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HQ 224027


August 17, 1992

CON-3-04-CO:R:C:E 224027 CB

CATEGORY: ENTRY

Regional Director
Commercial Operations Division
Pacific Region
U.S. Customs Service
One World Trade Center
Long Beach, CA 90831-0700

RE: Application for further review of Protest No. 2809-0- 101890; HTS 9804.00.45; personal exemption; corporation claiming personal exemption

Dear Sir:

The above-referenced protest was forwarded to this office for further review. We have considered the points raised and our decision follows.

FACTS:

According to the protest, in November, 1989, protestant, a sole proprietor of a business entity, shipped a 1955 Mercedes Benz 300SL valued at $425,000.00 to Europe. The automobile was returned to the United States in March, 1990. The automobile was purchased, exported and reimported under a corporate name. Upon reimportation of the subject automobile, duties were assessed on the full value of the automobile in the amount of $11,347.50.

It is protestant's contention that, because protestant is the sole proprietor of the corporation, protestant and the corporation are essentially one and the same entity. Therefore, the automobile should have been admitted duty free under HTSUS 9804.00.45.

ISSUE:

Whether a corporation can claim a personal exemption?

LAW AND ANALYSIS:

Initially, we note that the protest, with application for further review, was timely filed under the statutory and regulatory provisions for protests (see 19 U.S.C. 1514 and 19 CFR Part 174).

The classification and rates of duty, or exemptions therefrom, on imported goods are governed by the Harmonized Tariff Schedule of the United States (HTSUS). Articles exported and returned are provided for in Chapter 98, HTSUS. As prescribed in U.S. note 1 to chapter 98, HTSUS, "[i]n the absence of a specific provision to the contrary, the tariff status of an article is not affected by the fact that it was previously imported into the customs territory of the United States and cleared through customs whether or not duty was paid upon such previous importation." Duty is assessed on every subsequent importation into the United States unless specifically exempted.

Subheading 9804.00.45, HTSUS, provides for the entry free of duty of all personal and household effects taken abroad by a person. The exemption for personal effects is considered an individual exemption available only to persons arriving in the U.S. from a foreign country. Personal effects owned by and entered by or for the account of a corporation do not qualify for this exemption. This situation is analogous to the exemption for tools of trade. The Customs Service has consistently held that a corporation or other entity cannot claim entitlement to a personal exemption. See P.R.D. 74-16 (8 Cust. Bull. 614), C.S.D. 80-84, and HQ 223373.

Protestant's reliance on Headquarters Ruling (HRL) 714571 is without basis. HRL 714571 held that a watch purchased by a resident and shipped abroad for his/her use is entitled to the duty-free exemption for personal effects when the resident returns to the United States. The subject protest is readily distinguishable. There is no doubt that the automobile would qualify for duty-free treatment if it were owned by the protestant. However, title to the subject automobile is held by a corporation. As stated above, a corporation cannot claim entitlement to any of the personal exemptions. Protestant's argument that he is entitled to the exemption because he is the sole stockholder of the corporation is implausible. It is a well established principle of law that a corporation is distinct from the individuals who comprise it (i.e., the shareholders). The corporation has a personality and existence distinct from that of its creators. The law treats the corporation itself separate from the shareholders. Therefore, the argument that protestant and the corporation, which owns the subject automobile, are essentially one and the same person lacks any legal basis.

Additionally, it should be pointed out that if the automobile was imported in the name of the protestant, even if title was held by the corporation, then the protestant would have been able to claim the personal exemption. See C.S.D.'s 80-84 and 80-155.

HOLDING:

An automobile owned by a corporation is not subject to the personal exemption provided for under subheading 9804.00.45, HTSUS. This exemption is considered a personal exemption that can only be claimed by individuals. Therefore, the subject protest should be denied in full.

A copy of this decision should be attached to the Customs Form 19 and provided to the protestant as part of the notice of action on the protest.

Sincerely,

John A. Durant, Director

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