Railroad Equipment; 19 U.S.C. 1322; 19 U.S.C. 1202, as amended

HQ 111449 January 29, 1991 BOR-7-03-CO:R:IT:C 111449 GEV CATEGORY: Carriers Mr. M. J. Redman World Wide Customs Brokers, Ltd. #200, 3016 - 19th Street, N.E. Calgary, Alberta, Canada T1Y 5E1 RE: Railroad Equipment; 19 U.S.C. 1322; 19 U.S.C. 1202, as amended Dear Mr. Redman: This is in response to your letter dated December 17, 1990, on behalf of your client, regarding railroad equipment (tank cars) exported to Canada and subsequently imported into the United States. Our ruling on this matter is as follows. FACTS: Railroad tank cars, manufactured in the United States and exported to Canada for varying periods of time, are subsequently imported into the United States. While in Canada the cars are not advanced in value or improved in condition and do not undergo any repairs with the exception of routine maintenance. Their use in Canada is the same as that in the United States; the transportation of petroleum products. ISSUE: Whether U.S-manufactured railroad tank cars exported to Canada and not advanced in value or improved in condition are entitled to duty-free treatment under HTSUS subheading 9801.00.10 when returned to the United States. LAW AND ANALYSIS: Subheading 9801.00.10, Harmonized Tariff Schedule of the United States (HTSUS) provides for the duty-free entry of products of the United States that are returned after having been exported, without having been advanced in value or improved in condition by any process of manufacture or other means while abroad, provided there has been compliance with the documentary requirements of section 10.1, Customs Regulations (19 CFR 10.1). - 2 - Accordingly, since the subject railroad tank cars are not advanced in value or improved in condition while in Canada, we find they are entitled to duty-free entry under HTSUS subheading 9801.00.10. We note the reference in your letter to section 123.12(d), Customs Regulations which provides, in part, that for purposes of designation as instruments of international traffic, railroad equipment shall be considered "domestic" if it is "...manufactured in, or regularly imported into the United States...if not subsequently formally entered and cleared through foreign customs into another country..." While it may appear that section 123.12(d) conflicts with HTSUS subheading 9801.00.10, both provisions are reconcilable. While U.S.- manufactured railroad equipment entered and cleared through Canadian Customs would appear to be considered "foreign" per section 123.12(d), it can nonetheless regain its "domestic" status by being imported into the U.S. via HTSUS subheading 9801.00.10 and the requisite entry documentation set forth in section 10.1, Customs Regulations. HOLDING: U.S.-manufactured railroad tank cars exported to Canada and not advanced in value or improved in condition are entitled to duty-free treatment under HTSUS subheading 9801.00.10 when returned to the United States provided the documentary requirements of 19 CFR 10.1 are satisfied. Sincerely, B. James Fritz Chief Carrier Rulings Branch