On March 12, 2009, the Customs and Border Protection (CBP) proposed changes to the Customs Regulations with regard to to exclude from the dutiable value of repairs, alterations, or processing performed abroad on articles exported from the United States and returned under subheading 9802.00.40, 9802.00.50, or 9802.00.60, Harmonized Tariff Schedule of the United States (HTSUS), the value of U.S.-origin parts used in the foreign repairs, alterations, or processing. The proposed changes would provide an incentive to use U.S.-origin parts in the foreign repairs, alterations, or processing of articles entered under the above-referenced HTSUS provisions.
Comments on the proposed change must be received on or before May 12, 2009.
Subheadings 9802.00.40 and 9802.00.50, HTSUS, provide a partial
duty exemption for articles returned to the United States after having been exported to be advanced in value or improved in condition by repairs or alterations. Subheading 9802.00.40 encompasses articles repaired or altered abroad pursuant to a warranty, while subheading 9802.00.50 encompasses articles repaired or altered abroad other than
pursuant to a warranty. Articles entitled to classification under these tariff provisions are assessed duty based upon the value of the repairs or alterations.
Subheading 9802.00.60, HTSUS, provides a partial duty exemption for articles of metal manufactured in the United States that are exported for further processing and then returned to the United States for further processing. Articles entitled to classification under this tariff provision are assessed duty based upon the value of the processing performed outside the United States.
Currently, under both U.S. Note 3(a), subheading II, Chapter 98 and section 10.9 of the Customs Regulations, include in the cost or value of the repairs performed abroad the domestic value of any articles furnished for the repairs or alterations. The proposed changes would remove the domestic articles from such a calculation.