CLA-2 CO:R:C:F 951876 STB
Area Director of Customs
Room 425
6 World Trade Center
New York, NY 10048
RE: Decision on Application for Further Review of Protest No.
1001-91-103402, filed on April 19, 1991, concerning the
classification of a 1952 Ferrari automobile.
Dear Ms. Maguire:
This is a decision on a protest filed April 19, 1991,
against your decision in the classification and liquidation of a
1952 Ferrari automobile, entry made on June 15, 1990, liquidated
on January 18, 1991 and reliquidated under 19 USC 1501 on March
15, 1991.
FACTS:
The subject item is a used 1952 Ferrari 225s automobile that
was originally manufactured outside of the United States. The
automobile had been previously imported into the United States
and duty was paid. The protestant, Rio Imports, Inc. (affiliated
with RKM Enterprises, of New York, New York) was not the original
importer of the vehicle. Protestant exported the vehicle for
auction sale in Monte Carlo, where it was not purchased, and then
re-imported the vehicle into the United States under the entry
now in question.
In the current entry, the automobile was imported and
entered on June 15, 1990, liquidated on January 18, 1991, and
reliquidated under 19 USC section 1501 on March 15, 1991. The
automobile was entered by protestant under subheading
9801.00.2000, Harmonized Tariff Schedule of the United States
Annotated (HTSUSA), the duty-free provision for certain
merchandise which has previously been imported into, and then
exported out of, the United States. The value of the car was
stated as being $90,000.00. At reliquidation, Customs appraised
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the automobile at $500,000.00 and classified it under subheading
8703.24.0090, HTSUSA, the provision for used motor cars and other
motor vehicles, dutiable at 2.5 percent ad valorem.
ISSUES:
1. Whether the 1952 Ferrari 225s should be classified as an
antique or as a used motor vehicle?
2. Whether the automobile should receive duty-free
treatment under subheading 9801.00.2000, HTSUSA, as a previously
imported article?
3. What is the value of the 1952 Ferrari 225s?
LAW AND ANALYSIS:
Classification
Classification under the HTSUSA is made in accordance with
the General Rules of Interpretation (GRI's). The systematic
detail of the harmonized system is such that virtually all goods
are classified by application of GRI 1, that is, according to the
terms of the headings of the tariff schedule and any relative
section or chapter notes. In the event that the goods cannot be
classified solely on the basis of GRI 1, and if the headings and
legal notes do not otherwise require, the remaining GRI's may
then be applied. The Explanatory Notes (EN's) to the Harmonized
Commodity Description and Coding System, which represent the
official interpretation of the tariff at the international level,
facilitate classification under the HTSUSA by offering guidance
in understanding the scope of the headings and GRI's.
In this instance the merchandise can be classified by
reference to GRI 1. Heading 8703, HTSUSA, the provision for
"motor cars and other vehicles principally designed for the
transport of persons..." describes the vehicle in question.
Subheading 8703.23.0090, HTSUSA, the provision for such motor
cars that are "used" describes the automobile even more
specifically. Although the value of the automobile may be
increased by its make, model and year of production, the accuracy
of the description of the vehicle by the above cited subheading
is not affected. We also note that the vehicle is fully
operational. Heading 9706, HTSUSA, the provision for "Antiques
of an age exceeding 100 years" does not apply since the language
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of the heading itself specifically excludes any item not
exceeding 100 years of age. There is no legal exception to this
requirement. No provision of Chapter 97 applies to the subject
1952 Ferrari 225s.
We do note, however, that the classification of the vehicle
at reliquidation, subheading 8703.24.0090, HTSUSA, is hereby
modified to subheading 8703.23.0090, HTSUSA, which applies to
used automobiles of a cylinder capacity exceeding 1,500 cc but
not exceeding 3,000cc. This change is based on the description
of the automobile provided by the importer which describes the
1952 Ferrari 225s as possessing a "V12 cylinder, 2,715 c.c."
engine. This change does not affect the duty rate.
Previously Imported Articles
Protestant contends that the 1952 Ferrari 225s is entitled
to duty-free entry under subheading 9801.00.2000, HTSUSA, the
provision for previously imported articles. The provision in
question allows duty-free entry for the following:
Articles, previously imported, with respect to which
the duty was paid upon such previous importation or
which were previously free of duty pursuant to the
Caribbean Basin Economic Recovery Act or Title V of
the Trade Act of 1974, if (1) reimported, without
having been advanced in value or improved in condition
by any process of manufacture or other means while
abroad, after having been exported under lease or
similar use agreements, and (2) reimported by or for
the account of the person who imported it into, and
exported it from, the United States...
There are thus two (2) conditions attached to the
reimportation of the merchandise that must be satisfied in order
to obtain the duty-free status under this provision. In this
instance, condition (1) may have been satisfied but condition (2)
is not. As the protestant states in the attachment to Customs
Form 19, Rio Imports was not the original importer of the
automobile. Protestant requests that Customs be less "technical"
in its application of this provision. We note, however, that
there are no exceptions to these requirements and that the
provision is clearly drafted, leaving no room for alternate
interpretations.
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Value
Merchandise imported into the United States is appraised in
accordance with section 402 of the Tariff Act of 1930, as amended
by the Trade Agreements Act of 1979 (TAA; 19 U.S.C. 1401a).
The preferred method of appraisement is transaction value, which
is defined as the "price actually paid or payable for merchandise
when sold for exportation to the United States," plus certain
statutorily enumerated additions not here relevant. 19 U.S.C.
1401a(b)(1).
For Customs purposes, the word "sale" generally is defined
as a transfer of ownership in property from one party to another
for a price or other consideration. J.L. Wood v. United States,
62 CCPA 25, C.A.D. 1139 (1974); J.H. Cottman & Co. v. United
States, 20 CCPA 344, T.D. 46114 (1932). The instant merchandise
was not sold, i.e., it was not transferred from one party to
another for a consideration. Instead, protestant exported the
vehicle for auction sale in Monte Carlo; however, as it was not
purchased, protestant re-imported the automobile under the entry
now in question. The protested merchandise therefore was not
sold for exportation to the United States, and consequently, as
there was no price actually paid or payable, the transaction
value method is inapplicable.
If imported merchandise cannot be appraised on the basis of
transaction value, it will be appraised in accordance with the
remaining methods of valuation, applied in sequential order. 19
U.S.C. 1401a(a)(1). The alternative bases of appraisement, in
order of precedence, are: the transaction value of identical or
similar merchandise (19 U.S.C. 1401a(c)); deductive value (19
U.S.C. 1401a(d)); computed value (19 U.S.C. 1401a(e)); and
the "fallback" method (19 U.S.C. 1401a(f)).
The transaction value of identical or similar merchandise is
based on sales at the same commercial level and in substantially
the same quantity, of merchandise exported to the United States
at or about the same time as that being appraised. 19 U.S.C.
1401a(c). There is no information relating to sales of identical
or similar merchandise. Accordingly, the protested merchandise
cannot be appraised on this basis.
Under the deductive value method, merchandise is appraised
on the basis of the price at which it is sold in the U.S. in the
greatest aggregate quantity at or about the time of importation,
subject to certain statutorily enumerated deductions. 19 U.S.C.
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1401(d). However, the automobile was not sold subsequent to
importation; consequently, this method of appraisement is also
inapplicable with regard to the protested merchandise.
Under the computed value method, merchandise is appraised on
the basis of the material and processing costs incurred in the
production of imported merchandise, plus an amount for profit and
general expenses equal to that usually reflected in sales of
merchandise of the same class or kind, the value of any assists
and packing costs. 19 U.S.C. 1401a(e)(1). The merchandise in
question is a 1952 automobile. There is no information on which
to base computed value. Accordingly, this method of appraisement
is also inapplicable to the instant merchandise.
Where merchandise cannot be appraised under the methods set
forth in 19 U.S.C. 1401a(b)-(e), its value is to be determined
in accordance with the "fallback" method of 19 U.S.C. 1401a(f).
The fallback method provides that merchandise should be appraised
on the basis of a value derived from one of the previous methods
reasonably adjusted to the extent necessary to arrive at a value.
19 U.S.C. 1401a(f)(1). Since all other methods of appraisement
are inapplicable under the circumstances of the importation in
question, the value of the 1952 Ferrari 225s should be determined
under the fallback method.
Protestant contends that the instant merchandise should be
appraised at $90,000.00, i.e., on the basis of the price of a
1991 Ferrari; however, there is no authority for this approach
under the TAA. At reliquidation the automobile was appraised at
$500,000.00. We have no grounds to dispute this determination.
HOLDING:
The 1952 Ferrari 225s is classified in subheading
8703.23.0090, HTSUSA, the provision for "[M]otor cars and other
motor vehicles principally designed for the transport of persons
(other than those of heading 8702), including station wagons and
racing cars...Used." The automobile is valued at $500,000.00 and
the general column one rate of duty is 2.5 percent ad valorem.
Since reclassification of the merchandise as indicated above
would result in no net duty reduction, you are instructed to deny
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the protest in full. A copy of this decision should be attached
to the Form 19 Notice of Action.
Sincerely,
John Durant, Director