CSMS Message: 00-000372

TO : ALL ABI BROKERS.

FROM : JIM H. TOKMENKO

SUBJECT : MIS- 9802

DATE : 04/10/2000

ABI DAILY MESSAGE

THE PURPOSE OF THIS ABI DAILY MESSAGE IS CALL ATTENTION TO A
PATTERN OF DISCREPANCIES AND NON-COMPLIANCE TO PRODUCTION
EQUIPMENT IMPORTERS WHO FILE ENTRY UNDER HTS 9802 TRADE PROGRAM,
WHICH HAVE LED TO AN UNACCEPTABLE COMPLIANCE RATE IN THE PAST
SEVERAL FISCAL YEARS. HTS HEADING 9802 COVERS ARTICLES RETURNED
TO THE U.S. AFTER HAVING BEEN EXPORTED TO BE ADVANCED IN VALUE,
OR IMPROVED IN CONDITION, AS WELL AS THOSE ARTICLES ASSEMBLED
ABROAD, IN WHOLE OR IN PART, OF COMPONENTS OF U.S. ORIGIN. THESE
ARTICLES ARE CONDITIONALLY DUTY FREE OR SUBJECT TO A REDUCED
DUTY RATE.

RESEARCH CONDUCTED BY THE U.S. CUSTOMS STRATEGIC TRADE CENTER IN
SOUTH FLORIDA, WHICH HAS INCLUDED A REVIEW OF ALL NON-COMPLIANT
IMPORTATIONS OF PRODUCTION EQUIPMENT UNDER HTS 9802 TARIFF
PROVISION IMPORTED FROM JANUARY 1, 1999, THROUGH DECEMBER
31,1999, HAS IDENTIFIED SEVERAL SIGNIFICANT PATTERNS TO THESE
DISCREPANCIES:

HTS 9802.00.40 AND HTS 9802.00.50:
(1) DISCREPANCIES HAVE BEEN FOUND UNDER 9802.00.4040, ARTICLES
RETURNED AFTER HAVING BEEN EXPORTED FOR REPAIRS OR ALTERATIONS
SUBJECTED TO A WARRANTY. IMPORTERS SHOULD ENSURE THAT THE TRUE
VALUE OF THE REPAIRS HAS BEEN DECLARED, AND THAT ANY REPLACEMENT
PARTS WHICH MAY BE USED TO REPAIR THE ITEM HAVE BEEN DECLARED AT
THEIR TRUE VALUE. OMISSIONS IN LABOR COSTS, THE VALUE OF REPAIR
PARTS, OR BOTH, HAVE BEEN FOUND. SINCE THE REPAIRS ARE COVERED
BY WARRANTY, THE TRUE COSTS OF LABOR, AS WELL AS MATERIALS MUST
BE REFLECTED ON IMPORT INVOICES, EVEN IF NOT PAYABLE ON THE PART
OF THE U.S. IMPORTER.

(2) THE FULL COST OR VALUE OF THE REPAIRS OR ALTERATIONS
ACTUALLY PERFORMED ABROAD IS SUBJECT TO DUTY UNDER THE
PROVISIONS OF HTS 9802.00.40 OR 9802.00.50. THE COSTS OR VALUE
INCLUDES ALL DOMESTIC AND FOREIGN ARTICLES FURNISHED FOR THE
REPAIRS. ALL DOMESTIC AND FOREIGN ARTICLES FURNISHED FOR THE
REPAIRS ARE NOT BEING DECLARED.

(3) IN SEVERAL CASES WARRANTY REPLACEMENT PARTS HAVE BEEN
ENTERED WITH ZERO, OR A NOMINAL VALUE, SINCE THE IMPORTERS WERE
NOT PAYING THE EXPORTER FOR THESE PARTS. THE CORRECT DECLARED
VALUE SHOULD BE THE PRICE THAT THE IMPORTER WOULD HAVE PAID TO
THE SUPPLIER FOR AN IDENTICAL NONWARRANTY PART.

HTS 9802.00.8065:
(1)WHEN AN ENTRY IS FILED UNDER HTS 9802.00.80, DUTY IS PAID ON
THE COST TO ASSEMBLE THE U.S. COMPONENTS INCLUDING
TRANSPORTATION, FREIGHT AND INSURANCE COSTS TO THE FOREIGN
MANUFACTURER. THE TRANSPORTATION, FREIGHT AND INSURANCE COSTS
ARE OFTEN OMITTED FROM THE DUTIABLE VALUE.

(2) SEVERAL INSTANCES WERE FOUND WHERE THE COST OF THE U.S.
COMPONENTS WAS DEDUCTED FROM THE FOREIGN INVOICE TO ARRIVE AT
1DUTIABLE VALUE EVEN THOUGH THE COST OF THE COMPONENTS WAS NOT
INCLUDED IN THE FOREIGN INVOICE

(3) INSTANCES HAVE BEEN FOUND IN WHICH FOREIGN MADE MERCHANDISE
WAS ENTERED DUTY FREE UNDER HTS 9802.00.8065. ARTICLES ASSEMBLED
ABROAD MUST BE IN WHOLE OR IN PART OF U.S. ORIGIN IN ORDER TO BE
ELIGIBLE FOR ENTRY UNDER HTS 9802.00.8065. (NOTE: IF THE
MATERIALS WERE PURCHASED IN THE UNITED STATES BUT NOT OF U.S.
ORIGIN, IT IS NOT ELIGIBLE FOR ENTRY UNDER 9802. FOR EXAMPLE, A
NUMERICAL CONTROL, PURCHASED IN THE U.S. BUT OF FOREIGN ORIGIN,
WHICH HAS BEEN SENT ABROAD TO BE AFFIXED TO A MACHINE WOULD NOT
BE ELIGIBLE FOR DUTY FREE ENTRY UNDER 9802.00.8065).

ON APRIL 3, 2000, THE SOUTH FLORIDA STRATEGIC TRADE CENTER
ISSUED INFORMED COMPLIANCE LETTERS TO 250 PRODUCTION EQUIPMENT
IMPORTERS WHO FILE ENTRY UNDER THE HTS 9802 TRADE PROGRAM. HTS
HEADING 9802 COVERS ARTICLES RETURNED TO THE U.S. AFTER HAVING
BEEN EXPORTED TO BE ADVANCED IN VALUE, OR IMPROVED IN CONDITION,
AS WELL AS THOSE ARTICLES ASSEMBLED ABROAD, IN WHOLE OR IN PART,
OF COMPONENTS OF U.S. ORIGIN. THESE ARTICLES ARE CONDITIONALLY
DUTY FREE OR SUBJECT TO A REDUCED DUTY RATE. THE PURPOSE OF
THESE LETTERS WAS TO INFORM THE IMPORTERS OF OUR CONCERNS AND
THE CURRENT TREND OF DISCREPANCIES. THESE FIRMS WERE ALSO
NOTIFIED THAT IF THEIR COMPANY'S INDIVIDUAL IMPORT TRANSACTIONS
ARE NOT FREE FROM THESE TYPE OF ERRORS OUTLINED IN THE LETTERS,
AND THEY DO NOT TAKE IMMEDIATE CORRECTIVE ACTIONS DESIGNED TO
FOSTER COMPLIANCE, THEIR COMPANY COULD FIND ITSELF SUBJECT TO
INCREASED ENTRY REVIEWS AND/OR CARGO EXAMINATIONS, PENALTIES, OR
OTHER REMEDIAL ACTIONS.

THIS ABI DAILY MESSAGE IS BEING PROVIDED TO HELP MAXIMIZE
COMPLIANCE AND AVOID THE ERRORS WHICH ARE COMMON TO PRODUCTION
EQUIPMENT IMPORTERS WHO FILE ENTRY UNDER THE HTS 9802 TRADE
PROGRAM. FOR FURTHER INFORMATION, PLEASE CONTACT THE IMPORT
SPECIALISTS AT YOUR LOCAL PORT OF ENTRY, OR INTERNATIONAL TRADE
SPECIALIST MICHELLE NUALART AT THE SOUTH FLORIDA STRATEGIC TRADE
CENTER AT (954) 327-2806.