ENT-6-01-CO:R:C:E 223604 DHS
Category: Entry
District Director of Customs
880 Front St. Room 5-S-9
San Diego, California 92188
RE: Internal Advice No. 61/89; Chemtronics, Inc.; Repairs
to Engine Aircraft Blades; Certified For Use
Statement; Civil Aircraft Agreement; 19 CFR 10.183
Dear Sir:
This is in reference to your memorandum dated November 29,
1991, inquiring about the applicability of the Civil Aircraft
Agreement (Title VI of Public Law 96-39) to aircraft engine
blades.
FACTS:
Chemtronics, Inc. (hereinafter importer) has imported
aircraft engine blades from companies in Belgium, France and
Israel, to be repaired then exported back to those companies in
the foreign country for use in civil and military aircraft.
Importer contends that they are entitled to duty-free treatment
for the blades under the Civil Aircraft Agreement. The Los
Angeles District has sustained this view by issuing a blanket
certification for civil aircraft parts to the importer on July
18, 1991.
Your office alleges that the importer is not entitled to
this duty-free exemption since in good faith the importer cannot
complete the civil aircraft certification which requires an
acknowledgement by the importer that the imported article will be
used in civil aircraft. There has not been any evidence tendered
with your submission which would indicate whether the importer
has any knowledge of the final use of the repaired engine blades.
Furthermore, there is no indication that any evidence of this
nature has been presented to the Customs officials in San Diego.
ISSUE:
Can an importer, who imports aircraft parts for the purpose
of repair, then exports the parts back to the foreign companies,
in good faith complete a certification acknowledging that the
parts will be used in a qualifying manner as required under 19
CFR 10.183?
LAW AND ANALYSIS:
Title VI, of the Trade Agreements Act of 1979, enacted into
law the General Agreement on Tariffs and Trade (GATT), Agreement
on Trade in Civil Aircraft, signed in Geneva on April 12, 1979.
To secure duty-free entry of aircraft parts under Title VI, an
importer must comply with section 10.183 of the Customs
Regulations (19 CFR 10.183) and General Note 3(c)(iv) of the
Harmonized Tariff Schedules of the United States (HTSUS).
Civil aircraft and specified civil aircraft parts only
qualify for the duty-free exemption under these provisions if
they are certified by the importer (whether a repair station,
manufacturer or end user) for use in civil aircraft. The term
"certified for use" means that the importer shall file a written
statement, accompanied by supporting documentation as the
Secretary of the Treasury may require, with the appropriate
Customs officer. The written statement must provide: the
imported article has been imported for use in civil aircraft; it
will be so used; and, the article has been approved for such use
by the Federal Aviation Authority (FAA) or an airworthiness
authority in the country of exportation, if such approval is
recognized by the FAA as an acceptable substitute for FAA
certification.
Civil aircraft is defined in these provisions as all
aircraft other than aircraft purchased for use by the Department
of Defense or the U.S. Coast Guard.
There is no requirement placed upon the importer at the time
of entry summary to prove end use of the merchandise. There is,
however, a requirement that the importer certify that the parts
have been imported for use in a civil aircraft. The
certification represents a statement of intent by the importer
that the merchandise will be put to the qualifying use. "If the
importer cannot make a good faith assertion of intent as to all
merchandise covered by a certification, then the certification is
invalid from the beginning." HRL 222460, dated November 8, 1990.
To certify means "to declare (a thing) true, accurate, certain,
etc. by formal statement often in writing." Webster's New World
Dictionary (Third College ed. 1988). After entry, there is an
implied requirement that qualifying civil aircraft remain in
conformance with the certification that qualified it for duty-
free entry by using it in civil aircraft or by retaining the
intention to ultimately use it in a qualifying manner. HRL
222236, dated August 10, 1990.
In addition, the importer is required to comply with the
provisions substantiating the duty-free entry. In conformity
with General Note 3(c)(iv), the importer has stated in its
blanket certification that it would maintain documentation
sufficient to support its entry statements. According to section
10.183 of the Customs Regulations "each entry summary for civil
aircraft, ..., civil aircraft parts, ... shall be filed with a
copy of the written order, contract, or any additional
documentation Customs shall require, to verify the claim for
admission free of duty". Furthermore, the importer is subject to
the general recordkeeping requirements found in section 508 of
the Tariff Act of 1930 (19 U.S.C. 1508) and 19 CFR 162.
Importers must keep, and make available for examination, records
that pertain to importation, or to the information contained in
the documents required by law or regulation under the Tariff Act
of 1930 in connection with the entry of merchandise. "Records"
includes, but is not limited to, statements, declarations, books,
papers, correspondence, accounts, technical data, automated
record storage devices, and computer programs necessary to
retrieve information in a usable form. The records should be of
the kind normally kept in the ordinary course of business, and
must be sufficiently detailed: 1) to establish the right to
make, and the correctness of, any entry; 2) to determine the
liability of any person for duties and taxes due the United
States; 3) to determine the liability of any person for fines,
penalties, and forfeitures; and 4) to determine whether the
person has complied with the laws and regulations administered by
the Customs Service.
Since the Civil Aircraft Agreement does not have any
specific enforcement provisions, Customs enforces the terms of
the agreement including insuring the validity of the
certification, based upon Customs' inherent powers to collect and
protect the revenue of the United States. Furthermore, this
enforcement power is strengthened by the congressional statement
requiring Customs to "monitor closely entries under the Civil
Aircraft Agreement, and where necessary to protect the revenues,
take appropriate action to insure the continuing validity of
statements supplied to Customs under the certification
requirements." See, 1979 U.S. Code Cong. and Adm. News. p. 571.
In the situation described, the importer has imported engine
blades from various countries to be repaired then exported back
to those companies in the foreign countries without any knowledge
of the final use of the parts. The evidence submitted suggests
that the importer assumes that the parts will be used in a
qualifying manner. As stipulated above, the importer must intend
that the parts will be put to a qualifying use. Such an
intention cannot be held without actual knowledge. A
certification that the imported parts will be used on a
qualifying aircraft is, therefore, inadequate under the Civil
Aircraft Agreement unless the importer has knowledge of the final
use.
Note however, aircraft parts that are to be imported for
repair and then exported may qualify for duty-free treatment
under the temporary importation provisions of subheading
9813.00.05, HTSUS.
The importer must be prepared to prove the initial and
continued validity of his certification by proof of end use in
conformance with the certifications pledge in the event of an
audit. If actionable conduct is confirmed, penalties associated
with such conduct may be assessed. If the proper intent is not
held at the time of entry and completion of the certification,
actions under 19 U.S.C. 1592 may be available.
HOLDING:
Based upon the foregoing, an importer cannot in good faith
assert that the imported aircraft parts will be used in a
qualifying manner under the Civil Aircraft Agreement, if he lacks
knowledge of their final use. As an alternative, duty-free
treatment may be available under the temporary importation
provisions under subheading 9813.00.05, HTSUS.
Sincerely,
John Durant, Director