CON-9-RR:IT:EC 226034 JRS
Port Director of Customs
U.S. Customs Service
1000 Second Avenue, Suite 2200
Seattle, WA 98104
RE: Request for Internal Advice on the computation of the
TIB amount; Bond calculation concerning special
programs; 19 CFR 10.31(f); General Note 6, HTSUS;
Aircraft temporary free entry; IA 9/95
Dear Sir:
This is in response to your internal advice request dated
February 10, 1995 (FILE: CLA 1-01:SE:C:E SAD), regarding the bond
calculation under a TIB entry for aircraft parts. Our advice
follows.
FACTS:
Questions have arisen in your district concerning the proper
bond calculation on temporary importations under bond (TIB)
entries for aircraft parts under subheadings 9813.00.0540 and/or
9813.00.30, HTSUS.
You state that brokers admit merchandise under subchapter
XIII, Chapter 98, HTSUS, which may be classifiable, for example,
under such subheadings as 8411.12.4000; 8525.10.6020;
9032.89.6075; 9032.90.6080; 9401.10.8000; and 9403.20.0030,
HTSUS, and claim that the bond charge be calculated at the free
duty rate found in the "Special" subcolumn of Column 1, HTSUS,
since such merchandise is "ordinarily" entered under the special
program of the Civil Aircraft Agreement.
ISSUE:
Whether the TIB bond amount is properly calculated using the
free rate of duty ("Free (C)") of the special program for Civil
Aircraft or the "general" rate of duty of Column 1, HTSUS,
without regard to any special program indicator for special duty-free tariff treatment.
LAW AND ANALYSIS:
Section 10.31(f) of the Customs Regulations (19 CFR
10.31(f)) provides, in pertinent part:
With the exceptions stated herein [exceptions not
relevant in this case], a bond shall be given on
Customs Form 301, containing the bond conditions set
forth in 113.62 of this chapter, in an amount equal to
double the duties, including fees, which it is
estimated would accrue (or such larger amount as the
port director shall state in writing or by the
electronic equivalent to the entrant is necessary to
protect the revenue) had all the articles covered by
the entry been entered under an ordinary consumption
entry.
Section 10.39(e)(4) of the Customs Regulations (19 CFR
10.39(e)(4)) provides, in pertinent part, that the port director
may cancel the liability for the payment of liquidated damages:
Upon the payment of an amount equal to double the duty
which would have accrued on the articles had they been
entered under an ordinary consumption entry, ... .
We traced the bond requirement for the temporary free entry
of articles to the Tariff Act of October 3, 1913 (subsection 4,
paragraph J, of Section IV). The implementing Customs
Regulations of 1915 (Art. 379) and 1923 (Art.407) required that
bonds be given "in a penal sum equal to double the estimated
duty." The Customs Regulations of 1931 (Art. 428(d)) and 1937
(Art. 435(d)) required that "a bond shall be given in an amount
equal to one and one-quarter times the estimated duties which
would have been required to be deposited had the articles been
entered for consumption."
A review of current section 19 CFR 10.31(f) back to the
Customs Regulations of 1943 has revealed that the language
regarding the use of an "ordinary consumption entry" when
calculating the bond amount has remained unchanged, although the
amount chargeable has been amended over the years. The Customs
Regulations of 1943, section 10.31(c), stated that: "A bond shall
be given in an amount equal to one and one-quarter times the
duties which it is estimated would accrue had all the articles
covered by the entry been entered under an ordinary consumption
entry (emphasis added)." See T.D. 51868 (Feb. 18, 1948).
When aircraft parts are entered "duty-free" under the Civil
Aircraft Agreement, it is only a "conditionally" free entry. See
General Note 6, HTSUS. The entry bond in that case is calculated
as if the aircraft were entered using the Column 1 rate of duty
for an ordinary consumption entry. Aircraft parts entered for
consumption under subheading 8411.12.4000, HTSUS, have a 5 percnt
rate of duty unless the importer requests the conditionally free
rate of duty under the special program (Free (C)).
Likewise, the TIB bond calculation is based on an ordinary
consumption entry as stated in 19 CFR 10.31(f). The basis for
the computation of the amount of a temporary importation bond is
the estimated duties determined in accordance with sections
141.90 and 141.103 of the Customs Regulations. The full Column 1
general duty rate for each tariff classification applies (see 19
CFR 141.90 and 141.103), including any applicable ADD/CVD and
fees, without regard to any special program considerations. This
duty rate is used for bond purposes and liquidated damages if a
violation of the TIB occurs under 19 CFR 10.39(d)(1).
The Temporary Importation under Bond classification is a
special program itself under the tariff schedule. See Subchapter
XIII, Chapter 98, HTSUS. Since a TIB entry is a special program
for "temporary" duty-free treatment, additional special program
benefits do not apply. An importer at the time of entry may
choose either to present the merchandise under a TIB provision or
under a consumption entry obtaining, if he so requests, special
duty-free tariff treatment under the Agreement on Trade in Civil
Aircraft, but the importer cannot do both.
If the importer chooses to admit the merchandise under the
provisions of subchapter XIII, Chapter 98, he must produce a bond
calculation based on the TIB requirements of 19 CFR 10.31(f),
regardless of any other special trade programs or provisions for
which the merchandise might qualify. To hold otherwise and
permit a zero rate of duty under a special program would not
protect the revenue as required by the law (19 U.S.C. 1202;
General Note 1, HTSUS) and regulations (19 CFR 10.31 through
10.40).
HOLDING:
The TIB bond calculation is properly based on the Column 1
"general" rate of duty, without regard to any "special" program
rate found in the "Special" subcolumn of Column 1, HTSUS.
The Office of Regulations and Rulings will take steps to
make this decision available to Customs personnel via the Customs
Rulings Module in ACS and the public via the Diskette
Subscription Service, Freedom of Information Act and other public
access channels 60 days from the date of this decision.
Sincerely,
Director, International
Trade Compliance Division