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HQ 951876




March 23, 1993

CLA-2 CO:R:C:F 951876 STB

CATEGORY: CLASSIFICATION

TARIFF NO.: 8703.23.0090

Area Director of Customs
Room 425
6 World Trade Center
New York, NY 10048

RE: Decision on Application for Further Review of Protest No. 1001-91-103402, filed on April 19, 1991, concerning the classification of a 1952 Ferrari automobile.

Dear Ms. Maguire:

This is a decision on a protest filed April 19, 1991, against your decision in the classification and liquidation of a 1952 Ferrari automobile, entry made on June 15, 1990, liquidated on January 18, 1991 and reliquidated under 19 USC 1501 on March 15, 1991.

FACTS:

The subject item is a used 1952 Ferrari 225s automobile that was originally manufactured outside of the United States. The automobile had been previously imported into the United States and duty was paid. The protestant, Rio Imports, Inc. (affiliated with RKM Enterprises, of New York, New York) was not the original importer of the vehicle. Protestant exported the vehicle for auction sale in Monte Carlo, where it was not purchased, and then re-imported the vehicle into the United States under the entry now in question.

In the current entry, the automobile was imported and entered on June 15, 1990, liquidated on January 18, 1991, and reliquidated under 19 USC section 1501 on March 15, 1991. The automobile was entered by protestant under subheading 9801.00.2000, Harmonized Tariff Schedule of the United States Annotated (HTSUSA), the duty-free provision for certain merchandise which has previously been imported into, and then exported out of, the United States. The value of the car was stated as being $90,000.00. At reliquidation, Customs appraised
the automobile at $500,000.00 and classified it under subheading 8703.24.0090, HTSUSA, the provision for used motor cars and other motor vehicles, dutiable at 2.5 percent ad valorem.

ISSUES:

1. Whether the 1952 Ferrari 225s should be classified as an antique or as a used motor vehicle?

2. Whether the automobile should receive duty-free treatment under subheading 9801.00.2000, HTSUSA, as a previously imported article?

3. What is the value of the 1952 Ferrari 225s?

LAW AND ANALYSIS:

Classification

Classification under the HTSUSA is made in accordance with the General Rules of Interpretation (GRI's). The systematic detail of the harmonized system is such that virtually all goods are classified by application of GRI 1, that is, according to the terms of the headings of the tariff schedule and any relative section or chapter notes. In the event that the goods cannot be classified solely on the basis of GRI 1, and if the headings and legal notes do not otherwise require, the remaining GRI's may then be applied. The Explanatory Notes (EN's) to the Harmonized Commodity Description and Coding System, which represent the official interpretation of the tariff at the international level, facilitate classification under the HTSUSA by offering guidance in understanding the scope of the headings and GRI's.

In this instance the merchandise can be classified by reference to GRI 1. Heading 8703, HTSUSA, the provision for "motor cars and other vehicles principally designed for the transport of persons..." describes the vehicle in question. Subheading 8703.23.0090, HTSUSA, the provision for such motor cars that are "used" describes the automobile even more specifically. Although the value of the automobile may be increased by its make, model and year of production, the accuracy of the description of the vehicle by the above cited subheading is not affected. We also note that the vehicle is fully operational. Heading 9706, HTSUSA, the provision for "Antiques of an age exceeding 100 years" does not apply since the language
of the heading itself specifically excludes any item not exceeding 100 years of age. There is no legal exception to this requirement. No provision of Chapter 97 applies to the subject 1952 Ferrari 225s.

We do note, however, that the classification of the vehicle at reliquidation, subheading 8703.24.0090, HTSUSA, is hereby modified to subheading 8703.23.0090, HTSUSA, which applies to used automobiles of a cylinder capacity exceeding 1,500 cc but not exceeding 3,000cc. This change is based on the description of the automobile provided by the importer which describes the 1952 Ferrari 225s as possessing a "V12 cylinder, 2,715 c.c." engine. This change does not affect the duty rate.

Previously Imported Articles

Protestant contends that the 1952 Ferrari 225s is entitled to duty-free entry under subheading 9801.00.2000, HTSUSA, the provision for previously imported articles. The provision in question allows duty-free entry for the following:

Articles, previously imported, with respect to which the duty was paid upon such previous importation or which were previously free of duty pursuant to the Caribbean Basin Economic Recovery Act or Title V of the Trade Act of 1974, if (1) reimported, without having been advanced in value or improved in condition by any process of manufacture or other means while abroad, after having been exported under lease or similar use agreements, and (2) reimported by or for the account of the person who imported it into, and exported it from, the United States...

There are thus two (2) conditions attached to the reimportation of the merchandise that must be satisfied in order to obtain the duty-free status under this provision. In this instance, condition (1) may have been satisfied but condition (2) is not. As the protestant states in the attachment to Customs Form 19, Rio Imports was not the original importer of the automobile. Protestant requests that Customs be less "technical" in its application of this provision. We note, however, that there are no exceptions to these requirements and that the provision is clearly drafted, leaving no room for alternate interpretations.

Value

Merchandise imported into the United States is appraised in accordance with section 402 of the Tariff Act of 1930, as amended by the Trade Agreements Act of 1979 (TAA; 19 U.S.C. 1401a). The preferred method of appraisement is transaction value, which is defined as the "price actually paid or payable for merchandise when sold for exportation to the United States," plus certain statutorily enumerated additions not here relevant. 19 U.S.C.

For Customs purposes, the word "sale" generally is defined as a transfer of ownership in property from one party to another for a price or other consideration. J.L. Wood v. United States, 62 CCPA 25, C.A.D. 1139 (1974); J.H. Cottman & Co. v. United States, 20 CCPA 344, T.D. 46114 (1932). The instant merchandise was not sold, i.e., it was not transferred from one party to another for a consideration. Instead, protestant exported the vehicle for auction sale in Monte Carlo; however, as it was not purchased, protestant re-imported the automobile under the entry now in question. The protested merchandise therefore was not sold for exportation to the United States, and consequently, as there was no price actually paid or payable, the transaction value method is inapplicable.

If imported merchandise cannot be appraised on the basis of transaction value, it will be appraised in accordance with the remaining methods of valuation, applied in sequential order. 19 U.S.C. 1401a(a)(1). The alternative bases of appraisement, in order of precedence, are: the transaction value of identical or similar merchandise (19 U.S.C. 1401a(c)); deductive value (19 U.S.C. 1401a(d)); computed value (19 U.S.C. 1401a(e)); and the "fallback" method (19 U.S.C. 1401a(f)).

The transaction value of identical or similar merchandise is based on sales at the same commercial level and in substantially the same quantity, of merchandise exported to the United States at or about the same time as that being appraised. 19 U.S.C. 1401a(c). There is no information relating to sales of identical or similar merchandise. Accordingly, the protested merchandise cannot be appraised on this basis.

Under the deductive value method, merchandise is appraised on the basis of the price at which it is sold in the U.S. in the greatest aggregate quantity at or about the time of importation, subject to certain statutorily enumerated deductions. 19 U.S.C.

1401(d). However, the automobile was not sold subsequent to importation; consequently, this method of appraisement is also inapplicable with regard to the protested merchandise.

Under the computed value method, merchandise is appraised on the basis of the material and processing costs incurred in the production of imported merchandise, plus an amount for profit and general expenses equal to that usually reflected in sales of merchandise of the same class or kind, the value of any assists and packing costs. 19 U.S.C. 1401a(e)(1). The merchandise in question is a 1952 automobile. There is no information on which to base computed value. Accordingly, this method of appraisement is also inapplicable to the instant merchandise.

Where merchandise cannot be appraised under the methods set forth in 19 U.S.C. 1401a(b)-(e), its value is to be determined in accordance with the "fallback" method of 19 U.S.C. 1401a(f). The fallback method provides that merchandise should be appraised on the basis of a value derived from one of the previous methods reasonably adjusted to the extent necessary to arrive at a value. 19 U.S.C. 1401a(f)(1). Since all other methods of appraisement are inapplicable under the circumstances of the importation in question, the value of the 1952 Ferrari 225s should be determined under the fallback method.

Protestant contends that the instant merchandise should be appraised at $90,000.00, i.e., on the basis of the price of a 1991 Ferrari; however, there is no authority for this approach under the TAA. At reliquidation the automobile was appraised at $500,000.00. We have no grounds to dispute this determination.

HOLDING:

The 1952 Ferrari 225s is classified in subheading 8703.23.0090, HTSUSA, the provision for "[M]otor cars and other motor vehicles principally designed for the transport of persons (other than those of heading 8702), including station wagons and racing cars...Used." The automobile is valued at $500,000.00 and the general column one rate of duty is 2.5 percent ad valorem.

Since reclassification of the merchandise as indicated above would result in no net duty reduction, you are instructed to deny
the protest in full. A copy of this decision should be attached to the Form 19 Notice of Action.

Sincerely,

John Durant, Director

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