OT:RR:CTF:VS H273101 RMC
Port Director
U.S. Customs & Border Protection
40 South Gay St.
Baltimore, MD 21202
Re: Application for Further Review of Protest 1303-15-100117; Applicability of Subheading 9808.00.30, HTSUS; 19 C.F.R. § 10.112
Dear Port Director:
This is in response to your correspondence dated January 5, 2016, forwarding the Application for Further Review (“AFR”) of Protest 1303-15-100117, timely filed by AAI Corporation (“AAI”).
FACTS:
AAI is a manufacturer and supplier of articles for the U.S. military. At issue in this case is a “multi-sensor electro-optical surveillance and targeting turret” that AAI imported from a supplier in Canada. AAI plans to integrate the merchandise into an unmanned aerial vehicle that it is building under a contract from the U.S. Army.
AAI filed entry for the merchandise on December 10, 2014, classifying the multi-sensor turret in subheading 9013.80.90, Harmonized Tariff Schedule of the United States (“HTSUS”), and claiming duty-free treatment under the North American Free Trade Agreement (“NAFTA”). Your port then initiated a review of AAI’s NAFTA claim. Although AAI filed a NAFTA Certificate of Origin, it claims that its Canadian supplier would not provide the manufacturing and production records, cost data, and bill of materials that the port requested. Accordingly, the NAFTA claim was denied and the subject entry was rate advanced to the applicable 4.5% ad valorem rate.
AAI timely protested. Instead of pursuing its NAFTA claim, however, AAI now contends that the merchandise is eligible for duty-free treatment under subheading 9808.00.30, HTSUS, which applies to “[m]aterials certified to the Commissioner of Customs by authorized military procuring agencies to be emergency war material purchased abroad.” AAI provided a Defense Contract Management Agency (“DCMA”) Certification of Duty Free Entry, dated May 26, 2015, in connection with this claim both in hardcopy and as an email from the DCMA. AAI argues that it is free to substitute its NAFTA claim with a claim under subheading 9808.00.30, HTSUS, until the entry’s liquidation becomes final. Your office believes that an importer cannot decide to file a claim under subheading 9808.00.30, HTSUS, after having previously claimed and failed to substantiate NAFTA preference.
ISSUE:
Whether the subject merchandise is eligible for duty-free treatment under subheading 9808.00.30, HTSUS.
LAW AND ANALYSIS:
Subheading 9808.00.30, HTSUS, provides for duty-free treatment of “[m]aterials certified to the Commissioner of Customs by authorized military procuring agencies to be emergency war material purchased abroad.” The HTSUS is silent on whether a claim under subheading 9808.00.30, HTSUS, must be made at the time of entry.
Under U.S. Customs and Border Protection (“CBP”) regulations, in order to make a claim for duty-free treatment under subheading 9808.00.30, HTSUS, an importer must file a “certificate[ ] executed by a duly authorized officer or official of the appropriate Government agency or office” showing eligibility. See 19 C.F.R. § 10.102. The certificate must “clearly and unmistakably identif[y]” the articles covered by the entry or withdrawal. See 19 C.F.R. § 10.102(b).
AAI originally claimed duty-free treatment under NAFTA. After the NAFTA claim could not be supported, a DCMA certificate dated May 26, 2016 was submitted. Both the hardcopy and email versions of the certification match the information on the entry summary, and include the relevant contract number.
Your office denied the subheading 9808.00.30, HTSUS claim, stating that the request was not timely. In support of its argument that its request is timely, AAI cites to several CBP decisions holding that an importer who fails to file the appropriate subheading 9808.00.30, HTSUS certificate upon entry may, absent willful negligence or fraudulent intent, file the required certificate before the liquidation of the entry becomes final. See, e.g., Headquarters Ruling (“HQ”) H228786, dated March 30, 2000; HQ H114293, dated September 29, 1998; and HQ H559609, dated October 3, 1996. In each of these cases, the importer made a claim under subheading 9808.00.30, HTSUS, but did not file the required certificate. We note that that the CBP regulations provide, in pertinent part, that:
Whenever a free entry or a reduced duty document, form, or statement required to be filed in connection with the entry is not filed at the time of the entry or within the period for which a bond was filed for its production, but failure to file it was not due to willful negligence or fraudulent intent, such document, form, or statement may be filed at any time prior to liquidation of the entry or, if the entry was liquidated, before the liquidation becomes final.
19 C.F.R. § 10.112.
In each case, CBP held that because there was no specific showing of willful negligence or fraudulent intent concerning the submission of the certificate and the certificate was filed with the protest—i.e., before liquidation became final—the certificate filed with the protest was sufficient under 19 C.F.R. § 10.112 to support the subheading 9808.00.30, HTSUS claim.
CBP has previously considered a similar issue in HQ 953480, dated December 29, 1993. In that case, a camera system was entered with a claim for duty-free treatment under the Canadian Free Trade Agreement (“CFTA”). The importer protested after the entry was liquidated under subheading 8525.30.00, HTSUS as ineligible for CFTA duty-free treatment. On protest, in addition to contesting the eligibility of the camera system under the CFTA, the protestant argued that the merchandise qualified for duty-free treatment under subheading 9808.00.30, HTSUS. The information on the DCMA Certifications of Duty Free Entry, however, did not match the entry number and date of the merchandise subject to the protest. Accordingly, CBP held that the certificate did not “clearly and unmistakably identif[y]” the articles covered by the entry or withdrawal as required by 19 C.F.R. § 10.102(b) and rejected the protestant’s claim under subheading 9808.00.30, HTSUS.
Unlike in HQ 953480, the information in both certificates, as noted above, matches the information on the entry summary, including the relevant contract number. Therefore, as explained above, absent willful negligence or fraudulent intent, AAI may file a free entry or reduced duty document before liquidation becomes final. See 19 C.F.R. § 10.112. We find no allegation of willful negligence or fraudulent intent in this case. Because liquidation has not yet become final, we find that the certificate filed with the protest is sufficient to support a claim for duty-free treatment under subheading 9808.00.30, HTSUS. We note that this outcome is consistent with the procedures set forth in the now obsolete Customs Directive 3550-08 dated May 31, 1985, for the predecessor provision of this subheading under the Tariff Schedules of the United States, which allowed for an extension to file the certification provided liquidation was not final.
HOLDING:
The protest should be granted. The subject merchandise is eligible for duty-free treatment subheading 9808.00.30, HTSUS.
In accordance with Sections IV and VI of the CBP Protest/Petition Processing Handbook (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 or entries in accordance with the decision must be accomplished prior to mailing the decision. Sixty days from the date of the decision, the Office International Trade, Regulations and Rulings, will make the decision available to CBP personnel, and to the public on the CBP website at www.cbp.gov, by means of the Freedom of Information Act, and other methods of public distribution.
Sincerely,
Myles B. Harmon, Director
Commercial and Trade Facilitation Division