On April 1, 2020, Customs announced its intention to revoke the classification treatment it previously afforded to a 1937 Alfa Romeo automobile, specifically a 1937 Alfa Romeo 8C 2900B Touring Lungo Berlinetta. According to the proposed revocation, what Customs once regarded as a collectors’ piece of historical interest of heading 9705 which enters duty-free, will now be classifiable as a plain-old motor car of heading 8703. If entered today, the vehicle would be subject to a 2.5% general rate of duty.
The gist of the 1937 Alfa Romeo’s classification dilemma is generally this: The two headings that might apply upon importation to an automobile like that of the 1937 Alfa Romeo are heading 8703 for motor cars and heading 9705 for, amongst other things, collectors’ pieces of historical interest. There has never been contention over whether the 1937 Alfa Romeo is a motor car of Heading 8703. Pursuant to a governing note in Chapter 97 of the HTSUS, however, if the 1937 Alfa Romeo can also be considered a collectors’ piece of historical interest, then that is the main consideration for classification purposes and the automobile must be classified in Heading 9705.
The principal question is whether the 1937 Alfa Romeo is a collectors’ piece of historical interest under heading 9705, which hinges on the broader question of what, according to the HTSUS and Customs, is a historically interesting article? Unfortunately, the personal proclivities of an enthusiastic importer are not relevant to the analysis. While one may believe that the decaying forest green flats she wore to a Bob Dylan concert are of obvious historical interest, that will not afford them duty-free status under Heading 9705.
Images from: https://www.supercars.net/blog/
Automobiles are doubly difficult because of an explanatory note in the HTSUS stating that a good produced for commercial consumption qualifies for classification under heading 9705 only where, after production, the good attains the status of historical significance by reason of its age or rarity. Customs has also ruled that such goods can attain status as collectors’ pieces by reason of their:
(1) placement along the time spectrum as recorded in the annals of historical accountings,
(2) recognized accomplishments as documented and recorded in the pages of historical facts, and
(3) association to famous persons with or without a nexus to an historical time.
The current divergence more or less concerns whether all three criteria must be satisfied. In the two identified former rulings subject to be revoked - NY N278756 (Oct. 7, 2016) and NY N281521 (Dec. 23, 2016) – Customs reasoned that if the 1937 Alfa Romeo qualified by its placement in time to be of historical interest, then there was no requirement that the car itself be deed-worthy or belong to famous persons. Thus, in those rulings, Customs first assessed documentation and relevant literature which credited the 1937 Alfa Romeo generally as a glorious and impressive racing automobile that belonged to “the golden age of the car.” Customs then acknowledged that the subject 1937 Alfa Romeo had a history of museum exhibition and public showcase. The only real issue then became whether the subject 1937 Alfa Romeo was a bona fide original of that time-period. The 1937 Alfa Romeo had been dismantled and reassembled several times. Only thirty-three Alfa Romeos of this model were ever made, some had been cannibalized for their parts and some had to be restored with remanufactured or reconstructed parts. Thus, upon validation of the automobile’s authenticity, Customs agreed that the 1937 Alfa Romeo was classifiable under heading 9705 as a collectors’ item of historical significance.
In the proposed revocation ruling, HQ H307522, Customs rejects the idea that the criteria for a historically significant article can be read in the disjunctive. Citing previous rulings, one which classified jewelry owned by the Duke and Duchess of Windsor as collectors’ pieces of historical interest and two which declined to classify collector automobiles as such, Customs denies that rarity and age alone are sufficient to make an article eligible for classification in Heading 9705.
Rather, multiple factors of historical significance must be present for an article to gain status as a piece of historical interest. In the proposed revocation ruling, Customs explains that the authenticity of the 1937 Alfa Romeo alone does not make Heading 9705 proper; because the subject 1937 Alfa Romeo has not been owned or driven by a famous person and is not connected with a historic car race, the proper classification is instead under heading 8703, as a used automobile with an 8-cylinder engine.
An alternative position is that that ownership should be irrelevant to an automobile of which only thirty-three were ever made or that owning one makes a person famous (at least in auto collector circles). Customs, however, has drawn a hard line. Ultimately, what Customs is doing in the revocation ruling is reasserting the interpretive principle that heading 9705 is to be construed narrowly rather than broadly.
Note that beyond revoking the two identified rulings, Customs also proposes to revoke any rulings on the 1937 Alfa Romeo that may exist but have not been specifically identified as well as any treatment previously accorded by CBP to substantially identical transactions. Therefore, importers of articles potentially classifiable in heading 9705, specifically of commercial goods that may have attained special status because of age or rarity, should note that the standard for classification under heading 9705 is that much higher.
Customs is accepting written comments on the proposed revocation. Those comments can be addressed to U.S. Customs and Border Protection, Office of Trade, Regulations and Rulings, Attention: Trade and Commercial Regulations Branch, 90 K St., NE, 10th Floor, Washington, DC 20229–1177, and must be received on or before May 1, 2020. If you have any questions, please reach out to any BRC lawyer.