CBP Ruling H211941

HQ H211941 June 26, 2012 OT:RR:CTF:ER H211941 PTM John P. Nolan John A. Steer Company 28 South Second Street Philadelphia, PA 19106 Dear Mr. Nolan, We are writing in response to your March 22, 2012, correspondence that we received on March 30, 2012, regarding a ruling request pursuant to 19 C.F.R. Part 177, that you filed on behalf of your client, O’Sullivan Films, Inc. (“O’Sullivan”). You request confirmation that the importation of PVC resin and knitted tissue for use in the manufacture of artificial leather, known as Tundra, qualifies for duty-free importation under Temporary Importation Bond (“TIB”) under subheading 9813.00.05.20 of the Harmonized Tariff Schedule of the United States (“HTSUS”). Our response follows. FACTS: You state that O’Sullivan plans to import PVC resins and knitted tissue fabric from various vendors. The imported products will be shipped to O’Sullivan’s plant in Winchester, VA. The imported products are used to manufacture the artificial leather product marketed under the name “Tundra.” The finished Tundra product is then exported to Germany. Per your letter, the primary raw materials used in producing Tundra are PVC resins, plasticizers, stabilizers, foaming agents, pigments, adhesives and fabric. You state that the PVC resin is pumped onto a carrier paper. This material is dried in an oven, and another PVC layer is added. Next, an adhesive is added and the knitted tissue fabric is laid on top of the adhesive. The combined products go through another drying to create the finished Tundra product. ISSUE: Whether the operation described qualifies for duty-free under TIB pursuant to subheading 9813.00.05.20 HTSUS. LAW AND ANALYSIS: You assert the imported PVC resins and knitted tissue for use in the manufacture of Tundra pleather qualifies for TIB treatment under 9813.00.05.20. Pursuant to U.S. Note 1 (a) of Subchapter XIII of Chapter 98, HTSUS, articles to be repaired, altered or processed, may enter into the U.S. temporarily free of duty under 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. See U.S. Note I. (a)., Chapter 98, Subchapter XIII, HTSUS. Articles may be entered under subheading 9813.00.05 HTSUS only if they are to be “repaired, altered or processed.” Consequently, we must examine whether the use of the imported materials described above qualifies as “processing” within the meaning of 9813.00.05 HTSUS. In Headquarters Ruling Letter HQ 224661 (January 11, 1994), which pertained to subheading 9813.00.05, we stated that “[t]he processing can be a relatively minor procedure or extensive enough to be considered a manufacture or production.” Prior CBP Headquarters Rulings have addressed whether processes involving fabrics or textiles meet the requirements for TIB entry under 9813.00.05 HTSUS. In HQ 231004 (June 30, 2005) we held that the application of a flame retardant to cotton fabric is a process for the purposes of 9813.00.05 HTSUS. In HQ 228825 (June 14, 2000), we held that the seaming, de-sizing, scouring, bleaching, dyeing, heat setting, finishing and cauterizing of cotton greige goods falls within the definition of process for purposes of subheading 9813.00.05, HTSUS. In HQ 225700 (June 16, 1995), we determined that weaving yarn into fabric and the subsequent impregnation of fabric with plastic resin qualified as a processing under subheading 9813.00.05, HTSUS. These rulings show that creating fabric or further processing textiles into a new product satisfy the TIB provisions of 9813.00.50. As in the previous rulings, the process here involves the conversion of inputs into a finished textile product. Specifically, the process involves the conversion of resins, plasticizers, stabilizers, foaming agents, pigments and adhesives and fabric into the final textile product, Tundra artificial leather. Further, the process is similar to the processes that CBP has previously ruled qualify articles for TIB entry under 9813.00.05, HTSUS. Here, the inputs are converted into a new product, Tundra, which is manufactured or produced in the United States, which qualifies under 9813.00.05 HTSUS. Based on CBP precedent, we find that the process of converting imported PVC resin and knitted tissue into Tundra artificial leather satisfies the requirements for TIB entry under 9813.00.05 HTSUS. We note that the processing of converting PVC resin and knitted tissue into Tundra artificial leather must include a complete accounting to CBP for all articles, wastes, or irrecoverable losses resulting from the processing, and all articles and valuable wastes resulting from such processing must be exported or destroyed under CBP supervision within the bonded period. See U.S. Note 2(b) of Subchapter XIII, Chapter 98, HTSUS. HOLDING: The operations performed on the imported merchandise qualify as a “process” for the purposes 9813.00.05 HTSUS. Therefore, entry under TIB under 9813.00.05 is permissible. This decision is limited to the specific facts set forth herein. Sincerely, Myles B. Harmon, Director Commercial and Trade Facilitation Division