Monday, August 08, 2016

Ruling of the Week 2016.18: A 1967 Ferrari in the HTSUS

We have been down this road before. When is a car so classic, so old, and so valuable that it ceases to be a car for purposes of tariff classification and is treated as a collector's piece of historical interest?

This time, in HQ H271385 (May 9, 2016), the question involves a 1967 Ferrari 275 GTS/4 NART Spyder. I think this is the model in question:

This particular vehicle is the second to last of 10 such vehicles ever produced. One sold at auction in 2013 for over $27 million. The commercial invoice used at the time of importation showed this vehicle having a value of $25 million.

From a classification perspective, there is no question that this is a car of Heading 8703. The question is whether it is also a collectors' piece of historical interest of Heading 9705. If so, Note 4 to Chapter 97 precludes classifying the vehicle in Heading 8703.

Clearly, this item is of great interest to collectors. That leaves open the question of whether that interest is "historical." Looking to dictionary definitions, Customs determined that an item is of historical interest if it relates to history or is concerned with past events. To be of historical interest, the item should be rare, old, and connected to a specific historical event, era, person, or other thing worthy of study. When applied to the "Ushabti of Neferhotep," for example, Customs found an ancient Egyptian statute to be classifiable in Heading 9705.

Turning to prior rulings involving cars, Customs noted that cars are generally mass-produced commercial goods, not collector's pieces of historical significance. Even when made in limited runs and promoted as collectors' items, mass-produced merchandise is not likely to classified in 9705 until it is both old and rare. So much for my collection of Green Lantern Happy Meal toys.

But, this car is both old and rare. Customs has previously classified some nearly-unique vehicles as collectors' items. Customs did so after considering many factors and cautions against concluding that an antique or classic car is necessarily a collectors' item.

But, seriously, look at this car. It is a $25 million, nearly one-of-a-kind, 1967 Ferrari. It was personally designed by Enzo Ferrari and was handmade by him and his design partner. Of course it is an item of historical interest. Someone at Customs and Border Protection, being both rational and apparently a bit of a car buff, reached the same conclusion. This is a collectors' piece of historical interest. It is entitled to duty free entry. By my math, that is a $62,500 win for the importer.

1 comment:

Anonymous said...

In the EU Combined Nomenclature there is an additional legal note re heading 9705 that specifically addresses vehicles of a historical nature.