AIR-4-07 OT:RR:BSTC:CCR H242055 RES
Chad A. Thompson
Alston & Bird LLP
The Atlantic Building
950 F Street, NW
Washington, DC 20004-1404
RE: Formal Entry and Duty Requirements for Foreign Repairs/Overhaul on Commercial Aircraft; 19 U.S.C. § 1466(f).
Dear Mr. Thompson:
This is in response to your June 27, 2013, ruling request, on behalf of your client, Delta Air Lines, Inc. (“Delta”). Delta seeks a determination that its U.S.-registered aircraft that undergo foreign repairs/overhaul are not required to make formal entry of such repairs/overhaul upon returning to the United States. This correspondence constitutes a ruling letter pursuant to 19 C.F.R. § 177.1(d)(1) and it supersedes the information letter issued to you by this office on May 7, 2013.
FACTS
Delta is a U.S.-based airline that operates in the United States and throughout the world engaged in the carriage of passengers and cargo. Delta aircraft are both of foreign and U.S. origin and all of its aircraft in commercial use are registered in the United States. With regard to Delta’s aircraft of foreign origin, prior to being put into service such aircraft have been formally entered as imported articles pursuant to 19 C.F.R. §§ 10.41(d), 122.52(b), and 141.4(a). Subsequently, the aircraft are put into commercial service carrying passengers and cargo from points both within the United States and/or between destinations in the United States and foreign countries.
Delta performs repairs/maintenance and overhauls in foreign locales for some of its aircraft and the materials and components used in this work are incorporated into the aircraft and constitute integral parts of a complete aircraft. Subsequently, Delta would like to either put the aircraft back into commercial service flying the aircraft from the foreign repair locales back to the United States either empty or hauling passengers and cargo.
ISSUE
Whether U.S.-registered commercial aircraft are required to make formal entry and pay duty on foreign repairs/overhaul when returning to the United States?
LAW AND ANALYSIS
The entry and duty requirements for aircraft foreign repairs formerly arose in conjunction with the same requirements for vessels under 19 U.S.C. § 1466(a), which states in pertinent part the following:
The equipments, or any part thereof, including boats, purchased for, or the repair parts or materials to be used, or the expenses of repairs made in a foreign country upon a vessel documented under the laws of the United States to engage in the foreign or coasting trade, or a vessel intended to be employed in such trade, shall, on the first arrival of such vessel in any port of the United States, be liable to entry and the payment of an ad valorem duty of 50 per centum on the cost thereof in such foreign country. . . .
The entry and duty provisions of § 1466 were at one time applicable to both vessels and aircraft under 19 U.S.C. 1644a(b)(1)(E) which authorized the Secretary of the Treasury to apply by regulation the laws and regulations on entry and clearance of vessels to civil aircraft. As such, aircraft repairs, like vessel repairs, were formerly subject to the entry requirements of § 1466(a).
However, section 601 of the Trade Agreements Act of 1979, which enacted provisions of the Civil Aircraft Agreement, amended § 1466 by adding subsection (f) and exempted aircraft repairs and parts from duty. Subsection (f) provides as follows:
The duty imposed under subsection (a) of this section shall not apply to the cost of equipments, or any part thereof, purchased, of repair parts or materials used, or of repairs made in a foreign country with respect to a United States civil aircraft, within the meaning of general note 3(c)(iv) of the Harmonized Tariff Schedule of the United States.
The Customs and Border Protection (CBP) regulations relating to aircraft entry and clearance (“Air Commerce Regulations”), previously found under 19 C.F.R. Part 6, pursuant to § 601 of the Trade Agreements Act of 1979, removed the reporting requirement of foreign aircraft repairs and part purchases in 19 C.F.R. § 6.7, stating in pertinent part:
The requirement to report foreign aircraft repairs and part purchases at the time of arrival of each United States registered aircraft is not specifically required by statute. The provisions of 19 U.S.C. 1466 are only applied to aircraft under 19 U.S.C. 1644 and 49 U.S.C. 1509 “upon such conditions” as Customs “deems necessary.” The application of the reporting requirements to duty-free aircraft purchases and costs for each United States-registered aircraft is not deemed necessary by Customs. In fact, under Customs present regulations such purchases and costs need not be reported at the time of arrival of United States-registered aircraft under certain circumstances (see 19 CFR 6.7(e)). In light of the foregoing, paragraphs (d) and (e) of § 6.7 have been deleted by the final rule.
See T.D. 84-109; 49 Fed. Reg. 19447, 19448 (May 8, 1984) (emphasis added).
When the Air Commerce Regulations were redesignated from 19 C.F.R. Part 6 to 19 C.F.R. Part 122, CBP reiterated that U.S.-registered aircraft are not required to report foreign repairs stating, in pertinent part:
The major changes from the long-standing air commerce regulations are deletion of the requirements that American-flag aircraft report foreign repairs and pay duty (a change resulting from a provision of the Trade Agreements Act of 1979) . . . .
See T.D. 88-12; 53 Fed. Reg. 9285, 9286 (March 22, 1988).
The current Air Commerce Regulations require all aircraft, including commercial aircraft, coming to the United States from a foreign area to file a general declaration, CBP Form 7507, unless specifically excepted from such requirement and do not require aircraft to report foreign repairs. See 19 C.F.R. §§ 122.41-43.
In light of the amendments to the Air Commerce Regulations and CBP’s position set forth in both Treasury Decisions 84-109 and 88-12, we have determined that where U.S.-registered commercial aircraft are taken out of service to undergo foreign repairs or overhaul, the operators of such aircraft are not required to formally enter and pay duty on the foreign repairs or overhaul of such aircraft when returning to the United States whether such aircraft are empty or carrying passengers and cargo.
HOLDING
U.S.-registered commercial aircraft that are repaired or overhauled foreign are not required to make formal entry and pay duty on repairs or overhaul when returning to the United States.
Sincerely,
Lisa L. Burley
Acting Chief
Cargo Security, Carriers and Restricted Merchandise Branch
Office of International Trade, Regulations & Rulings