolarz,
This ruling is in response to LTI Holdings, Inc.’s (d/b/aBoyd Corporation) (“Boyd”) inquiry sent to U.S. Customs and Border Protection (“CBP”) on April 27, 2023, regarding whether inspecting and taking notes on the contents of imported merchandise constitutes manipulation in the context of 19 U.S.C. § 1562. On May 31, 2023, we responded to your inquiry with an information letter. You have since indicated that you would like a ruling on the issue presented by your inquiry. We have considered the facts and issues raised, and our decision follows.
FACTS:
According to your letter, Boyd plans to import merchandise into a Class 3 bonded warehouse, transport the merchandise via immediate transport to El Paso, TX, and simultaneously file an immediate export with CBP and a Mexican customs entry to allow the goods to be transported to Boyd’s plant in Juarez, Mexico. While in a Class 3 bonded warehouse in the United States, Boyd plans to record serial numbers of the imported machinery and equipment, and physically examine the imported merchandise for classification purposes. In both instances, the packaging must be opened to allow for visual access to the contents of the package. This operation amounts to a simple examination of the imported merchandise. After examination, the packages are then resealed.
Boyd believes that the examination of the imported merchandise does not rise to the level of manipulation described in 19 U.S.C. § 1562. As such, Boyd argues it is not required to file CBP Form 3499, “Application and Approval to Manipulate, Examine, Sample or Transfer Goods,” for every instance of examination.
ISSUE:
Whether Boyd is required to submit CBP Form 3499 for every instance of examination of merchandise imported into a Class 3 bonded warehouse?
LAW AND ANALYSIS:
CBP bonded warehouses are secured areas in which, “dutiable goods may be stored, manipulated, or undergo manufacturing operations without the payment of duty.” T.D. 82-204 (Oct. 22, 1982). There are various types of bonded warehouses, and each type operates under certain restrictions. The statute, in 19 U.S.C. § 1562 provides that, imported “merchandise may [with customs permission and supervision] be cleaned, sorted, repacked, or otherwise changed in condition but not manufactured, in bonded warehouse established for that purpose . . . .” “Manufacture” for purposes of 19 U.S.C. § 1562 does not require a substantial transformation, instead “a low threshold of ‘transformation’” satisfies the meaning of ‘manufactured’ for bonded warehouse purposes. Tropicana Products, Inc. v. United States, 16 C.I.T. 155, 160 (1992). Additionally, 19 C.F.R. § 19.11(d) requires that the application to manipulate is filed on CBP Form 3499 with the port director having jurisdiction of the warehouse or other designated place of manipulation and describes the contemplated manipulation in sufficient detail to enable the port director to determine whether the imported merchandise is to be cleaned, sorted, repacked, or otherwise changed in condition, but not manufactured.
Class 3 bonded warehouses are public bonded warehouses used exclusively for the storage of imported merchandise. 19 C.F.R. § 19.1. Boyd plans to import merchandise into a Class 3 bonded warehouse, examine the imported packages for classification purposes, and record serial numbers of the imported machinery and equipment. After examination, the packages will be resealed. Boyd argues that these operations do not constitute manipulation for purposes of 19 U.S.C. § 1562. Therefore, Boyd argues it is not required to file CBP Form 3499, “Application and Approval to Manipulate, Examine, Sample or Transfer Goods” for every instance of examination because its operation does not amount to manipulation.
According to 19 C.F.R. § 19.8, “[i]mporters may, upon application approved by the port director on Customs Form 3499 examine, sample, and repack or transfer merchandise in bonded warehouse. . . .” A footnote to this regulation states that “[r]epacking shall be considered a manipulation in the purview of sec. 562, Tariff Act of 1930, as amended.” CBP Form 3499 “is used as an application to perform various operations on merchandise located at a CBP approved bonded facility. This form is filed by importers, consignees, transferees, or owners of merchandise, and is subject to approval by the port director. The date requested on this form identifies the merchandise for which action is being sought and specifies what operation is to be performed.” Agency Information Collection Activities: Application and Approval to Manipulate, Examine, Sample or Transfer Goods, 81 Fed. Reg. 85,993 (Nov. 29, 2016).
We note that importers may examine, sample, repack, or transfer merchandise in a bonded warehouse if an application for these operations is approved by the Port Director on CBP Form 3499. See 19 C.F.R. § 19.8; see also 19 C.F.R. § 19.11(d). This regulation also emphasizes that of these operations, repacking is the only one that is considered a manipulation. Accordingly, inspecting and taking notes on the contents of imported merchandise¸ i.e., examining, does not constitute manipulation in the context of 19 U.S.C. § 1562. However, the issue of whether examination amounts to manipulation is irrelevant, as 19 C.F.R. § 19.8 states that CBP Form 3499 must be submitted and approved by the Port Director prior to an importer examining merchandise in a bonded warehouse. Therefore, Boyd must submit CBP Form 3499 prior to the examination of any merchandise in a bonded warehouse.
HOLDING:
Boyd is required to submit CBP Form 3499 for every instance of examination of merchandise imported into a Class 3 bonded warehouse pursuant to 19 C.F.R. § 19.8
Please note that 19 C.F.R. § 177.9(b)(1) provides that “[e]ach ruling letter is issued on the assumption that all the information furnished in connection with the ruling request and incorporated in the ruling letter, either directly, by reference, or by implication, is accurate and complete in every material respect. The application of a ruling letter by CBP to the transaction to which it is purported to relate is subject to the verification of the facts incorporated in the ruling letter, a comparison of the transaction described therein to the actual transaction, and the satisfaction of any conditions on which the ruling was based.” If the terms of the import or export contracts vary from the facts stipulated to herein, this decision shall not be binding on Customs and Border Protection as provided in 19 C.F.R. § 177.2(b)(1), (2) and (4), and § 177.9(b)(1) and (2).
Sincerely,
Monika R. Brenner, Interim Chief
Entry Process & Duty Refunds Branch