[Federal Register Volume 67, Number 46 (Friday, March 8, 2002)]
[Proposed Rules]
[Pages 10636-10640]
From the Federal Register Online via the Government Publishing Office [www.gpo.gov]
[FR Doc No: 02-5557]


 ========================================================================
 Proposed Rules
                                                 Federal Register
 ________________________________________________________________________
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 This section of the FEDERAL REGISTER contains notices to the public of 
 the proposed issuance of rules and regulations. The purpose of these 
 notices is to give interested persons an opportunity to participate in 
 the rule making prior to the adoption of the final rules.
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  Federal Register / Vol. 67, No. 46 / Friday, March 8, 2002 / Proposed 
Rules  

[[Page 10636]]



DEPARTMENT OF THE TREASURY

Customs Service

19 CFR Part 10

RIN 1515-AC88


Prototypes Used Solely for Product Development, Testing, 
Evaluation, or Quality Control Purposes

AGENCY: Customs Service, Department of the Treasury.

ACTION: Proposed rule.

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SUMMARY: This document proposes to amend the Customs Regulations in 
order to establish rules and procedures under the Product Development 
and Testing Act of 2000 (PDTA). The purpose of the PDTA is to promote 
product development and testing in the United States by allowing the 
duty-free entry of articles, commonly referred to as prototypes, that 
are to be used exclusively in product development, testing, evaluation 
or quality control. The proposed regulations set forth the procedures 
for both the identification of those prototypes properly entitled to 
duty-free entry, as well as the permissible sale of such prototypes, 
following use in the United States, as scrap, waste, or for recycling.

DATES: Comments must be received on or before April 8, 2002.

ADDRESSES: Written comments may be addressed to and inspected at the 
Regulations Branch, U.S. Customs Service, 1300 Pennsylvania Avenue, 
NW., 3rd Floor, Washington, DC 20229.

FOR FURTHER INFORMATION CONTACT: Patricia Fitzpatrick, Office of Field 
Operations, (202-927-1106).

SUPPLEMENTARY INFORMATION:

Background

    The Product Development and Testing Act of 2000 (``PDTA'') was 
enacted on November 9, 2000, as part of the Tariff Suspension and Trade 
Act of 2000 (``Act'') (Pub. L. 106-476). The provisions of the PDTA are 
found in sections 1431-1435 of the Act.
    The purpose of the PDTA, as set forth in section 1432(b) of the 
Act, is to promote product development and testing in the United States 
by allowing the importation on a duty-free basis of articles commonly 
referred to as ``prototypes'' that are to be used exclusively for such 
product development, testing, evaluation or quality control.
    By way of background, Congress has found, as stated in section 
1432(a) of the Act, that a substantial amount of product development 
and testing occurs in the United States incident to the introduction 
and manufacture of new products both for domestic consumption and for 
export overseas. Product testing also occurs with respect to products 
already introduced into commerce in order to ensure that these products 
continue to meet specifications and perform as designed.
    Until the enactment of the PDTA, prototype articles have generally 
been subject to Customs duty when imported, unless the articles were 
eligible for duty-free treatment under a special trade program, such as 
the North American Free Trade Agreement (NAFTA) (19 U.S.C. 3301 et 
seq.), or unless they were entered under a temporary importation bond 
(TIB) (subheading 9813.00.30, Harmonized Tariff Schedule of the United 
States (HTSUS)).
    Furthermore, the value of these prototypes had to be included in 
the dutiable value of any imported production merchandise that resulted 
from the same design and development efforts to which the prototype 
articles themselves were dedicated. In effect, duty on a prototype good 
was assessed twice, once when the prototype was imported and a second 
time as part of the dutiable value of the related imported production 
merchandise. In this latter respect, the prototype would be considered 
to be an ``assist'' (see Sec. 152.102(a)(1), Customs Regulations (19 
CFR part 152)) and, as such, it would have to be included in the 
dutiable cost of any associated production merchandise that was later 
imported.
    Congress found that assessing duty twice on prototypes 
unnecessarily inflates costs for U.S. businesses, thereby reducing 
their competitiveness and thus discourages development and testing in 
the United States, and favors its occurrence overseas, given that duty 
would only be charged once, upon the subsequent importation of the 
related production merchandise.
    Consequently, to provide for the duty-free entry of prototypes, 
section 1433 of the Act amended the Harmonized Tariff Schedule of the 
United States (HTSUS) by inserting a new subheading 9817.85.01 in 
Subchapter XVII of Chapter 98, HTSUS. The free rate of duty, as noted 
in HTSUS subheading 9817.85.01, only pertains to products from a 
country that would be entitled to the ``Column 1'' rate of duty; 
otherwise, the relevant rate would be that applicable in the absence of 
HTSUS subheading 9817.85.01.)
    Additionally, section 1433 of the Act amended the HTSUS by 
including a new U.S. Note 6 in Subchapter XVII of Chapter 98, HTSUS, 
that defines the term ``prototypes'' as used in HTSUS subheading 
9817.85.01.
    As defined in U.S. Note 6(a) to Subchapter XVII, the term 
``prototypes'' means originals or models of articles that are either in 
the preproduction, production or postproduction stage and that are to 
be used exclusively for product development, testing, evaluation or 
quality control purposes. However, articles may not be classified as 
prototypes under HTSUS subheading 9817.85.01 if imported for automobile 
racing for purse, prize or commercial competition, as this activity is 
not considered to be product development, testing, evaluation, or 
quality control. For originals or models of articles that are in the 
production or postproduction stage to qualify as prototypes, they must 
be associated with a change in design from current production; this 
would include any refinement, advancement, improvement, development, or 
quality control in the product itself or in the means for producing the 
product.
    Pursuant to U.S. Note 6(b) to Subchapter XVII of Chapter 98, HTSUS, 
prototypes may only be imported in limited noncommercial quantities 
based on industry practice. Moreover, any articles that are subject to 
quantitative restrictions, antidumping orders or countervailing duty 
orders may not be classified as prototypes. However, articles that are 
subject to licensing requirements, or that must comply with laws, rules 
or regulations administered by agencies other than Customs before being 
imported, may be entered as prototypes if they comply with all

[[Page 10637]]

applicable provisions of law and otherwise meet the definition of 
prototypes in U.S. Note 6(a) to Subchapter XVII of Chapter 98, HTSUS.
    In addition, except as provided by the Secretary of the Treasury, 
prototypes or parts of prototypes may not be sold after importation 
into the United States or be incorporated into other products that are 
sold.
    By this document, Customs proposes to amend the Customs Regulations 
to add a new Sec. 10.91, pursuant to sections 1433-1435 of the Act, 
that would: (1) Establish requirements regarding the identification of 
prototypes at the time of their importation into the United States; and 
(2) establish requirements regarding the sale of prototypes, following 
their intended use in product development, testing and evaluation, as 
scrap, waste, or for recycling, if all applicable duties are tendered 
for sales of the prototypes, including prototypes and parts of 
prototypes that are incorporated into other products that are sold as 
scrap, waste, or recycled materials, at the rate of duty in effect for 
such scrap, waste, or recycled materials at the time of importation of 
the prototypes.

Declaration of Intent

    Entry or withdrawal from warehouse for consumption of a prototype 
under HTSUS subheading 9817.85.01 may be accepted by the port director 
as an effective declaration that the articles will be used solely for 
the purposes stated in the subheading. If it is believed the 
circumstances so warrant, the port director may request the submission 
of proof of actual use, executed and dated by the importer. While there 
is no particular form proposed for this declaration, it may either be 
submitted in writing, or electronically as authorized by Customs, and 
must include a description of the use made of the articles set forth in 
sufficient detail so as to enable the port director to determine 
whether the articles have been entitled to entry as claimed.

Sale

    The prototype or any part(s) of the prototype, after having been 
used for the purposes for which it was entered or withdrawn under HTSUS 
subheading 9817.85.01, may only be sold as scrap, waste, or for 
recycling. This includes a prototype or any part that is incorporated 
into another product, as scrap, waste, or recycled material. The 
importer must provide notice of such sale to the port director where 
the entry or withdrawal of the prototype was made. The notice of sale 
must be filed with a tender of appropriate duties within 10 business 
days of the sale.
    While no particular form is required for the notice of sale, a 
consumption entry (Customs Form 7501), appropriately modified, or an 
electronic equivalent as authorized by Customs, may be used for this 
purpose. If the article sold is dutiable, the notice must also be 
accompanied by the payment of any duty due. In any case, a notice must 
be submitted in connection with the sale, whether or not duty is 
payable. If the notice is filed electronically, payment of any duty 
owed will be handled through the Automated Clearinghouse (see 
Sec. 24.25, Customs Regulations (19 CFR 24.25)).
    Such notice of sale must be executed by the importer, or other 
person having knowledge of the facts surrounding the sale, and it must 
include the following: the identity of the prototype, the consumption 
entry number under which it was imported, a copy of the declaration of 
actual use, and a description of the condition of the prototype 
following use for the intended permissible purposes, including any 
damage, degradation or deterioration to the article resulting from such 
use; the name and address of the party to whom the article was sold, 
and (if known) the use to which the party intends to put the article; 
the HTSUS subheading number for scrap, waste, or recycled material, as 
applicable, claimed in connection with the sale of the prototype, 
together with the corresponding rate of duty in effect at the time the 
prototype was originally imported for consumption; the value of the 
prototype article (if dutiable and the duty owed is based upon value); 
and the title of the party executing the declaration along with the 
date of execution.
    For purposes of proposed Sec. 10.91, with respect to any duty owed 
on prototypes or parts that are sold as scrap, or waste, or for 
recycling, where the duty owed is based upon value, the relevant value 
is the market value of the prototypes or parts, based upon their 
character and condition following use for the purposes prescribed in 
HTSUS subheading 9817.85.01. In this regard, the market value will 
generally be measured by the selling price. If a prototype or part of a 
prototype becomes a component of another product that is sold as scrap, 
waste, or recycled material, the relevant market value would be that 
portion of the selling price attributable to the component (that is, 
the prototype or part of prototype).

Required Recordkeeping

    The importer must be prepared to submit to the Customs officer, if 
requested, such information, including any supporting documents, 
reports and records, as was necessary for the preparation of the 
declaration of use and, if applicable, the notice of sale. As 
previously noted, the submission of the notice of sale, if a sale 
occurs, is mandatory. The supporting documentary evidence for the 
notice of sale must be retained for a period of 5 years, as provided in 
Sec. 163.4(a), Customs Regulations (19 CFR 163.4(a)), from the date of 
its filing in complete and proper form. Supporting records must be made 
available to the Customs officer upon request in accordance with 
Sec. 163.6(a), Customs Regulations (19 CFR 163.6(a)). The notice, 
together with any related supporting evidence, may be subject to any 
verification that the port director reasonably deems necessary.

Effective Date

    As noted in section 1435(1) and (2) of the Act, duty-free treatment 
under the PDTA applies to an entry of a prototype under HTSUS 
subheading 9817.85.01 made on or after the date of enactment of the Act 
(November 9, 2000) as well as to an entry of a prototype (as defined in 
U.S. Note 6(a) to Subchapter XVII of Chapter 98, HTSUS) made under 
subheading 9813.00.30, for which liquidation has not become final as of 
November 9, 2000.
    In this latter regard, an entry under HTSUS subheading 9813.00.30 
is made under a temporary importation bond (TIB), and an entry made 
under a TIB does not liquidate, given that a TIB entry does not involve 
liquidated duties (see Sec. 10.31(h), Customs Regulations (19 CFR 
10.31(h)). Rather, upon satisfaction of the terms and conditions of the 
TIB, charges under the bond are cancelled (see Sec. 10.39, Customs 
Regulations (19 CFR 10.39)), and the related entry is ``closed'' (and 
not liquidated). Customs proposes in Sec. 10.91 to give effect to the 
intent of Congress underlying section 1435(2) that certain prototypes 
already entered under a TIB as of November 9, 2000, be allowed to take 
advantage of duty-free entry under the PDTA.
    To accomplish this, the importer must submit a written request, or 
an electronic equivalent as authorized by Customs, that a TIB entry 
under HTSUS subheading 9813.00.30, which had not been closed and for 
which the TIB period had not expired as of November 9, 2000, be 
converted instead into a duty-free consumption entry under HTSUS 
subheading 9817.85.01. Customs will so convert the TIB entry,

[[Page 10638]]

provided that the port director is satisfied that the entry is for 
articles that are ``prototypes'' as defined in U.S. Note 6(a) to 
Subchapter XVII of Chapter 98, HTSUS, and provided further that the 
entry was in effect and had not been closed (as opposed to having been 
finally liquidated), and the TIB period for the entry had not expired, 
as of November 9, 2000. When the TIB entry is so converted, the bond 
will be cancelled and the entry closed. The port director will provide 
a courtesy acknowledgment to the importer in writing or electronically 
once the conversion is complete.

Comments

    Before adopting this proposal, consideration will be given to any 
written comments that are timely submitted to Customs. Customs 
specifically requests comments on the clarity of this proposed rule and 
how it may be made easier to understand. Comments submitted will be 
available for public inspection in accordance with the Freedom of 
Information Act (5 U.S.C. 552), Sec. 1.4 of the Treasury Department 
Regulations (31 CFR 1.4), and Sec. 103.11(b), Customs Regulations (19 
CFR 103.11(b)), on regular business days between the hours of 9:00 a.m. 
and 4:30 p.m. at the Regulations Branch, U.S. Customs Service, 1300 
Pennsylvania Avenue, NW. 3rd Floor, Washington, D.C.

Regulatory Flexibility Act and Executive Order 12866

    The proposed regulations implement the terms and requirements of 
the PDTA which went into effect on November 9, 2000. The proposed 
amendments benefit the public by allowing the duty-free importation of 
prototypes that are to be used exclusively for product development and 
testing, thereby promoting such product development and innovation in 
the United States, as opposed to overseas. Accordingly, pursuant to the 
provisions of the Regulatory Flexibility Act (5 U.S.C. 601 et seq.), it 
is certified that, if adopted, the proposed amendments will not have a 
significant economic impact on a substantial number of small entities. 
Nor do the proposed amendments meet the criteria for a ``significant 
regulatory action'' as specified in E.O. 12866.

Paperwork Reduction Act

    The collections of information encompassed within this proposed 
rule have previously been reviewed and approved by the Office of 
Management and Budget (OMB) in accordance with the Paperwork Reduction 
Act of 1995 (44 U.S.C. 3507) and assigned OMB Control Numbers 1515-0091 
(Requirement of importer to maintain accurate, detailed records on use 
or other disposition of imported merchandise for ``actual use'' duty 
assessment requirements); and 1515-0109 (Certificate of importer to 
verify actual use of articles imported duty-free or at a reduced rate 
of duty under actual use provisions). These collections encompass a 
claim for duty-free entry for prototype articles imported for use 
exclusively for development, testing, product evaluation or quality 
control purposes. This proposed rule does not present any material 
change to the existing approved information collections.
    An agency may not conduct or sponsor, and a person is not required 
to respond to, a collection of information unless the collection of 
information displays a valid control number assigned by OMB.
    Upon adoption of the proposed amendments as a final rule, part 178, 
Customs Regulations (19 CFR part 178), containing the list of approved 
information collections, will be revised to make reference to new 
Sec. 10.91.

Drafting Information

    The principal author of this document was Janet L. Johnson, Office 
of Regulations and Rulings, U.S. Customs Service. However, personnel 
from other offices participated in its development.

List of Subjects in 19 CFR Part 10

    Customs duties and inspection, Imports, Preference programs, 
Reporting and recordkeeping requirements, Shipments.

Proposed Amendments to the Regulations

    It is proposed to amend part 10, Customs Regulations (19 CFR part 
10), as set forth below.

PART 10--ARTICLES CONDITIONALLY FREE, SUBJECT TO A REDUCED RATE, 
ETC.

    1. The general authority citation for part 10 would continue to 
read as follows, and specific sectional authority for Sec. 10.91 would 
be added in appropriate numerical order to read as follows:

    Authority: 19 U.S.C. 66, 1202 (General Note 22, Harmonized 
Tariff Schedule of the United States (HTSUS)), 1321, 1481, 1484, 
1498, 1508, 1623, 1624, 3314.
* * * * *
    Sec. 10.91 also issued under Pub. L. 106-476 (114 Stat. 2101), 
sections 1434, 1435;
* * * * *
    2. It is proposed to amend part 10 by adding after Sec. 10.90 a new 
center heading entitled ``Prototypes'' followed by a new Sec. 10.91 to 
read as follows:

Prototypes


Sec. 10.91  Prototypes used exclusively for product development and 
testing.

    (a) Duty-free entry; declaration of intent; suspension of 
liquidation.
    (1) Entry or withdrawal for consumption. Articles defined as 
``prototypes'' and meeting the other requirements prescribed in 
paragraph (b) of this section may be entered or withdrawn from 
warehouse for consumption, duty-free, under subheading 9817.85.01, 
Harmonized Tariff Schedule of the United States (HTSUS), on Customs 
Form 7501 or an electronic equivalent. A separate entry or withdrawal 
must be made for a qualifying prototype article each time the article 
is imported/reimported to the United States.
    (2) Importer declaration.--(i) Entry accepted as declaration. Entry 
or withdrawal from warehouse for consumption under HTSUS subheading 
9817.85.01 may be accepted by the port director as an effective 
declaration that the articles will be used solely for the purposes 
stated in the subheading.
    (ii) Proof of Actual Use. If it is believed the circumstances so 
warrant, the port director may request the submission of proof of 
actual use, executed and dated by the importer. While there is no 
particular form for this declaration, it may either be submitted in 
writing, or electronically as authorized by Customs, and must include 
the following:
    (A) A description of the use to be made of the articles set forth 
in sufficient detail so as to enable the port director to determine 
whether the articles have been entitled to entry as claimed;
    (B) A statement that the articles are not to be put to any other 
use; and
    (C) A statement that neither the articles nor any parts of the 
articles will be sold, or be incorporated into other products that are 
sold, after the articles have been entered or withdrawn from warehouse 
for consumption and prior to the completion of their use as provided in 
HTSUS subheading 9817.85.01 (see paragraph (b)(2)(ii) of this section).
    (b) Articles classifiable as prototypes.--(1) Prototypes defined. 
In accordance with U.S. Note 6(a) to Subchapter XVII of Chapter 98, 
HTSUS, the term ``prototypes'' means originals or models of articles 
that:
    (i) Are either in the preproduction, production or postproduction 
stage and

[[Page 10639]]

are to be used exclusively for development, testing, product 
evaluation, or quality control purposes (not including automobile 
racing for purse, prize or commercial competition); and
    (ii) In the case of originals or models of articles that are either 
in the production or postproduction stage, are associated with a design 
change from current production (including a refinement, advancement, 
improvement, development or quality control in either the product 
itself or the means of producing the product).
    (2) Additional requirements. In accordance with U.S. Note 6(b) to 
Subchapter XVII of Chapter 98, HTSUS, the following additional 
restrictions apply to articles that may be classified as prototypes:
    (i) Importations limited. Prototypes may be imported pursuant to 
this section only in limited noncommercial quantities in accordance 
with industry practice.
    (ii) Sale prohibited after entry and prior to use. Prototypes or 
parts of prototypes may not be sold, or be incorporated into other 
products that are sold, after the prototypes have been entered or 
withdrawn from warehouse for consumption under HTSUS subheading 
9817.85.01, unless, after having been used for the purposes for which 
they were entered or withdrawn from warehouse under HTSUS subheading 
9817.85.01, such prototypes or any part(s) of the prototypes may be 
sold as scrap, waste, or for recycling, as prescribed in paragraph (d) 
of this section.
    (iii) Articles subject to laws of another agency. Articles that are 
subject to licensing requirements, or that must comply with laws, rules 
or regulations administered by an agency other than Customs before 
being imported, may be entered as prototypes pursuant to this section 
if they meet all applicable provisions of law and otherwise meet the 
definition of prototypes in paragraph (b)(1) of this section.
    (iii) Articles excluded from being prototypes. Articles subject to 
quantitative restrictions, antidumping orders or countervailing duty 
orders are excluded from being classified as prototypes under this 
section.
    (c) Sale of prototype following use.--(1) Sale. Prototypes or any 
part(s) of prototypes, after having been used for the purposes for 
which they were entered or withdrawn under HTSUS subheading 9817.85.01, 
may only be sold as scrap, waste, or for recycling. This includes a 
prototype or any part thereof that is incorporated into another 
product, as scrap, waste, or recycled material. In addition, prototypes 
or their parts may only be sold as scrap, waste, or for recycling, upon 
payment of applicable duty on the prototypes or parts, at the rate of 
duty in effect for such scrap, waste, or recycled materials at the time 
the prototypes were entered or withdrawn for consumption.
    (2) Notice of sale required. If, after a prototype has been used 
for the purposes contemplated in HTSUS subheading 9817.85.01, the 
prototype or any part(s) of the prototype (including a prototype or any 
part that is incorporated into another product) is sold as scrap, 
waste, or for recycling, the importer must provide notice of such sale 
to the port director where the entry or withdrawal of the prototype was 
made. A notice must be submitted in connection with the sale, whether 
or not duty is payable. The notice, if applicable, should not be 
submitted prior to the submission of the declaration of actual use (see 
paragraph (c)(1) of this section).
    (3) Form and content of notice; tender of duty. While no particular 
form is required for the notice of sale, a consumption entry (Customs 
Form 7501), appropriately modified, or an electronic equivalent as 
authorized by Customs, may be used for this purpose. The notice must be 
filed within 10 business days of the sale. If the article sold is 
dutiable, the payment of any duty due must be forwarded together with 
the notice (see paragraph (d)(1) of this section). If the notice is 
filed electronically, payment of any duty owed will be handled through 
the Automated Clearinghouse (see Sec. 24.25 of this chapter). In 
addition, the notice of sale must be executed by the importer, or other 
person having knowledge of the facts surrounding the sale, and must 
include the following:
    (i) The identity of the prototype, the consumption entry number 
under which it was imported, a copy of the declaration of actual use, 
along with a description of the condition of the prototype following 
use for the intended permissible purposes, including any damage, 
degradation or deterioration to the article resulting from such use;
    (ii) The name and address of the party to whom the article was 
sold, and (if known) the use to which the party intends to put the 
article;
    (iii) The HTSUS subheading number for scrap, waste, or recycled 
material, as applicable, claimed in connection with the sale of the 
prototype, together with the corresponding rate of duty in effect at 
the time the prototype was originally imported for consumption;
    (iv) The value of the prototype article (if dutiable and the duty 
owed is based upon value) (see paragraph (e)(2) of this section); and
    (v) The title of the party executing the declaration and the date 
of execution.
    (4) Failure to file timely notice. Failure to file timely the 
notice of sale or to deposit the appropriate duty shall be a breach of 
the importer's bond and result in the assessment of liquidated damages.
    (e) Recordkeeping; retention and production.--(1) Recordkeeping. 
The importer must be prepared to submit to the Customs officer, if 
requested, such information, including any supporting documents, 
reports and records, as was necessary for the preparation of the 
declaration of use in paragraph (a)(2)(ii) of this section, and the 
notice of sale in paragraph (c)(3) of this section. The submission of 
the notice of sale is mandatory if a sale occurs after importation. The 
notice, together with any related supporting evidence, may be subject 
to such verification as the port director reasonably deems necessary. 
Such documentary evidence must be made available to the Customs 
officer, upon request, for a period of five years from the date of 
filing in complete and proper form, the declaration of use, if 
requested, and, if applicable, the notice of sale, as provided in 
Sec. 163.4 of this chapter. The supporting records must be made 
available to the Customs officer upon request in accordance with 
Sec. 163.6 of this chapter. The specific documentary evidence necessary 
to support notice of sale, if applicable, consists of:
    (i) The identity of the prototype, including the identity of the 
consumption entry under which it was imported, and a description of the 
condition of the prototype following use for the intended permissible 
purposes, including any damage, degradation or deterioration to the 
article resulting from such use;
    (ii) The name and address of the party to whom the article was 
sold, and (if known) the use to which the party intends to put the 
article;
    (iii) The HTSUS subheading number for scrap, waste, or recycled 
material, as applicable, claimed in connection with the sale of the 
prototype, together with the corresponding rate of duty in effect at 
the time the prototype was originally imported for consumption;
    (iv) The value of the prototype article (if dutiable and the duty 
owed is based upon value) (see paragraph (e)(2) of this section); and
    (v) The title of the party executing the declaration and the date 
of execution.
    (2) Relevant value for used prototype or parts sold. For purposes 
of this section, with respect to any duty owed

[[Page 10640]]

on prototypes or parts of prototypes that are sold as scrap, or waste, 
or for recycling, where the duty owed is based upon value, the relevant 
value is the market value of the prototypes or parts, based upon their 
character and condition following use for the purposes prescribed in 
HTSUS subheading 9817.85.01. The market value will generally be 
measured by the selling price. Should a prototype or part of a 
prototype become a component of another product that is sold as scrap, 
waste, or recycled material, the relevant market value would be that 
portion of the selling price attributable to the component (prototype 
or part) as provided in this paragraph.
    (f) Articles admitted under TIB.--(1) Duty-free entry available. 
Under the procedure presented in paragraph (f)(2) of this section, an 
entry of an article made under a temporary importation bond (TIB) 
solely for testing, experimental or review purposes under HTSUS 
subheading 9813.00.30 may be converted into a duty-free entry under 
HTSUS subheading 9817.85.01, if the following conditions exist:
    (i) The article meets the definition for ``prototypes'' in 
paragraph (b) of this section (U.S. Note 6(a) to Subchapter XVII, 
Chapter 98, HTSUS); and
    (ii) The TIB entry for the article was in effect and had not been 
closed, and the TIB period for the article had not expired, as of 
November 9, 2000.
    (2) Procedure for converting TIB entry to duty-free entry.--(i) 
Importer request. The importer must submit a written request, or an 
electronic equivalent as authorized by Customs, that a TIB entry made 
under HTSUS subheading 9813.00.30, which was in effect and had not been 
closed, and for which the TIB period had not expired, as of November 9, 
2000, be converted instead into a duty-free consumption entry under 
HTSUS subheading 9817.85.01.
    (ii) Action by Customs. Customs will convert the TIB entry under 
HTSUS subheading 9813.00.30 to a duty-free entry under HTSUS subheading 
9817.85.01, provided that the port director is satisfied that the 
conditions set forth in paragraphs (f)(1)(i) and (f)(1)(ii) of this 
section have been met. When the TIB entry is converted, the bond will 
be cancelled and the entry closed. Once the conversion is complete, the 
port director will provide a courtesy acknowledgment to this effect to 
the importer in writing or electronically.

Robert C. Bonner,

Acting Commissioner of Customs.
    Approved: March 5, 2002.
Timothy E. Skud,
Acting Deputy Assistant Secretary of the Treasury.
[FR Doc. 02-5557 Filed 3-7-02; 8:45 am]
BILLING CODE 4820-02-P