HQ 0223604 - Internal Advice No. 61/89; Chemtronics, Inc.; Repairs to Engine Aircraft Blades; Certified For Use Statement; Civil Aircraft Agreement; 19 CFR 10.183 - United States International Trade Commision Rulings

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HQ 223604

May 28, 1992

ENT-6-01-CO:R:C:E 223604 DHS

Category: ENTRY

District Director of Customs
880 Front St. Room 5-S-9
San Diego, California 92188

RE: Internal Advice No. 61/89; Chemtronics, Inc.; Repairs to Engine Aircraft Blades; Certified For Use Statement; Civil Aircraft Agreement; 19 CFR 10.183

Dear Sir:

This is in reference to your memorandum dated November 29, 1991, inquiring about the applicability of the Civil Aircraft Agreement (Title VI of Public Law 96-39) to aircraft engine blades.

FACTS:

Chemtronics, Inc. (hereinafter importer) has imported aircraft engine blades from companies in Belgium, France and Israel, to be repaired then exported back to those companies in the foreign country for use in civil and military aircraft. Importer contends that they are entitled to duty-free treatment for the blades under the Civil Aircraft Agreement. The Los Angeles District has sustained this view by issuing a blanket certification for civil aircraft parts to the importer on July 18, 1991.

Your office alleges that the importer is not entitled to this duty-free exemption since in good faith the importer cannot complete the civil aircraft certification which requires an acknowledgement by the importer that the imported article will be used in civil aircraft. There has not been any evidence tendered with your submission which would indicate whether the importer has any knowledge of the final use of the repaired engine blades. Furthermore, there is no indication that any evidence of this nature has been presented to the Customs officials in San Diego.

ISSUE:

Can an importer, who imports aircraft parts for the purpose of repair, then exports the parts back to the foreign companies, in good faith complete a certification acknowledging that the parts will be used in a qualifying manner as required under 19 CFR 10.183?

LAW AND ANALYSIS:

Title VI, of the Trade Agreements Act of 1979, enacted into law the General Agreement on Tariffs and Trade (GATT), Agreement on Trade in Civil Aircraft, signed in Geneva on April 12, 1979. To secure duty-free entry of aircraft parts under Title VI, an importer must comply with section 10.183 of the Customs Regulations (19 CFR 10.183) and General Note 3(c)(iv) of the Harmonized Tariff Schedules of the United States (HTSUS).

Civil aircraft and specified civil aircraft parts only qualify for the duty-free exemption under these provisions if they are certified by the importer (whether a repair station, manufacturer or end user) for use in civil aircraft. The term "certified for use" means that the importer shall file a written statement, accompanied by supporting documentation as the Secretary of the Treasury may require, with the appropriate Customs officer. The written statement must provide: the imported article has been imported for use in civil aircraft; it will be so used; and, the article has been approved for such use by the Federal Aviation Authority (FAA) or an airworthiness authority in the country of exportation, if such approval is recognized by the FAA as an acceptable substitute for FAA certification.

Civil aircraft is defined in these provisions as all aircraft other than aircraft purchased for use by the Department of Defense or the U.S. Coast Guard.

There is no requirement placed upon the importer at the time of entry summary to prove end use of the merchandise. There is, however, a requirement that the importer certify that the parts have been imported for use in a civil aircraft. The certification represents a statement of intent by the importer that the merchandise will be put to the qualifying use. "If the importer cannot make a good faith assertion of intent as to all merchandise covered by a certification, then the certification is invalid from the beginning." HRL 222460, dated November 8, 1990. To certify means "to declare (a thing) true, accurate, certain, etc. by formal statement often in writing." Webster's New World Dictionary (Third College ed. 1988). After entry, there is an implied requirement that qualifying civil aircraft remain in conformance with the certification that qualified it for duty- free entry by using it in civil aircraft or by retaining the intention to ultimately use it in a qualifying manner. HRL 222236, dated August 10, 1990.

In addition, the importer is required to comply with the provisions substantiating the duty-free entry. In conformity with General Note 3(c)(iv), the importer has stated in its blanket certification that it would maintain documentation sufficient to support its entry statements. According to section 10.183 of the Customs Regulations "each entry summary for civil aircraft, ..., civil aircraft parts, ... shall be filed with a copy of the written order, contract, or any additional documentation Customs shall require, to verify the claim for admission free of duty". Furthermore, the importer is subject to the general recordkeeping requirements found in section 508 of the Tariff Act of 1930 (19 U.S.C. 1508) and 19 CFR 162. Importers must keep, and make available for examination, records that pertain to importation, or to the information contained in the documents required by law or regulation under the Tariff Act of 1930 in connection with the entry of merchandise. "Records" includes, but is not limited to, statements, declarations, books, papers, correspondence, accounts, technical data, automated record storage devices, and computer programs necessary to retrieve information in a usable form. The records should be of the kind normally kept in the ordinary course of business, and must be sufficiently detailed: 1) to establish the right to make, and the correctness of, any entry; 2) to determine the liability of any person for duties and taxes due the United States; 3) to determine the liability of any person for fines, penalties, and forfeitures; and 4) to determine whether the person has complied with the laws and regulations administered by the Customs Service.

Since the Civil Aircraft Agreement does not have any specific enforcement provisions, Customs enforces the terms of the agreement including insuring the validity of the certification, based upon Customs' inherent powers to collect and protect the revenue of the United States. Furthermore, this enforcement power is strengthened by the congressional statement requiring Customs to "monitor closely entries under the Civil Aircraft Agreement, and where necessary to protect the revenues, take appropriate action to insure the continuing validity of statements supplied to Customs under the certification requirements." See, 1979 U.S. Code Cong. and Adm. News. p. 571.

In the situation described, the importer has imported engine blades from various countries to be repaired then exported back to those companies in the foreign countries without any knowledge of the final use of the parts. The evidence submitted suggests that the importer assumes that the parts will be used in a qualifying manner. As stipulated above, the importer must intend that the parts will be put to a qualifying use. Such an intention cannot be held without actual knowledge. A certification that the imported parts will be used on a qualifying aircraft is, therefore, inadequate under the Civil Aircraft Agreement unless the importer has knowledge of the final use.

Note however, aircraft parts that are to be imported for repair and then exported may qualify for duty-free treatment under the temporary importation provisions of subheading 9813.00.05, HTSUS.

The importer must be prepared to prove the initial and continued validity of his certification by proof of end use in conformance with the certifications pledge in the event of an audit. If actionable conduct is confirmed, penalties associated with such conduct may be assessed. If the proper intent is not held at the time of entry and completion of the certification, actions under 19 U.S.C. 1592 may be available.

HOLDING:

Based upon the foregoing, an importer cannot in good faith assert that the imported aircraft parts will be used in a qualifying manner under the Civil Aircraft Agreement, if he lacks knowledge of their final use. As an alternative, duty-free treatment may be available under the temporary importation provisions under subheading 9813.00.05, HTSUS.

Sincerely,

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See also:

Tariff No.: 9813.00.05 - Articles to be repaired, altered or processed (including processes which result in articles manufactured or produced in the United States)