RR:CR:DR 229110 IDL
Fritz Companies, Inc.
Attn: Cindy R. Sherman
8777 Stemmons Freeway
Dallas, Texas 75247
Re: Merchandise Processing Fee; 19 U.S.C. 58c(b)(8)(B)(i); 9802.00.50, HTSUS; 19 U.S.C. 58c(b)(8)(D)
Dear Ms. Sherman:
This is in response to your correspondence dated March 2, 2001, concerning a ruling request and Marconi Aerospace Avionics, Inc., of Austin, Texas.
Marconi Aerospace Avionics, Inc. ("Marconi") imports aircraft parts from Great Britain. On March 10, 2000, Marconi entered OTH ARTCLS EXP REPAIR/ALT-OTHR OTHR INST & APP: AERO/SPACE N, Entry No. 110-xxxx661-0, HTSUS No. 9802.00.5060/9014.20.8080. Marconi states that clarification is needed regarding the application of Merchandise Processing Fees (MPF) on imported aircraft parts returned for repair and then re-imported.
Whether the merchandise processing fee is applicable to various imported aircraft parts that have been returned to Great Britain for repairs and then re-imported into the Unites States?
LAW AND ANALYSIS:
The provisions of 19 U.S.C. 58c(a) allow Customs to assess fees for processing of merchandise.
19 U.S.C. 58c(a)
...[T]he Secretary of the Treasury shall charge and collect the following fees for the provision of customs services in connection with the following:
(9)(A) For the processing of merchandise that is formally entered or released during any fiscal year, a fee in an amount equal to 0.21 percent ad valorem, unless adjusted under subparagraph (B). 19 U.S.C. 58c(a)(9)(A).
But, the provisions of 19 U.S.C. 58c(a)(9)(A) are subject to limitations. Marconi contends that its entry under 9802.00.5060 is exempt from any merchandise processing fees, pursuant to the following provision, under subparagraph B:
19 U.S.C. 58c(b)(8)(B)(i)
No [merchandise processing] fee may be charged...for the processing of any article that is provided for under any item in chapter 98 of the HTSUS, except subheading 9802.00.60 or 9802.00.80....19 U.S.C. 58c(b)(8)(B)(i) (2000).
However, there appears to be a disconnect in the statutory texts of 19 U.S.C. 58c(b)(8)(B)(i) (above) and 58c(b)(8)(D):
19 U.S.C. 58c(b)(8)(D)
The fee charged under subsection (a)(9)...shall-
(iii) in the case of merchandise classified under subheading 9802.00.60 of the Harmonized Tariff Schedule of the United States, be applied to the value of the foreign repairs or alterations... (emphasis added)
The words "value of foreign repairs or alterations" don't apply to subheading 9802.00.60,HTSUS. The text in subheading 9802.00.60, HTSUS, that imposes the duty is "value of such processing outside the United States". The words "value of foreign repairs or alterations" instead are appropriate to subheading 9802.00.50, HTSUS.
The legislative history, H.Rpt. 100-391(II) on Pub.L.100-203, 969, shows an apparent intent to assess the user fee on items 806.20, 806.30, and 807.00, TSUS. Item 806.20, TSUS, was the predecessor provision to subheading 9802.00.50, HTSUS. Item 806.30, TSUS, was the predecessor provision to subheading 9802.00.60, HTSUS. Item 807.00, TSUS, was the predecessor provision to subheading 9802.00.80,HTSUS. However, section 9501 of Public Law 100-203 imposed the user fee on merchandise entered under two provisions only. In addition, the law after exempting all articles entered under former schedule 8, except for items 806.30 and 807.00, TSUS, used the language more appropriate to item 806.20 with respect to item 806.30. That language has been continued without change to the current provision.
The words "No fee may be charged under subsection (a)(9) or (10) of this section for the processing of any article that is provided for under any item in chapter 98 of the Harmonized Tariff Schedule of the United States, except subheading 9802.0060 or 9802.00.80," could not be more clear. The connection of the language of subheading 9802.00.50, HTSUS, to the reference to subheading 9802.00.60, HTSUS, is unclear.
Various rules or canons of construction have been developed by courts for the purpose of ascertaining legislative intent, where a statute is not clear and unambiguous on its face. Universal Mercantile Co. v. United States, 18 CCPA 441, T.D. 44698 (1931); United States v. United Geophysical Company, 38 CCPA 137, 141, C.A.D. 451 (1951); United States v. Damrak Trading Co., Inc., 43 CCPA 77, C.A.D. 611 (1956).
Rules of construction are but guidelines by which to arrive at legislative intent and must be applied with care and with due regard to common sense. A study not only of the rule but the cases applying them and attention to the purpose of Congress, prior tariff acts, background information, and legislative history are important in this area. L.R. Markell et al. v. United States, 16 Ct. Cust. Appls. 518, T.D. 43239 (1929).
It is a primary function of the courts to determine legislative intent. United Metal Goods Mfg. Company v. United States, 46 CCPA 120, C.A.D. 712 (1959); United States v. S. H. Kress & Co., 46 CCPA 135, C.A.D. 716 (1959). The first source for the determination of that intent is the statutory language, which is presumed to be used in its normal sense. United States v. Esso Standard Oil Co., 42 CCPA 144, 151, C.A.D. 587 (1955); United States v. British Cars & Parts, Inc., et al., 47 CCPA 114, C.A.D. 741 (1960); John S. James a/c The Consolidated Packaging Corp. v. United States, 48 CCPA 75, C.A.D. 768 (1961); United States v. Gulf Oil Corporation et al., 47 CCPA 32 C.A.D. 725 (1959). It is the duty of the court to adopt the rule of construction which will give effect to the intention of Congress as ascertained. United States v. American Express Co., 2 Ct. Cust. Appls. 95, T.D. 31636 (1911).
In the presence of ambiguity in a statute, the fact that inconsistent or absurd results may flow from one construction and not another will often lead the court to adopt the latter as most likely expressing the legislative intent. Cohn & Rosenberger v. United States, 4 Ct. Cust. Appls. 378, 383, T.D. 33536 (1913); Spencer-Importing & Trading Co. v. United States, 2 Ct. Cust. Appls. 444, T.D. 32201 (1912). A possible ambiguity in the first part of an act may be resolved when the entire statute is read and considered. Border Brokerage Company v. United States, 27 Cust. Ct. 223, 227-228, C.D. 1375 (1951), aff'd 40 CCPA 185, C.A.D. 515 (1953). It is well-established that in the construction of a statute the intention of the legislature is to be deduced from the whole statute and every material part of the same. The entire context must be considered and every effort made to give full force and effect to all the language contained therein. United States v. Invicta Seeland Inc., 25 CCPA 300, 305, T.D. 49397 (1938); Dart Export Corp. et al. v. United States, 43 CCPA 64, 74, C.A.D. 610 (1956); United States v. Gulf Oil Corporation et al., 47 CCPA 32, 35, C.A.D. 725 (1959).
Whether or not a given term in a tariff statute is used in an ambiguous manner must be determined, not from the literal meaning of the term, but from the connection in which it is used, and the consideration of the statute as a whole. Charles Hardy, Inc. v. United States, 21 CCPA 173, 175, T.D. 46509 (1933); Brier Mfg. Co. v. United States, 26 CCPA 195, 198, C.A.D. 17 (1938); Premier Dental Products Co. v. United States, 28 CCPA 44, 49, C.A.D. 123 (1940).
Section 8101(a) of P.L. 99-509 (Act of October 21, 1986) exempted all articles imported under schedule 8, TSUS. House Report 100-391(II) on P.L. 100-203 at page 969 states that three provisions might have been intended to be covered-807 (now 9802.00.80), 806.30 (now 9802.00.60), and 806.20 (now 9802.00.50). The latter covers repairs or alterations. However, the ensuing discussion is limited to the so-called loophole of 806.30 and 807.00, TSUS. Section 9501 of P.L. 101-203 contained the present language reference to repairs or alterations, but limited the text to 806.30 (9802.00.60) and 807 (9802.00.80). The change to 9802.00.60 and 9802.00.80 was made by the Act of November 10, 1988 (P.L. 100-647) section 9001.
In the instant case, Marconi entered the aircraft parts under 9802.00.50 of the HTSUS. Pursuant to 19 U.S.C. 58c(b)(8)(B)(i), the aircraft parts are exempt from the MPF as to the value of the parts prior to foreign repair. Customs has made no attempt to resolve the legislative contradiction in the Customs Regulations. Thus, the clear language of 58c(b)(8)(B)(i) must take precedence in determining liability for MPF.
Therefore, since Marconi entered merchandise under Chapter 98 of the HTSUS, but not under 9802.00.60 or 9802.00.80, this entry is exempt from the MPF, pursuant to 58c(b)(8)(B)(i), above.
The Merchandise Processing Fee is not applicable to imported aircraft parts, returned for repair and then re-imported and entered under HTSUS 9802.00.50, HTSUS.
Sixty days from the date of the decision, the Office of Regulations and Rulings will make the decision available to Customs personnel, and to the public on the Customs Home Page on the World Wide Web at www.customs.ustreas.gov, by means of the Freedom of Information Act, and other methods of public distribution.
Myles B. Harmon
Commercial Rulings Division