Condition Codes on Parts with Multiple Tags

An association member recently asked about the “correct” condition code to use when selling a component with multiple tags.

This answer is limited to commercial condition codes, such as those used on listing services like ILSmart or PartsBase.  If one is looking for the condition code to list on an 8130-3 tag or other government tag then the answer may be different!  For example, one may not describe an article as overhauled on an 8130-3 (approval for return to service) unless the article was disassembled, cleaned, inspected, repaired as necessary, reassembled, and tested.  All of this must be performed using methods, techniques, and practices acceptable to the FAA.

The specific question involves a hypothetical fuel pump bearing two 8130-3 tags.  The first tag is an earlier overhaul tag.  we will assume for this hypothetical that the tag is in good order and that the overhaul was properly completed.  The second tag is a more recent one stating “Modified” in the status/work block, and explaining in the remarks block of the tag that the fuel pump was modified according to instructions in a manufacturer’s service bulletin. The part has remained unused and uninstalled since the overhaul.  Which condition code is appropriate for identifying the unit?

A part that is marketed as “overhauled” may be perceived as having a different value than a part that is marketed as “modified,” so knowing which condition code is commercially appropriate for marketing the part can have a real dollars-and-cents effect.

We are talking about condition codes in commercial communications (and not codes on a regulated document, like an 8130-3 tag).  These condition codes may be governed by instructions associated with the commercial medium.  Therefore, if you are using a commercial medium for this communication then you should follow the rules set by that medium.  Typically, online inventory locator services will have their own definitions and standards.  If you are communicating via a SPEC 106 form, then that specification provides some guidance about condition codes for use in the associated form.

In the hypothetical that we’ve posed, the fact that this is for a fuel pump may mean that the age of the earlier overhaul tag is relevant.  Fuel pumps include seals that could degrade over time.  This is a rather specific issue connected to the hypothetical that may not be applicable to other parts with more recent overhaul tags, or that do not have elements that are susceptible to degradation over time.

Setting those issues aside, though, it is generally acceptable for a distributor to describe an aircraft part as overhauled if the maintenance records reveal that it was properly overhauled, and has not been used or installed since the overhaul.  If there is an applicable Service Bulletin, then the customer will likely want to know about the Service Bulletin status, but that can be discussed directly with the customer (or disclosed in a remarks field, if such a field is available).  One reason that this is acceptable is because the Service Bulletin should not have done anything to the part to change the fact that it was overhauled – obviously, if the service bulletin modification undermines the overhaul, or provides alternative instructions for identification, then the service bulletin that was incorporated should take precedence over this advice.

Note that there are a variety of unusual circumstances that can change this rule-of-thumb-advice.  For example, where the subsequent service bulletin requires a part number change, it may become inappropriate to list the part under its new part number as “overhauled,” because it was overhauled under the prior part number (causing a mismatch between the part number on the overhaul tag and the new part number on the part).  In such a case, it may be more appropriate to list the new part number’s condition as modified or altered on the grounds that the new part number was not associated with the earlier maintenance, and the new part number could have different overhaul requirements.

 

 

 

How Do You Calculate the Export VALUE of an Overhauled Aircraft Part?

If you are exporting an overhauled civil aircraft part, then how do you calculate the value of the export?

The value of an export must be reported as part of the electronic export information (EEI) that is required by the regulations.  15 C.F.R. § 30.6(a)(17).  When you sell a unit, the value is easy to calculate – your sales price is the export value (although that “value” may have to be adjusted, as discussed below).  But when you are exporting an overhauled unit, your value may be different from this general rule.

It is most convenient for us to address this issue as three different types of transactions, each of which has a different value calculation:

(1) A part that has been imported into the United States for overhaul and is now being exported again (e.g. back to the owner).

(2) A part that has been imported into the United States for warranty repair or overhaul and is now being exported again (e.g. back to the owner) [in which the warranty covers some or all of the price of the work].

(3) A part that originated in the US as an overhauled part and then is subsequently exported as an overhauled part.

In the first case, where a part that has been sent to the US for overhaul is now being exported again to the sender, you need to have reported the article as a part imported for repair purposes at the time it was imported.  Then, when you export it back to the sender you can use Schedule B classification commodity number 9801.10.000 and you can report the export value in the EEI as the value of parts and labor from the overhaul (the value of the original unit shall not be included in the reported value).  15 C.F.R. § 30.29(a).

But if the part was sent back for warranty repair, and there is no charge for the parts and labor, then the value of the replacement parts (alone) should be reported.  15 C.F.R. § 30.29(b)(2).  There is no need to report the value of the warranty labor.  The bill of lading, manifest, air waybill, or other commercial-loading document (wherever you write the International Transaction Number, or ITN) should state: “Product replaced under warranty, value for EEI purposes.” Id.

In the third case shown above, where a part that originated in the US as an overhauled part is then subsequently exported as an overhauled part, you would report the full value of the part. If you bought the article overhauled in the US then the value is the sales price to your foreign customer. 15 C.F.R. § 30.6(a)(17)(i). If you are exporting it without a sale (e.g. for consignment to your foreign warehouse) then the value reported on the EEI is the fair market value of the overhauled article. Id.

You are supposed to adjust the EEI-reported value by adding the cost of shipping the part from the US point of origin to the port of export (costs will include freight and insurance). 15 C.F.R. § 30.6(a)(17)(ii)(A). If the part is sold at a “delivered price” (so the exporter is paying all shipping costs), then the exporter should subtract the shipping costs from the point of export to the customer (so value is adjusted downward for those post-export shipping charges). 15 C.F.R. § 30.6(a)(17)(ii)(C).