CLA-2-98:OT:RR:NC:N1:106
Edward MacDonald
Senior ICC Administrator
StandardAero
707 Flight Road
Winnipeg, MB, R3H 1C6
Canada
RE: The applicability of subheading 9801.00.10 to disassembled aircraft engines from the United States and Canada.
Dear Mr. MacDonald,
In your letter dated March 30, 2017, you requested a ruling on whether disassembled aircraft engines were eligible for duty-free treatment under subheading 9801.00.10, Harmonized Tariff Schedule of the United States (HTSUS).
The items under consideration are Pratt and Whitney Canada’s PT6, PW100 and a General Electric CF34 models of aircraft engines, which are imported for teardown (dismantle). You state in your request that the engines are initially imported to Canada for repair and return, but end up going to teardown because they are beyond economical repair (BER). During the teardown process, all hardware, such as nuts, bolts, screws, gaskets, and o-rings are destroyed in the removal process.
There are three ways the disassembled engines are returned from Canada to the United States:
The engines are dismantled and shipped in their entirety, with or without the normally destroyed hardware.
Some parts/components are sold to you and remain in Canada, while the rest of the engine is shipped back in its disassembled state.
Some parts/components are repaired and shipped separately, while the rest of the engine is shipped back in its disassembled state.
You state that in all three cases the engines will still retain their U.S. ownership when imported to Canada and exported back to the United States.
Section 904(b) of the Trade Facilitation and Trade Enforcement Act of 2015 (Pub. L. 114-125, February 24, 2016) amended subheading 9801.00.10, HTSUS, to include any products which are returned within 3 years after having been exported. Previously, subheading 9801.00.10, HTSUS, only applied to products of the United States. Subheading 9801.00.10, HTSUS, now provides for the duty-free treatment of: Products of the United States when returned after having been exported, or any other products when returned within 3 years after having been exported, without having been advanced in value or improved in condition by any process of manufacture or other means while abroad.
Title 19 Code of Federal Regulations (CFR), Part 10.1 states:
(a) Except as otherwise provided for in paragraph (g), (h), (i) or (j) of this section or elsewhere in this part or in § 145.35 of this chapter, the following documents must be filed in connection with the entry of articles in a shipment valued over $2,500 and claimed to be free of duty under subheading 9801.00.10 or 9802.00.20, Harmonized Tariff Schedule of the United States (HTSUS):
(1) A declaration by the foreign shipper
(2) A declaration by the owner, importer, consignee, or agent having knowledge of the facts regarding the claim for free entry. If the owner or ultimate consignee is a corporation, such declaration may be signed by the president, vice president, secretary, or treasurer of the corporation, or may be signed by any employee or agent of the corporation who holds a power of attorney executed under the conditions outlined in subpart C, part 141 of this chapter and a certification by the corporation that such employee or other agent has or will have knowledge of the pertinent facts.
(b) In any case in which the value of the returned articles exceeds $2,500 and the articles are not clearly marked with the name and address of the U.S. manufacturer, the Center director may require, in addition to the declarations required in paragraph (a) of this section, such other documentation or evidence as may be necessary to substantiate the claim for duty-free treatment. Such other documentation or evidence may include a statement from the U.S. manufacturer verifying that the articles were made in the United States, or a U.S. export invoice, bill of lading or airway bill evidencing the U.S. origin of the articles and/or the reason for the exportation of the articles.
CBP has addressed similar issues in previous Headquarters Ruling Letters ("HRLs"). In HRL 561541, dated March 13, 2000, HQ determined that removing a part from an article without any additional processing does not result in an advancement in value or improvement in condition of that part, within the meaning of subheading 9801.00.10, HTSUS.
Moreover, in Burgess Battery v. United States, C.D. 866 (1944), appeal dismissed, 32 CCPA 207 (1944), the court held that zinc scrap, the residue from the manufacture in Canada of battery cups from U.S.-origin zinc sheets, was entitled to duty-free treatment as American goods returned under item 800.00, Tariff Schedules of the United States (now subheading 9801.00.10, HTSUS). The court reasoned that zinc was exported and zinc returned; that although it was changed in condition, the Canadian processing did not enhance the zinc scrap’s value or condition.
Based on the facts presented, we find that the disassembly of the aircraft engines does not result in a substantial transformation. We further find that the removal of parts does not result in an advancement in value or improvement in condition.
As a result, the disassembled engines are eligible for the duty free treatment under subheading 9801.00.10, provided that the Center Director is satisfied that the engines are of U.S. origin, and that the Canadian engines had previously been imported and duty paid thereon, and the documentary requirements of 19 CFR 10.1 (a) and (b) are satisfied.
This ruling is being issued under the provisions of Part 177 of the Customs Regulations (19 C.F.R. 177).
A copy of the ruling or the control number indicated above should be provided with the entry documents filed at the time this merchandise is imported. If you have any questions regarding the ruling, please contact National Import Specialist Liana Alvarez at [email protected].
Sincerely,
Steven A. Mack
Director
National Commodity Specialist Division