OT:RR:CTF:VSP H271066 tmf
Port Director
U.S. Customs and Border Protection
726 Exchange Street, Suite 400,
Buffalo, New York 14210
RE: Application for Further Review of Protest No. 0901-15-100113; Automobile
Parts; Subheading 9801.00.85, HTSUS
Dear Port Director:
This is in response to an Application for Further Review (“AFR”) of Protest No. 0901-15-100113, timely filed by the law firm of George R. Tuttle, P.C. (“Counsel”), on behalf of its client, the protestant, Porsche Motorsport North America, Inc. (hereinafter, “PMNA”). This protest which was received by your office July 6, 2015, contests the denial of duty free treatment of certain motor vehicle parts under subheading 9801.00.85 of the Harmonized Tariff Schedule of the United States (HTSUS). The AFR was properly approved by the port. Our decision follows.
FACTS:
The business of Porsche Motorsports North America (“PMNA”) includes supporting privately-owned U.S. and Canadian race teams, as well as Porsche AG factory race teams at events within the U.S. and Canada by making available tools, equipment and original Porsche replacement parts and accessories to the teams for use in the event they are needed during the races (for example, in the unlikely event of a breakdown, malfunction or crash.) According to counsel, PMNA entered into contracts with race teams which require PMNA to provide parts, accessories and equipment as necessary. In the protest, counsel states the goods were exported from the U.S. to Canada, and PMNA registered the goods on CBP Form 4455. These registered tools and equipment, along with domestic and foreign-sourced automotive parts were temporarily exported from the U.S. in a PMNA-owned tractor trailer mobile warehouse to racing events in Canada for teams who may need them. According to counsel, there was an expectation that PMNA would return the parts to the U.S after the races were completed. At entry into the U.S., PMNA classified the goods under subheading 9801.00.85, HTSUS.
When the parts were used, the teams reimbursed (purchased) PMNA for any parts and accessories. It is stated that less than three percent of the parts were used in Canada by the race teams. Counsel also states that the costs and expenses incurred by PMNA to move the trailer, parts, accessories, equipment and staff to and from Canada were not reimbursed.
On September 30, 2014, CBP issued a CBP Form 28 inquiring whether PMNA was the original importer of the invoiced parts from the notated country, and whether the tools provide support to the race teams in Canada. In response to PMNA’s answers, on December 9, 2014, CBP notified PMNA on a CBP Form 29 that the goods do not qualify for subheading 9801.00.85, HTSUS treatment because they are not “tools of the trade” for racing, but replacement parts for sale in Canada. On May 15, 2015, CBP rate advanced the entry denying subheading 9801.00.80, HTSUS, treatment.
ISSUE:
Whether the returned automobile parts and accessories to the U.S. qualify for subheading 9801.00.85, HTSUS, treatment as tools of trade?
LAW AND ANALYSIS:
Subheading 9801.00.85, HTSUS, provides duty-free treatment for:
[p]professional books, implements, instruments, and tools of trade, occupation, or employment, when returned to the United States after having been exported for use temporarily abroad, if imported by or for the account of the person who exported such items.
Section 44 of the Miscellaneous Trade and Technical Corrections Act of 1996, Pub. L. No. 104-295, 110 Stat. 3514 (1996), added subheading 9801.00.85, HTSUS, to permit the duty-free entry of "tools of the trade" by corporations which previously could only be entered duty-free if they were exported and reimported by the same individual under subheading 9804.00.10, HTSUS.
CBP has defined “tools of trade” to generally include those items necessary for the exercise of the trade or profession of the individual. See Headquarters Ruling Letter (HQ) H013537, dated July 2, 2007, which found certain tools such as mechanics’ tooling, specialized tooling, shop supplies, attaching hardware, reference manuals, and shop equipment to qualify for entry under subheading 9801.00.85, HTSUS, provided they were imported by or for the account of the person who exported those goods.
Counsel cites to HQ 562318, dated August 27, 2002, which states, in pertinent part:
in order to receive the preferential tariff treatment in subheading 9801.00.85, HTSUS, the “plain language of that provision only requires the merchandise (1) be exported for temporary use abroad and (2) be imported (after being exported) by or for the account of the person who originally exported the merchandise.
Counsel argues that there is no requirement that goods be used overseas by the exporter. However, with regard to “use,” we note that subheading 9801.00.85, HTSUS, clearly provides that the goods are for use temporarily abroad, and “use” is also specifically mentioned in the ruling cited above by Counsel. The scope of “tools of the trade” does not include parts and/or accessories for sale, only tools exported for use temporarily abroad. If the goods are sold, there is no temporary use. In New York Ruling Letter (NY) N013372, dated July 3, 2007, and cited by counsel as support, there was no intention to sell the kit; it was exclusively used for repair of the exporter’s own plane. In PMNA’s case, its intention is to have the goods “on standby” for sale to the racing teams who experience mechanical breakdown of the vehicles during the race. The replacement automobile parts and/or accessories sold to the racing teams are not returned to the vendor, protestant. Only the items that are not sold will be returned to the U.S. as replacement parts.
Although counsel contends that PMNA intended to return the automotive parts and/or accessories that were not sold, intent is not relevant to whether the goods are considered “tools of the trade” within subheading 9801.00.85, HTSUS. Rather, the goods may be exported temporarily for use, and then are to be subsequently returned. See NY I82934, dated June 17, 2002. Further, we disagree with counsel and find the protestant’s parts are not similar or analogous to the “specific repair” kit of NY N013373, dated June 29, 2007, wherein the repair kit was assembled in the U.S., and exported to an international location for the account of an airline company exclusively for repair of planes. In addition, all of the kit’s contents (parts, tooling and other materials) in NY N013373 were transported to repair a plane, and the facts do not state that some of the parts remained overseas. See also NY J88198, dated August 29, 2013, in which CBP found all of the integrated and associated parts of the H-Scan Technology System which were shipped as an entire unit were eligible for duty-free treatment because all of the parts were shipped back to the U.S. after completion of the assessment project overseas.
Counsel also argues that NY N013372 is “directly applicable to PMNA’s case in that the repair work was performed abroad, and the kit was re-imported to the U.S. without those parts used abroad [emphasis added].” We disagree. In this case, protestant’s parts were for sale to support the racing teams. However, the airline maintenance toolkit of NY N013372 (which consisted of tools, equipment, spare parts for an aircraft/aircraft engine/support equipment and/or consumable spare parts), were not for sale, but for use exclusively to repair planes. Further, the toolkit parts did not stay abroad after the repair was concluded. See also HQ H013537, supra, finding where “[m]aterials removed from the serviced aircraft (i.e., materials which were not taken abroad by the…mechanics) do not fall within the scope of subheading 9801.00.85, HTSUS, they are not eligible for entry under this provision.
In the case at bar, although PMNA provided the CBP Form 4455 (Certificate of Registration) for its duty-free exemption claim under subheading 9801.00.85, HTSUS, the Port determined that the items on the list were not tools for use abroad temporarily, but were inventory parts on standby for sale. The number of exported automobile parts and accessories did not match the number of returned automobile parts and accessories because some were sold in Canada at the races. Therefore, based upon the facts and circumstances, we do not find the goods are eligible for duty-free treatment as tools of the trade used temporarily abroad under subheading 9801.00.85, HTSUS.
HOLDING:
On the basis of the information provided, we find the automobile parts and accessories returned by and for the account of PMNA, were not “tools of the trade” within the meaning of subheading 9801.00.85, HTSUS. Therefore, the protest should be DENIED.
In accordance with the Protest/Petition Processing Handbook (CIS HB 3500-08A, December 2007, pp. 24 and 26), you are to mail this decision, together with the CBP Form 19, to the protestant no later than 60 days from the date of this letter. Any reliquidation of the entry in accordance with this decision must be accomplished prior to mailing of the decision. Sixty days from the date of the decision, Regulations and Rulings of the Office of International Trade will make the decision available to CBP personnel, and to the public on the CBP Home Page on the World Wide Web at www.cbp.gov, by means of the Freedom of Information Act, and other methods of public distribution.
Sincerely,
Myles B. Harmon, Director
Commercial Trade and Facilitation Division