CLA-2 CO:R:C:S 557731 BLS
Area Director of Customs
J.F.K. Area
Cargo Bldg. 178
Jamaica, N.Y. 11430
RE: Application for further review of Protest No. 1001-3-104056;
Eligibility of motor cars for duty-free entry under
HTSUS 9801.00.60; exportation
Dear Sir:
This is in reference to an Application For Further Review of
the above-captioned protest, timely filed by Barchetta Motor Cars,
Inc. ("Barchetta"), concerning the eligibility of two Ferrari motor
cars for duty-free entry under subheading 9801.00.60, Harmonized
Tariff Schedule of the United States (HTSUS).
FACTS:
The two Ferrari automobiles were shipped to Nice, France and
then transported to the Orion Auction House ("Orion") in Monte
Carlo, the principality of Monaco. Protestant states that the cars
were temporarily entered into Monaco free of duty under bond. (A
copy of the bond was not submitted.) The president of Barchetta
has submitted an affidavit in which he states that there was no
intent to sell the two automobiles at the auction. Instead, he
states that the cars were sent to the auction house at Monte Carlo
for purposes of show and display, and to increase his reputation
and standing in the exotic car world market. As an indication of
this intent, the affiant states that a very high reserve value,
which allegedly was substantially over the market value, was placed
on the cars. In a second affidavit, this individual states that
Orion was made fully aware of his intention to exhibit the cars at
the auction, and that the auction house showed its understanding
by accepting the vehicles with a very high reserve value.
Protestant has submitted in evidence a copy of a mandate of sale
without signatures and wihout specific terms, which provides that
Barchetta mandates Orion to sell the automobiles described on the
form. The president of Barchetta states in the second affidavit
that he does not recall having executed a mandate of sale, which
he claims was prepared by Orion for purposes of having a complete
file for the temporary customs entry into France and the
principality of Monaco.
- 2 -
The two vehicles were returned to the U.S. unsold and
apparently were entered free of duty under subheading 9801.00.10,
HTSUS. Protestant advises that they were later traded for other
cars with a value of $900,000. The reserve value at the auction
for both cars was $1.2 million. Protestant claims that the
vehicles were never exported because they never entered the
commerce of a foreign country and there was no intent to unite them
with the mass of goods of a foreign country. It is argued that
merely displaying the vehicles at an auction in itself does not
indicate an intent to sell. Protestant contends that an intent to
sell would have been shown by placing a reserve value on the cars
equal to their market value. Protestant cites Swan & Finch Co. v.
United States, 190 U.S. 143 (1903), that when in doubt, "...the
doubt [would be] resolved in favor of the importer as duties are
never imposed on citizens upon vague or doubtful interpretations"
(Id. at 143).
In the alternative, protestant contends that the vehicles are
entitled to duty-free entry under subheading 9801.00.60, HTSUS,
because they were exported solely for purpose of exhibition at the
public auction. In this regard, protestant claims that the so-
called auctions of collectors' cars in Europe are actually shows,
and that few sales are made at the event. The auction house
benefits by drawing other participants and their cars, as well as
viewers or visitors to the auction. Further, protestant claims
that in this instance Orion did not charge Barchetta the customary
fee for accepting the cars for auction.
ISSUES:
1) Whether there was an "exportation" of the motor cars from
the U.S.
2) Whether the automobiles are entitled to duty-free treatment
under subheading 9801.00.60, HTSUS, upon return from abroad.
LAW AND ANALYSIS:
The Supreme Court has ruled that "exportation" is the
severance of goods from the mass of things belonging to [the United
States] with the intention of uniting them to the mass of things
belonging to some foreign country. Swan & Finch, supra. The Swan
& Finch holding has been followed in at least two Customs Court
cases, F.W. Myers & Co. v. United States, 29 Cust. Ct. 202, C.D.
1468 (1952), and Nassau Distributing Co., Inc. v. United States,
29 Cust. Ct. 151, C.D. 1459 (1952). The controlling factor in each
of these cases was the intention of the party at the time of
shipment.
- 3 -
See also section 101.1(k), Customs Regulations (19 CFR 101.1(k)).
Moreover, the courts have held that "...So long as an immediate
bona fide purpose to seek a foreign market coincides with a bona
fide act of shipment later changes in either the intent or
destination have no effect upon the original character of the act
as an exportation." Nassau Distributing Co., supra, citing United
States v. The National Sugar Refining Co., 39 CCPA 96 (1951).
While in the instant case protestant contends that there was
no intention of sale, as the vehicles were exported for exhibition
only, the manifest evidence reflects that indeed a commercial
venture, i.e., a sale of goods, was contemplated at the time of
exportation. Thus, the automobiles were sent to an auction house,
where a reserve value was placed on both vehicles. The placing of
a reserve value by an auction house indicates an intention to put
the articles up for sale. Protestant has not submitted evidence
which would overcome the presumption based on these facts that the
vehicles were exported for purposes of sale. Under the
circumstances, we find that under applicable case law, there was
an "exportation" of the vehicles from the United States.
Subheading 9801.00.60, HTSUS, provides for the free entry of
articles which are returned after having been exported for use
temporarily abroad solely for exhibition or use at any public
exposition, fair or conference, provided such articles are returned
by or for the account of the person who exported them. In order
to obtain duty-free treatment under this provision, the documentary
requirements of 19 CFR 10.66 must be satisfied.
The terms "public exposition, fair, or conference," as used in
subheading 9801.00.60, HTSUS, were defined in C.E. Durnell v.
United States, C.D. 1236, 24 Cust. Ct. 218 (1950) as follows: (a)
exposition - "[a] public exhibition or show, as of industrial and
artistic productions"; (b) fair - "[a] competitive exhibition of
wares, farm products, etc., not primarily for purpose of sale, and
usually with premiums for excellence'; and (c) conference - "an
association, of firms in the same business, for carrying out a
common policy."
In Headquarters Ruling Letter (HRL) 063176 dated July 20,
1979, Customs held that where a commercial venture, i.e., sale of
goods, is contemplated at the time of exporting goods for purposes
of exhibition or use at a public exposition, fair or conference,
the articles, upon reimportation, are not entitled to duty-free
treatment under subheading 9801.00.60, HTSUS. However, where a
sale of some of the exported goods is only incidental to the
overseas exhibition, the articles sold would not be eligible for
duty-free treatment, but the unsold articles would be eligible for
such treatment upon return to the U.S., provided (1) the goods, as
- 4 -
a whole, are primarily exported for exhibition, and (2) the other
requirements of subheading 9801.00.60, HTSUS, are met.
Based on the facts presented, we find that the subject motor
cars returned to the U.S. are not entitled to duty-free treatment
under subheading 9801.00.60, HTSUS. Although protestant claims
that the automobiles were exported for purposes of show and display
so as to increase Barchetta's standing in the exotic car market,
the fact remains that the automobiles were sent to an auction house
which is not an exposition, fair, or conference, and a reserve
value was placed on the vehicles.
Accordingly, we find that protestant has not met the burden
of establishing that the requirements of subheading 9801.00.60,
HTSUS, have been met.
Holding:
1) There was an "exportation" of the automobiles from the U.S.
within the meaning of applicable case law.
2) The automobiles are not entitled to duty-free treatment
under subheading 9801.00.60, HTSUS.
In accordance with Section 3A(11)(b) of Customs Directive 099
3550-065, dated August 4, 1993, Subject: Revised Protest Directive,
this decision should be mailed to your office to the protestant no
later than 60 days from the date of this letter. Sixty days from
the date of the decision the Office of Regulations and Rulings will
take steps to make the decision available to customs personnel via
the Diskette Subscription Service, Lexis, Freedom of Information
Act and other public access channels.
Sincerely,
John Durant, Director
Commercial Rulings Division