[Federal Register Volume 65, Number 93 (Friday, May 12, 2000)]
[Proposed Rules]
[Pages 30555-30558]
From the Federal Register Online via the Government Publishing Office [www.gpo.gov]
[FR Doc No: 00-11734]


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DEPARTMENT OF COMMERCE

International Trade Administration

DEPARTMENT OF THE TREASURY

Customs Service

15 CFR Part 301

[Docket No. 000331091-0091-01]
RIN 0625-AA47


Proposed Changes in Procedures for Florence Agreement Program

AGENCIES: Import Administration, International Trade Administration, 
Department of Commerce; U.S. Customs Service, Department of the 
Treasury.

ACTION: Proposed rule and request for comments.

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SUMMARY: This action invites public comment on a proposal to amend the 
regulations which govern duty-free entry of scientific instruments and 
apparatus, by educational and nonprofit institutions, into the United 
States. The amendments are being proposed for the purposes of making 
the technical changes required by the passage of the Omnibus Trade and 
Competitiveness Act of 1988 and by passage of the Miscellaneous Trade 
and Technical Corrections Act of 1999; updating the regulations by 
specifying the correct court of review, taking into account 
terminological changes in the scientific community, and by extending 
the waiver for repair components to maintenance tools as well; and 
simplifying and clarifying the regulations for the using community by 
clarifying the commercial use provisions and removing redundant 
requirements, adding information about procedures for obtaining duty 
refunds, reducing the number of copies required for resubmissions and 
permitting performance data obtained in tests or trials as evidence of 
guaranteed specifications.

DATES: Written comments must be received on or before June 12, 2000.

ADDRESSES: Address written comments to Gerald Zerdy, Program Manager, 
Statutory Import Programs Staff, Room 4211, U.S. Department of 
Commerce, Washington D.C. 20230.

FOR FURTHER INFORMATION CONTACT: Gerald Zerdy, (202) 482-1660, same 
address as above.

SUPPLEMENTARY INFORMATION: The Departments of Commerce and the Treasury 
are proposing to amend Part 301, Chapter III, Subtitle B of Title 15 of 
the Code of Federal Regulations relating to their responsibilities 
under the Educational, Scientific, and Cultural Materials Importation 
Act of 1966 (the ``Act''; Pub. L. 89-651; 80 Stat. 897).
    The proposed rule would make the necessary technical changes to 
reflect the conversion from the Tariff Schedule of the United States 
(TSUS) to the Harmonized Tariff Schedule of the United States (HTSUS); 
and the modification made by Proclamation 5978 of May 12, 1989, which 
was issued pursuant to sections 1121 and 1204 of the Omnibus Trade and 
Competitiveness Act of 1988 (Pub. L. 100-418) and section 604 of the 
Trade Act of 1974 (Pub. L. 93-618), as amended; and the statutory 
amendment made by section 2402 of the Miscellaneous Trade and Technical 
Corrections Act of 1999 (Pub. L. 106-36). The proposed rule would also 
make editorial and administrative changes, including updating 
terminology.
    Specifically, we propose amending Sec. 301.2(h) to provide further 
information about the entry of accessories for existing instruments.
    We propose amending paragraph (r) of Sec. 301.2 to permit 
performance data obtained from a trial or test run of an instrument, 
under conditions specified by the applicant, to be used as evidence for 
a guaranteed specification since this is sometimes stipulated as a 
condition for purchase or provides the basis for selecting one 
instrument over another. In the past, applicants have regularly cited 
such ad hoc performance data to support their justification for duty 
exemption.
    We propose removing the language in Sec. 301.4(a)(1) that refers to 
specific documentation Customs may require to establish the applicant's 
nonprofit or tax exempt status. The proposed revision leaves the method 
of this determination to the discretion of Customs.
    We propose amending Sec. 301.4(a)(3) to further emphasize that an 
applicant may not participate in the development and evaluation of an 
instrument, beyond routine acceptance testing and calibration, if 
substantial benefits accrue to the manufacturer as a result of such 
participation for which the applicant receives a valuable 
consideration. The purpose of this change is to clarify the conditions 
of compliance with the statutory prohibition of commercial use within 
five years of entry (see Sec. 301.1(c)(1)).
    We propose amending Sec. 301.5(a)(1) by making copies of 
applications available for public inspection within five days of 
receipt from Customs instead of the ten days currently specified in the 
regulations. This amendment would bring the rule into accord with 
established practice.
    The proposed rule would eliminate Sec. 301.5(a)(7), which relates 
to the routine sending of copies of applications to interested domestic 
manufacturers. Use of this service has been extremely limited. While 
the routine provision of copies would be eliminated, we would continue 
to provide copies on a case-by-case basis if requested.
    We propose amending Sec. 301.5(c)(3) by removing language 
requesting consultants to provide advice within 30 days. Routine 
interagency procedures do not require codification. ``National Bureau 
of Standards'' would be replaced by ``National Institute of Standards 
and Technology.''
    We propose to reduce the paperwork burden on applicants by amending 
Sec. 301.5(e)(3) to permit resubmissions by facsimile, e-mail or other 
electronic means in addition to posted mail, and to permit 
resubmissions with an original copy only instead of in quadruplicate. 
We also propose amending Sec. 301.5(e)(5) to conform with this change.
    We propose to eliminate Sec. 301.5(e)(9), which provides for 
comment by interested parties on resubmitted applications. Interested 
parties are afforded ample opportunity to comment on the original 
applications. Also, applicants are not permitted to introduce new 
purposes or other material changes in a resubmission. Accordingly, no 
useful purpose is served by the existing procedure.
    We propose to amend Sec. 301.8(d) to inform the applicant that 
estimated duties levied by U.S. Customs at the time of entry may be 
refundable, and to instruct the applicant to contact Customs at the 
port of entry for information and claims status.
    Presidential Proclamation 5978 of May 12, 1989, issued pursuant to 
sections 1121 and 1204 of the Omnibus Trade and Competitiveness Act of 
1988 and section 604 of the Trade Act of 1974, as amended, added 
maintenance tools for scientific instruments to the list

[[Page 30556]]

of items eligible for duty-free import under the Act. Accordingly, we 
propose amending Sec. 301.10 (a) to add maintenance tools to the scope 
of the waiver already in place for repair tools.

Regulatory Flexibility Act

    In accordance with the Regulatory Flexibility Act, 5 U.S.C. 601 et 
seq., the Chief Counsel for Regulation at the Department of Commerce 
has certified to the Chief Counsel for Advocacy, Small Business 
Administration, that the proposed rule, if promulgated as final, will 
not have a significant economic impact on a substantial number of small 
entities. This is because the rulemaking is primarily to update, 
clarify, and simplify the regulations, make technical changes and 
reduce paperwork.

Paperwork Reduction Act

    This rulemaking involves information collection activities subject 
to the Paperwork Reduction Act of 1980, 44 U.S.C. 3501 et seq., which 
are currently approved by the Office of Management and Budget under 
control number 0625-0037. The proposed amendments reduce the 
information burden on the public by, among other things, eliminating 
the need for copies in a resubmission, making provision for 
resubmissions in electronic formats and eliminating the need to make 
application for maintenance tools.

Executive Order 12866

    It has been determined that the proposed rulemaking is not 
significant for purposes of Executive Order 12866.

List of Subjects in 15 CFR Part 301

    Administrative practice and procedure, Customs duties and 
inspection, Educational facilities, Imports, Nonprofit organizations, 
Scientific equipment.
    For reasons set forth above, 15 CFR part 301 is proposed to be 
amended as follows:

PART 301--[AMENDED]

    1. The authority citation for part 301 is revised to read as 
follows:

    Authority: Sec. 6 (c), Pub. L. 89-651, 80 Stat. 897, 899; Sec. 
2402, Pub. L. 106-36, 113 Stat. 127, 168.

    2. Amend part 301 as follows:
    a. Revise all references to ``tariff item 851.60'', ``item 
851.60'', or ``item 851.60, TSUS'' to read ``subheading 9810.00.60, 
HTSUS''.
    b. Revise all references to ``item 851.65'' or ``tariff item 
851.65'' to read ``subheading 9810.00.65, HTSUS''.
    3. Amend Sec. 301.1 as follows:
    a. Paragraph (b)(1) is amended by removing ``, contracted to by 
approximately 89 countries'';
    b. Paragraph (d) is amended by removing ``Headnote 6, TSUS'' from 
the first sentence and adding ``U.S. Note 6, Subchapter X, Chapter 98, 
HTSUS'' in its place; by removing ``and Operations'' in the second 
sentence; and by removing ``Deputy'' in the third sentence;
    c. Revise paragraphs (b)(3), (c)(1) and (c)(2); and
    d. Add paragraph (c)(4).


Sec. 301.1  General provisions.

* * * * *
    (b) * * *
    (3) The Annex D provisions are implemented for U.S. purposes in 
Subchapter X, Chapter 98, Harmonized Tariff Schedule of the United 
States (HTSUS).
    (c) Summary of statutory procedures and requirements. (1) U.S. Note 
1, Subchapter X, Chapter 98, HTSUS, provides, among other things, that 
articles covered by subheadings 9810.00.60 (scientific instruments and 
apparatus), 9810.00.65 (repair components therefor) and 9810.00.67 
(tools for maintaining and testing the above therefor), HTSUS, must be 
exclusively for the use of the institutions involved and not for 
distribution, sale, or other commercial use within five years after 
having been entered. These articles may be transferred to another 
qualified nonprofit institution, but any commercial use within five 
years of entry shall result in the assessment of applicable duties 
pursuant to Sec. 301.9(c).
    (2) An institution wishing to enter an instrument or apparatus 
under tariff subheading 9810.00.60, HTSUS, must file an application 
with the Secretary of the Treasury (U.S. Customs Service) in accordance 
with these regulations. If the application is made in accordance with 
the regulations, notice of the application is published in the Federal 
Register to provide an opportunity for interested persons and 
government agencies to present views. The application is reviewed by 
the Secretary of Commerce (Director, Statutory Import Programs Staff) , 
who decides whether or not duty-free entry may be accorded the 
instrument and publishes the decision in the Federal Register. An 
appeal of the final decision may be filed with the U.S. Court of 
Appeals for the Federal Circuit, on questions of law only, within 20 
days after publication in the Federal Register.
* * * * *
    (4) Tools specifically designed to be used for the maintenance, 
checking, gauging or repair of instruments or apparatus admitted under 
subheadings 9810.00.65 and 9810.00.67, HTSUS, require no application 
and may be entered duty-free in accordance with the procedures 
prescribed in Sec. 301.10.
* * * * *


Sec. 301.2  [Amended]

    4. Amend Sec. 301.2 as follows:
    a. Paragraph (f) is amended by removing ``only'' in the first 
sentence; by removing ``classifiable under the tariff items specified 
in headnote 6(a) of part 4 of Schedule 8'' and adding in its place 
``specified in U.S. Note 6(a), Subchapter X, Chapter 98, HTSUS''; and 
by adding the following after the second sentence: ``The term 
``instrument'' also covers separable components of an instrument that 
are imported for assembly in the United States in such instrument where 
that instrument, due to its size, cannot feasibly be imported in its 
assembled state. The components, as well as the assembled instrument 
itself, must be classifiable under the tariff provisions listed in U.S. 
Note 6(a), Subchapter X, Chapter 98, HTSUS. See Sec. 301.2(k) and 
Sec. 301.3(f).'';
    b. Paragraph (f)(5) is amended by removing all that follows ``under 
bond under'' and adding in its place the following: ``subheading 
9813.00.30, HTSUS, subject to the provisions of U.S. Note 1(a), 
Subchapter XIII, Chapter 98, HTSUS, and must be exported or destroyed 
within the time period specified in that U.S. Note.'';
    c. Paragraph (h) is amended by adding a new sentence to the end of 
the paragraph to read: ``The existing instrument, for which the 
accessory is being purchased, may be domestic or, if foreign, it need 
not have entered duty free under subheading 9810.00.60, HTSUS.'';
    d. Paragraph (k) is amended by adding the following at the end of 
the paragraph: ``The above notwithstanding, separable components of 
some instruments may be eligible for duty-free treatment. See 
Sec. 301.2(f).'';
    e. Paragraph (r) is amended by removing ``angstroms'' in the second 
sentence and adding ``nanometers'' in its place, and by adding a 
sentence at the end of the paragraph to read: ``Performance results on 
a test sample run at the applicant's request may be cited as evidence 
for or against a guaranteed specification.''; and
    f. Paragraph(s) is amended by removing ``and/'' from the first 
sentence, removing the last sentence and adding in its place the 
following: ``Also, characteristics such as size, weight, appearance, 
durability, reliability, complexity (or simplicity), ease of

[[Page 30557]]

operation, ease of maintenance, productivity, versatility, ``state of 
the art'' design, specific design and compatibility with currently 
owned or ordered equipment are not pertinent unless the applicant 
demonstrates that the characteristic is necessary for the 
accomplishment of its scientific purposes.''
    5. Amend Sec. 301.3 as follows:
    a. Paragraph (d) is amended by removing ``One copy of the form'' 
from the second sentence and adding in its place ``One of these 
copies'';
    b. Redesignate paragraph (f) as paragraph (g); and
    c. Add a new paragraph (f).


Sec. 301.3  Application for duty-free entry of scientific instruments.

* * * * *
    (f) An application for components of an instrument to be assembled 
in the United States as described in Sec. 301.2(f) may be filed 
provided that all of the components for the complete, assembled 
instrument are covered by, and fully described in, the application. See 
also Sec. 301.2(k).
* * * * *
    6. In Sec. 301.4, paragraphs (a)(1), (a)(2) and the first two 
sentences of (a)(3) are revised to read as follows:


Sec. 301.4  Processing of applications by the Department of the 
Treasury (U.S. Customs Service).

    (a) * * *
    (1) Whether the institution is a nonprofit private or public 
institution established for research and educational purposes and 
therefore authorized to import instruments into the U.S. under 
subheading 9810.00.60, HTSUS. In making this determination, the 
Commissioner may require applicants to document their eligibility under 
this paragraph;
    (2) Whether the instrument or apparatus falls within the classes of 
instruments eligible for duty-free entry consideration under subheading 
9810.00.60, HTSUS. For eligible classes, see U.S. Note 6(a), Subchapter 
X, Chapter 98, HTSUS; and
    (3) Whether the instrument or apparatus is for the exclusive use of 
the applicant institution and is not intended to be used for commercial 
purposes. For the purposes of this section, commercial uses would 
include, but not necessarily be limited to: distribution, lease or sale 
of the instrument by the applicant institution; any use by, or for the 
primary benefit of, a commercial entity; or use of the instrument for 
demonstration purposes in return for a fee, price discount or other 
valuable consideration. Evaluation, modification or testing of the 
foreign instrument, beyond normal, routine acceptance testing and 
calibration, to enhance or expand its capabilities primarily to benefit 
the manufacturer in return for a discount or other valuable 
consideration, may be considered a commercial benefit. * * *
* * * * *
    7. Amend Sec. 301.5 as follows:
    a. Paragraph (a)(1) is amended by removing ``10'' from the first 
sentence and adding ``5'' in its place;
    b. Paragraph (a)(2) is amended by removing ``contained in Question 
11 of the form'' in the second sentence and adding ``on the form'' in 
its place, and by adding ``pursuant to paragraph (e) of this section'' 
at the end of the last sentence;
    c. Paragraph (a)(3) is amended by removing the last sentence;
    d. Paragraph (a)(4)(v) is amended by removing ``submitted a 
formal'' and adding ``issued an'' in its place;
    e. Paragraph (a)(5) is amended by removing ``on an application'' 
from the first sentence, by removing ``in his discretion, may entertain 
comments filed untimely to the extent that they contain factual 
information, as opposed to arguments, explanations, or 
recommendations'' from the second sentence and by adding ``at his 
discretion, may take into account factual information contained in 
untimely comments'' in its place;
    f. Paragraph (a)(6) is amended by removing ``apprise'' from the 
first sentence and adding ``inform'' in its place, by removing 
``routinely'' from the second sentence, removing ``commentor's'' from 
the last sentence and adding ``provider's'' in its place, and by 
removing ``on a particular application'' from the last sentence;
    g. Paragraph (a)(7) is removed;
    h. Paragraph (b) is revised;
    i. Paragraph (c)(2), is amended by removing the word ``the'' 
between ``to'' and ``appropriate'' and by removing ``written'';
    j. Paragraph (c)(3) is amended by removing the first sentence, by 
removing ``may'' from the second sentence, and by removing ``National 
Bureau of Standards'' and adding ``National Institute of Standards and 
Technology'' in its place in the second sentence;
    k. Paragraph (d)(1)(i) is amended by removing ``combines'' from the 
fourth sentence and adding ``brings together'' in its place, and by 
removing ``instrument(s)'' in the last sentence and adding 
``instrument'' in its place;
    l. Paragraph (d)(1)(ii) is amended by removing ``conversion'' from 
the last sentence and adding ``adaptation'' in its place, and by 
removing ``for such programs'' from the last sentence;
    m. Add a paragraph (d)(5); and
    n. Revise paragraphs (e) introductory text, (e)(2) and (e)(3); add 
a sentence to the end of paragraph (e)(5); and remove paragraph (e)(9).


Sec. 301.5  Processing of applications by the Department of Commerce.

* * * * *
    (b) Additions to the record. The Director may solicit from the 
applicant, from foreign or domestic manufacturers, their agents, or any 
other person or Government agency considered by the Director to have 
related competence, any additional information the Director considers 
necessary to make a decision. The Director may attach conditions and 
time limitations upon the provision of such information and may draw 
appropriate inferences from a person's failure to provide the requested 
information.
* * * * *
    (d) * * *
    (5) Processing of applications for components. (i) The Director may 
process an application for components which are to be assembled in the 
United States into an instrument or apparatus which, due to its size, 
cannot be imported in its assembled state (see Sec. 301.2(k)) as if it 
were an application for the assembled instrument. A finding by the 
Director that no equivalent instrument is being manufactured in the 
United States shall, subject to paragraph (d)(5)(ii) of this section, 
qualify all the associated components, provided they are entered within 
the period established by the Director, taking into account both the 
scientific needs of the importing institution and the potential for 
development of related domestic manufacturing capacity.
    (ii) Notwithstanding a finding under paragraph (d)(5)(i) of this 
section that no equivalent instrument is being manufactured in the 
United States, the Director shall disqualify a particular component for 
duty-free treatment if the Director finds that the component is being 
manufactured in the United States.
    (e) Denial without prejudice to resubmission (DWOP). The Director 
may, at any stage in the processing of an application by the Department 
of Commerce, DWOP an application if it contains any deficiency which, 
in the Director's judgment, prevents a determination on its merits. The 
Director shall state the deficiencies of the application in the DWOP 
letter to the applicant.
* * * * *

[[Page 30558]]

    (2) If granted, extensions of time will generally be limited to 30 
days.
    (3) Resubmissions must reference the application number of the 
earlier submission. The resubmission may be made by letter to the 
Director. The record of a resubmitted application shall include the 
original submission on file with the Department. Any new material or 
information contained in a resubmission, which should address the 
specific deficiencies cited in the DWOP letter, should be clearly 
labeled and referenced to the applicable question on the application 
form. The resubmission must be for the instrument covered by the 
original application unless the DWOP letter specifies to the contrary. 
The resubmission shall be subject to the certification made on the 
original application.
* * * * *
    (5) * * * Resubmission by fax, e-mail or other electronic means is 
acceptable provided an appropriate return number or address is provided 
in the transmittal. Resubmissions must clearly indicate the date of 
transmittal to the Director.
    8. Amend Sec. 301.6 by revising paragraphs (a) and (c) to read as 
follows:


Sec. 301.6  Appeals.

    (a) An appeal from a final decision made by the Director under 
Sec. 301.5(f) may be taken in accordance with U.S. Note 6(e), 
Subchapter X, Chapter 98, HTSUS, only to the U.S. Court of Appeals for 
the Federal Circuit and only on questions of law, within 20 days after 
publication of the decision in the Federal Register. If at any time 
while its application is under consideration by the Court of Appeals on 
an appeal from a finding by the Director an institution cancels an 
order for the instrument to which the application relates or ceases to 
have a firm intention to order such instrument, the institution shall 
promptly notify the court.
* * * * *
    (c) Questions regarding appeal procedures should be addressed 
directly to the U.S. Court of Appeals for the Federal Circuit, Clerk's 
Office, Washington, DC 20439.


Sec. 301.7  [Amended]

    9. Amend Sec. 301.7 by removing ``(see Sec. 301.6(a))'' from the 
first sentence of paragraph (a).
    10. Amend Sec. 301.8 as follows:
    a. Amend paragraph (a)(1) by adding ``(as defined in 19 CFR 
101.1)'' after ``Customs territory of the United States'';
    b. Amend the second sentence of paragraph (a)(5) by adding the 
words ``either by delaying importation or by placing the instrument in 
a bonded warehouse or foreign trade zone,'' after the words ``duty-free 
entry of the instrument,'';
    c. Amend paragraph (b) by removing ``above'' and ``mentioned'' from 
the first sentence;
    d. Amend paragraph (c) by removing ``of Sec. 301.8'' in the first 
sentence and adding a comma after ``provisions'';
    e. Revise paragraph (d) to read as follows:


Sec. 301.8  Instructions for entering instruments through U.S. Customs 
under subheading 9810.00.60, HTSUS.

* * * * *
    (d) Payment of duties. The importer of record will be billed for 
payment of duties when Customs determines that such payment is due. If 
a refund of a deposit made pursuant to paragraph (a)(4) of this section 
is due, the importer should contact Customs officials at the port of 
entry, not the Department of Commerce.


Sec. 301.9  [Amended]

    11. Amend Sec. 301.9 by removing ``latter'' from the first sentence 
of the introductory text of paragraph (a) and adding ``receiving'' in 
its place.
    12. Sec. 301.10 is revised to read as follows:


Sec. 301.10  Importation of repair components and maintenance tools 
under HTSUS subheadings 9810.00.65 and 9810.00.67 for instruments 
previously the subject of an entry liquidated under subheading 
9810.00.60, HTSUS.

    (a) An institution owning an instrument that was the subject of an 
entry liquidated duty-free under subheading 9810.00.60, HTSUS, that 
wishes to enter repair components or maintenance tools for that 
instrument may do so without regard to the application procedures 
required for entry under subheading 9810.00.60, HTSUS. The institution 
must certify to Customs officials at the port of entry that such 
components are repair components for that instrument under subheading 
9810.00.65, HTSUS, or that the tools are maintenance tools necessary 
for the repair, checking, gauging or maintenance of that instrument 
under subheading 9810.00.67, HTSUS.
    (b) Instruments entered under subheading 9810.00.60, HTSUS, and 
subsequently returned to the foreign manufacturer for repair, 
replacement or modification are not covered by subheading 9810.00.65 or 
9810.00.67, HTSUS, although they may, upon return to the United States, 
be eligible for a reduced duty payment under subheading 9802.00.40 or 
9802.00.50, HTSUS (covering articles exported for repairs or 
alterations) or may be made the subject of a new application under 
subheading 9810.00.60, HTSUS.

Robert S. LaRussa,
Assistant Secretary for Import Administration.
Raymond W. Kelly,
Commissioner of Customs.
    Dated: May 3, 2000.
John P. Simpson,
Deputy Assistant Secretary of the Treasury.
[FR Doc. 00-11734 Filed 5-11-00; 8:45 am]
BILLING CODES 3510-DS-P; 4820-02-P