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HQ 965330




July 15, 2002

CLA-2 RR:CR:GC 965330 AML

CATEGORY: CLASSIFICATION

TARIFF NO.: 8704.33.30

Port Director
U.S. Customs Service
P.O. Box 37260
Milwaukee, WI 53237-0260

RE: Protest 3701-00-100034; engines; 19 C.F.R. §10.138; proof of actual use

Dear Port Director:

This is in regard to Protest 3701-00-100034, dated October 11, 2001, filed by counsel on behalf of Polaris Industries, Inc., against your classification of snowmobile engines under subheading 8407.33.6080, Harmonized Tariff Schedule of the United States (“HTSUS”). Subheading 8407.33.6080, HTSUS, provides for spark-ignition reciprocating or rotary internal combustion piston engines, reciprocating piston engines of a kind used for the propulsion of vehicles of chapter 87, of a cylinder capacity exceeding 250 cc but not exceeding 1000 cc, to be installed in vehicles of subheading 8701.20, or heading 8702, 8703 or 8704, other.

FACTS:

Protestant contests Customs decision to rate advance and liquidate, on July 9, 2001, certain entries of engines from its Foreign Trade Zone (“FTZ”) for failure to certify actual use of the imported engines. The protestant contends that it timely and adequately certified actual use of the engines.

The engines were entered during June, July and August 1998, under subheading 8704.33.30, HTSUS, which provides for engines to be installed in vehicles designed for travelling on snow. In April 1998, the importer/protestant provided letters describing the nature of the imported engines and their sole use as contemplated by the subheading under which they were entered. In response to separate Customs requests, protestant submitted, via facsimiles dated October 14, 1998 and October 1999, spreadsheets indicating the serial numbers and descriptions of the engines and their intended use, i.e., their designation for installation into a snowmobile.

Also during this time period, viz. on January 25, 2000, Customs Regulatory Audit Division, Chicago Field Office, Denver Branch, initiated a FTZ audit of the importer/protestant, which was postponed due to then ongoing Customs compliance assessment and drawback audit initiatives. The FTZ audit report was issued on September 26, 2001.

The entries were liquidated in July 2001, under subheading 8407.33.6080, HTSUS, as described above.

ISSUES:

Whether the actual use of imported goods was certified in compliance with the relevant statutes?

What is the proper classification of the merchandise?

LAW AND ANALYSIS:

Initially, we note that the protest was timely filed (i.e., within 90 days after but not before the notice of liquidation; see 19 U.S.C. §1514(c)(3)(A)) and the matter protested is protestable (see 19 U.S.C. §1514(a)(2) and (5)).

Merchandise imported into the United States is classified under the HTSUS. Tariff classification is governed by the principles set forth in the General Rules of Interpretation (GRIs) and, in the absence of special language or context which otherwise requires, by the Additional U.S. Rules of Interpretation. The GRIs and the Additional U.S. Rules of Interpretation are part of the HTSUS and are to be considered statutory provisions of law for all purposes.

The Additional U.S. Rules of Interpretation provide, in pertinent part, as follows:

1. In the absence of special language or context which otherwise requires-- (b) a tariff classification controlled by the actual use to which the imported goods are put in the United States is satisfied only if such use is intended at the time or importation, the goods are so used and proof thereof is furnished within 3 years after the date the goods are entered[.]

Customs Regulations 10.131 through 10.139 (19 C.F.R. §§10.131 through 10.139), provide the requirements which must be met when the rate of duty is dependent upon the actual use of the article being imported. Customs Regulations 10.133 (19 C.F.R. §10.133) delineates three conditions that must be met to receive duty preferences for actual use. The three conditions are:

(1) Such use is intended at the time of importation.

(2) The article is so used.

(3) Proof of use is furnished within three years after the date the article is entered or withdrawn from warehouse for consumption.

The intention of use at the time of importation must be evidenced by a declaration of intent that is filed with the entry for consumption or for warehouse, or by entering the proper actual use subheading of the HTSUS on the entry form. Customs Regulation 10.134, 19 C.F.R. §10.134. Only when a declaration of intent has been made in accordance with Customs Regulation 10.134 may the liquidation of an entry be suspended until proof of use is furnished. See Customs Regulation 10.136, 19 C.F.R. §10.136.

In this case, the protestant entered the engines under an actual use provision (subheading 8704.33.30, HTSUS) and the liquidation was suspended pending submission of actual use certification. As discussed above, protestant, in response to Customs requests for information, provided both a letter that described the engine’s design and use in specific applications (i.e., solely for snowmobiles) and a spreadsheet showing the specifications and serial numbers of the engines. An inventory specialist employed by the importer/protestant authored the facsimiles.

Part 10.138, “Proof of use” provides as follows:

Within 3 years from the date of entry or withdrawal from warehouse for consumption, the importer shall submit in duplicate in support of his claim for free entry or for a reduced rate of duty a certificate executed by (1) the superintendent or manager of the manufacturing plant, or (2) the individual end-user or other person having knowledge of the actual use of the imported article. The certificate shall include a description of the processing in sufficient detail to show that the use contemplated by the law has actually taken place. A blanket certificate covering all purchases of a given type of merchandise from a particular importer during a given period, or all such purchases with specified exceptions, may be accepted for this purpose, provided the importer shall furnish a statement showing in detail, in such manner as to be readily identified with each entry, the merchandise which he sold to such manufacturer or end-user during such period. The facsimiles from protestant to Customs demonstrated that, following entry into the Customs territory from the FTZ, the engines were installed in snowmobiles. Although there is no evidence that the engines were actually started and propelled the snowmobiles into which they were installed, we find that the facsimiles and explanatory letter satisfy the actual use certification contemplated by the statute. Additionally, we find that the then-pendent FTZ audit, compliance assessment and drawback audit initiatives (which were undertaken within three years of the June 1998 entries), within which Customs acknowledged that the importer/protestant manufactured, among other things, engines for snowmobiles, gave notice of the use of the engines and further support the contention that importer/protestant satisfied the actual use certification.

Congress has passed no law and Customs has issued no regulation mandating specific language to meet the requirements of 19 C.F.R. §10.138. Upon review of the documentation in this case, we find that the evidence presented is tantamount to an actual use certification and therefore complies with law and regulation.

This holding comports with a previous determination made by this office. In Headquarters Ruling Letter (HQ) 957772, dated April 21, 1995, held that no specific language is required to demonstrate actual use pursuant to 19 C.F.R. §10.138. See also HQ 952440, dated August 27, 1992, which held that sufficient evidence was presented to demonstrate actual use and compliance with the certification requirements of 19 C.F.R §10.138. The actual use certification, based on evidence compiled by an inventory specialist in the employ of the importer/protestant, is considered a proper certification by the importer himself. See HQ 085308, a Customs memorandum dated December 8, 1989.

HOLDING:

The protestant adequately demonstrated the actual use of the engines. The subject merchandise is properly classified under subheading 8407.33.30, HTSUS, which provides for spark-ignition reciprocating or rotary internal combustion piston engines, reciprocating piston engines of a kind used for the propulsion of vehicles of chapter 87, of a cylinder capacity exceeding 250 cc but not exceeding 1000 cc, to be installed in vehicles of subheading 8701.20, or heading 8702, 8703 or 8704, to be installed in vehicles specially designed for traveling on snow.

The protest should be GRANTED. In accordance with Section 3A(11)(b) of Customs Directive 099 3550-065, dated August 4, 1993, Subject: Revised Protest Directive, you are to mail this decision, together with the Customs Form 19, to the protestant no later than sixty (60) days from the date of this letter. Any reliquidation of the entry or entries in accordance with the decision must be accomplished prior to mailing the decision. Sixty (60) days from the date of the decision, the Office of Regulations and Rulings will make the decision available to Customs personnel, and to the public on the Customs Home Page on the World Wide Web at www.customs.treas.gov, by means of the Freedom of Information Act, and other methods of public distribution.

Sincerely,

Myles B. Harmon, Acting Director

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