HQ 544315: Test equipment; 19 U.S.C. 1401a(h)(1)(A)

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 544315
                          May 30, 1989

CLA -2 CO:R:C:V  544315 DHS

CATEGORY:  Valuation

John A. Slagle
Wolf D. Barth Co. Inc.
7575 Holstein Avenue
Philadelphia, Pennsylvania 19153

RE:  Test equipment; 19 U.S.C. 1401a(h)(1)(A)

Dear Mr. Slagle:

     This is in reference to your letter of February 28, 1989,
inquiring as to the dutiability of certain test equipment
pursuant to section 402(h)(1)(A) of the Tariff Act of 1930, as
amended by the Trade Agreements Act of 1979 (TAA; 19 U.S.C.
1401a(h)(1)(A)). 

FACTS:

     A U.S. company provides test equipment free of charge to
foreign manufacturers to check the integrity of the finished
instruments before shipment to the United States.  There is no
indication in your submission as to the method used to appraise
the merchandise.
  
ISSUE:

     Does test equipment fall within the definition of an assist
pursuant to section 402(h)(1)(A) of the TAA?

LAW AND ANALYSIS:

      Section 402(h)(1)(A) provides as follows:

          The term assist means any of the following if
          supplied directly or indirectly, and free of
          charge or at reduced cost, by the buyer of
          imported merchandise for use in connection with
          the production or the sale for export to the
          United States of the merchandise:

               (i)    Materials, components, parts, and
               similar items incorporated in the
               imported merchandise.

               (ii)   Tools, dies, molds and similar
               items used in the production of the
               imported merchandise

               (iii)  Merchandise consumed in the
               production of the imported
               merchandise.
     
               (iv)   Engineering, development, art
               work, design work, plans and
               sketches that are undertaken
               elsewhere than in the United States
               and are necessary for the
               production of the imported
               merchandise.
      
     In TAA No. 11, dated November 7, 1980 (HRL 542187), we held
that testing costs incurred as a result of testing the accuracy
of the design and structure of steel structures which were
neither part of the design and engineering work, nor necessary
for the fabrication of the product by the U.S. purchaser to the
foreign exporter were not assists within the meaning of section
402(h)(1)(A) of the TAA.  However, in certain instances, payments
made by the U.S. purchaser to the foreign exporter were
considered to be part of "the price actually paid or payable" for
the imported merchandise. 

     With respect to the instant case, it appears that the
testing equipment is not used in the production of the imported
merchandise within the meaning of section 402(h)(1)(A)(ii) of the
TAA or the above cited case.  Furthermore, the equipment does not
fall within any of the other assist categories.  We note in this
regard that these categories are intended to be inclusive and,
accordingly, items not included therein are not considered
assists.

     It should be noted that if the equipment is appraised under
computed value the costs of the equipment may be included as the
"cost or value of the materials and the fabrication and other
processing of any kind employed in the production of the imported
merchandise" or "an amount for profit and general expenses ...
made by the producers in the country of exportation for export to
the United States."  See, section 402(e)(1)(A) and (B) of the
TAA.  If, in accordance with generally accepted accounting
principles of the country of production or exportation, the costs
of this equipment should be reflected in the books of the foreign
assembler as processing costs, then it may be that the costs are
to be included in determining the computed value of the final
imported product.  See, HRL No. 544083, dated August 16, 1988 and
TAA No. 9, dated October 15, 1980 (HRL 542139).
 HOLDING:

     In view of the foregoing, we conclude that the testing
equipment is not an assist within the meaning of 402(h)(1)(A)
of the TAA.  If the merchandise is to be appraised under computed
value, the inclusion of these costs must be determined according
to generally accepted accounting principles.


                                   Sincerely,




                                   John Durant, Director
                                   Commercial Rulings Division