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HQ 560256




July 23, 1997

CLA-2 RR:TC:SM 560256 MLR

CATEGORY: CLASSIFICATION

TARIFF NO.: 9801.00.85

Bryan Schillinger, Esq.
Baker & Hostetler, L.L.P.
1000 Louisiana, Suite 2000
Houston, TX 77002-5009

RE: Applicability of duty exemption under HTSUS subheading 9801.00.85 to equipment; tools of trade

Dear Mr. Schillinger:

This is in reference to your letters dated July 15 and October 2, 1996, and January 6, 1996 (sic), requesting a ruling on behalf of Lockheed Martin Corp. ("Lockheed) concerning the free entry of certain equipment. On January 16, 1997, we asked you whether you wished for us to consider the applicability of the new subheading 9801.00.85, Harmonized Tariff Schedule of the United States (HTSUS). As you agreed on May 5, 1997, we will not respond to your initial request concerning the applicability of subheading 9801.00.20, HTSUS.

FACTS:

It is stated that Lockheed, its operating divisions, and its subsidiaries frequently export and return equipment for use in the installation, maintenance, or repair abroad of other merchandise. The equipment may be of foreign origin. It is stated that the equipment will be returned without having been advanced in value or improved in condition by any process of manufacture or other means while abroad. It is also stated that the equipment will be exported and returned by or for the account of Lockheed. Lockheed will also have imported the equipment into the U.S. duty-paid on a prior occasion, but occasionally will purchase a foreign-origin good in the U.S. before exportation abroad.

ISSUE:

Whether the equipment may qualify for duty-free treatment under subheading 9801.00.85, HTSUS.

LAW AND ANALYSIS:

Subheading 9801.00.85, HTSUS, provides duty-free treatment for:

[p]rofessional books, implements, instruments, and tools of trade, occupation, or employment, when returned to the United States after having been exported for use temporarily abroad, if imported by or for the account of the person who exported such items.

Section 44 of the Miscellaneous Trade and Technical Corrections Act of 1996, Pub. L. No. 104-295, 110 Stat. 3514 (1996), added subheading 9801.00.85, HTSUS, to permit the duty-free entry of "tools of the trade" by corporations which previously could only be entered duty-free if they were exported and reimported by the same individual under subheading 9804.00.10, HTSUS. See HRL 223198 dated October 17, 1991, which states that subheading 9804.00.10, HTSUS, is considered a personal exemption available only to individuals arriving in the U.S. from a foreign country, and that merchandise consigned to and entered by or for the account of a firm does not qualify for this exemption.

Accordingly, in this case, we find that equipment exported by Lockheed for use in the installation, maintenance, or repair abroad of other merchandise may be entered under subheading 9801.00.85, HTSUS, if the merchandise is imported by or for the account of Lockheed. In response to your specific questions, if Lockheed is not the original importer of the equipment but pays duty upon a subsequent reimportation of the equipment, the equipment may qualify for duty-free treatment under subheading 9801.00.85, HTSUS, for future importations if Lockheed exports the equipment temporarily and the equipment is reimported for its account. Furthermore, we find that Lockheed may receive duty-free treatment under subheading 9801.00.85, HTSUS, even if it the equipment was not initially imported by Lockheed, provided Lockheed exports the equipment for temporary use abroad and the equipment is imported for its account. Likewise, to the extent duty was paid for equipment initially imported by a company and the company undergoes a reorganization, the equipment may receive duty-free treatment under subheading 9801.00.85, HTSUS, if the equipment is subsequently exported and imported by or for the account of the same person. Additionally, whether or not the origin of the equipment is foreign or domestic, subheading 9801.00.85, HTSUS, may be used provided the statutory requirements are satisfied.

While the Customs Regulations do not currently specify specific documentation required to substantiate a claim under subheading 9801.00.85, HTSUS, it is our opinion that carnets, commercial invoices, packing lists, landing certifications, Customs documents used to import the merchandise into the foreign country, or any other documentation which shows that the merchandise being imported under subheading 9801.00.85, HTSUS, is the same as what was exported, may be utilized.

HOLDING:

On the basis of the information submitted, it is our opinion that equipment used in the installation, maintenance, or repair abroad of other merchandise may be reimported duty-free under subheading 9801.00.85, HTSUS, provided Lockheed exports the merchandise temporarily and the same merchandise is imported by Lockheed or for its account.

A copy of this ruling letter should be attached to the entry documents filed at the time the goods are entered. If the documents have been filed without a copy, this ruling should be brought to the attention of the Customs officer handling the transaction.

Sincerely,

John Durant, Director

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