HQ 555966: Application for Further Review of Protest No. 3501-0-000241, concerning reimportation of a machine tool. Documentary requirements; 19 CFR 10.108

Native CBP ruling rendition. Applicability is fact-specific; modification/revocation relationships and original publisher date are retained. Publisher sentinel year0001 means unknown date, not a historical legal adoption.

                            HQ 555966

                          May 24, 1991

CLA-2 CO:R:C:S KCC 555966

CATEGORY:  Classification

TARIFF NO.:  9801.00.20

Area Director of Customs 
U.S. Customs Service
110 South Fourth Street
Minneapolis, Minnesota  55401

RE:  Application for Further Review of Protest No. 3501-0-000241,
     concerning reimportation of a machine tool. Documentary
     requirements; 19 CFR 10.108

Dear Sir:

     The above-referenced protest contests your denial of duty-
free treatment under subheading 9801.00.20, Harmonized Tariff
Schedule of the United States (HTSUS), to a machine tool
reimported into the U.S. from Germany. 

FACTS:

     Amoco Chemical Corporation (herein referred to as
"protestant") separately entered a thermoforming machine and a
machine tool from Germany through the Minneapolis port of entry
on April 3, 1990, under subheading 8543.80.9080, HTSUS.  On July
27, 1990, the entries were liquidated under subheading
8543.80.9080, HTSUS, with duty assessed on the full value of the
articles at the rate of 3.9% ad valorem.  

     After liquidation, the protestant "discovered" that
subheading 9801.00.20, HTSUS, may be applicable to the machine
tool, and, on October 25, 1990, counsel for the protestant filed
this protest contesting the tariff classification of the article.

     The machine tool is a German manufactured 10 cavity Deli-
Bowl form tool.  Protestant claims it originally imported the
machine tool and paid all necessary duties in 1980 or 1981 but no
supporting documentation to that effect has been submitted. 
Protestant states that it exported the machine tool to Gabler
Machinery in Luebeck, Germany, for the purpose of testing a
Thermoforming Machine Model F-743, which it had ordered from
Gabler, and to train engineers.  Prior to the tool's export from
the U.S., the protestant registered the article with Customs on 
Customs Form 4455.  Once the operation was approved and the
training complete, the machine tool and the thermoforming machine
were separately imported into the U.S.  

     Protestant contends that the use of the machine tool by the
foreign manufacturer constitutes a "similar use agreement" within
the meaning of subheading 9801.00.20, HTSUS.  The protestant
states that as a result of the shipment of the tool to Gabler, a
"bailment" existed between the two parties.  According to Black's
Law Dictionary (1979), "bailment" is defined as follows:

     A delivery of goods or 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 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 the purpose
     of the trust.

Gabler did not lease the tool, but merely used it free of charge. 
Protestant states that it and Gabler benefited from the testing
as both companies stood to gain from the proper operation of the
machine.  Protestant contends that this bailment is a type of
"similar use agreement" covered by this tariff provision. 
Protestant contends that the purpose of the addition of "similar
use agreement" language to item 801.00, Tariff Schedules of the
United States (TSUS) (the precursor provision to subheading
9801.00.20, HTSUS), was to codify Custom's practice of permitting
the use of this tariff provision when no actual monetary
consideration was exchanged.

ISSUE:

     Whether the machine tool is entitled to duty-free treatment
under subheading 9801.00.20, HTSUS.

LAW AND ANALYSIS:

     Subheading 9801.00.20, HTSUS, 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 
     othermeans 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 (emphasis added).

     Free entry under item 801.00, TSUS, was originally
restricted to articles that had been exported under lease to a
foreign manufacturer.  The Trade and Tariff Act of 1984 (Public
Law 98-573) amended this provision by extending the exemption to
situations where the articles had been exported under lease or
similar use agreements to entities other than foreign
manufacturers.

     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 duty paid on a previous
importation, and is being reimported by or for the account of the
person who previously imported it into, and exported it from the
U.S.

     The protestant has failed to submit any documentation which
shows that the machine tool was previously imported and that it
was previously imported by or for its account.  It is clear from
the regulations that the decision to grant duty-free treatment is
dependent upon the district director being satisfied that the
requirements of 19 CFR 10.108 are met.  Since the protestant has
failed to provide the documentation necessary to satisfy the
district director, we find that the machine tool is ineligible
for duty-free treatment under subheading 9801.00.20, HTSUS.

HOLDING:

     On the basis of the record presented, it is our opinion that
the machine tool may not be accorded duty-free treatment under
subheading 9801.00.20, HTSUS.  Accordingly, you are directed to
deny the protest in full.  A copy of this decision should be
attached to the Form 19 to be sent to the protestant.

                              Sincerely,



                              John Durant, Director
                              Commercial Rulings Division