Articles Assembled Abroad: Operations Incidental to the Assembly Process, 33299-33301 [E8-13203]
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Federal Register / Vol. 73, No. 114 / Thursday, June 12, 2008 / Rules and Regulations
30 days after publication of these rules.
The EDGAR system upgrade to Release
9.10 is scheduled to become available
on May 5, 2008. The Commission
believes that it is necessary to
coordinate the effectiveness of the
updated Filer Manual with the system
upgrade.
Statutory Basis
We are adopting the amendments to
Regulation S–T under Sections 6, 7, 8,
10, and 19(a) of the Securities Act of
1933,8 Sections 3, 12, 13, 14, 15, 23, and
35A of the Exchange Act,9 Section 319
of the Trust Indenture Act of 1939,10
and Sections 8, 30, 31, and 38 of the
Investment Company Act of 1940.11
List of Subjects in 17 CFR Part 232
Incorporation by reference, Reporting
and recordkeeping requirements,
Securities.
Text of the Amendment
In accordance with the foregoing,
Title 17, Chapter II of the Code of
Federal Regulations is amended as
follows:
PART 232—REGULATION S–T—
GENERAL RULES AND REGULATIONS
FOR ELECTRONIC FILINGS
Supplement,’’ Version 1 (September
2005). All of these provisions have been
incorporated by reference into the Code
of Federal Regulations, which action
was approved by the Director of the
Federal Register in accordance with 5
U.S.C. 552(a) and 1 CFR Part 51. You
must comply with these requirements in
order for documents to be timely
received and accepted. You can obtain
paper copies of the EDGAR Filer
Manual from the following address:
Public Reference Room, U.S. Securities
and Exchange Commission, 100 F
Street, NE., Room 1580, Washington, DC
20549, on official business days
between the hours of 10 a.m. and 3 p.m.,
or by calling Thomson Financial at (800)
638–8241. Electronic copies are
available on the Commission’s Web site.
The address for the Filer Manual is
https://www.sec.gov/info/edgar.shtml.
You can also inspect the document at
the National Archives and Records
Administration (NARA). For
information on the availability of this
material at NARA, call (202) 741–6030,
or go to: https://www.archives.gov/
federal_register/
code_of_federal_regulations/
ibr_locations.html.
I
1. The authority citation for part 232
continues to read in part as follows:
Authority: 15 U.S.C. 77f, 77g, 77h, 77j,
77s(a), 77z–3, 77sss(a), 78c(b), 78l, 78m, 78n,
78o(d), 78w(a), 78ll, 80a–6(c), 80a–8, 80a–29,
80a–30, 80a–37, and 7201 et seq.; and 18
U.S.C. 1350.
By the Commission.
Dated: June 4, 2008.
Florence E. Harmon,
Acting Secretary.
[FR Doc. E8–12961 Filed 6–11–08; 8:45 am]
BILLING CODE 8010–01–P
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DEPARTMENT OF HOMELAND
SECURITY
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2. Section 232.301 is revised to read
as follows:
I
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§ 232.301
U.S. Customs and Border Protection
EDGAR Filer Manual.
Filers must prepare electronic filings
in the manner prescribed by the EDGAR
Filer Manual, promulgated by the
Commission, which sets out the
technical formatting requirements for
electronic submissions. The
requirements for becoming an EDGAR
Filer and updating company data are set
forth in the updated EDGAR Filer
Manual, Volume I: ‘‘General
Information,’’ Version 4 (August 2007).
The requirements for filing on EDGAR
are set forth in the updated EDGAR Filer
Manual, Volume II: ‘‘EDGAR Filing,’’
Version 8 (June, 2008). Additional
provisions applicable to Form N–SAR
filers are set forth in the EDGAR Filer
Manual, Volume III: ‘‘N–SAR
8 15
U.S.C. 77f, 77g, 77h, 77j, and 77s(a).
U.S.C. 78c, 78l, 78m, 78n, 78o, 78w, and 78ll.
10 15 U.S.C. 77sss.
11 15 U.S.C. 80a–8, 80a–29, 80a–30, and 80a–37.
9 15
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DEPARTMENT OF THE TREASURY
19 CFR Part 10
[CBP Dec. 08–21]
RIN 1505–AB90
Articles Assembled Abroad:
Operations Incidental to the Assembly
Process
AGENCIES: Customs and Border
Protection, Department of Homeland
Security; Department of the Treasury.
ACTION: Final rule.
SUMMARY: This document amends the
Customs and Border Protection (‘‘CBP’’)
Regulations in title 19 of the Code of
Federal Regulations (19 CFR) in order to
remove a provision that draws a
distinction between preservative and
decorative painting for purposes of the
partial duty exemption under
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33299
subheading 9802.00.80, Harmonized
Tariff Schedule of the United States
(‘‘HTSUS’’). The change is made to
conform the CBP Regulations with the
holding of a court decision in which the
regulatory distinction between
preservative and decorative painting
was found to be invalid.
DATES: Final rule effective July 14, 2008.
FOR FURTHER INFORMATION CONTACT:
Gerry O’Brien, Regulations and Rulings,
Office of International Trade, (202) 572–
8792.
SUPPLEMENTARY INFORMATION:
Background
Subheading 9802.00.80, Harmonized
Tariff Schedule of the United States
(‘‘HTSUS’’), 19 U.S.C. 1202, provides a
partial duty exemption for articles
assembled abroad in whole or in part of
fabricated components, the products of
the United States, which: (a) Were
exported in condition ready for
assembly without further fabrication; (b)
have not lost their physical identity in
such articles by change in form, shape,
or otherwise; and, (c) have not been
advanced in value or improved in
condition abroad except by being
assembled and except by operations
incidental to the assembly process, such
as cleaning, lubricating, and painting.
The regulations implementing
subheading 9802.00.80, HTSUS, are
found within §§ 10.11 through 10.26 of
title 19 of the Code of Federal
Regulations (19 CFR 10.11–10.26).
Section 10.13 of title 19 of the CFR
(19 CFR 10.13) provides that articles
that satisfy the requirements of
subheading 9802.00.80, HTSUS, are
subject to a duty upon the full value of
the imported article, less the cost or, if
no charge is made, the value of such
products in the United States. The rate
of duty that is assessed on an imported
article eligible for the partial duty
exemption under subheading
9802.00.80, HTSUS, is that which is
applicable to the imported article as a
whole under the appropriate HTSUS
provision for such article.
Section 10.16 of title 19 of the CFR
(19 CFR 10.16) concerns the assembly
operations for purposes of subheading
9802.00.80, HTSUS. Section 10.16(b)
sets forth general information regarding
operations considered incidental to the
assembly process. Under § 10.16(b),
operations incidental to the assembly
process whether performed before,
during, or after assembly, do not
constitute further fabrication, and will
not preclude the application of the
exemption. Examples of operations
considered incidental to the assembly
process are provided under
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§§ 10.16(b)(1)–(7). The application of
preservative paint or coating, including
preservative metallic coating, lubricants,
or protective encapsulation is currently
considered an operation incidental to
the assembly process under
§ 10.16(b)(3).
Section 10.16(c) sets forth general
information regarding operations that
are not considered incidental to the
assembly process. Under § 10.16(c), any
significant process, operation, or
treatment other than assembly whose
primary purpose is the fabrication,
completion, physical or chemical
improvement of a component, or which
is not related to the assembly process,
whether or not it effects a substantial
transformation of the article, will not be
regarded as incidental to the assembly
process and will preclude the
application of the duty exemption to the
article. Examples of operations that are
not considered incidental to the
assembly process are set forth under
§§ 10.16(c)(1)–(5). Pursuant to
§ 10.16(c)(3), painting primarily
intended to enhance the appearance of
an article or to impart distinctive
features or characteristics is not
currently considered an operation
incidental to the assembly process.
As indicated, § 10.16 currently draws
a distinction between preservative and
decorative painting for purposes of the
partial duty exemption under
subheading 9802.00.80, HTSUS:
Painting operations performed abroad
that are deemed to be ‘‘preservative’’ in
nature are considered incidental to the
assembly process under § 10.16(b)(3)
and will not preclude application of the
partial duty exemption under
subheading 9802.00.80, HTSUS; and,
painting operations performed abroad
that are deemed to be ‘‘decorative’’ in
nature are not considered incidental to
the assembly process under § 10.16(c)(3)
and will preclude application of the
partial duty exemption under
subheading 9802.00.80, HTSUS.
Explanation of Amendments
In DaimlerChrysler Corporation v.
United States, 361 F.3d 1378 (Fed. Cir.
2004), the United States Court of
Appeals for the Federal Circuit
considered the issue of whether § 10.16
was valid to the extent that the
regulation draws this distinction
between preservative and decorative
painting for purposes of the partial duty
exemption under subheading
9802.00.80, HTSUS. In that case,
DaimlerChrysler Corporation assembled
trucks in Mexico with sheet metal
components from the United States. The
sheet metal components were initially
treated with primer coats designed to
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Jkt 214001
prevent corrosion. After heat treatment,
color coats and clear coats, referred to
as ‘‘top coats’’, were applied to the sheet
metal components.
Customs and Border Protection
(‘‘CBP’’) considered the primer coats to
be preservative in nature and,
consequently, determined that the
application of the primer coats was an
operation incidental to the assembly
process under § 10.16(b)(3). However,
CBP considered the top coats to be
decorative in nature because they were
intended primarily to enhance the
appearance of the trucks. Because CBP
did not consider application of the top
coats to be an operation incidental to
the assembly process pursuant to
§ 10.16(c)(3), these operations were not
eligible for a partial duty exemption
under subheading 9802.00.80, HTSUS.
Upon considering this particular issue
on appeal, the U.S. Court of Appeals for
the Federal Circuit held that subheading
9802.00.80, HTSUS, unambiguously
provides that painting is an operation
incidental to the assembly process.
Therefore, the court determined that the
distinction between preservative and
decorative painting set forth in § 10.16
is invalid.
In order to implement the court’s
interpretation of subheading 9802.00.80,
HTSUS, CBP is amending § 10.16 so as
to eliminate the distinction in the
regulation between preservative and
decorative painting. Section 10.16(b)(3)
is amended to provide that applying
paint or preservative coating, including
preservative metallic coating, lubricants,
or protective encapsulation, constitutes
an operation incidental to the assembly
process for purposes of subheading
9802.00.80, HTSUS. In addition, this
document removes from the regulations
§ 10.16(c)(3), which currently provides
that painting primarily intended to
enhance the appearance of an article, or
to impart distinctive features or
characteristics, is not considered an
operation incidental to the assembly
process. Sections 10.16(c)(4) and (c)(5)
are redesignated as §§ 10.16(c)(3) and
(c)(4), respectively.
The amendments conform the
regulations to reflect the decision issued
by the United States Court of Appeals
for the Federal Circuit in
DaimlerChrysler Corporation v. United
States by removing from § 10.16 the
distinction between preservative and
decorative painting. Under the
amendments, for example, the
application of primer coats and top
coats will both be considered incidental
to the assembly process for purposes of
the partial duty exemption under
subheading 9802.00.20, HTSUS. Finally,
this document amends §§ 10.16(b) and
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(c) by removing the word ‘‘shall’’ each
place it appears and adding, in its place,
the word ‘‘will’’.
Inapplicability of Prior Public Notice
This document deletes from the
regulations a provision determined to be
invalid by the United States Court of
Appeals for the Federal Circuit and
benefits the public by expanding the
scope of painting operations that will be
considered incidental to the assembly
process and thus eligible for a partial
duty exemption under subheading
9802.00.80, HTSUS. For these reasons,
CBP has determined, pursuant to the
provisions of 5 U.S.C. 553(b)(B), that
prior public notice and comment
procedures on this regulation are
unnecessary and contrary to the public
interest.
Regulatory Flexibility Act
Because no notice of proposed
rulemaking is required, this document is
not subject to the provisions of the
Regulatory Flexibility Act (5 U.S.C. 601
et seq.).
Signing Authority
This document is being issued in
accordance with § 0.1(a)(1) of the CBP
regulations (19 CFR 0.1(a)(1)) pertaining
to the authority of the Secretary of the
Treasury (or his/her delegate) to
approve regulations related to certain
customs revenue functions.
List of Subjects in 19 CFR Part 10
Assembly, Customs duties and
inspection, Imports, Preference
programs, Reporting and recordkeeping
requirements, Trade agreements.
Amendments to the CBP Regulations
For the reasons set forth above, part 10
of title 19 of the Code of Federal
Regulations (19 CFR part 10) is
amended as follows:
I
PART 10—ARTICLES CONDITIONALLY
FREE, SUBJECT TO A REDUCED
RATE, ETC.
1. The general authority citation for
part 10 continues to read in part as
follows:
I
Authority: 19 U.S.C. 66, 1202 (General
Note 3(i), Harmonized Tariff Schedule of the
United States (HTSUS)), 1321, 1481, 1484,
1498, 1508, 1623, 1624, 3314;
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2. In § 10.16:
a. In paragraph (b), the introductory
paragraph and paragraph (b)(3) are
revised;
I b. In paragraph (c), the introductory
text is amended by removing the word
‘‘shall’’ each place it appears in the first
I
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Federal Register / Vol. 73, No. 114 / Thursday, June 12, 2008 / Rules and Regulations
sentence and adding, in its place, the
word ‘‘will’’;
I c. Paragraph (c)(3) is removed; and
I d. Paragraphs (c)(4) and (c)(5) are
redesignated as paragraphs (c)(3) and
(c)(4), respectively.
The revisions read as follows:
§ 10.16
Assembly abroad.
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(b) Operations incidental to the
assembly process. Operations incidental
to the assembly process whether
performed before, during, or after
assembly, do not constitute further
fabrication, and will not preclude the
application of the exemption. The
following are examples of operations
which are incidental to the assembly
process:
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(3) Application of paint or
preservative coating, including
preservative metallic coating, lubricants,
or protective encapsulation;
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Approved: June 6, 2008.
Jayson P. Ahern,
Acting Commissioner, U.S. Customs and
Border Protection.
Timothy E. Skud,
Deputy Assistant Secretary of the Treasury.
[FR Doc. E8–13203 Filed 6–11–08; 8:45 am]
BILLING CODE 9111–14–P
provisions of the Internal Revenue Code
on partnership allocations.
DATES: This correction is effective June
12, 2008, and is applicable on May 19,
2008.
FOR FURTHER INFORMATION CONTACT:
Jonathan E. Cornwell and Kevin I.
Babitz at (202) 622–3050 (not a toll-free
number).
SUPPLEMENTARY INFORMATION:
Background
The final regulations that are the
subject of this document are under
section 704 of the Internal Revenue
Code.
Need for Correction
As published, final regulations (TD
9398) contain an error that may prove to
be misleading and is in need of
clarification.
Correction of Publication
Accordingly, the publication of the
final regulations (TD 9398), which were
the subject of FR Doc. E8–11176, is
corrected as follows:
On page 28701, column 2, in the
preamble, under the paragraph heading
‘‘B. The Baseline for Comparison in
§ 1.704–1(b)(2)(iii)’’, line 2 from the
bottom of the second paragraph, the
language ‘‘and (2) and the conclusions
reached by’’ is corrected to read ‘‘and (2)
and the conclusions reached by’’.
I
26 CFR Part 1
LaNita Van Dyke,
Chief, Publications and Regulations Branch,
Legal Processing Division, Associate Chief
Counsel, (Procedure and Administration).
[FR Doc. E8–13251 Filed 6–11–08; 8:45 am]
[TD 9398]
BILLING CODE 4830–01–P
DEPARTMENT OF THE TREASURY
Internal Revenue Service
RIN 1545–BD70
DEPARTMENT OF THE TREASURY
Partner’s Distributive Share;
Correction
Internal Revenue Service
Internal Revenue Service (IRS),
Treasury.
ACTION: Final regulations; correction.
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AGENCY:
SUMMARY: This document contains a
correction to final regulations (TD 9398)
that were published in the Federal
Register on Monday, May 19, 2008 (73
FR 28699) providing rules for testing
whether the economic effect of an
allocation is substantial within the
meaning of section 704(b) where
partners are look-through entities or
members of a consolidated group. The
final regulations clarify the application
of section 704(b) to partnerships the
interests of which are owned by lookthrough entities and members of
consolidated groups and, through an
example, reiterate the effect of other
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16:29 Jun 11, 2008
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26 CFR Part 1
[TD 9398]
RIN 1545–BD70
Partner’s Distributive Share;
Correction
Internal Revenue Service (IRS),
Treasury.
ACTION: Correcting amendments.
AGENCY:
SUMMARY: This document contains
corrections to final regulations (TD
9398) that were published in the
Federal Register on Monday, May 19,
2008 (73 FR 28699) providing rules for
testing whether the economic effect of
an allocation is substantial within the
meaning of section 704(b) where
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33301
partners are look-through entities or
members of a consolidated group. The
final regulations clarify the application
of section 704(b) to partnerships the
interests of which are owned by lookthrough entities and members of
consolidated groups and, through an
example, reiterate the effect of other
provisions of the Internal Revenue Code
on partnership allocations.
DATES: This correction is effective June
12, 2008, and is applicable on May 19,
2008.
FOR FURTHER INFORMATION CONTACT:
Jonathan E. Cornwell and Kevin I.
Babitz at (202) 622–3050 (not a toll-free
number).
SUPPLEMENTARY INFORMATION:
Background
The final regulations that are the
subject of this document are under
section 704 of the Internal Revenue
Code.
Need for Correction
As published, final regulations (TD
9398) contain errors that may prove to
be misleading and are in need of
clarification.
List of Subjects in 26 CFR Part 1
Income taxes, Reporting and
recordkeeping requirements.
Correction of Publication
Accordingly, 26 CFR part 1 is
corrected by making the following
correcting amendments:
I
PART 1—INCOME TAXES
Paragraph 1. The authority citation
for part 1 continues to read, in part, as
follows:
I
Authority: 26 U.S.C. 7805 * * *
I Par. 2. Section 1.704–1 is amended as
follows:
1. In paragraph (b)(2)(iii)(d)(3), the
last sentence, the language ‘‘In the case
of a controlled foreign corporation that
is a look-through entity, the tax
attributes to be taken into account are
those of any person that is a United
States shareholder (as defined in
paragraph (b)(2)(iii)(d)(5) of this section)
of the controlled foreign corporation, or,
if the United States shareholder is a
look-through entity, a United States
person that owns an interest in such
shareholder directly or indirectly
through one or more look-through
entities.’’ is removed and the language
‘‘In the case of a controlled foreign
corporation that is a look-through entity,
the tax attributes to be taken into
account are those of any person that is
a United States shareholder (as defined
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]]>Agencies
[Federal Register Volume 73, Number 114 (Thursday, June 12, 2008)]
[Rules and Regulations]
[Pages 33299-33301]
From the Federal Register Online via the Government Printing Office [www.gpo.gov]
[FR Doc No: E8-13203]
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DEPARTMENT OF HOMELAND SECURITY
U.S. Customs and Border Protection
DEPARTMENT OF THE TREASURY
19 CFR Part 10
[CBP Dec. 08-21]
RIN 1505-AB90
Articles Assembled Abroad: Operations Incidental to the Assembly
Process
AGENCIES: Customs and Border Protection, Department of Homeland
Security; Department of the Treasury.
ACTION: Final rule.
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SUMMARY: This document amends the Customs and Border Protection
(``CBP'') Regulations in title 19 of the Code of Federal Regulations
(19 CFR) in order to remove a provision that draws a distinction
between preservative and decorative painting for purposes of the
partial duty exemption under subheading 9802.00.80, Harmonized Tariff
Schedule of the United States (``HTSUS''). The change is made to
conform the CBP Regulations with the holding of a court decision in
which the regulatory distinction between preservative and decorative
painting was found to be invalid.
DATES: Final rule effective July 14, 2008.
FOR FURTHER INFORMATION CONTACT: Gerry O'Brien, Regulations and
Rulings, Office of International Trade, (202) 572-8792.
SUPPLEMENTARY INFORMATION:
Background
Subheading 9802.00.80, Harmonized Tariff Schedule of the United
States (``HTSUS''), 19 U.S.C. 1202, provides a partial duty exemption
for articles assembled abroad in whole or in part of fabricated
components, the products of the United States, which: (a) Were exported
in condition ready for assembly without further fabrication; (b) have
not lost their physical identity in such articles by change in form,
shape, or otherwise; and, (c) have not been advanced in value or
improved in condition abroad except by being assembled and except by
operations incidental to the assembly process, such as cleaning,
lubricating, and painting. The regulations implementing subheading
9802.00.80, HTSUS, are found within Sec. Sec. 10.11 through 10.26 of
title 19 of the Code of Federal Regulations (19 CFR 10.11-10.26).
Section 10.13 of title 19 of the CFR (19 CFR 10.13) provides that
articles that satisfy the requirements of subheading 9802.00.80, HTSUS,
are subject to a duty upon the full value of the imported article, less
the cost or, if no charge is made, the value of such products in the
United States. The rate of duty that is assessed on an imported article
eligible for the partial duty exemption under subheading 9802.00.80,
HTSUS, is that which is applicable to the imported article as a whole
under the appropriate HTSUS provision for such article.
Section 10.16 of title 19 of the CFR (19 CFR 10.16) concerns the
assembly operations for purposes of subheading 9802.00.80, HTSUS.
Section 10.16(b) sets forth general information regarding operations
considered incidental to the assembly process. Under Sec. 10.16(b),
operations incidental to the assembly process whether performed before,
during, or after assembly, do not constitute further fabrication, and
will not preclude the application of the exemption. Examples of
operations considered incidental to the assembly process are provided
under
[[Page 33300]]
Sec. Sec. 10.16(b)(1)-(7). The application of preservative paint or
coating, including preservative metallic coating, lubricants, or
protective encapsulation is currently considered an operation
incidental to the assembly process under Sec. 10.16(b)(3).
Section 10.16(c) sets forth general information regarding
operations that are not considered incidental to the assembly process.
Under Sec. 10.16(c), any significant process, operation, or treatment
other than assembly whose primary purpose is the fabrication,
completion, physical or chemical improvement of a component, or which
is not related to the assembly process, whether or not it effects a
substantial transformation of the article, will not be regarded as
incidental to the assembly process and will preclude the application of
the duty exemption to the article. Examples of operations that are not
considered incidental to the assembly process are set forth under
Sec. Sec. 10.16(c)(1)-(5). Pursuant to Sec. 10.16(c)(3), painting
primarily intended to enhance the appearance of an article or to impart
distinctive features or characteristics is not currently considered an
operation incidental to the assembly process.
As indicated, Sec. 10.16 currently draws a distinction between
preservative and decorative painting for purposes of the partial duty
exemption under subheading 9802.00.80, HTSUS: Painting operations
performed abroad that are deemed to be ``preservative'' in nature are
considered incidental to the assembly process under Sec. 10.16(b)(3)
and will not preclude application of the partial duty exemption under
subheading 9802.00.80, HTSUS; and, painting operations performed abroad
that are deemed to be ``decorative'' in nature are not considered
incidental to the assembly process under Sec. 10.16(c)(3) and will
preclude application of the partial duty exemption under subheading
9802.00.80, HTSUS.
Explanation of Amendments
In DaimlerChrysler Corporation v. United States, 361 F.3d 1378
(Fed. Cir. 2004), the United States Court of Appeals for the Federal
Circuit considered the issue of whether Sec. 10.16 was valid to the
extent that the regulation draws this distinction between preservative
and decorative painting for purposes of the partial duty exemption
under subheading 9802.00.80, HTSUS. In that case, DaimlerChrysler
Corporation assembled trucks in Mexico with sheet metal components from
the United States. The sheet metal components were initially treated
with primer coats designed to prevent corrosion. After heat treatment,
color coats and clear coats, referred to as ``top coats'', were applied
to the sheet metal components.
Customs and Border Protection (``CBP'') considered the primer coats
to be preservative in nature and, consequently, determined that the
application of the primer coats was an operation incidental to the
assembly process under Sec. 10.16(b)(3). However, CBP considered the
top coats to be decorative in nature because they were intended
primarily to enhance the appearance of the trucks. Because CBP did not
consider application of the top coats to be an operation incidental to
the assembly process pursuant to Sec. 10.16(c)(3), these operations
were not eligible for a partial duty exemption under subheading
9802.00.80, HTSUS.
Upon considering this particular issue on appeal, the U.S. Court of
Appeals for the Federal Circuit held that subheading 9802.00.80, HTSUS,
unambiguously provides that painting is an operation incidental to the
assembly process. Therefore, the court determined that the distinction
between preservative and decorative painting set forth in Sec. 10.16
is invalid.
In order to implement the court's interpretation of subheading
9802.00.80, HTSUS, CBP is amending Sec. 10.16 so as to eliminate the
distinction in the regulation between preservative and decorative
painting. Section 10.16(b)(3) is amended to provide that applying paint
or preservative coating, including preservative metallic coating,
lubricants, or protective encapsulation, constitutes an operation
incidental to the assembly process for purposes of subheading
9802.00.80, HTSUS. In addition, this document removes from the
regulations Sec. 10.16(c)(3), which currently provides that painting
primarily intended to enhance the appearance of an article, or to
impart distinctive features or characteristics, is not considered an
operation incidental to the assembly process. Sections 10.16(c)(4) and
(c)(5) are redesignated as Sec. Sec. 10.16(c)(3) and (c)(4),
respectively.
The amendments conform the regulations to reflect the decision
issued by the United States Court of Appeals for the Federal Circuit in
DaimlerChrysler Corporation v. United States by removing from Sec.
10.16 the distinction between preservative and decorative painting.
Under the amendments, for example, the application of primer coats and
top coats will both be considered incidental to the assembly process
for purposes of the partial duty exemption under subheading 9802.00.20,
HTSUS. Finally, this document amends Sec. Sec. 10.16(b) and (c) by
removing the word ``shall'' each place it appears and adding, in its
place, the word ``will''.
Inapplicability of Prior Public Notice
This document deletes from the regulations a provision determined
to be invalid by the United States Court of Appeals for the Federal
Circuit and benefits the public by expanding the scope of painting
operations that will be considered incidental to the assembly process
and thus eligible for a partial duty exemption under subheading
9802.00.80, HTSUS. For these reasons, CBP has determined, pursuant to
the provisions of 5 U.S.C. 553(b)(B), that prior public notice and
comment procedures on this regulation are unnecessary and contrary to
the public interest.
Regulatory Flexibility Act
Because no notice of proposed rulemaking is required, this document
is not subject to the provisions of the Regulatory Flexibility Act (5
U.S.C. 601 et seq.).
Signing Authority
This document is being issued in accordance with Sec. 0.1(a)(1) of
the CBP regulations (19 CFR 0.1(a)(1)) pertaining to the authority of
the Secretary of the Treasury (or his/her delegate) to approve
regulations related to certain customs revenue functions.
List of Subjects in 19 CFR Part 10
Assembly, Customs duties and inspection, Imports, Preference
programs, Reporting and recordkeeping requirements, Trade agreements.
Amendments to the CBP Regulations
0
For the reasons set forth above, part 10 of title 19 of the Code of
Federal Regulations (19 CFR part 10) is amended as follows:
PART 10--ARTICLES CONDITIONALLY FREE, SUBJECT TO A REDUCED RATE,
ETC.
0
1. The general authority citation for part 10 continues to read in part
as follows:
Authority: 19 U.S.C. 66, 1202 (General Note 3(i), Harmonized
Tariff Schedule of the United States (HTSUS)), 1321, 1481, 1484,
1498, 1508, 1623, 1624, 3314;
* * * * *
0
2. In Sec. 10.16:
0
a. In paragraph (b), the introductory paragraph and paragraph (b)(3)
are revised;
0
b. In paragraph (c), the introductory text is amended by removing the
word ``shall'' each place it appears in the first
[[Page 33301]]
sentence and adding, in its place, the word ``will'';
0
c. Paragraph (c)(3) is removed; and
0
d. Paragraphs (c)(4) and (c)(5) are redesignated as paragraphs (c)(3)
and (c)(4), respectively.
The revisions read as follows:
Sec. 10.16 Assembly abroad.
* * * * *
(b) Operations incidental to the assembly process. Operations
incidental to the assembly process whether performed before, during, or
after assembly, do not constitute further fabrication, and will not
preclude the application of the exemption. The following are examples
of operations which are incidental to the assembly process:
* * * * *
(3) Application of paint or preservative coating, including
preservative metallic coating, lubricants, or protective encapsulation;
* * * * *
Approved: June 6, 2008.
Jayson P. Ahern,
Acting Commissioner, U.S. Customs and Border Protection.
Timothy E. Skud,
Deputy Assistant Secretary of the Treasury.
[FR Doc. E8-13203 Filed 6-11-08; 8:45 am]
BILLING CODE 9111-14-P
