CLA-2 CO:R:C W555657 CW
Marjorie M. Shostak, Esq.
Stein Shostak Shostak & O'Hara 3580 Wilshire Blvd., Suite 1240 Los Angeles, California 90010-2597
RE: Applicability of subheading 9810.00.40, HTSUS, to a sculpture to be imported for examination and possible purchase by a museum
Dear Ms. Shostak:
This is in response to your letter of May 8, 1990, on behalf of The J. Paul Getty Trust, requesting a ruling on the applicability of subheading 9810.00.40, Harmonized Tariff Schedule of the United States (HTSUS), to an antique bronze sculpture to be imported by your client.
FACTS:
A bronze sculpture, valued at approximately $13 million, will shortly be imported by your client (a museum) "on loan for study and examination for possible purchase." The importer, a nonprofit institution established for educational purposes or for encouragement of the fine arts, wishes to enter the article under subheading 9810.00.40, HTSUS, which provides for the free entry of sculptures imported for "the use" of this type of institution. Articles classifiable under this provision are exempt from the merchandise processing user fee imposed by the Omnibus Budget Reconciliation Act of 1986 (Pub. L. 99-509), as amended (19 U.S.C. 58c(a)(9)). A determination that subheading 9810.00.40, HTSUS, is inapplicable to this sculpture will result in its classification in subheading 9703.00.00, HTSUS (free of duty as "original sculptures"), and the assessment of approximately
$22,300 in user fees.
The issue raised in this case is identical to that raised in Application for Further Review of Protest No. 2704-9- 001150, filed by your client with the District Director of Customs, Los Angeles. In regard to the referenced protest,
which is presently pending in this office, the District Director determined that the sculptures were not entitled to classification under item 851.20, Tariff Schedules of the United States (the precursor to subheading 9810.00.40, HTSUS), because they were not imported for "the encouragement of the fine arts."
ISSUE:
Whether sculptures imported by a qualified institution for examination and approval before exhibition or purchase are entitled to classification under subheading 9810.00.40, HTSUS, with an exemption from the merchandise processing user fee.
LAW AND ANALYSIS:
With certain exceptions not applicable to this case, articles provided for in Chapter 98, HTSUS, are exempt from the merchandise processing user fee. 19 U.S.C. 58c(a)(9). Accordingly, sculptures classifiable under subheading 9810.00.40, HTSUS, would be exempt from the fee.
Classification under this tariff provision is conditioned upon the articles being imported for "the use" of the qualified nonprofit institution. The question involved here is whether importation for study and approval before purchasing can be considered to be for "the use" of the institution.
U.S. Note 1, subchapter X, Chapter 98, HTSUS, provides, in relevant part, as follows:
... the articles covered by this subchapter [including subheading 9810.00.40, HTSUS] must be exclusively for the use of the institutions involved, and not for distribution, sale, or other commercial use within 5 years after being entered. Articles admitted under any provision in this subchapter may be transferred from an institution specified with respect to such articles to another such institution, or may be exported or destroyed under customs supervision, without duty liability being incurred.
Although subheading 9810.00.40, HTSUS, provides that the institution must be "established for educational, scientific, literary, or philosophical purposes, or for the encouragement of the fine arts," the only limitations on the use of the
imported articles, as set forth in the above-quoted U.S. Note, are that they not be used for distribution, sale, or other commercial use. There is no indication that the sculpture in the instant case will be imported by the museum for distribution, sale, or other commercial use. Moreover, if, after studying the imported article, the museum decides not to purchase the item, there appears to be no question that the cited U.S. Note would permit the exportation of the article or its transfer to another qualified institution. Consequently, we are of the opinion that sculptures imported by a qualified institution for study and approval prior to exhibition or purchase may be treated as imported for "the use" of the institution.
HOLDING:
Sculptures imported by a qualified nonprofit institution for examination and approval prior to exhibition or purchase are considered to be for "the use" of the institution within the meaning of subheading 9810.00.40, HTSUS. Therefore, the sculpture under consideration in this case is entitled to free entry under this tariff provision without the assessment of the merchandise processing user fee.
Sincerely,
Jerry Laderburg
Acting Director
Commercial Rulings Division