The first column, entitled "Heading/Subheading", sets forth the 4-, 6-, or 8-digit number assigned to the class of goods described to its right. It should be recalled that the latter is the only numerical code at the legal level which is determined by the United States, since the 4- and 6-digit designators are part of the international convention.

The second column is labelled "Stat. Suf. & cd", meaning statistical suffix and check digit. Wherever a tariff rate line is annotated to permit collection of trade data on narrower classes of merchandise, the provisions adopted administratively by an interagency committee under section 484(e) of the 1930 Act (19 U.S.C. 1484(e)) are given 2 more digits which must be included on the entry documents presented to Customs officials. Where no annotations exist, 2 additional zeroes are added to the 8-digit legal code applicable to the goods in question. The goods falling in any of the 10-digit statistical reporting numbers of a particular 8-digit legal provision receive the same duty treatment. The last digit, the check digit, is reported to permit computers examining an entry document or export declaration to ascertain if the particular subheading number exists or was erroneously copied.

The third column, "Article Description", contains a detailed description of the goods falling within each heading and statistical reporting number.

In the fourth column, "Units of Quantity", the unit of measure in which the goods in question are to be reported for statistical purposes is set forth. These units are administratively determined under section 484(e) of the Tariff Act of 1930. In many instances, the unit of quantity is also the basis for the assessment of the duty. For many categories of products, two or three different figures in different units must be reported (e.g., for some textiles, weight and square meters; for some apparel, the number of garments, value, and weight), with the second unit of quantity frequently being the basis for administering a measure regulating imports, such as a quota. Where an "X" appears in this column, only the value of the shipment must be reported.

The last three columns appear under the common heading "Rates of Duty" and are entitled "General", "Special", and "2", respectively. These columns contain all of the various rates of duty that apply to the goods of the pertinent provision, depending on the source of the goods and other criteria. Their application to goods originating in particular countries is discussed below under the heading "Applicable duty treatment."

A rate of duty generally has one of three forms: ad valorem, specific or compound. An ad valorem rate of duty is expressed in terms of a percentage to be assessed upon the transaction value of the goods in question. A specific rate is expressed in terms of a stated amount payable on some quantity of the imported goods, such as 17 cents per pound. Compound duty rates combine both ad valorem and specific components (such as 5% ad valorem plus 17 cents per pound).

Chapter 98 comprises special classification provisions permitting, in specified circumstances, duty-free entry or partial duty-free entry of goods which would otherwise be subject to duty. The article descriptions set forth in the headings of this chapter enunciate

the circumstances in which goods are eligible for this duty treatment. Thus, articles reimported after having been exported from the United States; goods subject to personal exemptions (such as those for returning U.S. residents); government importations; goods for religious, educational, scientific, or other qualifying institutions; samples; and articles admitted under bond are some of the goods eligible for such duty treatment.

Chapter 99 contains provisions, generally temporary in nature, that modify or otherwise affect the duty treatment of specified articles in the other chapters. Additional duties and suspensions or reductions of duties enacted by Congress are included, as are temporary modifications (increases or decreases in duty rates) and import restrictions (quotas, import fees, and so forth) proclaimed by the President under trade agreements or pursuant to legislation. However, antidumping and countervailing duties imposed under the authority of the Tariff Act of 1930, as amended, to eliminate the unfair price advantage of underpriced or subsidized imports are not included. These duties are listed in the Federal Register.

Applicable duty treatment

Column 1-General.-The rates of duty appearing in the column 1-general of the HTS are imposed on products of countries that have been extended most-favored-nation (MFN) or non-discriminatory trade treatment by the United States, unless such imports are eligible for treatment under a preferential tariff scheme discussed below. The column 1-general duty rates are concessional and have been set through reductions of full statutory rates in negotiations with other countries.

Column 1-Special.-General note 3 to the HTS sets forth the special tariff treatment afforded to covered products of designated countries or under specified measures. These programs and the corresponding symbols by which they are indicated in the special subcolumn along with the appropriate rates of duty are as follows:

The presence of one or more of these symbols indicates eligibility of the described articles under the respective program. In the case of the GSP, a symbol followed by an asterisk indicates that, although the described articles are generally eligible for duty-free entry, such tariff treatment does not apply to products of the designated beneficiary countries specified in general note 3(c). In the case of CBERA, the asterisk indicates that some of the described articles are ineligible for duty-free entry. These programs are discussed in greater detail below.

Column 2.-The column 2 rates of duty apply to products of countries that have been denied MFN status by the United States (see general note 3(b)); these rates are the full statutory rates, gen

erally as enacted by the highly restrictive Tariff Act of 1930. (See separate description and law on most-favored-nation treatment for list of countries subject to column 2 rates of duty.)

Special duty exemptions and preferences

This section describes certain provisions in chapter 98 of the HTS that grant duty-free treatment to various categories of American goods returned from abroad and that allow U.S. tourists to import foreign articles duty-free. It also describes provisions in the general notes of the HTS that provide duty-free treatment to imports from the U.S. insular possessions, to imports of Canadian auto products under the Automotive Products Trade Act and to articles imported for use in civil aircraft under the Agreement on Trade in Civil Aircraft.

American goods returned (HTS subheading 9801.00.10)-American goods may be returned to the United States duty-free under HTS subheading 9801.00.10 if they are not advanced in value or improved in condition while abroad. The courts have interpreted this provision to allow duty-free entry of American goods which had been exported for sorting, separating (e.g., by grade, color, size, etc.), culling out, and discarding defective items and repackaging in certain containers, so long as the article itself has not been the object of advancement in value or improvement in condition while abroad.

American goods repaired or altered abroad (HTS subheading 9802.00.40).-HTS subheading 9802.00.40 provides that goods exported from the United States for repairs or alterations abroad are subject to duty upon their reimportation into the United States (at the duty rate applicable to the imported article) only upon the value of such repairs or alterations. The provision applies to processing such as restoration, renovation, adjustment, cleaning, correction or manufacturing defects, or similar treatment that changes the condition of the exported article but does not change its essential character. The value of the repairs or processing for purposes of assessing duties is generally determined, in accordance with U.S. note 3 to subchapter II of chapter 98, by

(1) the cost of the repairs or alterations to the importer, or (2) if no charge is made, the value of the repairs or alterations, as set out in the entry documents.

However, if the customs officer finds that the amount shown in the entry document is not reasonable, the value of the repairs or alterations will be determined in accordance with the valuation standards set out in section 402 of the Tariff Act of 1930.5

American metal articles processed abroad (Subheading 9802.00.60).—HTS subheading 9802.00.60 provides that an article of metal (except precious metal) which is exported from the United States for processing abroad may be subject to duty on the value of the processing only upon its return to the United States. To qualify for this duty treatment, the exported article (1) must have been manufactured or subjected to a process of manufacture in the

19 U.S.C. 1401a.

United States; and (2) must be returned "for further processing" in the United States.

The term "processing" refers to such operations as melting, molding, casting, machining, grinding, drilling, tapping, threading, cutting, punching, rolling, forming, plating, and galvanizing.

As in the case of articles imported under subheading 9802.00.40 (repairs or alterations), discussed above, the duty on metal articles processed abroad is assessed against the value of such processing, determined in accordance with U.S. note 3 to subchapter II of chapter 98.

American components assembled abroad (HTS subheading 9802.00.80).-Articles assembled abroad from American-made components may be exempt from duty on the value of such components when the assembled article is imported into the United States under HTS subheading 9802.00.80. This provision enables American manufacturers of relatively labor-intensive products to take advantage of low-cost labor and fiscal incentives in other countries (usually less developed countries) by exporting American parts for assembly in such countries and returning the assembled products to the United States with partial exemption from U.S. duties.

Subheading 9802.00.80 applies to articles assembled abroad in whole or in part of fabricated components, the product of the United States, which

(1) were exported in condition ready for assembly without further fabrication;

(2) have not lost their physical identity in such articles by change in form, shape, or otherwise; and

(3) 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.

To be eligible for entry under this subheading, the exported article must be a fabricated U.S. component, i.e., a manufactured article ready for assembly in its exported condition, except for operations incidental to the assembly process. Whereas, integrated circuits, compressors, zippers, and precut sections of a garment are examples of fabricated components, uncut bolts of cloth, lumber, sheet metal, leather, and other materials exported in basic shapes and forms are not considered to be fabricated components for this

purpose.

To be considered U.S. components, the articles do not necessarily have to be fabricated from articles or materials originating in the United States. If a foreign article or material undergoes a process of manufacture in the United States resulting in its "substantial transformation" into a new and different article, having a distinctive name, character, or use, then the component that emerges may qualify as a product of the United States for purposes of subheading 9802.00.80.

The assembly operations performed abroad include any method used to join solid components together, such as welding, soldering, gluing, sewing, or fastening with nuts and bolts. Mixing, blending, or otherwise combining liquids, gases, chemicals, food ingredients, and amorphous solids with each other or with solid components is not regarded as assembling for purposes of subheading 9802.00.80.