HQ 223423: Withdrawal of aircraft from international traffic;Importation of aircraft into the U.S. Customs territory; 19 CFR10.41; 19 CFR 122; 19 CFR 10.31; 19 CFR 10.183

Native CBP ruling rendition. Applicability is fact-specific; modification/revocation relationships and original publisher date are retained. Publisher sentinel year0001 means unknown date, not a historical legal adoption.

                            HQ 223423
                        December 2, 1991

ENT-1-03-CO:R:C:E 223423  DHS

CATEGORY:  Entry

Thomas M. Melone, Esq.
Hunton & Williams
200 Park Avenue
New York, New York 10166-1036

RE:  Withdrawal of aircraft from international traffic;
Importation of aircraft into the U.S. Customs territory; 19 CFR
10.41; 19 CFR 122; 19 CFR 10.31; 19 CFR 10.183

Dear Mr. Melone:

     This is in reference to your letter of August 22, 1991 and
your supplemental submissions dated September 27, 1991, October
29, 1991 and October 30, 1991, on behalf of your client, Public
Service Resources Corporation (PSRC) regarding the purchase of a
McDonnell-Douglas MD-11 aircraft.  Our ruling follows.

FACTS:

     On May 22, 1991, China Eastern Airlines, a Chinese airline
("CEA") took delivery of a McDonell-Douglas MD-11 aircraft from
McDonnell-Douglas Corporation, in Long Beach, California.  On May
24, 1991, the aircraft was ferried by CEA to Los Angeles,
California.  On May 25, 1991, CEA ferried the aircraft to
Shanghai, China.  

     Title to the aircraft is held by TAAL(CEA) I, a Cayman
Islands special purpose corporation (hereinafter, TAAL).  TAAL
purchased the aircraft from the Civil Aviation Authority of China
("CAAC").  The aircraft is on lease to China Aircraft Supplies
Corporation ("CASC") and is operated by CEA.  Since its delivery,
the aircraft has been used by CEA to carry passengers and cargo
between Shanghai and Los Angeles (via Anchorage occasionally) and
other destinations outside the U.S.. 

     At some future date, CEA will transport the aircraft either
as a regularly scheduled commercial flight carrying passengers
and cargo from Shanghai to Los Angeles, or as a nonrevenue ferry
flight.  While on the ground at the U.S. airport, TAAL will sell
the aircraft to PSRC.  PSRC will immediately, thereafter, lease
the aircraft back to CEA (or CASC) for a period of approximately
12 years.  Both before and after the sale and lease, the aircraft
will be registered and documented under the laws of China. 
Shortly after the sale and lease (within 48 hours thereafter),
the aircraft will leave the U.S. on a scheduled commercial
passenger flight or a nonrevenue flight.  The aircraft will
continue to be used in CEA's international airline business. 

ISSUE:

     Whether or not a sale of an aircraft, to a U.S. purchaser,
upon arrival from a flight in international traffic into a U.S.
airport and subsequently reentered into international traffic  is
subject to treatment as imported merchandise. 

LAW AND ANALYSIS:

     A foreign aircraft arriving in the U.S. in international
traffic and to be used solely in international traffic while in
the U.S. is not considered as imported merchandise and is
eligible for admission without payment of duty under 19 CFR
10.41.  See 19 U.S.C. 1322(a) and HRL 297003.  However, if
withdrawn from use solely in international traffic for use in
this country the aircraft would become imported merchandise and
subject to the payment of duties.  See 19 CFR 10.41(d) and T.D.
54826(1), (2) and (3).  (emphasis added)

     Specifically, 19 CFR 10.41(c) provides that a foreign
aircraft is subject to treatment under 19 CFR 122 (air commerce
regulations) unless entered under 19 CFR 10.31 (temporary
importation under bond (T.I.B.)), 10.183 (the "Civil Aircraft
Agreement") or 10.41(d) (transportation of passengers or cargo
domestically).  The application of these sections to the
situation at hand follow. 

     Presently, the aircraft in question would not be eligible
for entry under a T.I.B. since: (1) it is not being entered into
the U.S. to be used in any of the specified ways provided for
under Chapter 98, subchapter XIII, Harmonized Tariff Schedules of
the U.S. (HTSUS); and (2) it is to be brought into the U.S. for
the purpose of sale. 

     Additionally, the importer could enter the aircraft under 19
CFR 10.183 and qualify for duty-free treatment under Heading
8802, HTSUS.  Since the aircraft is in international traffic
however, there is no requirement to enter it into the U.S.
Customs terrritory. 

     Finally, section 10.41(d) would not be applicable under the
circumstances since the aircraft will not be utilized in the U.S.
to carry merchandise or passengers between points in the U.S. for
hire or as an element of a commercial transaction.  A sale of the
aircraft, under the circumstances, in and of itself would not be
significant enough to constitute a diversion from its use in
international traffic.  (See generally HRL 106404 (containers).) 

     From the facts presented, the aircraft in question is used
in international traffic since it will be coming to the U.S. from
a foreign port and flown as a regularly scheduled flight between
Shanghai and Los Angeles - Los Angeles and Shanghai.  In the
event the flight schedule does not coincide with the date of sale
requiring the aircraft to be ferried to the U.S. or to Shanghai,
its status as a flight in international traffic would not be
altered.  Customs therefore, would not consider the aircraft to
be imported and entered into the U.S. Customs territory. 

     If, however, the importer chooses to enter the aircraft
under the Civil Aircraft Agreement or the aircraft is diverted
from its use in international traffic, then entry of the
merchandise into the U.S. Customs territory would be required and
duty-free treatment would be extended to the aircraft.  Under
these circumstances, the procedures for arrival, entry and
clearance of the aircraft must comply with 49 U.S.C. App. 1509(c)
(1988), 19 U.S.C. 1644 (1988), 19 U.S.C. 1433 (1988), 19 CFR
122.41 et. seq. (1990). (See, HQ 111395.)

HOLDING:

     Based upon the foregoing, the aircraft in question would not
be withdrawn from international traffic and imported into the
U.S. Customs territory unless the above events occur. 

     

                                   Sincerely,




                                   John Durant, Director