OT:RR:CTF:VS H325452 EE
Center Director
Automotive and Aerospace Center of Excellence and Expertise
U.S. Customs and Border Protection
726 Exchange Street, Suite 400
Buffalo, NY 14210-1484
RE: Application for Further Review of Protest No. 3901-22-126450; Subheading 9801.00.10, HTSUS
Dear Center Director:
This is in reference to the Application for Further Review ("AFR") of Protest No. 3901-22-126450, timely filed on March 4, 2022, on behalf of MTU Maintenance Hannover GmbH (hereinafter, the "protestant"), concerning the applicability of subheading 9801.00.10, Harmonized Tariff Schedule of the United States ("HTSUS"), to the merchandise at issue.
FACTS:
The protestant performs maintenance, repair, and operations ("MRO") services on large commercial aircraft engines. The merchandise subject to the protest at issue is a turbine mid-frame assembly. The turbine mid-frame assembly was removed from a General Electric LM2500 gas turbine, serial number 677-186. The protestant states that this gas turbine was made by General Electric in Cincinnati, Ohio, and exported in March 2015. The turbine mid-frame assembly was disassembled by the protestant in Germany and reimported into the United States by the protestant for repair. The turbine mid-frame assembly was repaired after which it was reexported to be reassembled in the disassembled turbine in Germany.
The protestant claims that the turbine mid-frame assembly is eligible for duty-free treatment under subheading 9801.00.10, HTSUS. On November 4, 2021, the protestant requested a waiver from the Automotive and Aerospace CEE for the presentation of documentation in support of their subheading 9801.00.10, HTSUS, claim. 19 C.F.R. 10.1(d) provides that "[i]f the Center director is reasonably satisfied, because of the nature of the articles or production of other evidence, that the articles are imported in circumstances meeting the requirements of subheading 9801.00.10 or 9802.00.20, HTSUS, and related section and additional U.S. notes, he may waive the requirements for producing the documents specified in paragraph (a) of this section." On December 27, 2021, the Automotive and Aerospace CEE denied the request stating that initially, the protestant failed to respond to multiple attempts to verify the use of subheading 9801.00.10, HTSUS. While the protestant was eventually responsive to CBP's request for information, it was unable to provide the date and port of exportation of the merchandise and the protestant did not know if and when drawback was claimed when the merchandise was exported. The protestant followed up with a subsequent request on January 5, 2022. On January 13, 2022, the CEE reiterated that the waiver was denied. The protest was filed on March 4, 2022. Your office denied the protest on March 30, 2022, stating that the protestant did not support the use of subheading 9801.00.10, HTSUS. Specifically, the manufacturer's affidavit indicated that the merchandise obtained a drawback; CBP Form 3311 was incomplete; and the shipping note was incomplete. In support of their claim, the protestant provided the following documentation:
-The MTU engine overhaul process.
-The manufacturer's affidavit, dated February 23, 2022, issued by GE Aviation, indicating that the country of manufacture of the GE Turbine Engine LM2500 is the United States and that the turbine engine was not previously manufactured or produced in the United States under subheading 9813.00.05, HTSUS. The manufacturer's affidavit indicates that U.S. Customs drawback was claimed for the turbine engine, and it lists the amounts claimed. The affidavit is signed by the Senior Customs Strategic Initiatives Manager of GE Aviation.
-The consolidated shipper's export declaration and importer's declaration which indicates that the parts were disassembled from engine type LM2500 serial number 677-186, manufactured by GE Aviation in the United States. The declaration states that the articles were exported from the United States, the Port of Evendale, OH, in March 2015, and that they were returned without having been advanced in value or improved in condition by any process of manufacture or other means. The declaration lists the item, part number L50530G11, merchandise description, quantity, and value. The declaration is signed by the Senior Manager of Foreign Trade, Export Control and Customs of the protestant.
-A shipping note issued by the protestant to Component Repair Technologies in Ohio listing the turbine mid-frame assembly. The dispatch date listed on the shipping note is May 25, 2021. The shipping note indicates that the turbine mid-frame assembly part no. L50530G11 is being sent for repair and to be returned to the protestant.
-CBP Form 3311 submitted by the protestant, dated May 20, 2021. The form lists the turbine mid-frame assembly part no. L50530G11. The name of the manufacturer listed is Aero Products and Services JV LLC. The form states that the parts are removed from the engine referred to in the form for repair in the United States and will be returned to the protestant for assembly.
ISSUE:
Whether the turbine mid-frame assembly is eligible for duty-free treatment under subheading 9801.00.10, HTSUS.
LAW AND ANALYSIS:
Section 904(b) of the Trade Facilitation and Trade Enforcement Act of 2015 (Pub. L. 114-125, February 24, 2016) amended subheading 9801.00.10, HTSUS, to include any products which are returned within 3 years after having been exported. Previously, subheading 9801.00.10, HTSUS, only applied to products of the United States. Subheading 9801.00.10, HTSUS, now provides for the duty-free treatment of:
Products of the United States when returned after having been exported, or any other products when returned within 3 years after having been exported, without having been advanced in value or improved in condition by any process of manufacture or other means while abroad.
Section 10.1, CBP Regulations (19 C.F.R. 10.1) sets forth the documentary requirements for entry under subheading 9801.00.10, HTSUS. We note that CBP has not yet amended the regulations to implement the change to subheading 9801.00.10, HTSUS. Nonetheless, 19 C.F.R. 10.1(a)(1) requires the foreign shipper to declare the following information with regard to articles in a shipment valued over $2,500: the port of exportation, the date of exportation, the quantity, the description of the merchandise, the value of the merchandise, the date of the declaration, and whether the articles were returned without having been advanced in value or improved in condition by any process of manufacture or other means. In addition, the documentation is to be filed "in connection with the entry." As previously noted, the protestant provided a consolidated shipper's export declaration and importer's declaration. The declaration lists the port of exportation as the Port of Evendale, OH, the date of exportation as March 2015, merchandise description as turbine mid frame assembly, part number L50530G11, quantity, and value. The declaration states that the merchandise was returned without having been advanced in value or improved in condition by any process of manufacture or other means. The declaration also states that:
"[a]s an importer, who was neither the manufacturer or the exporter of the goods, MTU has no knowledge regarding whether drawback was claimed upon exportation. If Customs has reason to believe the merchandise was exported with the benefit of drawback, it is incumbent on Customs to determine the drawback amount and whether classification in subheading 9801.00.10 or 9801.00.80 is appropriate. See C.S.D. 85-32 and related cases."
We note that the date of the declaration is after the date of liquidation.
Section 10.1(a)(2), CBP Regulations (19 C.F.R. 10.1(a)(2)), requires the owner, importer, consignee, or agent having knowledge of the facts regarding the claim for free entry to declare that the foreign shipper's statement is true, and, that the articles were not manufactured or produced in the United States under subheading 9813.00.05, HTSUS, and that the articles were exported from the United States without benefit of drawback. The information required also pertains to the name of the manufacturer, the location of the manufacturer, and the date of the declaration. In the instant case, the manufacturer's affidavit states that the GE Turbine Engine LM2500 is manufactured by GE Aviation, Evendale, OH, and that the country of origin of the product is the United States. The affidavit indicates that the product was not previously manufactured or produced in the United States under subheading 9813.00.05, HTSUS. The affidavit also states that U.S. Customs drawback was claimed, and the amounts are listed in a table. Again, we note that the affidavit is dated after the date of liquidation of the entry.
The protestant claims that although the manufacturer's affidavit and the consolidated shipper's export declaration and importer's declaration indicate that drawback was claimed on the jet engine, and listed the drawback entries, drawback was not claimed on the turbine mid-frame assembly.
U.S. Note 1(a), Subchapter 1, HTSUS, provides that "[t]he provisions in this subchapter (except subheadings 9801.00.70 and 9801.00.80) shall not apply to any article: (a) Exported with benefit of drawback..." Further, CBP regulations at 19 C.F.R. 10.1(a)(2) indicate that the declaration by the owner, importer, consignee, or agent having knowledge of the facts regarding the claim for free entry must state that "the articles were not manufactured or produced in the United States under subheading 9813.00.05, HTSUS, and that the articles were exported from the United States without benefit of drawback." (emphasis added). The statute and CBP regulations clearly indicate that subheading 9801.00.10, HTSUS, does not apply to articles which were exported with the benefit of drawback. The importer has the burden to provide the necessary documentation to demonstrate eligibility for duty-free treatment under subheading 9801.00.10, HTSUS, and in the instant case, the manufacturer's affidavit does not meet the requirements of 19 C.F.R. 10.1(a)(2). Accordingly, we find that the turbine mid-frame assembly is not eligible for duty-free treatment under subheading 9801.00.10, HTSUS.
The protestant does make a further argument that drawback was claimed on the gas turbine and not on the turbine mid-frame assembly, and that Chas. Adler's Sons, Inc. v. United States, 21 CCPA 573 (1934) supports its claim that since the turbine mid-frame assembly, as a part, was imported for repair and was disassembled from U.S. engines, such parts would not be subject to the exclusion of Chapter 98, Subchapter 1, U.S. Note 1(a), "article exported . . . with benefit of drawback" for subheading 9801.00.10, HTSUS. Chas. Adler's Sons involved imported pearls which were incorporated in the United States into pendants. Drawback was obtained upon exportation of the pendants. Thereafter, the pearls were removed from the pendants abroad and reimported separately. The U.S. Court of Customs and Patent Appeals ruled that although the provisions applicable to articles on which drawback had previously been paid did not apply to the pearls, as they were not the articles, i.e., pendants, that were "exports with benefit of drawback," nonetheless, the pearls should be treated as newly imported pearls on the ground that the pearls were not American goods returned. Timex Corp. v. United States, 12 C.I.T. 629 (1988), which followed Chas. Adler's Sons, concerned whether bezels imported as part of watches were entitled to duty-free treatment as American goods returned after assembly abroad under item 807, Tariff Schedules of the United States (now subheading 9802.00.80, HTSUS). In that case, imported crystals were combined with U.S. bezels. The bezel crystal assemblies were then exported with the benefit of drawback. The bezel crystal assemblies were assembled with other parts to form watches, which were imported into the United States. The Timex court noted that the focus in the Chas. Adler's Sons case was on whether drawback could be repaid as the statute at issue in that case had been amended since that decision was rendered. The Timex decision, in allowing item 807 treatment on the bezel, noted it was clear that the bezel was fabricated in the United States. 21 CCPA at 576-577. Here, the protestant was not the manufacturer of the gas turbine and is only able to provide a consolidated shipper's export declaration and importer's declaration that lists the turbine mid frame assembly, part number L50530G11, as the item exported from the United States in March 2015 without benefit of drawback. In this case, there is no way to determine whether the assembly was, indeed, a product of the United States. Furthermore, since these two court cases were decided, further amendments have been made to subheading 9801.00.10, HTSUS. Accordingly, the turbine mid-frame assembly is not eligible for duty-free treatment under subheading 9801.00.10, HTSUS. Although the protestant has indicated it has had issues with importations under bond, this may be the best solution under these circumstances.
HOLDING:
The turbine mid-frame assembly is not eligible for duty-free treatment under subheading 9801.00.10, HTSUS. The protest should be DENIED.
You are instructed to notify the protestant of this decision no later than 60 days from the date of this decision. Any reliquidation of the entry or entries in accordance with the decision must be accomplished prior to this notification. Sixty days from the date of the decision, the Office of Trade, Regulations and Rulings will make the decision available to CBP personnel and the public on the Customs Rulings Online Search System (CROSS) at https://rulings.cbp.gov/, or other methods of public distribution.
Sincerely,
for Yuliya A. Gulis, Director
Commercial and Trade Facilitation Division