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HQ 223971

May 22, 1992

CON-9-09-CO:R:C:E 223971 JRS


Mr. Tim Gillespie
Assistant Vice President
National Railroad Passenger Corporation
AMTRAK Government and Public Affairs
60 Massachusetts Ave., N.E.
Washington, D.C. 20002

RE: Applicability of subheading 9813.00.30, HTSUS, to temporary importation under bond of high-speed train equipment for testing purposes.

Dear Sir:

This is in response to your ruling request dated May 14, 1992, on the applicability of a Temporary Importation Bond for the testing of high-speed rail equipment. Our ruling follows.


Amtrak plans to import a Swedish high-speed tilting train set to test the operation of the equipment and to obtain passenger reaction to a modern high-speed train in demonstration tests during its regularly scheduled service. The train set, valued at $15 million, will consist of one locomotive, a first class driving trailer/cab car, three first class coaches, and one buffet coach for food service. Amtrak will acquire temporarily the train set through a short-term arrangement known as a "Train Testing Agreement" with the Swedish State Railways (Statjens Jrnvgar, a government agency) and Amtrak will return the equipment after the evaluation is completed. The equipment is scheduled to arrive in the United States on November 27, 1992 and is scheduled to return to Sweden on August 5, 1993.

In your memorandum you state that Amtrak cannot purchase this equipment and, in fact, plans to test other foreign high- speed rail equipment in the next few years for the purpose of comparing the technology and economic feasibility of the various equipment before any consideration is given to the purchasing of such equipment. After testing various high-speed technologies, Amtrak will develop design specifications for a new generation of American high-speed rail passenger equipment. You included a copy of a letter from a potential American manufacturer in support of the importation.

Additionally, we acknowledge your submission of the drawings of the X2000 train set, the "Equipment Test and Demonstration Agreement" between Amtrak and the manufacturer which sets out the details of the testing plan and schedule, and the "Train Testing Agreement." Your request for CONFIDENTIAL treatment of the drawings and related materials is granted.


Whether a temporary importation under bond entry is permissible when the testing phase will include revenue demonstrations on its railway system in addition to the technical (mechanical) tests of the equipment?


Subheading 9813.00.30, Harmonized Tariff Schedule of the United States (HTSUS), provides for the temporary duty-free entry of:
Articles intended solely for the testing, experimental or review purposes, including specifications, photographs and similar articles for use in connection with experiments or for study.

Such articles when not imported for sale or sale on approval may be admitted into the United States without the payment of duty, under bond, for their exportation within 1 year from the date of importation, which period, in the discretion of the Secretary of the Treasury, may be extended upon application, for one or more further periods, which when added to the initial 1 year shall not exceed a total of 3 years. See U.S. Note 1(a) of subchapter XIII, Chapter 98, HTSUS.

Articles may be entered under subheading 9813.00.30, HTSUS, when there is an intention to test the article itself, or when the imported articles or merchandise are imported to be used as the raw material in testing another domestic or imported article. However, free entry is not available for importation of articles which, rather than being tested themselves, are imported to measure the performance of other articles. Generally, the Customs Service has interpreted the provision to preclude purely market tests as being eligible.

With regard to the use of the imported article in a commercial setting, any such use which is not incidental to the testing and evaluation program would constitute a violation of the bond resulting in the assessment of liquidated damages on an amount equal to double the estimated duties determined at the time of entry (see Customs ruling 206597, dated July 30, 1976). In Customs ruling DB 516.23, dated March 16, 1971, Headquarters held that a railroad company which imported a freight car for the purpose of testing its ability to function as both a covered hopper and boxcar, was permitted to use the car to haul revenue movements of a variety of commodities from selected shippers, as its use in domestic service was incidental to the legitimate testing purpose.

In the case under consideration, the high-speed train itself is imported not only to test its effectiveness on existing rail lines (technical/mechanical aspect), but also to test its adaptability or suitability for a specific use, which is passenger service (economic feasibility). The question becomes does the use of the train in regularly scheduled domestic service preclude it from entry under subheading 9813.00.30, HTSUS?

The evaluation of the American riders' reaction to the high- speed train is an essential element of the testing phase of the high-speed train technology. Since the seats in the Swedish train have the passengers facing each other in sets of four, it is imperative to evaluate the train passengers' reaction to such seating arrangements in order to determine whether such a design concept would be acceptable to the American public.

Moreover, the revenue generated from the high-speed test service will not augment the revenue Amtrak normally collects because (1) the test train would replace Amtrak's regularly scheduled train and (2) the fee charged the passenger would not include the cost of the "Train Testing Agreement" with the Swedish State Railways or the "Equipment Test and Demonstration Agreement."

Inasmuch as the regular fee charged the passenger does not subsidize the cost of the test and the number of trains in service remains the same, it is clear that no considerable revenue would result from the testing of the high-speed trains in Amtrak's regularly scheduled service in the Northeast corridor from April 4, 1993 to July 21, 1993.


The use of the train in regularly scheduled train service as part of the prescribed test procedures would not preclude entry of the imported train set under the provisions of subchapter XIII, Chapter 98, HTSUS, on the facts presented.


John Durant, Director

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