Interpretation ID: nht80-4.24

DATE: 12/04/80

FROM: AUTHOR UNAVAILABLE; Frank Berndt; NHTSA

TO: Volkswagen of America Inc.

TITLE: FMVSR INTERPRETATION

TEXT: This is in reply to your letter of October 28, 1980, enclosing a letter to the Environmental Protection Agency asking several questions about the relationship of your operation to the joint importation regulations.

As you have explained it the facts appear to be these: Volkswagen of America (VWoA) imports certain items of motor vehicle equipment which are incorporated together with parts of domestic manufacture into automobiles manufactured in the United States. As the components do not enter the "U.S. Customs Territory" en route to the plant, which is in a Foreign Trade Subzone, HS-7 forms are not provided at time of importation, but are furnished to Customs on a weekly basis together with formal Consumption Entries. You have asked

1) Must we file a [HS-7 Form] with each Consumption Entry?

The answer is no. Under the joint Custom-DOT importation regulation, 19 CFR 12.80(b), declarations are required for equipment items "offered for introduction into the Customs Territory of the United States." Such an introduction might be deemed to occur upon entry into interstate commerce of the motor vehicle incorporating the parts shipped from abroad (i.e. when it leaves the Subzone). But since the vehicle itself must be certified as meeting all applicable Federal motor vehicle safety standards we see no useful purpose to be served by requiring VWoA to submit HS-7 Forms for these parts, no matter what forms are required by other Federal agencies.

2) Do we have to amend previously filed forms?

For the reasons indicated in reply to your first question there is no need for VWoA to continue burdening either itself or this agency with these forms, amended or otherwise.

3) Do we have to enter "pilot vehicles" under a Customs Temporary Importation Bond (T.I.B.) Entry, or can we pay duty on them when they are withdrawn from the Subzone?

This question which you asked EPA has no apparent applicability to our regulations and I surmise that you are asking whether you must file a HS-7 Form with pilot vehicles and at what point is the filing appropriate.

No filing is necessary -- We understand the "pilot vehicle" to be a pre-production prototype manufactured in the New Stanton plant. Although that plant may be outside the Customs Territory of the United States for purposes of Customs regulations, it is within the "United States" under the National Traffic and Motor Vehicle Safety Act. Therefore when the vehicle leaves the Subzone, it is not "imported" into the United States and no HS-7 Form is required. Driving the pilot vehicle on the public roads outside the Subzone, however, introduces it into interstate commerce and it must comply with all applicable Federal motor vehicle safety standards if VWoA is not to be in violation of Section 108(a)(1)(A) of the Act (15 U.S.C. 1397(a)(1)(A)).

I hope this answers your questions.

SINCERELY,

VOLKSWAGEN OF AMERICA, INC.

WESTMORELAND ASSEMBLY PLANT

October 28, 1980

Department of Transportation NHTSA

Attention Chief Counsel - NHTSA

Gentlemen:

This will serve to confirm my telephone conversation with Mr. Buckley on October 27, 1980. We briefly discussed certain questions that we have relative to filing Customs entries and associated documents for automobiles and automobile trucks withdrawn from our Foreign Trade Subzone. The same questions have been placed before the EPA. Therefore, we respectively request that the enclosed letter to EPA be accepted and the questions asked be answered in behalf of DOT. This would involve the filing of the DOT form HS-7 and your position on our pilot vehicles.

If you should have any questions pertaining to the above or the enclosed, please do not hesitate to contact me at (412) 696-6358.

David N. Miller, Jr.

Manager Foreign Trade Zone Operations

ATTACH.

CC: E. BUCKLEY -- NHTSA

VOLKSWAGEN OF AMERICA, INC.

WESTMORELAND ASSEMBLY PLANT

October 28, 1980

Robert Marconi Attorney for the Investigations/Imports Section Manufacturers Operations Div. (EN-340) Environmental Protection Agency

Dear Sir:

This will serve to confirm our telephone conversation during the week of October 6, 1980. As discussed, our Westmoreland Assembly Plant is a Foreign Trade Subzone (#33A), and we have some unique problems. Possibly some background information would be helpful for you to better answer our questions.

Our Subzone was activated on January 2, 1979. We receive both foreign and domestic automotive components to be assembled together to produce our vehicles. The majority of the foreign components move from the U.S. ports of arrival "in bond" to the plant. Such parts do not enter into the "U. S. Customs territory." After our vehicles are produced, they are withdrawn from the Subzone and at that time, they enter into the "U. S. Customs territory." Each day we submit to Customs a request to withdraw vehicles produced for domestic consumption. This is done on a CF 215, and attached thereto are the specific vehicle VIN numbers. (A separate CF 215 and VIN listing is filed for automobiles and automobile trucks.) Weekly, we prepare formal Consumption Entries (CF 7501) and submit them along with the EPA (3520-1) and DOT (HS-7) forms, which includes VIN listings previously filed with the respective CF 215s. For automobiles we pay duty on the composite foreign material content at the automobile duty rate. We pay duty on the individual foreign components at their various part tariff rates for automobile trucks. Vehicles exported from the Subzone under Transportation and Exportation Bond Entries (CF 7512) do not enter the "U. S. Customs territory," and no duties are paid and would not be reported to Customs on a CF 215 nor to EPA. Hopefully, this has given you some insight on our operations. If more details are required, please feel free to contact me.

Our inquiry covers three (3) situations, and the first two are somewhat related. The questions under discussion are as follows:

1) Must we file an EPA form 3520-1 with each Consumption Entry? Normally, vehicles produced outside of the United States and subsequently imported, require the filing of the EPA form. However, even though our vehicles have not entered the legal "U. S. Customs territory" until they are withdrawn from our Subzone for domestic consumption, they are still considered as being manufactured within the United States. U. S. Customs themselves have no problem with us not submitting these documents since they are only administratively handling your regulatory requirements for Consumption Entries covering motor vehicles.

2) Do we have to amend previously filed forms?

For Model Year 1980 (i.e. August. 1979 thru August, 1980), we produced 246,111 vehicles. Our initial analysis indicates that we reported only 245,995 to Customs, EPA and DOT. Therefore, it appears that 116 vehicles (VINs) which are a combination of automobiles and automobile trucks, have not been declared. A portion of these vehicles may have been properly exported plus entered under Customs Temporary Importation Bond (T.I.B.) Entries, and therefore, not reflected on CF 215, EPA and DOT documentation. To qualify what automobile and/or automobile truck was not reported on what date and applicable EPA and DOT form would be very time consuming and costly. Therefore, we make a proposal to submit for Model Year 1980 a complete VIN listing and identify those exported or entered under T.I.B. versus amending each EPA/DOT form. Also, please accept this as an alternate proposal for future Model Years instead of filing EPA/DOT forms on a weekly basis with our Consumption Entries.

3) Do we have to enter "pilot vehicles" under a Customs Temporary Importation Bond (T.I.B.) Entry or can we pay duty on them when they are withdrawn from the Subzone?

As with all automotive manufacturers, we produce a limited quantity of preproduction "pilot vehicles." We had seventy (70) for Model Year 1980 and forty-seven (47) for Model Year 1981. They are normally used for testing, evaluation, advertising, etc. It has been our normal practice to enter these vehicles under T.I.B. Entries. However, we would prefer to pay duty on them when they are withdrawn from the Subzone. Again, U. S. Customs has no problem with us paying duty on these vehicles versus entering them under T.I.B. Entries.

Your prompt consideration to our questions and proposals would be greatly appreciated. If you should have any questions, please do not hesitate to contact me at (412) 696-6358.

David N. Miller, Jr. Manager Foreign Trade Zone Operations

CC: W. E. BOOTH, PORT DIRECTOR PITTSBURGH CUSTOMS; CHIEF COUNSEL -- NHTSA