CLA-05 RR:CR:SM 561472 RSD
TARIFF NO. 9817.00.98
Werner Kreissl
Ernst & Young
1 Place Ville Marie
Bureau 2400
Montreal Canada H3B 3M9
RE: Tariff classification of imported theatrical equipment, properties,
equipment, costumes, etc. for use in circus theatre shows;
subheading 9817.00.98, HTSUS
Dear Mr. Kreissl:
This is in response to your letter dated July 26, 1999, on behalf of Le Cirque du Soleil, Inc. regarding the applicability of tariff subheading 9817.00.98, Harmonized Tariff Schedule of United States, to merchandise its imports for use in its shows. On November 24, 1999, a meeting was held at Customs Headquarters with you, other representatives of Cirque du Soleil, and members of my staff to discuss this matter. We received a supplemental submission dated December 15, 1999. We regret the delay in responding to your request.
FACTS:
The Cirque du Soleil (“Cirque”) is an international live theatrical circus based in Montreal, Canada that has been performing since 1984. In 1987 it began performing internationally. Cirque refers to its shows as a theater circus. In the United States, Cirque has two kinds of shows: tour shows and theatre shows. All Cirque shows include acrobats, gymnasts, trapeze artists, and clowns (but no animals) in a theatrical setting complete with sets, lighting, costumes, music, and choreography. The shows are designed to create and maintain a magical atmosphere that is uninterrupted by the need to take down and put up new equipment. The props, accessories, and costumes, as well as the artistic dancing, singing and moving about the stage tell a continuing story based on the theme of the show.
Tour shows have been going back and forth across the Canadian-U.S. border since 1987. An average tour plan for a new show would include appearances in Montreal, Quebec City, Toronto, and Santa Monica, California during the first year. In subsequent years, the tour would perform for several months in different cities across the United States. Cirque spends anywhere from one to three months in each tour city. In the years since the tour shows have begun North American tours have lasted from one year and eight months to two years and eight months, including the tour plan for the 1999 show. However, in the future, tours may continue for up to four years.
Cirque began doing its theatre shows in 1992, when it performed for the first time in Las Vegas, Nevada, with a show called the New Experience. All theatre shows start with a basic contract of a determinable length with an independent partner. Each contract has certain options that one or both parties can elect to enforce. These options can end the contract or extend it for another fixed period of time based on very specific criteria. For example, New Experience was originally a two-year show which Cirque’s partner, the Mirage Casino Hotel, elected to stop after one year to advance the new show Mystere. The Mystere contract is an 11-year contract split into two periods of six and five years, with two different shows. Among the Mystere options is an 18-month guarantee with one-year extensions up to the first six-year period. There is another option to extend the first show for the full 11-year period or even add an additional five years.
Other theatre shows include one in Orlando, Florida, which is a show with a fixed contract of 12 years to be presented by Cirque du Soleil Inc. Cirque Du Soleil Biloxi Inc. will present a show called Alegria in Biloxi, Mississippi. The contract with the partner is a six-year contract during which Alegria will be presented for the first three years after which another show will be presented for the remaining three years. Another show, operated by Cirque du Soleil Nevada Inc., will be performed in Las Vegas in the Bellagio Theater. The contract for this show is for a 10-year period. All the above show contracts are similar to the Mystere contract in that there are options which can be elected by one or both partners to terminate the show or extend it for fixed time periods. All shows are self-contained and independent from each other and need to be complete for use elsewhere. In other words, the scenery, props, costumes, sets, equipment, etc. used in a show are a unit and will not be separated when the show is performed at a different location.
Cirque indicates that it will maintain an adequate system of controls on imported goods eligible for duty free entry under subheading 9817.00.98, HTSUS. For example, Cirque will maintain a listing of goods destroyed and/or consumed during any show and implement inventory controls to satisfy any audit requirements. It is stated that upon the termination of a show or tour in the United States, all goods will be returned to Canada.
ISSUE:
Whether the imported theatrical scenery, properties and apparel used in Cirque’s theatre and touring shows are eligible for duty-free treatment under subheading 9817.00.98, HTSUS.
LAW AND ANALYSIS:
Subheading 9817.000.98, HTSUS, provides that “[t]heatrical scenery, properties, and apparel brought into the United States by proprietors or managers of theatrical, ballet, opera or similar productions arriving from abroad for temporary use by them in such production” will be free of duty.
Cirque wishes to have the scenery, costumes, and properties imported for use in its theatre shows classified under subheading 9817.00.98, HTSUS. In addition, Cirque has also advised that it wishes to have similar items imported for use in its touring shows, after such shows have entered the United States and in the process of touring, also to be classified under subheading 9817.00.98, HTSUS. For articles to be classified under subheading 9817.00.98 HTSUS, three basic requirements must be satisfied:
The imported goods must consist of theatrical scenery, properties, and apparel;
the goods must be brought into the U.S. by proprietors
or managers of the theatrical, ballet, opera or similar
productions; and
the subject goods must be for temporary use in such
productions.
In determining the applicability of subheading 9817.00.98, HTSUS, to Cirque’s situation, we are satisfied that Cirque’s theatrical shows as well as the touring shows would meet the criteria of theatrical productions. We also conclude that if Cirque imports scenery, properties, or apparel into the United States, it would qualify, as a proprietor of a theatrical production.
In addition, we must consider which of the items that Cirque imports would be considered “theatrical scenery, properties, and apparel.” We find that subheading 9817.00.98, HTSUS, is limited to theatrical scenery, properties, and apparel that are directly used in a theatrical production or touring show. Consequently, ancillary items such as kitchen items to feed performers, office and computer equipment, sanitary units, accessories, etc. that Cirque may import, but are not directly used in a performance of its theatrical productions or touring shows would not be encompassed by subheading 9817.00.98, HTSUS.
The next issue that we must address concerns whether the goods that Cirque imports for use in its theatrical or touring production shows are imported for temporary use. First, in interpreting the term “temporary use”, we note that subheading 9817.00.98, HTSUS, was enacted in 1995 and replaced subheading 9813.00.65, HTSUS. Subheading 9813.00.65, HTSUS, provided for the duty-free entry under bond of “Theatrical scenery, properties and apparel brought into the United States by proprietors or managers of theatrical exhibitions arriving from aboard for temporary use by them in such exhibition”. The primary distinction between subheading 9817.00.98, HTSUS, and 9813.00.65, HTSUS, is that the former provision does not contain a bonding requirement for obtaining duty-free treatment for the theatrical scenery, properties, and apparel brought into the United States.
It appears that subheading 9817.00.98, HTSUS, was enacted to replace subheading 9813.00.65, HTSUS, so as to reduce the paperwork and the administrative burden involved in importing eligible items by eliminating the bonding requirements. However, because the language “for temporary use” remains in subheading 9817.00.98, HTSUS, it is necessary that the term be construed for purposes of the administration of the provision.
It is clear that Congress did not intend that the merchandise imported under this provision be used for an unlimited period in a theatrical production in the United States.
In this case, Cirque’s theatrical shows may be booked in the United States for several years at a time, often with options for renewal for several more years once the initial contract has expired. Cirque also indicates that it intends to export all goods upon the termination of a production or tour in the United States or when they are finished being used in the production.
We conclude that, for merchandise to qualify for entry under subheading 9817.00.98, HTSUS, Cirque must be able to establish to the satisfaction of Customs officials at the port of entry that the scenery, properties and apparel which it imports will be used temporarily in one of its theatrical productions or touring shows until that production or show ends in the United States or until the merchandise is no longer being used in the production or show. At that time all such merchandise must be exported.
HOLDING:
Subheading 9817.00.98, HTSUS is limited to theatrical scenery, properties, and apparel that are directly used in the theatrical productions or touring shows. In addition, for merchandise to qualify for duty-free entry under subheading 9817.00.98, HTSUS, Cirque must be able to establish to the satisfaction of Customs officials at the port of entry that the scenery, properties and apparel which it imports will be used temporarily in one of its theatrical productions or touring shows until that production or show ends in the U.S. or the merchandise is no longer being used in the production or show. At that time all such merchandise must be exported.
A copy of this ruling letter should be attached to the entry documents filed at the time the goods are entered. If the documents have been filed without a copy, this ruling should be brought to the attention of the Customs officer handling the transaction.
Sincerely,
John Durant, Director
Commercial Rulings Division