Request for a Ruling on the Importation of a Gas Turbine Engine for Testing under a Temporary Importation Under Bond

HQ H247513 April 16, 2014 CON 9-04 OT:RR:CTF:ER H247513 RGR Dennis McClure Rolls-Royce North America Customs Office 450 South Meridian Street Mail Code MC-N5-08 Indianapolis, IN 46225 Re: Request for a Ruling on the Importation of a Gas Turbine Engine for Testing under a Temporary Importation Under Bond Dear Mr. McClure: This is in response to your request for a ruling filed on behalf of Rolls-Royce Energy Systems, Inc. (“Rolls-Royce”), which we received on November 4, 2013. You request a ruling inquiring whether removing a defective accelerometer from a gas turbine engine imported under a temporary importation bond (“TIB”) for testing under subheading 9813.00.30 of the Harmonized Tariff Schedule of the United States (“HTSUS”), temporarily substituting it with a functioning accelerometer to complete the test, and subsequently replacing the defective accelerometer on the engine prior to exportation is permissible under the bond conditions of 9813.00.30, HTSUS. Our response follows. FACTS: You state that Rolls-Royce has imported a gas turbine engine under a TIB for testing under 9813.00.30, HTSUS. According to the CBP Form 7501 that you submitted with your ruling request, this gas turbine engine was imported on August 21, 2013. You explain that the engine was imported to perform American Petroleum Institute (“API”) 616 mechanical run testing at the Rolls-Royce testing facility in Mount Vernon, Ohio prior to exportation of the engine to its customer in Kazakhstan. However, because the engine’s accelerometer has been deemed defective, the API testing cannot be completed. Rolls-Royce intends to remove the defective accelerometer and temporarily substitute it with a functional accelerometer in order to complete the API testing. Following testing but before exportation to Kazakhstan, the functional accelerometer would be removed and the original, defective accelerometer would be replaced on the engine so that it will be exported in the same condition as when imported. Further, the functional accelerometer would also be exported with the gas turbine engine. ISSUE: Whether temporary substitution of a functional accelerometer in an engine entered under a TIB for testing purposes under 9813.00.30, HTSUS, is permissible under the bond conditions of the TIB. LAW AND ANALYSIS: General Note 1, HTSUS, dictates that all merchandise imported into the United States is subject to duty unless specifically exempted from duty. Pursuant to U.S. Note 1(a) to Subchapter XIII of Chapter 98, HTSUS, articles described in Chapter 98, which includes subheading 9813.00.30, HTSUS, may enter the United States temporarily free of duty, under bond, for exportation within one year from the date of importation. Pursuant to 19 C.F.R. § 10.37, this one-year period may be extended for one or more additional periods, which when added to the initial period may not exceed three years. The imported merchandise may not be imported for the purpose of a sale or sale on approval. The following merchandise was imported under 9813.00.30, HTSUS: “Articles intended solely for testing, experimental or review purposes, including specifications, photographs and similar articles for use in connection with experiments or for study.” CBP permits some part substitution to allow for testing. For example, in C.S.D. 79-372 (Mar. 28, 1979), an aircraft and special ground equipment were imported for testing under a TIB where the testing required removal of some parts of the aircraft and replacement with American-made parts to conduct compatibility tests. There, we held that the aircraft and ground equipment may be entered under the predecessor to subheading 9813.00.30, HTSUS, as long as all imported merchandise, including parts removed from the aircraft, are exported or destroyed under CBP’s supervision. C.S.D. 79-372 (Mar. 28, 1979). Therefore, provided that all parts imported under a TIB are exported, there would not be a violation of the terms of the TIB. Rolls-Royce has imported a gas turbine engine under a TIB in order to complete API testing prior to exportation to Kazakhstan. This testing cannot be completed without temporarily substituting the engine’s defective accelerometer with a functional one. Similarly, in C.S.D. 79-372, the compatibility testing of the aircraft and equipment could not be completed without removal and replacement of some of the parts of the aircraft with American-made parts. With respect to Rolls-Royce’s imported gas turbine engine, the defective accelerometer will be exported to Kazakhstan with the engine. The removal of the defective accelerometer and temporary substitution with a functional accelerometer in order to complete testing on the engine is permissible under the bond conditions of the TIB.  HOLDING: We find that where the gas turbine engine was imported under a TIB for testing, the bond conditions under subheading 9813.00.30, HTSUS, will not be breached when the defective accelerometer is temporarily substituted with a functional one in order to complete testing, and the defective accelerometer is subsequently replaced on the engine prior to exportation. 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 ruing 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.” Sincerely, Carrie L. Owens, Chief Entry Process and Duty Refunds Branch