Parts for repair under the Agreement on Trade in Civil Aircraft

H300627 October 4, 2018 OT:RR:CTF:VS H300627 JMV CATEGORY: Classification Luke Duvall Vice President Air Tiger Express (USA), Inc. 18343 8th Avenue South Seattle, WA 98148 Re: Parts for repair under the Agreement on Trade in Civil Aircraft Dear Mr. Duvall, This is in response to your letter dated August 10, 2018, on behalf of Aero Controls, Inc. (“Aero”). In your letter, you request a ruling pursuant to 19 C.F.R. Part 177 regarding whether the documentation specified will meet the requirements of 19 C.F.R. § 10.183 (d) and (e). FACTS: According to your letter, Aero will be purchasing and importing parts from one single aircraft for inspection and repair in the United States at Aero’s Federal Aviation Administration (“FAA”) certified repair station in Auburn, WA. Aero has a valid Air Agency Certificate issued by the FAA. Aero also has authority from the FAA to issue airworthiness certificates for all parts after repair. According to your submission, Aero will remove numerous parts from a single Airbus A320-MSN 1541 (“A320”) and import them into the United States under multiple Harmonized Tariff Schedule of the United States (“HTSUS”) codes and from various countries of origin. After repair, you state that the parts will be resold and used as replacement equipment in civil aircraft only. You claim that the A320, from which the parts will be removed, was previously in operation as an approved civil aircraft by the European Aviation Safety Agency (“EASA”). The foreign seller will provide the original certificate of airworthiness that confirms the parts were removed from this specific civil aircraft. You also state than an FAA approved certificate of airworthiness will be issued by Aero along with each part sold in the future. You provided documents from a previous, similar transaction conducted by Aero. These documents consist of an FAA certificate of airworthiness, a packing slip, and a purchase order from the buying party. The documents show that Aero purchased a Regulator Transmitter taken from a plane previously operated by Aruba Airlines. Aero repaired and subsequently resold this part to Air Canada for civilian use. Aero will seek duty free treatment for the parts that will be taken from the A320 under the Agreement on Trade in Civil Aircraft (“CAA”). You state that you are not at this time requesting classification determinations for each part. You are only seeking a ruling confirming that the documentation Aero will produce, specifically the EASA certificate of airworthiness and the FAA certificates of airworthiness that Aero will produce once the parts are repaired, will be sufficient to meet the requirements of 19 C.F.R. § 10.183(d) and (e). ISSUE: Whether the documentation outlined above meets the documentation requirements of 19 C.F.R. § 10.183 (d) and (e) for purposes of making a claim for duty-free treatment under the CAA. LAW AND ANALYSIS: The CAA was implemented by Title VI, “Civil Aircraft Agreement” of the Trade Agreements Act of 1979 (Sec. 601, Pub. L. 96-39, 93 Stat. 144, 96th Cong., 1st Sess. 1979), effective January 1, 1980, and became headnote 3 to schedule 6, part 6, Tariff Schedules of the United States (“TSUS”). Headnote 3 to schedule 6, part 6, TSUS, became GN 3(c)(iv) when the HTSUS was enacted, and became GN 6, HTSUS, with minimal changes in 1995. GN 6, HTSUS, was then amended by section 12 of the Miscellaneous Trade and Technical Corrections Act of 1996, Pub. L. 104-295, 110 Stat. 3514 (Oct. 11, 1996). GN 6(a), HTSUS, provides: (a) Whenever a product is entered under a provision for which the rate of duty “Free (C)” appears in the “Special” subcolumn and a claim for such rate of duty is made, the importer-- (i) shall maintain such supporting documentation as the Secretary of the Treasury may require; and (ii) shall be deemed to certify that the imported article is a civil aircraft, or has been imported for use in a civil aircraft and will be so used. See also 19 C.F.R. § 10.183(d). In order to be considered a “civil aircraft” under GN 6(a)(ii), the product must meet the description of “civil aircraft,” as laid out in GN 6(b)(i), HTSUS: For purposes of the tariff schedule, the term “civil aircraft” means any aircraft, aircraft engine, or ground flight simulator (including parts, components, and subassemblies thereof) - - (A) that is used as original or replacement equipment in the design, development, testing, evaluation, manufacture, repair, maintenance, rebuilding, modification, or conversion of aircraft; and (B) (1) that is manufactured or operated pursuant to a certificate issued by the Administrator of the Federal Aviation Administration (hereafter referred to as the “FAA”) under section 44704 of title 49, United States Code, or pursuant to the approval of the airworthiness authority in the country of exportation, if such approval is recognized by the FAA as an acceptable substitute for such an FAA certificate; . . . or (3) for which an application for such approval or certificate will be submitted in the future by an existing type and production certificate holder, pending the completion of design or other technical requirements stipulated by the Administrator of the FAA. See also 19 C.F.R. § 10.183(a)(2)(iii) The regulations implementing GN 6, HTSUS, are enumerated in 19 C.F.R. § 10.183. The documentation requirements to support a claim for duty free treatment under the CAA are outlined in 19 C.F.R. § 10.183(e). Subsection 10.183(e) provides that each entry claiming duty-free treatment under GN 6 as “civil aircraft” must be “supported by documentation to verify the claim for duty-free admission, including the written order or contract and other evidence that the merchandise entered qualifies under General Note 6, HTSUS, as a civil aircraft, aircraft engine, or ground flight simulator, or their parts, components, and subassemblies.” Customs and Border Protection (“CBP”) has stated that the importer need not provide this evidence at the time of importation. At importation, the importer must only make a good faith certification that all merchandise entered under the CAA will be put to a qualifying use in a civil aircraft. Subsequently, the importer must maintain records adequate to demonstrate the continued validity of the certification after importation. See Headquarters Ruling Letter (“HQ”) 222236, dated August 10, 1990. The importer also has the statutory obligation to notify CBP of any diversions of duty-free civil aircraft merchandise to a non-qualifying use if and when the intention to divert arises. See HQ 223654, dated September 4, 1992 (finding that an importer that may occasionally divert merchandise imported under the CAA for non-qualifying use was not precluded from making a good faith certification but must notify CBP of any such diversion). Here, Aero will produce evidence that the parts qualify as “civil aircraft” under GN 6(b)(i)(A). The parts are removed from an A320, which was previously in operation as an approved civil aircraft by the EASA. The foreign seller will provide the original EASA certificate of airworthiness that confirms the parts were removed from this specific civil aircraft. A bilateral agreement between the United States and the European Community, the Agreement between the United States of America and the European Community on Cooperation in the Regulation of Civil Aviation Safety (“U.S.-EC Agreement”), went into effect on May 1, 2011. This Agreement provides for the reciprocal acceptance of Authorized Release Certificates. See U.S.-EC Agreement, Annex 1 §§ 3.4.5, 3.5.1, and Appendix. Therefore, an EASA Form may be provided as documentary evidence to support a CAA claim. Aero will also meet the requirements of GN 6(b)(i)(B)(3). These parts will be imported and repaired to be used as replacement equipment in civil aircraft. As Aero is an existing FAA certificate holder, Aero will issue the certificates of airworthiness in the future, pending the inspection, repair, or maintenance of the parts. An FAA approved certificate of airworthiness will be issued along with each part sold in the future as per GN 6(b)(i)(B)(3). Finally, Aero will certify that the imported parts are for use in a civil aircraft by entering them as so, according to GN 6(a)(ii) and 19 C.F.R. § 10.183(d). However, since Aero will be reselling these parts to currently unknown purchasers, Aero has the responsibility to maintain records demonstrating the continued validity of the certification or to notify CBP if the imported merchandise will be diverted from a qualifying-use. Therefore, based on the information provided, Aero will meet the documentation requirements of 19 C.F.R. § 10.183 (d) and (e) provided it maintains records demonstrating qualifying-use. HOLDING: The documentation Aero plans to provide meets the documentation requirements of 19 C.F.R. § 10.183 (d) and (e) for purposes of making a claim for duty-free treatment under the CAA for items classified in HTSUS subheadings for which the rate of duty “Free (C)” appears in the Special sub-column. Aero has the responsibility to maintain records demonstrating the continued validity of the certification or to notify CBP if the imported merchandise will be diverted from a qualifying-use. Please note that 19 C.F.R. § 177.9(b)(1) provides that “[e]ach ruling letter is issued on the assumption that all of the information furnished in connection with the ruling request and incorporated in the ruling letter, either directly, by reference, or by implication, is accurate and complete in every material respect. The application of a ruling letter by a Customs Service field office to the transaction to which it is purported to relate is subject to the verification of the facts incorporated in the ruling letter, a comparison of the transaction described therein to the actual transaction, and the satisfaction of any conditions on which the ruling was based.” A copy of this ruling letter 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 & Special Programs Branch