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HQ 557731


May 31, 1994

CLA-2 CO:R:C:S 557731 BLS

CATEGORY: CLASSIFICATION

TARIFF NO.: 9801.00.60

Area Director of Customs
J.F.K. Area
Cargo Bldg. 178
Jamaica, N.Y. 11430

RE: Application for further review of Protest No. 1001-3-104056; Eligibility of motor cars for duty-free entry under HTSUS 9801.00.60; exportation

Dear Sir:

This is in reference to an Application For Further Review of the above-captioned protest, timely filed by Barchetta Motor Cars, Inc. ("Barchetta"), concerning the eligibility of two Ferrari motor cars for duty-free entry under subheading 9801.00.60, Harmonized Tariff Schedule of the United States (HTSUS).

FACTS:

The two Ferrari automobiles were shipped to Nice, France and then transported to the Orion Auction House ("Orion") in Monte Carlo, the principality of Monaco. Protestant states that the cars were temporarily entered into Monaco free of duty under bond. (A copy of the bond was not submitted.) The president of Barchetta has submitted an affidavit in which he states that there was no intent to sell the two automobiles at the auction. Instead, he states that the cars were sent to the auction house at Monte Carlo for purposes of show and display, and to increase his reputation and standing in the exotic car world market. As an indication of this intent, the affiant states that a very high reserve value, which allegedly was substantially over the market value, was placed on the cars. In a second affidavit, this individual states that Orion was made fully aware of his intention to exhibit the cars at the auction, and that the auction house showed its understanding by accepting the vehicles with a very high reserve value. Protestant has submitted in evidence a copy of a mandate of sale without signatures and wihout specific terms, which provides that Barchetta mandates Orion to sell the automobiles described on the form. The president of Barchetta states in the second affidavit that he does not recall having executed a mandate of sale, which he claims was prepared by Orion for purposes of having a complete file for the temporary customs entry into France and the principality of Monaco.

The two vehicles were returned to the U.S. unsold and apparently were entered free of duty under subheading 9801.00.10, HTSUS. Protestant advises that they were later traded for other cars with a value of $900,000. The reserve value at the auction for both cars was $1.2 million. Protestant claims that the vehicles were never exported because they never entered the commerce of a foreign country and there was no intent to unite them with the mass of goods of a foreign country. It is argued that merely displaying the vehicles at an auction in itself does not indicate an intent to sell. Protestant contends that an intent to sell would have been shown by placing a reserve value on the cars equal to their market value. Protestant cites Swan & Finch Co. v. United States, 190 U.S. 143 (1903), that when in doubt, "...the doubt [would be] resolved in favor of the importer as duties are never imposed on citizens upon vague or doubtful interpretations" (Id. at 143).

In the alternative, protestant contends that the vehicles are entitled to duty-free entry under subheading 9801.00.60, HTSUS, because they were exported solely for purpose of exhibition at the public auction. In this regard, protestant claims that the so- called auctions of collectors' cars in Europe are actually shows, and that few sales are made at the event. The auction house benefits by drawing other participants and their cars, as well as viewers or visitors to the auction. Further, protestant claims that in this instance Orion did not charge Barchetta the customary fee for accepting the cars for auction.

ISSUES:

1) Whether there was an "exportation" of the motor cars from the U.S.

2) Whether the automobiles are entitled to duty-free treatment under subheading 9801.00.60, HTSUS, upon return from abroad.

LAW AND ANALYSIS:

The Supreme Court has ruled that "exportation" is the severance of goods from the mass of things belonging to [the United States] with the intention of uniting them to the mass of things belonging to some foreign country. Swan & Finch, supra. The Swan & Finch holding has been followed in at least two Customs Court cases, F.W. Myers & Co. v. United States, 29 Cust. Ct. 202, C.D. 1468 (1952), and Nassau Distributing Co., Inc. v. United States, 29 Cust. Ct. 151, C.D. 1459 (1952). The controlling factor in each of these cases was the intention of the party at the time of shipment.

See also section 101.1(k), Customs Regulations (19 CFR 101.1(k)). Moreover, the courts have held that "...So long as an immediate bona fide purpose to seek a foreign market coincides with a bona fide act of shipment later changes in either the intent or destination have no effect upon the original character of the act as an exportation." Nassau Distributing Co., supra, citing United States v. The National Sugar Refining Co., 39 CCPA 96 (1951).

While in the instant case protestant contends that there was no intention of sale, as the vehicles were exported for exhibition only, the manifest evidence reflects that indeed a commercial venture, i.e., a sale of goods, was contemplated at the time of exportation. Thus, the automobiles were sent to an auction house, where a reserve value was placed on both vehicles. The placing of a reserve value by an auction house indicates an intention to put the articles up for sale. Protestant has not submitted evidence which would overcome the presumption based on these facts that the vehicles were exported for purposes of sale. Under the circumstances, we find that under applicable case law, there was an "exportation" of the vehicles from the United States.

Subheading 9801.00.60, HTSUS, provides for the free entry of articles which are returned after having been exported for use temporarily abroad solely for exhibition or use at any public exposition, fair or conference, provided such articles are returned by or for the account of the person who exported them. In order to obtain duty-free treatment under this provision, the documentary requirements of 19 CFR 10.66 must be satisfied.

The terms "public exposition, fair, or conference," as used in subheading 9801.00.60, HTSUS, were defined in C.E. Durnell v. United States, C.D. 1236, 24 Cust. Ct. 218 (1950) as follows: (a) exposition - "[a] public exhibition or show, as of industrial and artistic productions"; (b) fair - "[a] competitive exhibition of wares, farm products, etc., not primarily for purpose of sale, and usually with premiums for excellence'; and (c) conference - "an association, of firms in the same business, for carrying out a common policy."

In Headquarters Ruling Letter (HRL) 063176 dated July 20, 1979, Customs held that where a commercial venture, i.e., sale of goods, is contemplated at the time of exporting goods for purposes of exhibition or use at a public exposition, fair or conference, the articles, upon reimportation, are not entitled to duty-free treatment under subheading 9801.00.60, HTSUS. However, where a sale of some of the exported goods is only incidental to the overseas exhibition, the articles sold would not be eligible for duty-free treatment, but the unsold articles would be eligible for such treatment upon return to the U.S., provided (1) the goods, as
a whole, are primarily exported for exhibition, and (2) the other requirements of subheading 9801.00.60, HTSUS, are met.

Based on the facts presented, we find that the subject motor cars returned to the U.S. are not entitled to duty-free treatment under subheading 9801.00.60, HTSUS. Although protestant claims that the automobiles were exported for purposes of show and display so as to increase Barchetta's standing in the exotic car market, the fact remains that the automobiles were sent to an auction house which is not an exposition, fair, or conference, and a reserve value was placed on the vehicles.

Accordingly, we find that protestant has not met the burden of establishing that the requirements of subheading 9801.00.60, HTSUS, have been met.

Holding:

1) There was an "exportation" of the automobiles from the U.S. within the meaning of applicable case law.

2) The automobiles are not entitled to duty-free treatment under subheading 9801.00.60, HTSUS.

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 mailed to your office to the protestant no later than 60 days from the date of this letter. 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 Diskette Subscription Service, Lexis, Freedom of Information Act and other public access channels.

Sincerely,

John Durant, Director
Commercial Rulings Division

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