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HQ 557583


April 26, 1994

CLA-2 CO:R:C:S 557583 MLR

CATEGORY: CLASSIFICATION

TARIFF NO.: 9801.00.10

Area Director
U.S. Customs Service
J.F.K. Airport, Bldg. 77
Jamaica, New York 11430

RE: Application for Further Review of Protest No. 1001-92- 102529; Denial of duty exemption under HTSUS subheading 9801.00.10 to aircraft parts; documentary requirements; 19 CFR 10.1

Dear Sir:

The above-referenced Application for Further Review timely filed by SCAC Transport, on behalf of Industrial Procurement Services, Inc. ("IPS"), contests the denial of the duty exemption of subheading 9801.00.10, Harmonized Tariff Schedule of the United States (HTSUS), to certain aircraft parts.

FACTS:

The articles at issue are aircraft parts (digital control, valve, three park brake valves, amplifier, inverter, indicator, starter generator, and GCU) exported on June 13, 1992, by Dassault Aviation, Usine de Merignac ("Dassault"), France, to IPS in New Jersey, and entered on June 15, 1992. This entry was liquidated on February 15, 1993. The protestant seeks a refund of $3,006.97 claiming that these aircraft parts are duty-free under subheading 9801.00.10, HTSUS. Your office denied duty- free treatment under this tariff provision because the importer failed to provide sufficient documentation or information to show that the aircraft parts were of U.S. origin.

IPS sets forth the declaration in 19 CFR 10.1(a)(1) in a letter dated November 2, 1992, without completing the blanks to show the port or date of exportation, or providing part numbers or any details about the merchandise being reimported, but only makes reference to the entry number, and states that "these parts are returned to U.S.A. after being shipped overseas from our U.S. Stores, for maintenance of our fleet of U.S. made DC 10 aircraft, or removed from our air craft during operations overseas." Your office indicates that this affidavit was not signed by the original equipment manufacturer, but rather was signed by IPS, the importer, although "Return Material Report[s]" submitted by Dassault for each of the aircraft parts show other possible American manufacturers.

Furthermore, the Declaration for the Free Entry of Returned American Products {Customs Form (CF) 3311)} was not notated by your staff. Your office also indicates that nothing was submitted by the importer or broker that the parts at issue were made in the U.S., or if any additional work was done abroad to increase the value of this merchandise.

On the bottom of the Return Material Reports is the declaration set forth in 19 CFR 10.1(a)(1), stating that the articles are the product of the U.S., and were not advanced in value or improved in condition. These forms are signed by Ph. Deville Cavellin. However, the blanks of the declaration that indicate the port and date of exportation are not completed. A block on the Return Material Reports provides for "original export information" which references certain commercial invoices and bills of lading (BOL). We requested this information and IPS forwarded copies of these invoices as well as export airway bills for the shipment of the parts from the U.S. to France. The following documents are now contained in the record for the aircraft parts identified below:

Original Export Information
Return Material Serial IPS Bill of
Report & Part Number Number Invoice Lading

1. Digital Control
DECUSPK4FD09 9101305 C.3838 057.4427.0273 Baker Electronics, Inc. February 7, 1991

The additional information IPS submits is IPS invoice no. 03838 dated February 7, 1991, indicating the sale and shipment of the digital control with the same part and serial number to Dassault. The BOL shows the shipment of invoice 3838 from New Jersey to France on February 12, 1991. Baker Electronics, Inc. also submits a letter dated February 8, 1994, certifying that the DECU-SPK-4FD-09 was manufactured by them in the U.S.

2. Valve
3214730-3 423 C-10475 057.4829.7001
Garrett July 10, 1991

The additional information IPS submits is a copy of the Return Material Report with invoice C-10475 crossed out and substituted with invoice no. 99357. IPS invoice 99357 dated May 4, 1990, is enclosed showing that a shutoff valve with the same part and serial number was shipped from the U.S. to France. A BOL with a different number, 057-4453 1620, shows the shipment of invoice 99357 on May 9, 1990. An affidavit dated February 16, 1994, signed by Allied Signal Inc., declares that valve shutoff 3214730-3 was manufactured by them in the U.S. An invoice from Allied Signal, a Garrett Fluid Systems Division, dated April 30, 1990, shows IPS as the customer of the valve, with the same part and serial number and its export to France.

3. Park Brake Valve
70012-1 156 C.11787 057.4829.8762
Sterer October 17, 1991

The additional information IPS submits is IPS invoice C- 11787 dated October 17, 1991, showing that a park brake valve with the same part and serial number was shipped from the U.S. to France. The BOL shows the shipment of invoice 11787 on October 23, 1991. Sterer also submits an affidavit dated February 25, 1994, certifying that the park brake valve was manufactured by them in the U.S.

4. Park Brake Valve
70012-1 94 C.93616 057.3080.0630
Sterer April 14, 1989

The additional information IPS submits is a copy of the Return Material Report with invoice C.93616 crossed out and substituted with invoice "90284-870223010". IPS submits invoice 90284, showing that a part brake valve with the same part and serial number was shipped to France from the U.S. on July 29, 1988. A BOL with a different number, 057-1712 9066, shows invoice 90284 was shipped on August 3, 1988. Sterer also submits an affidavit dated February 25, 1994, certifying that the park brake valve was manufactured by them in the U.S.

5. Park Brake Valve
70012-1 156 C.96040 057.3350.6362
Sterer October 5, 1989

The additional information IPS submits is a copy of the Return Material Report with invoice C.96040 crossed out and substituted with "4032 89113002"; a new serial number, "132?", is also substituted. IPS submits invoice C-04032, showing that a park brake valve with the same part number, and serial number 132 was shipped from the U.S. to France on February 26, 1991. A BOL with a different number, 057-4282 9231, shows invoice 4032 was shipped on February 27, 1991. Sterer also submits an affidavit dated February 25, 1994, certifying that the park brake valve was manufactured by them in the U.S.

6. Amplifier
M1080A 9005417 C.2288 057.4286.5001
Baker November 6, 1990

The additional information IPS submits is invoice 02288 dated November 6, 1990, showing that an amplifier with the same part and serial number was shipped from the U.S. to France. The BOL shows invoice 2288 was shipped on November 9, 1990. Baker Electronics, Inc. also submits a letter dated February 8, 1994, certifying that the M1080A was manufactured by them in the U.S.

7. Inverter
SPC60H 112 C.12834 057.6752.1565
KGS Electronics January 7, 1992

The additional information IPS submits is a copy of the Return Material Report with invoice C.12834 crossed out and substituted with invoice C-13063. IPS submits invoice 13063 dated January 30, 1992, showing that a "converter" with the same part and serial number was shipped from the U.S. to France. [IPS states that this should have been listed as an inverter.] A BOL with a different number, 057-6752-2604, shows invoice 13063 was shipped on February 5, 1992. KGS Electronics also submits a letter dated February 14, 1994, certifying that the SPC-60(H) static inverter was produced by them in the U.S. and contains primarily American-made components. In a telephone conversation, the President of KGS Electronics stated that "SPC-60(H)" only refers to an inverter which converts voltage, and that IPS probably confused the terminology.

8. Indicator
622.9728.221 131 C.4783 057.4829.7760
Collins April 11, 1991

The additional information IPS submits is invoice 04783 dated April 11, 1991, showing that a "TVI920D" with the same part and serial number was shipped from the U.S. to France. The BOL shows the shipment of invoice 4783 on April 16, 1991. Rockwell Collins also submits a letter dated February 10, 1994, declaring that the 622-9728-221 TVI-920D, serial no. 131, was manufactured by them in the U.S.

In regard to the starter generator and GCU, IPS states that these articles are not U.S. goods but foreign merchandise, and that their value was incorrectly entered in U.S. dollars, when the invoices are actually in French Francs (FF) (Prix F.F. 12.000, and 17.000, respectively) so that the entered value was overstated by approximately $23,900.00.

In a telephone conversation with an employee of IPS, we were told that the value listed on the Return Material Reports and outgoing invoices are different due to fluctuations in the rate of exchange and because the prices, in some instances, were taken from invoices from previous years. The employee acknowledged that the records were not kept as accurately as they should have been. However, IPS states that each part has its own serial number, and we confirmed this fact with Sterer and Rockwell International.

ISSUE:

Whether the aircraft parts are eligible for duty-free treatment under subheading 9801.00.10, HTSUS.

LAW AND ANALYSIS:

Subheading 9801.00.10, HTSUS, provides for the free entry of products of the U.S. that have been exported and returned without having been advanced in value or improved in condition by any process of manufacture or other means while abroad, provided the documentary requirements of section 10.1, Customs Regulations are satisfied. While some change in the condition of the product while it is abroad is permissible, operations which either advance the value or improve the condition of the exported product render it ineligible for duty-free entry upon return to the U.S. Border Brokerage Company, Inc. v. United States, 314 F. Supp. 788 (1970), appeal dismissed, 58 CCPA 165 (1970).

Section 10.1(a), Customs Regulations {19 CFR 10.1(a)}, outlines the necessary documentation required for duty-free entry under subheading 9801.00.10, HTSUS. The documentation consists of CF 3311, the bottom portion of which must be executed by the district director at the port of exportation, and a declaration of the foreign shipper. However, section 10.1(c), provides that if the district director is reasonably satisfied, based on 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, HTSUS, the district director may waive the requirements of producing the documents specified above.

In this case, the bottom portion of the CF 3311 was not executed by the district director and the declaration, stating that the articles are products of the U.S. and were not advanced in value or improved in condition while abroad, was not completed on the Return Material Reports. However, we are satisfied that the totality of the evidence presented is sufficient to show that most of the aircraft parts are products of the U.S. Furthermore, although the declaration was not completed on the Return Material Reports, the correlation of this declaration on the Return Material Report which references the particular part and serial number, its original exportation from the U.S., and the signature thereon are sufficient evidence to prove that the articles were not advanced in value or improved in condition while abroad.

Therefore, in regard to the digital control, park brake valve (serial number 156), amplifier, and indicator, the additional invoices and BOLs submitted prove that those parts with their particular serial numbers were shipped from the U.S. to France, and the manufacturer's affidavits indicate that they are products of the U.S.

In regard to the valve, park brake valve, and inverter, although the invoice and BOLs numbers originally listed on the Return Material Reports were not correct, the protestant has now submitted the proper invoices and BOLs corresponding to the part and serial number at issue, which indicate that these articles were previously exported from the U.S. Furthermore, the Return Material Reports show that these parts with their particular serial numbers were shipped from France to the U.S. The manufacturer's affidavits also indicate that these parts are products of the U.S. However, in regard to the second park brake valve with the serial number 156, IPS now claims that the part entered had the serial number 132. Proof is also submitted to show that the part with serial number 132 was shipped from the U.S. to France. While we are satisfied that a part with serial number 132 was exported from the U.S., we are not satisfied that this particular part was returned. Furthermore, Sterer verified that each part has its own serial number; consequently, the second park brake valve entered with serial number 156 is dutiable.

In regard to the starter generator and GCU, IPS acknowledges that these articles are not products of the U.S.; consequently, duty is payable on these parts. Your office agreed in a telephone coversation that the additional documentation submitted appeared to be sufficient. As requested, we are enclosing this information for your review.

HOLDING:

On the basis of the information submitted, we are of the opinion that the digital control, park brake valve (serial number 156), amplifier, indicator, valve, park brake valve, and inverter are eligible for duty-free treatment under subheading 9801.00.10, HTSUS. It appears that adequate documentation has been presented to establish that these articles are products of the U.S. and were not advanced in value or improved in condition while abroad. However, we find that the second park brake valve with the serial number 156, starter generator and GCU are not products of the U.S. Accordingly, this protest should be granted and denied in part.

In accordance with Section 3A(11)(b) of Customs Directive 099 3550-065 dated August 4, 1993, Subject: Revised Protest Directive, this decision should be attached to Customs Form 19, Notice of Action, to be mailed by your office to the protestant no later than 60 days from the date of this letter. Any reliquidation of the entry in accordance with the decision must be accomplished prior to mailing of the decision. Sixty days from the date of the decision the Office of Regulations and Rulings will take steps to make the decision available to customs personnel via the Customs Rulings Module in ACS and the public via the Diskette Subscription Service, Lexis, Freedom of Information Act and other public access channels.

Sincerely,

John Durant, Director

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