When is an Aircraft Part NOT an Aircraft Part? When it is Imported! (Part 3 of 3)

May 25, 2014 by 1 Comment

There are some parts in aviation that may be imported but that cannot be characterized under the harmonized tariff code “8803.10.00.30” (which is normally the most common code used by most ASA members who are importing aircraft parts).  This article addresses those aircraft parts that are assigned different codes under the U.S. Harmonized Tariff Schedule (USHTS).

This is the third in a series of articles discussing import into the United States of aircraft parts. Last week we explained the basics of import classifications of aircraft parts under the USHTS. Today, we will look more closely at the exceptions which drive some aircraft parts to unexpected places in the harmonized tariff code.

U.S. import law applies to goods that enter the customs territory of the United States. Each such part must be classified correctly in order to assess the tariff status of the part. Most aircraft parts will fall within the scope of the Agreement on Trade in Civil Aircraft, which provides for the duty-free entry of civil aircraft and their parts into signatory nations (including the United States); most commercial airplane parts imported by U.S. repair stations will be described as by harmonized tariff code 8803.30.00.30. But there are significant exceptions to this provision, and there is a significant minority of commercial airplane parts that may not be classified under the “aircraft parts” provisions of this Agreement.

Most exceptions apply to parts. Generally, parts or accessories which are not suitable for use solely or principally with aircraft will not be considered aircraft parts. So a lamp which is used 95% of the time in buildings and 5% of the time in aircraft will not be considered an aircraft part for purposes of import tariff categorization, because its principal use is for non-aviation purposes. In addition the following categories of parts are generally NOT considered to fall under the aircraft parts provisions for import purposes:

  • Joints, washers or the like of any material (classified according to their constituent material or in heading 8484);
  • Articles of vulcanized rubber other than hard rubber (articles of heading 4016);
  • Tools (articles of chapter 82);
  • Pictures and mirrors (articles of heading 8306);
  • Most items of nuclear reactors, boilers, machinery and mechanical appliances, including machine tools and engines, pumps and tools used in nuclear power generation (articles of headings 8401 to 8479);
  • Engines or motor parts consisting of taps, cocks, and valves for pipes or ball or roller bearings (articles of heading 8481 or 8482);
  • Transmission shafts and cranks, bearing housings, housed bearings and plain shaft bearings, gears and gearing, ball or roller screws, and gear boxes (articles of heading 8483);
  • Electrical machinery or equipment (chapter 85);
  • Optical, photographic, cinematographic, measuring, checking, precision, medical or surgical instruments (articles of chapter 90);
  • Clocks and watches (articles of chapter 91);
  • Bombs, missiles ,or other arms (chapter 93);
  • Lamps or lighting fittings (articles of heading 9405); or
  • Brushes of a kind used as parts of vehicles (heading 9603).
  • Parts of general use (wires and cables, chains, tube or pipe fittings, locks, clasps, springs, castors, automatic door-closers, mountings, frames, mirrors, sign plates or other placards, washers, certain fasteners (like nails, tacks, drawing pins, staples, screws, bolts, nuts, coach screws, screw hooks, rivets, cotters, and cotter pins), and closures like buckles or hooks) made from metal (including articles of section XV and certain heading sunder chapters 73 and 83) or plastic (articles of chapter 39);

Note that the descriptions in this article are altered to make them more understandable to the layman but they ARE NOT the technical language and any questions should be answered from the actual technical language of the tariff code. The chapter, section and heading numbers are for reference only – to facilitate review of appropriate language.

Another exception would apply to foreign parts. Under US regulations (19 CFR 10.183) the duty-free provision applies only to parts manufactured under (1) FAA approval or (2) foreign approval that is recognized by the FAA as equivalent (e.g. under a bilateral agreement). Thus, parts made under foreign production approval where there is no corollary US approval would not be accorded duty-free treatment into the US because they are not recognized as valid aircraft parts under US regulations. This is unlikely to apply to most US repair station stations but it could apply in certain limited cases (such as where the repair station is doing work on foreign-produced aircraft that do not have a US type certificate).

Finally, the normal aviation provisions do not apply to things that look like aircraft but are not aircraft, like reduced scale models (e.g. radio controlled aircraft or other articles under heading 9503) and “aircraft” carnival rides (articles under heading 9508).

If you are importing into the U.S. an article that fits into one of these above-mentioned categories, please make sure that you do not improperly characterize is under the tariff code 8803.10.00.30!

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Import Classification 101: Introduction to Harmonized Tariff Codes (Part 2 of 3)

May 21, 2014 by Leave a comment

How are most commercial airplane parts supposed to be categorized under the Harmonized Tariff Schedule?  Many commercial airplane parts will be characterized as “8803.10.00.30.”  In today’s article we will focus on what this string of numbers really means.

This is the second in a three-part series of articles discussing import into the United States of aircraft parts. Yesterday, we explained that classifications of goods is based upon the U.S. Harmonized Tariff Schedule (USHTS). Today we will look more closely at the basic harmonized tariff codes applicable to aircraft parts.

U.S. import law applies to goods that enter the customs territory of the United States. Each such part must be classified correctly in order to assess the tariff status of the part. Most aircraft parts will fall within the scope of the Agreement on Trade in Civil Aircraft, which provides for the duty-free entry of civil aircraft and their parts into signatory nations (including the United States). But there are significant exceptions to this provision, and there is a significant minority of aircraft parts that will not be classified under the “aircraft parts” provisions of this Agreement [more on this tomorrow!].

Most aircraft parts are categorized under Chapter 88 of the Harmonized Tariff Code, and the most commonly used code will begin with 8803 (which is for parts). The additional numbers after the initial “8803” help to specify exactly what sort of aircraft parts they are. Civil aircraft propeller parts are characterized as 8803.10.00.30. Civil aircraft undercarriage parts are 8803.20.00.30 if they are intended for aircraft used by anyone other than the Department of Defense or the Coast Guard (the numbers would change if you altered any of these particulars).

Seeing a pattern to these numbers? The first set of digits (8803) indicates that it is an aircraft part. If the second sequence is “10” then it is a rotor or propeller part. If it is “20” then it is an undercarriage part. If it is a “30” then it is an “other” part from an airplane or helicopter.

For these particular subheadings, the third sequence will always be “00” but in other headings and subheadings, you can have different third sequence numbers that help to further distinguish different goods. The fourth sequence helps to further distinguish the nature of the parts, so for example in these subheadings a fourth sequence of “15” usually means the part is for use in a civil aircraft and civil aircraft is used by the Department of Defense or the United States Coast Guard. A fourth sequence of “30” usually means the part is for use in a civil aircraft that is NOT used by the Department of Defense or the United States Coast Guard.

As you can see, most civil aircraft parts imported by U.S. repair stations will be described as by harmonized tariff code 8803.30.00.30. Civil aircraft parts classified as 8803.30.00.30 may usually be entered into the U.S. on a duty free basis.

But, unfortunately, import classification of aircraft parts is not always this simple. There are many aircraft parts that fit into listed exceptions, and these parts are characterized under different tariff codes. Some of these tariff codes require the payment of import duties (the parts are not treated as duty-free under the Agreement on Trade in Civil Aircraft. On Monday morning, we examine the exceptions.

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Import Basics for the Aircraft Parts Distribution Community (Part 1 of 3)

May 20, 2014 by Leave a comment

This is the first in a series of articles discussing import into the United States of aircraft parts. It is meant to lay the ground-work for the rest of the series by explaining some basic terms and notions that apply to U.S. import law.

Import law is important to both U.S. companies (who are importing into the U.S.) and non-U.S. companies. non-U.S. companies may be exporting to the U.S., but that doesn’t mean tat they can ignore the U.S. import laws.  They need to cooperate with their U.S. importers to make sure that the importer can readily clear Customs with the goods without unnecessary delay.

U.S. import law applies to goods that enter the customs territory of the United States. The customs territory of the United States includes only the States, the District of Columbia and Puerto Rico. Other US possessions are not considered to be part of the customs territory of the United States.

Imports are regulated for a variety of reasons, but one of the most important historical reasons for regulating imports is to apply tariffs. The first US Congress passed the Tariff Act of 1789 in order to raise funds to be able to operate the government. Until the federal income tax began in the early 20th century, tariffs were the single most important source of revenue for the United States government.

Modern US policy no longer relies heavily on tariffs as a major source of US revenue – instead the US now uses tariffs to advance industrial, trade and foreign policy issues. For example, where the US believes that foreign goods are being subsidized, and that this subsidy is permitting them to be sold into the US market at a below-cost price, the US may apply heavy tariffs in order to make the imported goods more competitive relative to US-manufactured goods. Part of the reason for doing this is to protect the correlative US manufacturing industry because if the US correlative US manufacturing industry were to disappear in the face of the subsidized imports, then the prices for the imports could be increased to supra-competitive levels because there would be no domestic competition to offer competition that could prevent such price increases.

Many of the countries that have significant aviation industries are signatories to the Agreement on Trade in Civil Aircraft, which addresses import tariffs on aircraft parts. Most people in our industry know that aircraft parts are imported “duty-free” under the Agreement on Trade in Civil Aircraft.

But while duty-free treatment is the general rule, there are many exceptions.

Aviation industry personnel often do not realize that many aircraft parts are characterized as other things for import purposes. Some parts that appear to be aircraft parts are treated under other categories for import tariff purposes. This includes things like washers, certain rubber articles, certain bearings, brushes found in machines, and lamps and lighting fittings. These parts will all have special classifications, so learning how to identify the right classifications is important.

An important first step for importing goods is classification. The importer will be responsible for properly classifying the import goods, and this classification may drive the applicable tariffs.

Many nations have adopted the Harmonized Commodity Description and Coding System (HCDCS) which is a list that is published and maintained by the World Customs Organization (WCO). The HCDCS serves as the basis for the U.S. Harmonized Tariff Schedule, which is the list of goods used in the United States.

Classifications of goods are listed in the U.S. Harmonized Tariff Schedule, so you would find aircraft parts in this schedule; but you will also find exceptions. In part two of this series we will look more closely at the harmonized tariff codes applicable to aircraft parts and will discuss the full list of exceptions. In forthcoming articles, we will discuss topics like:

  • USHTS classification numbers associated with aircraft parts; and
  • Exceptions to the general rules including parts that are NOT duty-free.

 

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