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HQ 229248

March 4, 2002

CON-9-04 LIQ-4-01 LIQ-4-02


Ronald W. Gerdes, Esq.
Sandler, Travis & Rosenberg, P.A.
1300 Pennsylvania Avenue, NW
Washington, DC 20004-3002

RE: General Electric Company and Global Nuclear Fuel Americas, LLC.

Dear Mr. Gerdes:

This is in response to your letter of January 10, 2002, requesting this office to confirm the consequences of a breach of a bond covering an entry under subheading 9813.00.05 (HTSUS). We consider your previous request of July 26, 2001, for a ruling letter withdrawn; therefore this is an information letter, as defined in 19 C.F.R. § 177.1(d)(2), as it is intended to call attention to well-established interpretations or principles of Customs law, without applying such law to a specific set of facts.

According to your correspondence your client, Global Nuclear Fuel Americas, LLC. (“GNF-A”), which is a majority owned and controlled subsidiary of General Electric Company (“GE”) made four entries of enriched uranium under subheading 9813.00.05 which provides for temporary importation under bond (TIB). GNF-A processes domestic and foreign enriched uranium to produce nuclear fuel assemblies for electric utilities use in nuclear power stations. These four TIB entries at issue were entered between September 13, 2001, and December 21, 2001.

All merchandise imported into the United States is subject to duty unless specifically exempted therefrom. Subheading 9813.00.05, HTSUS, provides for duty-free entry, under bond, for merchandise imported into the United States for a temporary period for the purpose of repair, alteration, or processing. Thus, articles described in the provisions of this subchapter, when not imported for sale or for sale on approval, may be admitted into the United States without the payment of duty, under bond for their exportation within 1 year from the date of importation, which period, in the discretion of the Secretary of the Treasury, may be extended, upon application, for one or more further periods which, when added to the initial 1 year, shall not exceed a total of 3 years

The enriched uranium was entered under TIB to avoid the possible assessment of estimated antidumping duties because of the initiation of an antidumping duty investigation (see 66 FR 1080 (January 5, 2001)). Subsequent to the filing of the TIB entries the Department of Commerce published its final determinations with regard to the enriched uranium antidumping investigation. These final determinations included amendments to the scope of the investigation, which stated the following:

Also excluded from these investigations is LEU [low enriched uranium] owned by a foreign utility end-user and imported into the United States by or for such end-user solely for purposes of conversion by a U.S. fabricator into uranium dioxide (UO[2]) and/or fabrication into fuel assemblies so long as the uranium dioxide and/or fuel assemblies deemed to incorporate such imported LEU (i) remain in the possession and control of the U.S. fabricator, the foreign end-user, or their designed transporter(s) while in U.S. customs territory, and (ii) are re-exported within eighteen (18) months of entry of the LEU for consumption by the end-user in a nuclear reactor outside the United States. Such entries must be accompanied by the certifications of the importer and end-user.

(See 66 FR 65886 and 66 FR 65877 (December 21, 2001)). You state that, “this determination has the effect of excluding from the scope of the investigations each of the shipments covered by the TIB entries.” You further state that the enriched uranium entered with the four TIBs at issue meets the three qualifications described above in the Federal Register Notice and is thus not subject to antidumping duty. Therefore it is more cost effective for GNF-A to abandon the control and accounting procedures for the uranium required by Customs under the terms of the TIB which will likely be considered a breach of the bond. You request confirmation as to the consequences of such a breach.

19 CFR § 10.39(a) provides that charges against bonds for TIB entries may be canceled in the manner prescribed in 19 C.F.R. § 113.55. Section 113.55(a) provides that a bond to assure exportation may be canceled either upon exportation (as described in § 113.55(a)(1)) or upon the payment of liquidated damages. 19 CFR § 10.39(d) provides,

If any article entered under Chapter 98, subchapter XIII, HTSUS, except those entered under a carnet, has not been exported or destroyed in accordance with the regulations in this part within the period of time during which the articles may remain in the Customs territory of the United States under bond (including any lawful extension), the Fines, Penalties, and Forfeitures Officer shall make a demand in writing under the bond for the payment of liquidated damages equal to double the estimated duties applicable to such entry, unless a different amount is prescribed by § 10.31(f). The demand shall include a statement that a written petition for relief from the payment of the full liquidated damages may be filed with the Fines, Penalties, and Forfeitures Officer within 60 days after the date of the demand. For purposes of this section, the term estimated duties shall include any merchandise processing fees applicable to such entry.

Thus, breach of the bond covering temporary importation under 9813.00.05 (HTSUS) requires liquidated damages equal to double the estimated duties applicable to such entry.

You state that enriched uranium is classified under subheading 2844 (HTSUS) and the duty rate is free. The amount of the bond posted also takes into account antidumping duties to which the goods might be subject. Further, you contend that the uranium imported with these TIB entries is outside the scope of the antidumping investigation and thus not subject to antidumping duties.

If the duty rate under the HTSUS is zero for the uranium as entered and it is not subject to antidumping duty, then the estimated duties would be zero. Therefore, since the estimated duties applicable to the enriched uranium would be zero, the liquidated damages applicable to the entry of the merchandise in this case would be zero.

The foregoing makes it clear that when merchandise is entered under TIB and the bond is canceled upon payment of liquidated damages, the merchandise is not required to be exported or destroyed, nor is any entry for consumption required. Finally, the Customs Regulations themselves provide that once liquidated damages are assessed and paid, the bond for the TIB entry is canceled (19 C.F.R. § 10.39(a); 19 C.F.R. §113.55(a)(2)).


John A Durant, Director

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