HQ 225042 - Ruling request concerning the requirements on the use of on board under bond distilled spirits during flight; 19 U.S.C. 1555(b); 19 U.S.C. 1309; 19 CFR 10.59, 10.62, and 10.64; Customs ruling HQ 305754 (Customs Legal Determination 3137-03 (June 8, 1978)). - United States International Trade Commision Rulings

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HQ 225042

July 14, 1994

CON-13-02 CO:R:C:E 225042 TLS

CATEGORY: ENTRY

Mr. Trevor Long
Qantas Airways Limited
Qantas Centre
203 Coward Street
Mascot 2020
Australia

RE: Ruling request concerning the requirements on the use of on board under bond distilled spirits during flight; 19 U.S.C. 1555(b); 19 U.S.C. 1309; 19 CFR 10.59, 10.62, and 10.64; Customs ruling HQ 305754 (Customs Legal Determination 3137-03 (June 8, 1978)).

Dear Mr. Long:

This office has received the above-referenced request for a ruling as provided for under Customs regulations. We have considered the request and have made the following decision.

FACTS:

Your company is an airline that serves its passengers distilled spirits during flights. The airline generally serves pre takeoff alcoholic beverages as a courtesy for its passengers. As you correctly note, the U.S. Customs Service does not permit such beverages to be supplied from under bond stocks. You state that Qantas purchases the distilled spirits from duty-paid stocks for this use. You request that we review Customs policy of not allowing these beverages to be supplied from under bond stocks and that you be granted permission to do so.

ISSUE:

Whether commercial airlines may be permitted to serve pre-takeoff alcoholic beverages supplied from under bond stocks.

LAW AND ANALYSIS:

There are two statutes that govern the delivery of duty-free merchandise from a Customs bonded warehouse. Duty-free sales enterprises operate under 19 U.S.C. 1555(b). The delivery of aircraft supplies, such as as alcoholic beverages to be served to passengers and fuel to be used by the aircraft is done pursuant to 19 U.S.C. 1309.

With respect to aircraft stores, paragraph (3)(F) of 19 U.S.C. 1555(b) provides for the delivery to an area restricted to departing international passengers, delivery to the aircraft as passenger baggage, or to the gate holding area of an airport. These activities are permitted only if there is reasonable assurance that duty-free merchandise so delivered will be exported. That statute has been implemented by section 19.39 of the Customs regulations. With respect to delivery of merchandise to a passenger, the airline is required not to release that merchandise until the aircraft has departed for its foreign location.

With respect to the delivery of bonded fuel or aircraft supplies to a foreign registered aircraft, the provisions of 19 U.S.C. 1309(a)(3) govern. The statute requires that the aircraft be engaged in foreign trade. The statute also requires that aircraft registered in the United States be accorded substantially reciprical privileges by the country of foreign registration. It does not require identical reciprocity and it does not permit treatment in excess of the that provided in paragraph (a)(3), even if the foreign government does so. While you allege that the Government of Austrailia provides a more extensive exemption for duties, you did not provide any evidence in support of that allegation. On the contrary, our Government found that the Government of Austrailia did not allow the duty-free use of ground equipment by American registered airlines. That finding was published as T.D. 54747(1) (1958) and continues in effect today (19 CFR 10.59(f)).

The delivery of bonded fuel to aircract under 19 U.S.C. 1309 is governed by sections 10.59, 10.62, and 10.64 of the Customs regulations. Foreign aircraft with departing passengers must be actually transporting those passengers to a foreign location. The delivery of supplies other than fuel is governed by sections 10.59 and 10.62a of the Customs regulations. Under section 10.64 of the Customs regulations the cancellation of the bond obligation for both fuel and other supplies does not occur until the aircraft's departure in foreign trade.

The Customs Service has determined the departure of an aircract in foreign trade to occur when all persons who are not to depart have left the aircraft, all doors to the aircraft have been closed, and the boarding ramp is withdrawn. Customs ruling HQ 305754 (Customs Legal Determination 3137-03 of June 8, 1978).

HOLDING:

A foreign registered aircraft that is eligible to withdrawn duty-free alcoholic beverages from a Customs bonded warehouse as aircraft supplies under 19 U.S.C. 1309(a) may not serve those beverages until all persons that will not depart with the aircraft have left the aircraft, all aircraft doors are closed, and the boarding ramp has been withdrawn.

Sincerely,

John Durant, Director

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