CBP's Interpretation of Drawback Statute Having Unpredictable Effects, Importer Argues

The government’s position in a case regarding substitution unused merchandise drawback for aircraft parts would lead to "absurd results" if upheld, presenting a "significant risk of manipulation or unintended results" arising from changes in statistical language in the tariff schedule if the court agrees with DOJ's interpretation of the drawback statute, importer Spirit Aerosystems said in an Aug. 18 reply brief at the Court of International Trade (Spirit Aerosystems v. U.S., CIT # 20-00094).

Spirit said that the government has shifted its argument surrounding what constitutes an "article description" at the 8- and 10-digit levels in the Harmonized Tariff Schedule based "on nothing more than 'administrative convenience'" without regard for long-term effects. The importer is seeking to have a government motion for judgment tossed and its aircraft parts classifiable under HTSUS subheading 8803.30.0030 ruled eligible for substitution unused merchandise drawback.

According to Spirit, CBP's incorrect interpretation of the statute is what caused the elimination of drawback eligibility for airplane parts currently being contested because the agency ignored the “numerically unaligned” article description text for parts classified under 10-digit subheading 8803.30.0030. Such an interpretation has created a "perpetual issue that can be exacerbated as tariff language is changed," Spirit said.

The importer cited an example of recently revised statistical language for organic syrup. The language was changed in order to gain more detailed statistics on imports. Under the government's interpretation of the drawback statute, certain syrup would have been eligible for drawback, Spirit said. That interpretation would make merchandise that was previously eligible for drawback suddenly become ineligible, despite the fact the statistical category became more specific, Spirit said.

DOJ argued for a "plain reading" of both the drawback and tariff statutes in its June motion for judgment and suggested that Spirit petition the 484(f) Committee to change the statistical language (see 2306020059). Spirit said that such an argument disregards the "many absurdities" that result from a plain reading and that the issue is one of statutory interpretation, not addressable by the committee.

Substitution unused merchandise drawback can be claimed if both the imported and exported merchandise are classifiable under the same 8-digit subheading and the "article description" doesn't begin with the term "other," or if the merchandise is classifiable under the same 10-digit statistical reporting number and the article description for that number doesn't begin with "other." CBP denied Spirit's drawback claim, saying that the article description at the 10-digit subheading said "other."

The aircraft parts for which Spirit sought drawback were imported in January 2018 and classified under the discontinued 10-digit HTS subheading 8803.30.0030, which covered "Parts of goods of heading 8801 or 8802: Other parts of airplanes or helicopters: For use in civil aircraft: Other." The eight-digit level of the subheading covered "other parts of airplanes or helicopters" and the phrase "for use in civil aircraft" is the superior text to the 10-digit line "other."