HQ 222948: Request for binding ruling concerning a TIB entry of raw hops

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 222948

                         April 10, 1991

CON-9-04-CO:R:C:E  222948  CB

CATEGORY:  Entry

Mr. Billy J. Gwin
Geo. S. Bush & Co., Inc.
1400 Exchange Building
821 Second Avenue
Seattle, WA  98104

RE:  Request for binding ruling concerning a TIB entry of raw
     hops

Dear Mr. Gwin:

     This is in reply to your letter of January 4, 1991, wherein
you requested a binding ruling on a prospective shipment of raw
hops which are to be made into hop pellets or hop extract.

     According to your letter, the raw hops are made into pellets
or extract and there is a four percent waste with the processing
of hop pellets.  Two percent is a weight loss from the packaging
material and the other two percent is part evaporation of water
and product loss through dust and impurities which is in the hops
as stones, metal parts, and strings.  The importer proposes to
enter the merchandise under a temporary importation bond (TIB)
entry under subheadings 9813.00.0520 and 1210.10.0000, Harmonized
Tariff Schedule of the United States (HTSUSA).

     You have posed the following questions in your letter and we
will address them in that order:

     1)  How will the Customs Service treat the loss during
     manufacture?

     2)  Will the importer have to pay double duty on the waste
     since duty is based on weight?

     3)  Will Customs accept the importer's weight loss of four
     percent?

     4)  If the loss has no value and is not recoverable does the
     importer have to pay the penalty of double duty?


                               -2-


     First of all, we must advise you that you did not provide
sufficient information to enable us to issue a binding ruling.
However, we can provide you with general information.  The
importer must meet all of the accountability requirements under
subchapter XIII, chapter 98, U.S. note 2(b), HTSUSA, which
provides that if any processing of merchandise entered under a
TIB results in an article (other than an article described in (a)
of this note) manufactured or produced in the United States: (i)
a complete accounting will be made to the Customs Service for all
articles, wastes and irrecoverable losses resulting from such
processing; and (ii) 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 at rates of duties
in effect for such wastes at the time of importation.

     In order to issue a binding ruling, we would need to look at
certain factors to determine if the spent hops are a waste.
For example, how does the importer record the evaporation of
water, an explanation on how the loss due to the packaging
material and how the stones, metal and string are recorded and
treated by the company.  In CSD 81-224, Customs found that the
intent of Congress was to allow tender of duty and retention in
the U.S. of valuable waste where exportation or destruction is
uneconomic.  Any evidence, satisfactory to the district director,
that is sufficient to identify the valuable waste and show its
description and quantity is adequate.  Such evidence might be a
statement of the importer, or other person having knowledge of
the facts, setting forth the circumstances of the production of
the valuable waste.

     However, if the Customs Service determines that the spent
hops are a by-product of the imported hops, tender of duty is not
allowed.  By-products which result from the manufacture of
articles entered under a TIB must be exported or destroyed.  In
general, Customs considers a number of elements in determining
the distinction between a waste and by-product.  In C.S.D. 82-109
a number of significant elements were listed.  The Customs
Service will look at the following:

     1.  The nature of the material of which the residue is
     composed.

     2.  The value of the residue as compared to the value of the
     principal product and the raw material.

     3.  The use to which the residue is put.

                               -3-


     4.  Its status under the tariff laws, if imported.

     5.  Whether it is a commodity recognized in commerce.

     6.  Whether it must be subjected to some process to make it
     saleable.


     In light of the above, the answer to your first question is
that it depends on how the manufacturer treats the loss.  The
Customs Service would require that the importer submit evidence
to that effect.  Second, if the "waste" is valuable, the statute
requires a tender of duty only.  Third, Customs acceptance of the
four percent loss depends on the specific records presented by
the manufacturer to the district director.  The district director
must be satisfied that the claims of no value or irrecoverability
are valid.  And fourth, to the extent that the district director
is satisfied that the "waste" is not an article and has no value
or is not recoverable, the statute does not require the "waste"
to be either exported or destroyed.  Only valuable waste and
articles must be exported, destroyed, or duty paid.

     For your information, enclosed is a copy of HQ 223042
recently issued by the Customs Service regarding the treatment of
spent hops.

     Please be aware that this is an "information letter", as
defined in section 177.1(d)(2), Customs Regulations (19 CFR
177.1(d)(2)), and not a "ruling" (see 19 CFR 177.1(d)(1)).  The
procedures and requirements for obtaining a binding ruling are
set forth in Part 177 of the Customs Regulations (19 CFR Part
177).

                                   Sincerely,




                                   William G. Rosoff
                                   Chief, Entry Rulings Branch


Enclosure