CBLES

ABC Smith & Co. manufactures small gardening hand-held shovels in its foreign trade zone (FTZ). For the shovels’ production, the company imports and formally enters screws that are subject to a 2% ad valorem rate of duty, which the company then subsequently admits to its FTZ. Additionally, ABC Smith & Co. extracts raw metal from its mine in Minnesota. The raw metal is classified under an HTS with a 10% ad valorem rate of duty. ABC Smith & Co. then admits the extracted metal into its FTZ. Furthermore, ABC Smith & Co. admits to its FTZ as non- privileged foreign status merchandise plastic shovel handles that are subject to an 8% ad valorem rate of duty. In the FTZ, ABC Smith & Co. then smelts the raw metal, shapes it into the heads of shovels, and assembles the heads with the plastic shovel handles and screws to form finished hand-held shovels that are subject to a 4% ad valorem rate of duty. What rate of duty applies to the hand-held shovels upon withdrawal from the FTZ and entry into the customs territory of the United States?

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The Answer is: B

Citation: 19 CFR 146.43(a)(2), 19 CFR 146.65(a)(2)

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