also known in the Harmonized Tariff by c14VAhN

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									                                     HQ H125982

                                 September 28, 2011


OT:RR:CTF:VS H125982 BGK

CATEGORY: Classification

Port Director
U.S. Customs and Border Protection
301 E. Ocean Blvd., Suite 700
Long Beach, California 90802

Re: Protest No. 2704-10-101519; headphones for airplanes; Agreement on Trade in
    Civil Aircraft

Dear Port Director:

     This is in response to the Application for Further Review of Protest No. 2704-10-
101519, which pertains to the eligibility of certain headphones for duty-free treatment
under the Agreement on Trade in Civil Aircraft (the Agreement), also known in the
Harmonized Tariff Schedule of the United States (HTSUS) as the Civil Aircraft
Agreement (CAA). We note that the protest was timely filed on July 28, 2010, which is
within 180 days after the first entry was liquidated on January 29, 2010. See 19 U.S.C.
§ 1514(c)(3). We spoke with a staff member at the Federal Aviation Administration
(FAA) regarding FAA certification, on both December 13, 2010 and June 16, 2011, and
with counsel for the importer, on December 20, 2010. A meeting was held with the
protestant and their counsel on April 14, 2011, and an additional submission was
received thereafter.

FACTS:

        The headphones are used with FAA certified in-flight entertainment systems that
are in place on aircraft worldwide. The importer states that in most cases the
headphones are designed for, and are only sold for, use in civil aircraft. The style and
features of the headphones vary by the airline’s specifications. The headphones plug
into the passenger’s arm rest and connect to the in-flight entertainment system and
in-flight communication system. The importer, AVID Airline Products Corp. (AVID), has
filed a blanket certification, dated January 23, 2009, which states that the headphones
are used in civil aircraft and are certified by an accepted airworthiness authority (the
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FAA or an FAA accepted substitute). AVID also states that blanket certifications
regarding eligibility have been in place for over 15 years. Additionally, AVID claims that
the headphones are only sold for use in civil aircraft, and in most cases, are designed
specifically for civil aircraft.

        AVID has submitted a Supplemental Type Certificate issued by the FAA to a
company that produces one of the in-flight entertainment systems that are compatible
with AVID’s headphones. The FAA states that the headphones themselves are not
eligible to be certified. AVID has also submitted a variety of sample 300 ohm
headphones and the specification sheets from multiple airlines, which provide the
technical, electrical, and aesthetic specifications for the headphones to be used with
their in-flight entertainment systems. All the specifications require an impedance of 300
ohm for the headphones.

       AVID entered the headphones under subheading 8518.30.20, HTSUS, and U.S.
Customs and Border Protection (CBP) does not dispute this classification. The importer
also entered the headphones using Special Program Indicator (SPI), “C”. SPI “C” is the
HTSUS SPI for merchandise for which preferential treatment under the CAA is being
claimed. See General Note 3(c)(i), HTSUS. CBP determined that the headphones did
not meet the requirements of the CAA, and therefore, liquidated the entries without
preferential treatment beginning on January 13, 2009. AVID also claims that it has
imported headphones under the CAA for approximately 25 years, and they have been
consistently liquidated duty-free.

ISSUES:

I.     Are the headphones eligible for preferential tariff treatment under the CAA?

II.    If not, did an established and uniform practice exist such that CBP was required
       to provide notice of a change in practice pursuant to 19 U.S.C. § 1315(d)?

III.   In the alternative, did previous treatment exist with regard to substantially
       identical transactions such that CBP is required to publish the protest review
       decision in the Customs Bulletin pursuant to 19 U.S.C. § 1625(c)(2)?

LAW AND ANALYSIS:

I.     Are the headphones eligible for preferential tariff treatment under the CAA?

       The Agreement on Trade in Civil Aircraft was implemented by Title VI, "Civil
Aircraft Agreement" of the Trade Agreements Act of 1979 (Sec. 601, Pub. L. 96-39, 93
Stat. 144, 96th Cong., 1st Sess. 1979), effective January 1, 1980, and became
headnote 3 to schedule 6, part 6, Tariff Schedules of the United States (TSUS).
Headnote 3 to schedule 6, part 6, TSUS, became General Note (GN) 3(c)(iv) when the
HTSUS was enacted, and became GN 6, HTSUS, with minimal changes in 1995. GN
6, HTSUS, was then amended by section 12 of the Miscellaneous Trade and Technical
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Corrections Act of 1996, Pub. L. 104-295, 110 Stat. 3514 (Oct. 11, 1996). Subsection
(a) of GN 6, HTSUS, provides:

      (a) Whenever a product is entered under a provision for which the rate of duty
      “Free (C)” appears in the “Special” subcolumn and a claim for such rate of duty is
      made, the importer--
      (i) shall maintain such supporting documentation as the Secretary of the
      Treasury may require; and
      (ii) shall be deemed to certify that the imported article is a civil aircraft, or has
      been imported for use in a civil aircraft and will be so used.

In order to be considered a “civil aircraft” under GN 6(a)(ii), the product must meet the
description of “civil aircraft”, as laid out in GN 6(b)(i), HTSUS:

      For purposes of the tariff schedule, the term “civil aircraft” means any aircraft,
      aircraft engine, or ground flight simulator (including parts, components, and
      subassemblies thereof) - -
      (A) that is used as original or replacement equipment in the design, development,
      testing, evaluation, manufacture, repair, maintenance, rebuilding, modification, or
      conversion of aircraft; and
      (B) (1) that is manufactured or operated pursuant to a certificate issued by the
      Administrator of the Federal Aviation Administration under [49 U.S.C. § 44704],
      or pursuant to the approval of the airworthiness authority in the country of
      exportation, if such approval is recognized by the FAA as an acceptable
      substitute for such an FAA certificate; . . .

The regulations implementing GN 6, HTSUS, are enumerated in 19 C.F.R. § 10.183,
and the documentation requirements are in subsection 10.183(e).

        In accordance with GN 6(a), HTSUS, the headphones were imported under
subheading 8518.30.20, HTSUS, which is designated with the SPI “C”.                 This
classification is not disputed by CBP. The issue in this case is whether the imported
headphones meet the requirements of GN 6(b)(i), HTSUS, as “civil aircraft,” or “ for use
in a civil aircraft and will be so used” under GN 6(a)(ii).

       “Civil Aircraft”

        AVID claims the headphones may be considered “civil aircraft” as described in
GN 6(b)(i), HTSUS. AVID argues that CBP has previously held that individual parts of
certified civil aircraft are a part of that certification. In support of this argument AVID
cites C.S.D. 80-242 (Headquarters Ruling Letter (HRL) 712568), dated March 28 1980.
In HRL 712568, the final aircraft was certified by the FAA, but the individual parts and
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subassemblies were not individually certified. Customs stated “[i]t is our understanding
that when a certain model aircraft is FAA approved for airworthiness or for test flying,
the type of aircraft parts used in that aircraft are so listed and form part of that approval.”
HRL 712568. However, unlike the aircraft subassemblies in HRL 712568, the
headphones at issue were not part of the aircraft or certified in-flight entertainment
system when either received certification, and are thus not certified as part of the plane.

        FAA Type Certificates are for aircraft, aircraft engines, propellers or other
appliances reasonably required by the FAA to apply for certificates. See 49 U.S.C.
§ 44704(a). Supplemental Type Certificates are for “. . . a change to an aircraft, aircraft
engine, propeller or appliance.” 49 U.S.C. § 44704(b). In-flight entertainment systems
require supplemental type certificates, but the headphones at issue may not receive
FAA certification on their own and are not submitted to the FAA as part of the in-flight
entertainment system. Therefore, the headphones themselves are not considered to be
certified by the FAA.

        AVID also cites rulings in which individual parts of an airplane were determined
to be parts of aircraft. AVID cites C.S.D. 83-44 (HRL 066654), dated April 30, 1981, in
which subassemblies used in passenger entertainment systems were classified in a
provision for parts of aircraft under the TSUS. Similarly, in HRL 953562, dated October
7, 1993, Customs discussed an airplane lavatory’s FAA requirements in determining
that the lavatory should be properly classified as “Other parts of airplanes or
helicopters”, subheading 8803.30.00, HTSUS. In both these rulings, Customs cited “. . .
the broad statement of Congressional purpose in enacting the [CAA], to promote a more
free and unencumbered trade in civil aircraft[,]” in support of the decision to classify
these subassemblies as “parts”. HRL 953562; and HRL 066654. However, although
these rulings classified the imported articles as “parts”, the rulings did not find this alone
to be sufficient to qualify an article for preferential treatment under the CAA. In holding
the subassemblies were “parts”, Customs stated the goods would be duty-free, “. . . if
certified for use in civil aircraft.” HRL 066654. The rulings did not hold that the parts
were FAA certified due to their classification status as “parts.” In this case, the
headphones are not classified in a subheading for parts of airplanes.

        AVID further argues that the headphones are manufactured and sold pursuant to
specifications issued by the airlines and should thus meet the definition of “civil aircraft”
as an aircraft part. In order to meet the definition of “civil aircraft”, an aircraft part must
be “. . . manufactured or operated pursuant to a certificate issued by the [FAA]. . ..” See
GN 6(b)(i)(B), HTSUS; 10 C.F.R. § 10.183(a)(2); and HRL 223408, dated December 26,
1991 (Stating that although the regulations technically allow for foreign military aircraft
to claim preferential treatment, the products will still not qualify because the FAA does
not certify military aircraft). As discussed above, the headphones themselves may not
be certified.
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        Next, AVID argues that the language in GN 6(b)(i)(B)(1), “. . . pursuant to a
certificate issued by the Administrator of the Federal Aviation Administration. . .”, means
that the headphones themselves need not be certified by the FAA because they are
operated in connection with an FAA-certified in-flight entertainment system. The
headphones are manufactured and sold pursuant to specifications issued by the airlines
for headphones with a specific impedance of 300 ohm. In comparison, a standard set
of Apple™ headphones has an impedance of 32 ohm.1 The specifications for the
headphones are dictated by the airline such that they will be compatible with the in-flight
entertainment system in use.2

       In interpreting what is meant by “. . . pursuant to a certificate. . .” in GN 6,
HTSUS, we must initially review the text of the statutory provision. See United States v.
Alvarez-Sanchez, 511 U.S. 350 (1994) (“When interpreting a statute, we look first and
foremost to its text.”). “If the statute is clear and unambiguous ‘that is the end of the
matter, for the court, as well as the agency, must give effect to the unambiguously
expressed intent of Congress.’ . . . The traditional deference courts pay to agency
interpretation is not to be applied to alter the clearly expressed intent of Congress.”
Board of Governors, FRS v. Dimension Financial Corp., 474 U.S. 361, (1986), quoting
Chevron U.S.A. Inc. v. Natural Resources Defense Council, Inc., 467 U.S. 837, 842-43,
(1984). Next, the court will apply the ordinary meaning of a term if it is not defined by
the statute. See United States v. Daas, 198 F.3d 1167, 1174 (9th Cir. 1999). But if a
statute is ambiguous with respect to a particular issue, an agency shall consult a
statute’s legislative history to discern Congressional intent. Id.

       The Miscellaneous Trade and Technical Corrections Act of 1996, through which
GN 6, HTSUS, was promulgated, provides no assistance in the interpretation of GN 6,
HTSUS, as the remainder of the Act deals with other miscellaneous issues. Next, we
look to the plain meaning of “pursuant to”, which as defined by the Oxford English
Dictionary means “Following upon, consequent and in conformance to; in accordance
with.” OXFORD ENGLISH DICTIONARY ONLINE (3rd ed. 2007). Under this definition,
“pursuant to” could mean the particular imported article must be manufactured or
operated under a certificate, or that use in connection with a certified article is sufficient.
Therefore, this provision of the statute is ambiguous, and we must look to the legislative
history. Senate Report No. 104-393 states the following with regard to the modification
of the definition of “civil aircraft” in GN 6, HTSUS:

        . . . Finally, the provision modifies the definition of “civil aircraft” to include aircraft,
        aircraft engines, and flight simulators (including parts, components, and
        subassemblies thereof) that are (1) certified by the FAA or an airworthiness

1
  http://www.apple.com/ipodshuffle/specs.html. Sony™ Over The Ear Noise Cancelling Headphones
have an impedance of 32-64 ohm. See http://www.bestbuy.com/site/Sony+-+Over-the-Ear+Noise-
Canceling+Headphones+-+Black/8703405.p?id=1199495404307&skuId=8703405&IcsCsid=2-39-1378-
25-5-37088-16719-25-1378-820-25-1378-3650-0-5.
2
  See ARINC, Cabin Equipment Interfaces, Part 2, Cabin Management and Entertainment Systems –
Seat Interfaces 12-13 (May 30, 2005) (Prepared by Airlines Electronic Engineering Committee, states that
the airline should determine the impedance required by the entertainment system, and lower impedance
headphones should be avoided in systems requiring higher impedance, and vise versa).
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       authority recognized by the FAA, or (2) purchased for use by the Department of
       Defense or the Coast Guard, if such aircraft, aircraft engines, and flight
       simulators (or parts, components, or subassemblies thereof) are manufactured or
       operated pursuant to a certificate issued or recognized by the FAA.

S. REP. NO. 104-393, at 10 (1996), reprinted in 1996 U.S.C.C.A.N. 4036, 4045
(emphasis added). Although the language of GN 6, HTSUS, broadened the definition of
“civil aircraft” from the Trade Agreements Act of 1979, the “pursuant to” language
pertains to Department of Defense or Coast Guard items, originally excluded by the
Trade Agreements Act of 1979. See Trade Agreements Act of 1979, Sec. 601, Pub. L.
96-39, 93 Stat. 144, 96th Cong., 1st Sess. 1979 (Jan. 1, 1980) (“For purposes of the
schedules, the term “civil aircraft” means all aircraft other than aircraft purchased for use
by the Department of Defense or the United States Coast Guard.”).

         Additionally, when the Trade Agreements Act of 1979 was passed, the language
of headnote 3 to schedule 6, part 6, TSUS, along with the legislative history, clearly
required the imported article to be certified by the FAA, or another appropriate
airworthiness authority. See Trade Agreements Act of 1979, Sec. 601, Pub. L. 96-39,
93 Stat. 144, 96th Cong., 1st Sess. 1979 (Jan. 1, 1980) (“3. Certified for Use in Civil
Aircraft. (a) Whenever the term ‘certified for use in civil aircraft’ is used in an item
description in the schedules, the importer shall file a written statement . . . that the
article has been approved for such use by the [FAA]. . ..”). Senate Report No. 96-249,
pertaining to the Trade Agreements Act of 1979, defines articles covered by the CAA as
“. . . airplanes and parts certified for use in civil aircraft . . ..” S. REP. NO. 96-249, at 25
(1979), reprinted in 1979 U.S.C.C.A.N. 381, 411. The Report further emphasizes this
point in the Introduction to the Agreement: “[p]arts will be eligible for duty-free entry
under the amendments in Title VI only if they are certified for use in civil aircraft at the
time of entry.” Id. at 185, 1979 U.S.C.C.A.N. at 571.

       The legislative history to the Miscellaneous Trade and Technical Corrections Act
of 1996 shows no intention to change this essential requirement from the Trade
Agreements Act of 1979, except to allow articles sold to the Department of Defense or
Coast Guard to receive duty-free treatment under the CAA. Therefore, “pursuant to”
does not broaden the scope of the FAA certification requirement except as to articles
that are not certified due to their status of sale to the Department of Defense or Coast
Guard. Therefore, we do not agree with AVID that “pursuant to” means the headsets
need only be operated in connection with the certified in-flight entertainment system.

        Additionally, AVID argues that the headsets must be considered parts of the
aircraft or in-flight entertainment system for purposes of the CAA because they are
listed in the Annex to the Agreement and contain an SPI “C” next to the subheading in
the HTSUS, even though it is not possible for headsets to be certified by the FAA. We
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do not agree. In discussions with the FAA, we have learned that pilot’s headphones not
only may be certified, but should be certified by the FAA, and these pilot headphones
are included in the Annex under the same provision as the headphones at issue.

      As the headphones imported by AVID are not certified by the FAA, they do not
meet the definition of “civil aircraft” provided in GN 6(b).



       Imported for use in Civil Aircraft and will be so used

         The next issue is whether the headphones may receive preferential tariff
treatment under 6(a)(ii) as products “. . . imported for use in a civil aircraft and will be so
used.” Although the second half of GN 6(a)(ii) is not limited by the remainder of the
General Note, pertaining to the definition of “civil aircraft” or the regulations, we find it is
still limited by the Agreement itself. See generally United Tech. Corp. v. United States,
315 F.3d 1320 (Fed. Cir. 2003).

       In United Technologies, the court examined GN 3(c)(iv), HTSUS. GN 3(c)(iv)
provided for, in pertinent part:

       the importer shall file a written statement, . . . stating that the imported article has
       been imported for use in civil aircraft, that it will be so used and that the article
       has been approved for such use by the Administrator of the Federal Aviation
       Authority. . ..

(Emphasis added.) While the main difference between GN 3(c)(iv) and GN 6 is that
articles imported for use in civil aircraft to be so used were also required to be approved
for such use by the FAA in GN 3(c)(iv), which is not included in GN 6(a), the court
focused on the words “for use in civil aircraft.” In construing this language to determine
whether certain parts installed in test engines, not aircraft, were eligible for GN 3(c)(iv)
treatment, the court looked to the Agreement.

       Although Article 1 of the Agreement states that it applies to aircraft and aircraft
parts “whether used as original or replacement equipment in the manufacture, repair,
maintenance, rebuilding, modification or conversion of civil aircraft” and Article 2 repeats
similar language, that language now exists in GN 6(b) in defining “civil aircraft,” not GN
6(a). Therefore, while the headphones are incorporated in the aircraft during flights,
instead of during the events enumerated in Articles 1 and 2 of the Agreement, we find
this does not prevent them from qualifying for preferential treatment under GN 6(a) as
they are entered under a provision for which the SPI “C” is present and the headphones
are 300 ohm, which is the specific ohm for the certified in-flight entertainment systems
where the headphones are used.
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HOLDING:

       The protest should be granted. The headphones are entered under a provision
for which the SPI “C” is present and are imported for use in civil aircraft, and so used.

        In accordance with the Protest/Petition Processing Handbook (CIS HB 3500-08A,
December 2007, pp. 24 and 26), you are to mail this decision, together with the CBP
Form 19, to the protestant no later than 60 days from the date of this letter. Any
reliquidation of the entry in accordance with this decision must be accomplished prior to
mailing of the decision. Sixty days from the date of the decision Regulations and
Rulings of the Office of International Trade will make the decision available to CBP
personnel, and to the public on the CBP Home Page on the World Wide Web at
www.cbp.gov, by means of the Freedom of Information Act, and other methods of public
distribution.
                                          Sincerely,



                                         Myles B. Harmon, Director
                                         Commercial and Trade Facilitation Division

								
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