Tin-Plated Brass Strips Eligible for TIB Treatment, but Subject to 'Lesser Of' Rule, CBP Says

Tin-plated brass strips imported by Cooper Plating and then made into plumbing parts before being exported are eligible for temporary importation under bond under subheading 9813.00.05, CBP said in a recent ruling. However, while they undergo the required processing to qualify for TIB treatment, they are subject to the USMCA "lesser of duty rule" for similar reasons, CBP said.

Cooper Plating buys the tin-plated brass strips from China, imports them into Canada, plates the strips with tin and slit, then processes them in the U.S. into brass plumbing parts for "use in vehicle manufacturing," CBP said. The parts for use are exported to Mexico, and the scrap materials are exported to Canada, the agency said.

Under subheading 9813.00.05, "articles to be repaired, altered, or processed (including processes that result in articles manufactured or produced in the United States), may be entered temporarily free of duty, under a bond for exportation, which must occur within one year from the date of importation," CBP said.

CBP found the transformation of tin-plated brass strips into plumbing parts qualifies as "processing" under subheading 9813.00.05 because "the activity results in a new and different article having a distinctive name, character, and use," it said. "When imported, the strips act as a raw material to be made into the final brass plumbing part, which will ultimately be used for the manufacture of vehicles," CBP said. "This U.S. processing alters the name of the article, from brass strips to a plumbing part, which has a distinct character -- as further noted by the new HTSUS subheading -- and the use of the article changes, as it is now able to be used for vehicle manufacturing."

The goods also meet two other requirements for TIB. First they won't be processed into "alcohol, distilled spirits, wine, beer or any dilution or mixture of any or all of the foregoing; a perfume or other commodity containing ethyl alcohol ...; or a product of wheat," CBP said.

Second, any waste from the processing of the product will be exported or destroyed within "the bonded period", the agency said, and a "complete accounting will be made" to CBP "for all articles, wastes and irrecoverable losses resulting from such processing." Cooper Plating said that it would export any scraps from U.S. processing to Canada.

However, the USMCA lesser of duty rule applies to the goods because they are no longer in the "same condition" as entered as when imported in the U.S., CBP said.

Under USMCA, "drawback may be granted only on the lesser of the total duties paid or owed on the importation into the United States or the total amount of duties paid on the exported good on its subsequent importation into Canada or Mexico -- often referred to as the 'lesser of' rule," CBP said. "TIB entries are treated as a form of such a drawback under the USMCA provisions."

Since the strips are changed into brass plumbing parts, they are not in the same condition as when imported, CBP said. As a result, the products are "subject to USMCA drawback and the duty deferral restrictions," the agency said. A consumption entry must be filed "upon export to Canada or Mexico" and the lesser of duties must be paid, CBP said.

Cooper Plating didn't respond to our request for comment.