CLA-2:CO:R:C:M 951072 JAS
District Director of Customs
P.O. Box 1490
St. Albans, Vermont 05478
RE: MIG Aircraft Manufactured in USSR, Exported From Egypt;
Theory of Divestiture; Country of Origin; Civil Aircraft
Agreement; Ashdown U.S.A. v. United States, 12 CIT 808,
Slip Op. 88-119 (1988); PRD 0201-91-100425
This is our decision on Application for Further Review of Protest No. 0201-91-100425, dated July 25, 1991, filed on behalf of Warplanes, Inc., in connection with your action in liquidating an entry of certain used military aircraft.
The plane in question is a MIG 21U dual seat trainer, serial number 5068. Protestant alleges the plane was built under license in India. However, Bureau of Alcohol, Tobacco and Firearms (BATF) Forms 6 and 4587 indicate the plane was manufactured in the USSR in 1966, disassembled, then exported to and reassembled in Egypt in 1967. It was used in the Egyptian Air Force until 1983 and has been stored in nonflying condition since then. The plane was imported unarmed and demilitarized for use in air shows and other exhibitions.
The plane was entered under the provision for airplanes and other aircraft, used or rebuilt military aircraft, in subheading 8802.30.00, Harmonized Tariff Schedule of the United States (HTSUS), with a claim for free entry under the Civil Aircraft Agreement. In its Customs Form 19 protestant refers to the plane as a "Soviet aircraft" but cites the BATF permits as approval for civil use, and notes that aircraft of the same design built in non-proscribed countries are allowed free entry. - 2 -
Your office notes that the plane was built in the USSR and liquidated the entry under the same HTSUS provision, but at the column 2 rate of duty of 30 percent ad valorem.
Whether a military airplane built in a column 2 country but used in a column 1 country for an extended period is eligible for free entry under the Civil Aircraft Agreement.
LAW AND ANALYSIS:
Title VI, Civil Aircraft Agreement, of the Trade Agreements Act of 1979, implemented the Agreement on Trade in Civil Aircraft, which entered into force with respect to the United States on January 1, 1980. See Sec. 601, Trade Agreements Act of 1979 (P.L. 96-39, July 2, 1979). This law accords duty-free treatment to civil aircraft and parts certified for use in civil aircraft that are imported into the United States from a nation entitled to most favored (column 1) tariff treatment. Products imported directly or indirectly from the Union of Soviet Socialist Republics (USSR) are dutiable at the column 2 rates of duty. See General Note 3(b), HTSUS.
Protestant concedes that the MIG trainer in issue is of Soviet origin. However, the real issue is whether by virtue of its use in Egypt for a period of sixteen years, the plane had become a bona fide part of the commerce of Egypt, a most favored nation trading partner whose products are eligible for column 1 tariff treatment.
In Ashdown, U.S.A. v United States, Slip Op. 88-119 (1988), the court applied the theory of divestiture in deciding that a product of a column 2 country can be removed from its Communist country status by becoming a bona fide part of the commerce of a non-communist country. It rejected the substantial transformation test as a viable standard. Quoting from prior cases dealing with the same issue, the court cited the intent of Congress to deny the benefits of reduced duties to products of Communist countries. The court stated that the party seeking relief must show by competent evidence that the connection between the merchandise and the column 2 country of origin has been so effectively broken that it could no longer be regarded as an import from that country.
In this case, it appears that the MIG 21 was used by the Egyptian Air Force during the period 1967 through 1983 for training and air defense missions, and since then has been in - 3 -
storage in Egypt. Whether spare parts provided for this plane during routine maintenance were of column 1 origin is not evident from the record but is not believed dispositive.
In this case, the stated intent of Congress has not been thwarted since this was a purely commercial transaction between the Egyptian Defense Ministry and the U. S. importer. The USSR received no benefit at all from the transaction. The MIG can no longer be regarded as an import from the USSR.
The MIG 21U dual seat trainer, serial number 5068, is to be regarded as a product of Egypt for tariff purposes. The protest should be allowed.
A copy of this decision should be attached to the Customs Form 19 and mailed to the protestant as part of the notice of action on the protest.
John Durant, Director
Commercial Rulings Division