H297439

March 30, 2020 HQ H297439 CON 9-04 OT: RR: CTF: ER H297439 SMS Cecelia Rothrock Crane Worldwide Logistics LLC 1500 Rankin Road Houston, TX 77073 Re: Ruling request; eligibility for duty-free treatment as temporary importations under bond Dear Ms. Rothrock: This is in response to your letter of May 21, 2018. In your letter, on behalf of your client, Thermal Engineering Int’l. (“TEI”), you request a binding ruling regarding whether six individual parts or components may be eligible for duty free entry per subheading 9813.00.0520, of the Harmonized Tariff Schedule of the United States (“HTSUS”) as temporary importations under bond (“TIB”). We also take into consideration your correspondences of December 13 and 19, 2018. Our decision follows. FACTS: TEI wishes to import six individual parts: the main vane, chevron vane spacer, end vane element, double bend vane element, leading single bend vane element, and trailing single bend vane element. These parts will be subjected to a welding operation resulting in a “Chevron Vane Assembly,” (“CVA”) a finished product which will be exported. CVAs are used in nuclear power plants utilizing the Rankine cycle, the fundamental operating cycle of power plants wherein an operating fluid is continuously evaporated and condensed. Specifically, the CVAs are packed together in vane banks and structurally mounted into a moisture separator system so that they may be utilized for wet steam moisture removal by reducing the heating steam demand. The aforementioned parts are fit into a proprietary jig fixture and subjected to a welding process using “automated electronic resistance spot welding.” This creates “pocket depths” that allow segregation of the liquid and gas phases of wet steam. As explained by TEI, prior to welding, the components are loose parts, and they cannot be installed into a moisture separator system or used to separate moisture and segregate the liquid and gas phases of wet steam. Only when assembled per TEI’s proprietary design and welded together are these CVAs useful in nuclear power plants. You also indicated that it is not anticipated that there will be any waste or scrap from the preparations which the imported components undergo. However, in the event that any waste or scrap is generated as a result of the welding, TEI will consult with its customs broker, for an appropriate resolution with U.S. Customs and Border Protection (“CBP”). Your submission also included a statement of the use to be made of the articles, and a declaration that the articles are not to be put to any other use and that they are not imported for sale or sale on approval. Lastly, TEI asserts that the finished assemblies will be exported within the TIB required timeframe. In sum, TEI seeks a binding ruling confirming that the aforementioned operations qualify as a “processing” such that the parts are eligible for entry under TIB. ISSUE: Whether the six components are eligible for duty-free treatment under subheading 9813.00.0520, HTSUS? LAW AND ANALYSIS: General Note 1, HTSUS, mandates that all merchandise imported into the United States is subject to duty unless specifically exempted therefrom. Pursuant to U.S. Notes 1(a) and (c) of Subchapter XIII of Chapter 98 of the HTSUS, which contains subheading 9813.00.0520, HTSUS, articles to be processed into articles manufactured or produced in the United States may enter into the United States temporarily free of duty under a TIB, for exportation within one year from the date of importation. This one year period may be extended for one or more additional periods, which when added to the initial period may not exceed three years. See 19 C.F.R. § 10.37. The imported merchandise may not be imported for the purpose of a sale or sale on approval. Subchapter XIII of Chapter 98 of the HTSUS, U.S. Note 1 (a). (“Ch. 98, Sub. XIII, U.S. Note 1(a), HTSUS”); see Louise & Co. v. United States, 8 Ct. Cust. App. 430, T.D. 37669 (1918) (concluding that when sales occur in the United States, to effect the exportation of merchandise, such sales are permissible and the merchandise can still be entered under a TIB). In addition, there are two prerequisites that must be met for merchandise to be admitted under subheading 9813.00.05, HTSUS. First, merchandise admitted under subheading 9813.00.05, HTSUS may not be processed into “alcohol, distilled spirits, wine, beer or any dilution or mixture of any or all of the foregoing; a perfume or other commodity containing ethyl alcohol . . . ; or a product of wheat. See Ch. 98, Sub. XIII, U.S. Note 2(a), HTSUS. Second, if the processing results in an article other than that described above in U.S. Note 2(a): A complete accounting will be made to the Customs Service for all articles, wastes and irrecoverable losses resulting from such processing; and All articles and valuable wastes resulting from such processing will be exported or destroyed under customs supervision within the bonded period; except that in lieu of the exportation or destruction of valuable wastes, duties may be tendered on such wastes at rates of duties in effect for such wastes at the time of importation. Ch. 98, Sub. XIII, U.S. Note 2(b), HTSUS. Subheading 9813.00.0520, HTSUS does not define the term “processed.” Through its rulings however, CBP has defined and explained the term, for purposes of TIB. In Headquarters Ruling (“HQ”) 224661, dated January 11, 1994, we explained that “[t]he processing can be a relatively minor procedure or extensive enough to be considered a manufacture or production.” See also CBP Drawback Regulations found at 19 C.F.R. § 190.2 (“Manufacture or production means a process, including, but not limited to, an assembly, by which merchandise is either made into a new and different article having a distinctive name, character or use; or is made fit for a particular use even though it is not made into a new and different article.) (emphasis added). CBP has also “liberally interpreted this provision [heading 9813.00.05 HTSUS] to include processes which would not otherwise qualify as a manufacture or production for drawback under 19 U.S.C. 1313(a) or (b).” HQ 226589 (Mar. 1, 1996); see also HQ 957424 (May 12, 1995) (determining that slitting steel is an allowable operation under subheading 9813.00.05 even though it did not rise to the level of a manufacture.) An article is “processed” when the “result is a change in the character and use” of the merchandise to meet certain customer specifications. HQ 229962 (Aug. 1, 2003). In HQ 229962, we found that blending and grading wheat is a “process” for TIB purposes, because the character and use of the wheat was changed; specifically, the “character is changed in the grade, protein level, moisture content or falling number, and the use is changed to meet certain customer specifications.” Id. In HQ 230286, dated April 12, 2004, we found that “creating welded tube from the titanium strip by rolling, welding and cutting is a process within the meaning of subheading 9813.00.05, HTSUS, and the titanium strip may be entered into the U.S. under subheading 9813.00.05, HTSUS.” (emphasis added). We also determined that the “welded tubing is an article manufactured or produced in the U.S., because, when compared with the imported titanium strip, the welded tubing is a new and different article having a distinctive name, character and use.” Id. (citing Anheuser-Busch v. United States, 207 U.S. 556 (1908)). The welding method used by TEI to produce CVAs from the six imported parts constitutes a “process” within the meaning of subheading 9813.00.0520, HTSUS based upon our ruling in HQ 230286 (Apr. 12, 2004). Welding the components here is similar to the welding that occurred in HQ 230286 in that both operations result in a new and different article having a distinctive, name character and use. See id. The combined components (the main vane, chevron vane spacer, end vane element, double bend vane element, leading single bend vane element, and tr

General Note 1, HTSUS, mandates that all merchandise imported into the United States is subject to duty unless specifically exempted therefrom. Pursuant to U.S. Notes 1(a) and (c) of Subchapter XIII of Chapter 98 of the HTSUS, which contains subheading 9813.00.0520, HTSUS, articles to be processed into articles manufactured or produced in the United States may enter into the United States temporarily free of duty under a TIB, for exportation within one year from the date of importation. This one year period may be extended for one or more additional periods, which when added to the initial period may not exceed three years. See 19 C.F.R. § 10.37. The imported merchandise may not be imported for the purpose of a sale or sale on approval. Subchapter XIII of Chapter 98 of the HTSUS, U.S. Note 1 (a). (“Ch. 98, Sub. XIII, U.S. Note 1(a), HTSUS”); see Louise & Co. v. United States, 8 Ct. Cust. App. 430, T.D. 37669 (1918) (concluding that when sales occur in the United States, to effect the exportation of merchandise, such sales are permissible and the merchandise can still be entered under a TIB). In addition, there are two prerequisites that must be met for merchandise to be admitted under subheading 9813.00.05, HTSUS. First, merchandise admitted under subheading 9813.00.05, HTSUS may not be processed into “alcohol, distilled spirits, wine, beer or any dilution or mixture of any or all of the foregoing; a perfume or other commodity containing ethyl alcohol . . . ; or a product of wheat. See Ch. 98, Sub. XIII, U.S. Note 2(a), HTSUS. Second, if the processing results in an article other than that described above in U.S. Note 2(a): A complete accounting will be made to the Customs Service for all articles, wastes and irrecoverable losses resulting from such processing; andAll articles and valuable wastes resulting from such processing will be exported or destroyed under customs supervision within the bonded period; except that in lieu of the exportation or destruction of va