CLA-2 OT:RR:CTF:VS H078735 EE
John Scura
J.T. Scura, Incorporated
761 West Broadway
Woodmere, NY 11598
RE: Subheading 9801.00.30, HTSUS; loaner aircraft engines
Dear Mr. Scura:
This is in response to your letter, dated August 26, 2009, on behalf of Dallas Airmotive Inc. of Dallas, Texas (“DAI”), concerning the applicability of subheading 9801.00.30, of the Harmonized Tariff Schedule of the United States (“HTSUS”), to certain loaner aircraft engines.
FACTS:
DAI is a wholly owned subsidiary of BBA Aviation PLC of the United Kingdom. DAI is [xxx] original equipment manufacturer authorized aircraft engine overhaul and repair facility [xxx]. DAI has been, and is an approved overhaul facility for [xxx]. Country of manufacture of these engines is the United States, Canada, Germany, and the United Kingdom.
To support this activity, DAI maintains a pool of loaner engines in [xxx]. The engines can be obtained either domestically or overseas. The engines, if imported, are entered for consumption under their respective classifications such as subheading 8411.21.40, HTSUS, and the merchandise processing fee (“MPF”) is paid, before joining the rental or lease pool.
When a customer needs an overhaul or repair, if they do not have a spare engine, a loaner engine of the same type is provided by the overhaul facility. The loaner engine is attached to the customer’s aircraft by DAI or another overseas facilities personnel. No repairs are done to the loaner engine other than installation and calibration. The engine is not improved while overseas. The loaner engine is used until the customer’s engine is overhauled and returned.
You state that when a loaner engine is provided, it is always done so on a signed loan or lease agreement. The loan usually provides DAI with a payment, but on some occasions, to stimulate business, or to do warranty work, it does not provide for payment to DAI. Occasionally, DAI may have to obtain an engine from others to meet customer demands, and therefore not own a particular engine.
ISSUE:
Whether the loaner engines qualify for entry under subheading 9801.00.30, HTSUS.
LAW AND ANALYSIS:
Subheading 9801.00.30, HTSUS, provides duty-free treatment for:
[a]ny aircraft engine or propeller, or any part or accessory of either, previously imported, with respect to which the duty was paid upon such previous importation, 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 loan, lease or rent to an aircraft owner or operator as a temporary replacement for an aircraft engine being overhauled, repaired, rebuilt or reconditioned in the United States, and (2) reimported by or for the account of the person who exported it from the United States.
In this case, the loaner engines are obtained either domestically or overseas. If they are obtained from abroad, they are classified under subheading 8411.21.40, HTSUS, and the MPF is paid. Since the loaner engines are classified under a provision within chapter 1-97, HTSUS, we find that the prerequisite to obtaining the benefit of subheading 9801.00.30, HTSUS, is met even though subheading 8411.21.40, HTSUS, is now a duty-free provision.
You inquire whether there is a requirement under subheading 9801.00.30, HTSUS, for monetary payment to DAI on the use of the loaner engine by the foreign aircraft operator owner or operator having his engine overhauled in the United States.
Subheading 9801.00.30, HTSUS, requires that the subject merchandise must be exported under loan, lease or rent to an aircraft owner or operator as a temporary replacement for an aircraft engine being overhauled, repaired, rebuilt or reconditioned in the United States. Black's Law Dictionary defines a “lease” as, inter alia, “a contract by which the rightful possessor of personal property conveys the right to use that property in exchange for consideration.” Black's Law Dictionary 970 (9th ed. 2009). Although a lease must be supported by consideration, a loan is “an act of lending; a grant of something for temporary use.” Black's Law Dictionary 1019. In Werner & Pfleiderer Corporation v. United States, 17 C.I.T. 916, 919 (1993), a case interpreting item 801.00, Tariff Schedules of the United States (“TSUS”) (the precursor provision to subheading 9801.00.20, HTSUS, which is a similar provision to subheading 9801.00.30, HTSUS), the U.S. Court of International Trade stated that the general definitions of a loan and a lease are identical except for the requirement of consideration in a valid lease for purposes of item 801.00, TSUS. The court also noted CBP’s ruling where CBP held that “consideration supporting a lease need not be monetary in nature, but may be in the form of an act or the promise to perform an act which is not illegal, and which the promising party is not already legally obliged to do.” C.S.D. 79-287, 13 Cust. Bull. 1418, 1420 (1979).
In the instant case, the loaner engine is provided under a loan or a lease agreement to an aircraft owner or operator as a temporary replacement for an aircraft engine being, or to be, overhauled or repaired in the United States. The loan usually provides DAI with a payment, but in some occasions, it does not provide for payment to DAI. Based on the previously cited definition of a lease, consideration does not need to be in the form of a monetary payment. Additionally, a loan does not need to be supported by consideration. Accordingly, we find that there is no requirement for monetary payment to DAI on the use of the engine under loan or lease for the purposes of subheading 9801.00.30, HTSUS.
Next, you inquire whether there is a requirement that DAI own the loaner engines if all other requirements of subheading 9801.00.30, HTSUS, are met. Pursuant to subheading 9801.00.30, HTSUS, merchandise must be reimported by or for the account of the person who exported it from the United States. Subheading 9801.00.30, HTSUS, does not require a party to own the merchandise in order for the merchandise to be eligible for duty-free treatment under this provision. In the instant case, the loaner engines are obtained either domestically or overseas. Although DAI has a large stock of loaner engines available, the possibility exists that DAI may have to obtain an engine from others. DAI could obtain possession and use through financial arrangements other than outright ownership. Since DAI is the same entity that imports the merchandise into the United States, exports it under lease or loan, and subsequently reimports the merchandise into the United States, the second requirement under subheading 9801.00.30, HTSUS, is met. Therefore, we find that there is no requirement that DAI own the loaner engines under subheading 9801.00.30, HTSUS.
You also inquire whether DAI is a “person” within the scope of subheading 9801.00.30, HTSUS. The term “person” is not defined in the HTSUS. When, as in this case, a tariff term is not defined in either the HTSUS or its legislative history, “the term's correct meaning is its common meaning.” Mita Copystar Am. v. United States, 21 F.3d 1079, 1082 (Fed. Cir. 1994). The common meaning of a term used in commerce is presumed to be the same as its commercial meaning. Simod Am. Corp. v. United States, 872 F.2d 1572, 1576 (Fed. Cir. 1989). To ascertain the common meaning of a term, a court may consult “dictionaries, scientific authorities, and other reliable information sources” and “lexicographic and other materials.” C.J. Tower & Sons v. United States, 69 C.C.P.A. 128, 673 F.2d 1268, 1271 (CCPA 1982); Simod, 872 F.2d at 1576. Black’s Law Dictionary defines “person” as, inter alia, “an entity (such as a corporation) that is recognized by law as having most of the rights and duties of a human being. In this sense, the term includes partnerships and other associations, whether incorporated or unincorporated.” Black's Law Dictionary 1257. Additionally, CBP has consistently interpreted the definition of a “person” in subheading 9801.00.20, HTSUS, a similar provision to 9801.00.30, HTSUS, to include entities. See HQ H016586, dated October 15, 2007; HQ 964960, dated September 4, 2002; HQ 562177, dated November 9, 2001; HQ 560827, dated February 25, 1998. In the instant case, we find that since DAI is an incorporated entity, it meets the definition of a “person.”
Lastly, you inquire whether the MPF is payable on subheading 9801.00.30, HTSUS. The MPF is collected per 19 U.S.C. § 58c(a)(9)(A) for the processing of merchandise that is formally entered or released into the United States. The limitations on the MPF are set forth in 19 U.S.C. § 58c(b). 19 U.S.C. § 58c(b)(8)(B) provides, in pertinent part, that no fee may be charged for the processing of any article “provided for any item in chapter 98 of the Harmonized Tariff Schedule of the United States, except subheading 9802.00.60 or 9802.00.80…” See 19 U.S.C. § 58c(b)(8)(B)(i). CBP implementing regulations at 19 C.F.R. § 24.23(c)(1)(i) provide, in pertinent part, that with the exception of articles provided for in subheading 9802.00.60 or 9802.00.80, HTSUS, the MPF does not apply to articles provided for in Chapter 98, HTSUS. In this case, the loaner engines would be entered under subheading 9801.00.30, HTSUS. Accordingly, pursuant to 19 C.F.R. § 24.23(c)(1)(i), the MPF does not apply to the subject items.
HOLDING:
Based on the information presented, the loaner aircraft engines, which are previously imported by DAI, subsequently exported under a lease or loan agreement to an aircraft owner or operator as a temporary replacement for an aircraft engine being overhauled, repaired, rebuilt or reconditioned in the United States and then reimported by DAI into the U.S. without having been advanced in value or improved in condition while abroad, are eligible for duty-free entry into the U.S. under subheading 9801.00.30, HTSUS.
A copy of this ruling letter should be attached to the entry documents filed at the time this merchandise is entered. If the documents have been filed without a copy, this ruling should be brought to the attention of the CBP officer handling the transaction.
Sincerely,
Monika R. Brenner
Chief
Valuation & Special Programs Branch