Heat Testing Crystals Imported for Measurement Readings Not Considered Business Records, CBP Says

Crystals used within various types of machinery to gauge maximum heat points that are then imported into the U.S. for measurement readings aren't classifiable as a medium for carrying business records, CBP said in a Jan. 11 ruling (here). The crystals, which are sold by LG Tech-Link and exported to its customers, are reviewed for heat-related physical changes following exposure, the company said. "According to LG, the crystals are used for analysis because they are a medium for carrying business information" and therefore exempt from customs duties.

Following return back to the U.S., the crystals are stored in LG’s facility in the event that its customers desire to have them re-read, it told CBP. "LG states that like business records, the crystals are not reused or resold for any purpose." While the company previously served as the ultimate consignee on the crystal entries, "LG has submitted this ruling request because it is now interested in becoming the importer of record on at least some of the entries in which the crystals are returned," CBP said. The crystals were previously entered in subheading 2849.20.2000, which applies to “Carbides, whether or not chemically defined: Of silicon: In grains, or ground, or pulverized or refined."

The crystals at issue differ from business record mediums, CBP said. Unlike in other rulings on customs exceptions for business records, the crystal aren't related to the business operations of the company, the agency said. Instead, "the subject crystals are part of a commercial service provided by LG to customers," CBP said. "The crystals undergo physical changes when exposed to heat, which LG analyzes. The analysis of the crystals is a paid commercial service provided to LG’s customers and [d]o not relate to how LG operates its business as the firm that is importing the crystals. Rather, the crystals provided to LG’s customers are purely commercial in nature and is sold to and purchased by LG’s customers."

The fact that the crystals record a measurement doesn't automatically make them the same as business records, CBP said. "Just as a thermometer or litmus paper does not become a business record simply because it is used as an instrument to measure temperature or pH, neither do the subject crystals become records simply because they are used to measure heat temperature," the agency said. The fact that the crystals won't be reused or resold doesn't change whether they can be considered records, it said. "We find that the subject crystals do not qualify for the records exemption," CBP said.

As an alternate classification, LG suggested classification under the duty-free 9801.00.10 for U.S. goods returned. The crystals aren't eligible for that classification because they advance in value before returned, CBP said. "[W]hen the silicon carbide crystals are exposed to heat, they undergo physical changes in density, porosity, and water absorption," it said. "These physical changes enable LG to determine the maximum temperature to which the crystals were exposed and report the results to its customers." However, duty-free treatment for returned goods for scientific or educational purposes in subheading 9801.00.40 may apply, if the documentary requirements are satisfied, CBP said.