United States International Trade Commision Rulings And Harmonized Tariff Schedule
faqs.org  Rulings By Number  Rulings By Category  Tariff Numbers
faqs.org > Rulings and Tariffs Home > Rulings By Number > 2005 HQ Rulings > HQ 563295 - HQ 966997 > HQ 563353

Previous Ruling Next Ruling
HQ 563353




December 1, 2005

CLA-02 RR:CTF:VS 563353 DCC

CATEGORY: CLASSIFICATION

Mr. Randy Rucker
Gardner Carton & Douglas
191 N. Wacker Drive, Suite 3700
Chicago, Ill. 60606-1698

RE: Applicability of duty exemption under HTSUS subheading 9801.00.10 to aircraft engine parts

Dear Mr. Rucker:

This is in response to your letter dated September 9, 2005, requesting a ruling on behalf of Honeywell International, Inc. (“Honeywell”), concerning applicability of subheading 9801.00.10, Harmonized Tariff Schedule of the United States (“HTSUS”), to certain parts used to manufacture gas turbine propulsion aircraft engines and auxiliary power units (“APUs”).

FACTS:

Honeywell manufactures aircraft engines and APUs at its manufacturing facilities in the United States. These aircraft engines and APUs are manufactured with parts produced in the United States and abroad.

Customs and Border Protection has previously held that the production of aircraft engines effects a substantial transformation on imported parts for country of origin marking purposes. In this case, however, Counsel provided insufficient information regarding the origin of the parts and manufacturing processes to determine whether Honeywell’s production of aircraft engines and APUs results in a substantial transformation of the foreign parts used to produce these articles. For purposes of this ruling, therefore, we assume that the imported parts undergo a substantial transformation as a result of processing and assembly operations in the United States in order to determine whether such parts are eligible for duty-free treatment under 9801.00.10, HTSUS, but make no determination regarding the origin of the imported parts used to produce aircraft engines and APUs. Honeywell sells finished aircraft engines and APUs to U.S. and foreign commercial aircraft manufacturers.

Occasionally, aircraft manufacturers and commercial jet operators remove and return Honeywell aircraft engine and APU parts to the company’s Aviation Aftermarket Services business unit in the United States for repair or replacement. Because the returned engine and APU parts often have no country of origin markings it is generally not possible for Honeywell to determine the original country of production of these parts. Whenever a customer returns a part to Honeywell, however, the customer is required to provide the serial number of the particular engine or APU from which the part was removed. Based on the serial number, Honeywell is able to determine where the aircraft engine or APU was produced. You claim that the aircraft engine and APU parts returned to the United States for repair or replacement may be classified under subheading 9801.00.10, HTSUS.

ISSUE:

Whether the aircraft engine and APU parts are entitled to duty-free treatment under subheading 9801.00.10, HTSUS, when returned to the United States.

LAW AND ANALYSIS:

Subheading 9801.00.10, HTSUS, provides for the free entry of products of the United States that have been exported and returned without having been advanced in value or improved in condition by any process of manufacture or other means while abroad, provided the documentary requirements of section 10.1, Customs and Border Protection (“CBP”) Regulations (19 C.F.R. 10.1), are met. Although some change in the condition of the product while it is abroad is permissible, operations which either advance the value or improve the condition of the exported product render it ineligible for duty-free entry upon return to the United States. See Border Brokerage Co. v. United States, 314 F. Supp. 788 (Cust. Ct. 1970), appeal dismissed, 58 CCPA 165 (1970).

The issue presented in this case is whether the aircraft engine and APU parts are products of the United States which have not been advanced in value or improved in condition by any process of manufacture while abroad. For purposes of this ruling we assume that the imported parts used to manufacture the aircraft engines and APUs were initially substantially transformed in the United States as a result of Honeywell’s manufacturing operations.

CBP has addressed similar issues in previous Headquarters Ruling Letters (“HRLs”). In HRL 559703, dated August 23, 1996, CBP addressed whether the disassembly of an aircraft engine resulted in a change in the country of origin of the extracted parts for marking purposes. In that case we held that parts of an aircraft engine that were disassembled and imported into the United States for repair or replacement did not undergo a change in character or use as a result of the disassembly, but rather retained their identity as parts of the engine from which they were removed. Therefore, because the parts did not undergo a substantial transformation as a result of the disassembly, CBP determined that the country of origin of the parts remained the country where the engine was produced and the extracted parts must be marked accordingly.

In HRL 966117, dated April 17, 2003, CBP considered the tariff treatment of flash charger assemblies for single-use cameras under subheading 9801.00.10, HTSUS. In that case, 35 mm cameras were assembled in the United States with U.S. and foreign parts, including flash charger assemblies that were manufactured abroad. After use in the United States, the used cameras were shipped to Mexico for inspection and disassembly. Extracted flash assemblies that could be recycled were returned to the United States. CBP determined that the assembly of various U.S. and foreign parts in the United States to produce cameras resulted in a substantial transformation of the initially imported flash assemblies. HRL 966117 further addressed the foreign disassembly of U.S. goods and return of parts that were previously substantially transformed in the United States. In particular, HRL 966117 states:
removing a component (that was originally made abroad) from a U.S.-origin camera in Mexico does not cause that part to lose its U.S. origin and revert back to its original country of manufacture. Finally, as we stated in HRL 561541, removing a part from an article without any additional processing does not result in an advancement in value or improvement in condition of that part, within the meaning of subheading 9801.00.10, HTSUS.

Based on the facts presented, we find that the disassembly of the aircraft engines and APUs does not result in a substantial transformation of the extracted components. We further find that the removal of parts does not result in an advancement in value or improvement in condition. Therefore, we find that the parts removed from aircraft engines and APUs that are returned to the United States for repair or replacement are eligible for duty-free treatment under subheading 9801.00.10, HTSUS, provided the foreign parts used to produce the aircraft engines and APUs are substantially transformed as a result of assembly in the United States, and assuming compliance with the documentation requirements of section 10.1, CBP Regulations (19 C.F.R. § 10.1).

Section 10.1(a), CBP Regulations (19 CFR 10.1(a)), outlines the necessary documentation required for duty-free entry under subheading 9801.00.10, HTSUS. The first documentary requirement is a declaration by the foreign shipper (if the value of the returned articles exceed $2,000), which includes the quantity, description, and value of the returned articles, the U.S. port of export, and the date of exportation from the United States. 19 C.F.R. 10.1(a)(1).

HOLDING:

Parts removed from aircraft engines and APUs that are returned to the United States for repair or replacement are eligible for duty-free treatment under subheading 9801.00.10, HTSUS, provided the foreign parts used to produce the aircraft engines and APUs are substantially transformed in the United States.

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

Sincerely,

Monika R. Brenner, Chief
Valuation and Special Programs Branch

Previous Ruling Next Ruling

See also: