CIT Denies Porsche Duty-Free Treatment of Auto Parts Temporarily Exported Then Reimported

Auto parts and tools exported to Canada for use at auto races then re-imported don't qualify for duty-free treatment under a U.S. goods returned tariff provision for "tools of the trade," said the Court of International Trade in a Dec. 30 opinion. Though Porsche Motorsport North America contended that the goods were exported to support race teams, CIT Judge Stephen Vaden found that the auto parts and tools were exported to generate sales to race teams rather than for a professional purpose, as required under subheading 9801.00.8500.

"Selling cars and their parts is not a 'professional' pursuit within the meaning of subheading 9801.00.85.00. It does not require 'professed knowledge of some subject' or 'prolonged training and a formal qualification,'" the opinion said. "Because the items were brought to the racetracks merely for the purpose of sales, they are indistinguishable, under subheading 9801.00.85.00, from other goods related to racing that may be desired by drivers and mechanics but have nothing to do with professional services."

Subheading 9801.00.8500 provides for duty-free treatment of “professional books, implements, instruments, and tools of trade, occupation, or employment, when returned to the United States after having been exported for use temporarily abroad, if imported by or for the account of the person who exported such items.” To qualify, goods must be professional tools, returned to the U.S. after being exported for a temporary use abroad, and used by the person who exported them.

In 2014, Porsche exported three shipments of auto replacement and repair tools, parts and accessories in a trailer to Canada for emergency support to Porsche race teams at three races. For each trailer, it filed CBP Form 4455 Certificates of Registration indicating its intent to temporarily export them. The parts were sold only to race teams, not the general public, but weren't subsequently returned to Porsche Motorsport. After each of the three races, Porsche Motorsport reimported the remainder of the shipments.

CBP eventually assessed over $122,000 in duties, fees and interest on parts in their regular HTS subheadings, denying the company duty-free treatment under subheading 9801.00.8500. Porsche unsuccessfully protested this move, and filed suit at CIT (see 2107150068). Despite some argument during the case over whether the goods were returned and were used by the person, Vaden said the duty-free subheading had been "significantly misunderstood and applied by both" Porsche and the U.S. government. The parts and tools don't even fall under the common definitions of "professional" and "tools," he said. The company didn't "bring these items across the Canadian border for a professional purpose; instead, it aimed to generate sales among clients who raced cars that year," he said.

(Porsche Motorsport North America v. United States, Slip Op. 21-176, CIT #16-00182, dated 12/30/21, Judge Stephen Vaden. Attorneys: George Tuttle of Law Offices of George R. Tuttle for plaintiff PMNA; Beverly Farrell for defendant U.S. government)