CLA-2-84:RR:NC:MA:104 A86348
Mr. James E. Grieger
SEAL Trade Services
22310 85th Place
Salem, WI 53168-9353
RE: The tariff classification of a plastic injection mold from
Portugal and eligibility for 9801.00.2000 treatment upon
exportation under lease to foreign manufacturer in Mexico
and reimportation to the United States
Dear Mr. Grieger:
In your letter dated July 24, 1996 on behalf of Sage
Products, Inc. you requested a tariff classification ruling.
A steel mold to be used in a plastic injection molding
machine was originally imported by Sage Products, Inc. ("Sage")
in 1989. The mold was manufactured in Portugal by Simoldes of
Codex. Subsequent to this transaction, the mold was exported to
Mexico to be used by Hycoplastic De Mexico Y CIA ("Hycoplastic")
in the manufacture of disposable medical containers. Upon
completion of this manufacturing contract, the mold will be
reimported into the United States.
In your letter, you inquire as to whether the mold would be
eligible for a duty exemption under subheading 9801.00.2000,
Harmonized Tariff Schedule of the United States, (HTS), when
returned to the United States. Section 141.2, Customs
Regulations (19 CFR 141.2) states that "Dutiable merchandise
imported and afterwards exported even though duty thereon may
have been paid on the first importation, is liable to duty on
every subsequent importation into the Customs territory of the
United States" unless specifically exempted therefrom under the
HTSUS. Subheading 9801.00.20, HTS, provides duty-free treatment
for "articles previously imported, with respect to which the duty
was paid upon such previous importation or which were previously
free of duty pursuant to the Caribbean Basin Economic Recovery
Act or Title V of the Trade Act of 1974, if (1) reimported,
without having been advanced in value or improved in condition by
any process of manufacture or other means while abroad, after
having been exported under lease or similar use agreements, and
(2) reimported by or for the account of the person who imported
it into, and exported it from, the United States.".
To support your claim, you have submitted copies of the C.F.
7501 and the commercial invoice from the initial importation of
the Portuguese plastic injection mold in 1989 showing Sage to be
the original importer. As you indicate mold will not be returned
to the United States until some point later this year, no
documentation pertaining to its reimportation [such as C.F. 7501
for the reimportation transaction showing that mold being
reimported by Sage, declaration by person abroad who received and
is returning the mold containing description/serial number of
mold, verification (e.g., by serial number) that the same mold
exported is being reimported, etc.] was submitted.
Also included in your submission is a copy of a purchase
order between Sage and Hycoplastic which you indicate serves as
the "contract" between the two parties concerning this
transaction. The purchase order states that Sage will furnish
the mold to Hycoplastic and that said mold will "...remain the
property of Sage Products and will be returned in supplied crates
with necessary rust and corrosion protection. Mold maintenance
if required should be authorized by Sage Mold Engineering. Molds
cannot remain in Mexico beyond the time allowed on the temporary
permit.". Hycoplastic will procure the necessary amount of raw
material and furnish the labor and overhead to produce the
containers. Hycoplastic will charge Sage a predetermined per
unit rate for the containers Hycoplastic produces. This
predetermined amount is to cover Hycoplastic's cost of raw
materials, labor, overhead and margin.
Section 10.108, Customs Regulations (19 CFR 10.108),
provides, in relevant part, that free entry shall be accorded
under subheading 9801.00.20, HTSUS, whenever it is established to
the satisfaction of the district director that the article for
which free entry is claimed was exported from the United States
under a lease or similar use agreement. One has to consider
whether or not the submitted contract cited above is a "similar
use agreement". Originally, free entry under item 801.00, TSUS,
was restricted to articles that had been exported under lease to
a foreign manufacturer. Said provision was amended by The Trade
and Tariff Act of 1984 (Public Law 98-573) which extended the
exemption to situations where the articles had been exported
under lease or similar use agreements to entities other than
foreign manufacturers. According to Black's Law Dictionary 800
(5th ed. 1979), the word "lease" means "a contract by which one
owning such property grants to another the right to possess, use
and enjoy it for a specified period of time in exchange for
periodic payment of a stipulated price referred to as rent". In
this instance, there is an absence of a payment. The purchase
order is more in the form of a "use agreement" or bailment.
According to Black's Law Dictionary 179 (5th ed. 1979), a
bailment is "a delivery of goods of personal property, by one
person to another, in trust for the execution of a special object
upon or in relation to such goods, beneficial to either to the
bailor or bailee or both, and upon a contract, express or
implied, to perform the trust and carry out such object, and
thereupon either to redeliver the goods to the bailor or
otherwise dispose of the same in conformity with purpose of the
trust.".
As noted in Headquarters Ruling 222863 dated July 1, 1991,
"...There is nothing in the law or legislative history, either
expressed or implied, that suggests the application of 9801.00.20
hinged upon a transaction involving a payment.". Therefore, Sage
by supplying the purchase order has met the requirement of the
submission of a "lease or similar use agreement".
Documentation supplied states that drawback is not claimed
at time of export to Mexico. In addition, data indicates that
the Portuguese mold will not be advanced in value or improved in
condition by any process of manufacture or other means while in
Mexico. It is assumed that the mold maintenance (if any)
referred to in the purchase order will not be to such an extent
that it advances the value or improves the condition of the mold.
The applicable subheading for the plastic injection mold
will be 8480.71.9010, HTS, which provides for Molding boxes for
metal foundry; mold bases; molding patterns; molds for metal
(other than ingot molds), metal carbides, glass, mineral
materials, rubber or plastics: Molds for rubber or plastics:
Injection or compression types: Other...Injection type. The
rate of duty will be 3.6 percent ad valorem.
Articles classifiable under subheading 9801.00.2000, HTS,
upon which duty was previously paid, not having been advanced in
value or improved in condition while abroad and reimported by the
party who exported the mold from the United States under a lease
or a similar use agreement are entitled to duty free treatment
upon compliance with all applicable regulations.
This ruling is being issued under the provisions of Part 177
of the Customs Regulations (19 C.F.R. 177).
A copy of the ruling or the control number indicated above
should be provided with the entry documents filed at the time
this merchandise is imported. If you have any questions
regarding the ruling, contact National Import Specialist Robert
Losche at 212-466-5670.
Sincerely,
Roger J. Silvestri
Director
National Commodity
Specialist Division