Auto Parts Temporarily Exported Fail to Qualify for Duty-Free Treatment, DOJ Says

Porsche Motorsports North America failed to show that its exported, then reimported, trailer with auto parts and tools qualifies for a particular Harmonized Tariff Schedule subheading that would have allowed it duty-free treatment, the Department of Justice said in a July 9 reply brief. Since Porsche acknowledged that certain articles it brought in from Canada had not originally been exported from the U.S. to Canada, the shipment fails to meet the standard for Harmonized Tariff Schedule of the U.S. subheading 9801.00.85, DOJ argued (Porsche Motorsports North America, Inc. v. U.S., CIT # 16-00182).

To obtain duty-free treatment under the HTS subheading, an importer must prove that its goods are "(i) professional implements, instruments, or tools; (ii) of a trade, occupation, or employment; (iii) returned to the United States after having been exported for use temporarily abroad; and (iv) imported by or for the account of the person who exported such goods."

By admitting the fact that some of the goods were not originally exported to Canada, Porsche fails to clear the third factor for the duty-free treatment, DOJ said. Porsche also conceded that some of the goods were exported for possible sale in Canada for auto repairs, and if they were not sold, were returned to the U.S. in original packaging. "As such, these articles are not implements, instruments or tools of an occupation or trade, were not exported for use temporarily abroad, and, thus, do not satisfy the terms of subheading 9801.00.85, HTSUS," the brief said.

DOJ also argued that the legislative history of the particular HTS subheading was particularly "fatal" for Porsche's case. The history explained that the subheading was designed to allow companies to "avail themselves of what had been a personal-allowance exemption." Porsche said that the goods it shipped to Canada "were exported with the intention that they be made available for use." This is not the standard of the subheading, DOJ said.

By exporting and not using the parts, Porsche again failed to clear the standard for the HTS subheading, DOJ said. "The books, implements, instruments and tools covered by subheading 9801.00.85, HTSUS, are those used to provide repairs abroad and then returned," the brief said. "However, the only [Porshe] items on the CF4455s used for the repair of race cars did not return to the United States. Thus, those articles cannot satisfy subheading 9801.00.85, HTSUS, because they were not returned. Instead, the bulk of the articles on the CF-4455s were not used to provide repairs and were simply returned. Thus, these returned articles cannot satisfy subheading 9801.00.85, HTSUS."

In a recent brief, Porsche argued that tools of the trade returned after temporary use abroad don't have to actually be used to be eligible for the HTS subheading (see 2107010088). CBP itself has ruled in the past that it's enough for the goods to only have been made available for use to qualify for duty-free treatment, Porsche said.