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HQ 088178


January 14, 1991

CLA-2 CO:R:C:G 088178 JMH

CATEGORY: CLASSIFICATION

TARIFF NO.:

District Director
U.S. Customs Service
Patrick V. McNamara Building
Suite 200
477 Michigan Ave
Detroit, MI 48266

RE: Protest and Request for Further Review 3801-0-001700, diesel engines; actual use

Dear Sir:

The following is our decision regarding the Protest and Request for Further Review No. 3801-0-001700, dated March 21, 1990.

FACTS:

The subject entries consist of diesel engines manufactured in England. The engines were properly classified upon entry in subheading 8408.90.90, Harmonized Tariff Schedule of the United States Annotated "(HTSUSA"), as "Compressions-ignition internal combustion piston engines (diesel or semi-diesel engines)... Other...Other..."

Upon entry the importer posted a proof-of-use bond since certain articles used in agricultural pursuits are entitled to duty free entry under headings 9817.00.50, 9817.00.60, HTSUSA. . The importer hoped that proof-of-use documentation could be submitted at a later date if the engines were used with agricultural tractors and that the duty free status could then be utilized. The bond was posted, according to the importer, to prevent allegations of fraud in the event that any proof-of-use documentation ultimately submitted was found to be not applicable. Furthermore, the importer argues that the bond was required due to indecision on Custom's part regarding what constitutes an agricultural tractor.

The importer requested that liquidation be delayed pending the submission of agricultural use certification. You have recommended that the protest be denied in full.

ISSUE:

Whether the posting of a bond for proof-of-use and subsequent documentation constitutes the necessary intent required by the actual use provisions, 19 C.F.R. 10.131-139, to allow duty free entry.

LAW AND ANALYSIS:

Customs Regulations 10.131 through 10.134, 19 C.F.R. 10.131 through 10.139, provide the requirements which must be met when the rate of duty is dependent upon the actual use of the article being imported. Customs Regulations 10.133, 19 C.F.R. 10.133, states three conditions which must be met to receive duty preferences for actual use. The three conditions are:

(1) Such use is intended at the time of importation.
(2) The article is so used.
(3) Proof of use is furnished within three years after the date the article is entered or withdrawn from warehouse for consumption.

The intention of use at the time of importation must be evidenced by a declaration of intent that is filed with the entry for consumption or for warehouse, or by entering the proper actual use subheading of the HTSUSA on the entry form. Customs Regulation 10.134, 19 C.F.R. 10.134. Only when a declaration of intent has been made in accordance with Customs Regulation 10.134. may the liquidation of an entry be suspended until proof of use is furnished. See Customs Regulation 10.136, 19 C.F.R. 10.136.

The entries for the subject diesel engines do not meet the conditions of Customs Regulation 10.133, and therefore, are not entitled to duty free entry. No intent for using the engines for agricultural purposes was declared at the time of importation. The entry documents do not include a declaration of intent for the engines to be used in agricultural tractors, nor do the documents contain an actual use classification. Without one of these declarations made at the time of entry, there is no showing of intent under the Customs Regulations. The regulations do not allow the posting of a bond to be evidence of intent. Thus, the entries of diesel engines fail the first condition of 10.133 that the use is intended at the time of importation.

Indecision on the part of Customs as to what constitutes an agricultural tractor should not prevent an importer from declaring the use of imported products at the time of importation, providing the use is known at the time of importation. Since the requisite declaration of intent was not performed in accord with 10.134, the liquidation of the entry cannot be suspended until the proof of use is furnished.

HOLDING:

To benefit from the actual use rates of duty an importer must demonstrate at the time of importation that the use in question is intended at the time of importation. Such intent is established by a declaration filed with the entry documents or by the inclusion of the actual use classification with the entry documents. The posting of a bond for proof-of-use is not an allowed method for evidencing the necessary intent at the time of importation. Since the entries concerning the subject diesel engines are void of any declaration of intent for the actual use of the articles, they are prohibited from obtaining the preferential duty rates.

The protest should be denied in full. A copy of this decision should be attached to the Form 19 Notice of Action for the protest.

Sincerely,

John Durant, Director
Commercial Rulings Division

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