[Federal Register Volume 66, Number 102 (Friday, May 25, 2001)]
[Rules and Regulations]
[Pages 28831-28834]
From the Federal Register Online via the Government Publishing Office [www.gpo.gov]
[FR Doc No: 01-13165]



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Rules and Regulations
                                                Federal Register
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Federal Register / Vol. 66, No. 102 / Friday, May 25, 2001 / Rules 
and Regulations

[[Page 28831]]



DEPARTMENT OF COMMERCE

International Trade Administration

DEPARTMENT OF THE TREASURY

Customs Service

15 CFR Part 301

[Docket No. 000331091-0177-02]
RIN 0625-AA47


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: Final rule.

-----------------------------------------------------------------------

SUMMARY: The International Trade Administration and U.S. Court of Law 
amended the regulations which govern duty-free entry of scientific 
instruments and apparatus, by educational and nonprofit institutions, 
into the United States. The amendments make the technical changes 
required by the Omnibus Trade and Competitiveness Act of 1988 and by 
the Miscellaneous Trade and Technical Corrections Act of 1999. In 
addition this rule revises the regulations to specify the correct court 
of review, to use terminology consistent with accepted metric units, to 
extend the waiver for repair components to maintenance tools as well, 
to simplify and clarify the regulations for applicants by clarifying 
the commercial use provisions and by removing redundant requirements, 
to add information about procedures for obtaining duty refunds, to 
reduce the number of copies required for resubmitted applications and 
to permit performance data obtained in tests or trials as evidence of 
guaranteed specifications.

EFFECTIVE DATE: June 25, 2001.

ADDRESSES: Send comments regarding the reporting burden estimate or any 
other aspect of the collection-of-information requirements in this 
final rule, including suggestions for reducing the burden, to U.S. 
Department of Commerce, ITA Information Officer, Washington, DC 20230 
and Office of Information and Regulations Officer, Office of Management 
and Budget, Washington, DC 20503 (Attn: OMB Desk Officer).

FOR FURTHER INFORMATION CONTACT: Gerald Zerdy, (202) 482-1660.

SUPPLEMENTARY INFORMATION: The International Trade Administration of 
the Department of Commerce and the U.S. Customs Service of the 
Department of the Treasury: 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 rule makes 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 rule makes editorial and 
administrative changes, including updating terminology.
    We have amended Sec. 301.2(h) to provide further information about 
the entry of accessories for existing instruments.
    The rule amends 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.
    The rule removes 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 revision leaves the method of this 
determination to the discretion of Customs.
    Section 301.4(a)(3) is amended 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. This change clarifies the conditions of compliance with 
the statutory prohibition of commercial use within five years of entry 
(see Sec. 301.1(c)(1)).
    The rule amends 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.
    The rule eliminates Sec. 301.5(a)(7), relating to the routine 
sending of copies of applications to interested domestic manufacturers. 
Use of this service has been extremely limited. We will continue to 
provide copies on a case-by-case basis if requested.
    Section 301.5(c)(3) is amended by removing language requesting 
consultants to provide advice within 30 days. Routine interagency 
procedures do not require codification. ``National Bureau of 
Standards'' is replaced by ``National Institute of Standards and 
Technology.''
    To simplify the application process Sec. 301.5(e)(3) is amended 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. Section 301.5(e)(5) is amended 
to conform with this change.
    The rule eliminates Sec. 301.5(e)(9), which allows interested 
parties to comment 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.
    Section 301.8(d) is amended to inform the applicant that estimated 
duties levied by U.S. Customs at the time of entry may be refundable, 
and instruct the applicant to contact Customs at the port of entry for 
information and claims status.

[[Page 28832]]

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

Classification

Comments on Proposed Rule

    No comments were received in response to the notice of proposed 
rulemaking published for this rule on May 12, 2000 (65 FR 30555). No 
comments were received on that certification and the basis for it was 
not changed. Accordingly a Regulatory Flexibility Analysis has not been 
prepared. The Chief Counsel for Regulation of the Department of 
Commerce certified to the Chief Counsel for Advocacy, Small Business 
Administration, when this rule was proposed, that it will not have a 
significant economic impact on a substantial number of small entities.

Paperwork Reduction Act

    Notwithstanding any other provision of law, no person is required 
to respond to nor shall a person be subject to a penalty for failure to 
comply with a collection of information subject to the requirements of 
the Paperwork Reduction Act unless that collection of information 
displays a currently valid Office of Management and Budget (OMB) 
control number. Public reporting burden for this collection of 
information is estimated to average 2 hours per response. 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 OMB under control number 0625-0037. The 
amendments will not increase the information burden on the public. Send 
comments on this burden estimate or any other aspects of the collection 
of information, including suggestions for reducing the burden, to the 
U.S. Department of Commerce and to OMB (see ADDRESSES).

Plain English

    The President has directed Federal agencies to use plain language 
in their communications with the public, including regulations. To 
comply with this directive, we seek public comment on any ambiguity or 
unnecessary complexity arising from the language used in this rule (see 
ADDRESSES).

Executive Order 12866

    This rulemaking has been determined to be 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 the reasons set forth in the preamble, 15 CFR part 301 is 
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. Amend paragraph (b)(1) by removing '', contracted to by 
approximately 89 countries'';
    b. Revise paragraphs (b)(3), (c)(1) and (c)(2); and
    c. Add paragraph (c)(4).
    d. Amend paragraph (d) 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;


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), HTSUS, must be 
exclusively for the use of the institutions involved and not for 
distribution, sale, or other commercial use within five years after 
entry. 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 the regulations in this section. 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. Amend paragraph (f) 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 paragraph (k) of this section and 
Sec. 301.3(f).'';
    b. Revise paragraph (f)(5);
    c. Amend paragraph (h) by adding a new sentence to the end of the 
paragraph to read: ``The existing

[[Page 28833]]

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. Amend paragraph (k) 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 paragraph (f) 
of this section.'';
    e. Amend paragraph (r) 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. Amend paragraph(s) 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 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.''


Sec. 301.2  Definitions

* * * * *
    (f) * * *
    (5) Instruments initially imported solely for testing or review 
purposes which were entered under bond under 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.
* * * * *

    5. Amend Sec. 301.3 as follows:
    a. Amend paragraph (d) 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 paragraph (a)(3) are revised and a new third sentence is 
added 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. Amend paragraph (a)(1) by removing ``10'' from the first 
sentence and adding ``5'' in its place;
    b. Amend paragraph (a)(2) 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. Amend paragraph (a)(3) by removing the last sentence;
    d. Amend paragraph (a)(4)(v) by removing ``submitted a formal'' and 
adding ``issued an'' in its place;
    e. Revise paragraph (a)(5);
    f. Amend paragraph (a)(6) 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. Remove paragraph (a)(7);
    h. Revise paragraph (b);
    i. Amend paragraph (c)(2), by removing the word ``the'' between 
``to'' and ``appropriate'' and by removing ``written''
    j. Amend paragraph (c)(3) 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. Amend paragraph (d)(1)(i) 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. Amend Paragraph (d)(1)(ii) 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 
two sentences to the end of the paragraph (e)(5); and remove paragraph 
(e)(9).


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

    (a) * * *
    (5) Untimely comments. Comments must be made on a timely basis to 
ensure their consideration by the Director and the technical 
consultants, and to preserve the commenting person's right to appeal 
the Director's decision. The Director, at his discretion, may take into 
account factual information contained in untimely comments.
* * * * *
    (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

[[Page 28834]]

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.
* * * * *
    (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 ``of this section''
    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.

Troy H. Cribb,
Acting Assistant Secretary for Import Administration.
Raymond W. Kelly,
Commissioner of Customs.
John P. Simpson,
Deputy Assistant Secretary of the Treasury.
[FR Doc. 01-13165 Filed 5-24-01; 8:45 am]
BILLING CODE 3510-DS-P; 4820-02-P