H350905

H350905 May 13, 2026 OT:RR:CTF:VS H350905 AMW CATEGORY: Valuation Jaime De La Cruz [ ] [ ] [ ] RE: Transaction Value; Transaction Value of Identical or Similar Merchandise; Imported Aircraft Engine Parts; No Sale Dear Mr. De La Cruz: This is in response to your letter, dated July 28, 2025, in your capacity as an employee of [ ] (the “Requestor”) for a prospective ruling on the valuation of certain aircraft engine components imported into the United States. You have requested confidential treatment for certain information contained in your submission, which includes certain identifying information. Inasmuch as the request conforms to the requirements of 19 CFR §177.2(b)(7), the Requestor’s application for confidentiality is approved. The information contained within brackets and all attachments to the request will not be released to the public and will be withheld from published versions of this ruling. FACTS: The following facts are based on your July 28, 2025, ruling request and follow-up information provided to this office on January 30, 2026. The Requestor is a U.S. corporate affiliate of [ ] (“the Manufacturer”), a producer of aircraft engines used by large commercial airliners, regional jets, and business aviation. The Manufacturer exports engine parts to [ ], an unrelated Maintenance, Repair, and Overhaul shop (the “MRO”) in the United States, which uses the parts to service and repair aircraft engines produced by the Manufacturer. Under the scenario described in your request, the MRO may import and install aircraft parts under two different transaction structures, which you describe as the (1) customer care contract process, and (2) time and materials (“T&M”) maintenance. These processes differ based on the contractual relationship between the Manufacturer and the engine operator, all of whom are similarly unrelated to the Manufacturer, Requester, and MRO. The customer care process relates to repairs performed by the MRO for engine operators who have entered a “customer care contract” with the Manufacturer. In so doing, the operator (typically an airline, shipping company, or other aircraft operator) pays a monthly fee to the Manufacturer in exchange for certain maintenance and overhaul services of its engines. The Manufacturer, in turn, subcontracts with the U.S.-based MRO to perform maintenance and overhaul work as needed under the customer care contracts. The MRO will be paid by the Manufacturer for all services performed under this arrangement and will not engage with or receive payment from engine operators. If parts are needed to repair or maintain the engine, the MRO will issue a purchase order to the Manufacturer. The Manufacturer will then pick and pack the ordered parts at its Aftermarket Centre in the United Kingdom and ship the items to the MRO. The MRO will then use the parts to repair or service the engine, which will be returned to the operator after services are complete. After purchasing the engine parts, the MRO will carry the parts in its inventory for the duration of the repair process. However, the service contract between the MRO and Manufacturer requires the MRO to consult the Manufacturer prior to any disposition decision (e.g., scrap, refurbishment) and that all repair activities be aligned with the Manufacturer. The agreement between the Manufacturer and MRO further states that the MRO will not profit from the purchase or sale of parts back to the Manufacturer, but rather from services and expertise provided by the MRO. Once the repairs are complete and the parts have been incorporated into the engine that has been serviced or repaired, the MRO will sell the engine parts back to the Manufacturer. Accordingly, while the operator will gain physical possession of the engine and incorporated parts after repair/overhaul, the newly incorporated parts will have been sold back to the Manufacturer by the MRO and will continue to be owned by the Manufacturer. Based on this arrangement, the MRO “purchases” repair or service parts from the Manufacturer but is required to “sell” the parts back to the Manufacturer after repairs/service is complete without making a profit. Essentially, the Manufacturer reimburses the MRO for its “purchase” of the repair parts. The Manufacturer then pays the MRO for the repair and expertise services it performs pursuant to the customer care contract. The request states that the customer care arrangement is intended to resemble the Manufacturer “moving its own parts around to service its customer care contracts.” Under the customer care arrangement, MRO will purchase engine parts at the Manufacturer’s World List Price (“WLP”) minus an 85% discount. The WLP is described in the request as “the aspirational, best possible, price that [the Manufacturer] could get for the aftermarket parts if they were sold directly to operators.” Meanwhile, the request describes the 85% discount as follows: To account for the sub-contracting of services arrangement, [the Manufacturer] is selling to the MRO as if it were moving its own goods into the United States. Accordingly, the pricing of the customer care parts is allocated as it would be should [the Manufacturer] be moving its own goods without a sale. The WLP – 2 85% reflects all costs plus [the Manufacturer’s] producer’s profit, as if [the Manufacturer] were using a computed value. The second repair scenario relates to the time and maintenance repairs. T&M repairs are provided by the MRO to operators of the Manufacturer’s engines who have not entered a customer care contract with the Manufacturer. In this scenario, an operator contracts directly with the MRO for repair and overhaul services. After receiving an engine, the MRO will again examine the engine, identify repairs and maintenance needed, and purchase the necessary parts from the Manufacturer. The Manufacturer will then pick, pull, and export the parts from the same U.K. Aftermarket Centre. Unlike parts purchased under the customer care process, however, the Manufacturer will sell parts to the MRO at WLP with no discount. Further, the Manufacturer will impose no conditions on the sale, the MRO is not required to consult the Manufacturer regarding the disposition of the parts, and the MRO will not sell any of the maintenance or repair parts back to the Manufacturer once repair/overhaul is complete. The Requestor seeks a prospective ruling only in relation to the valuation of those parts imported pursuant to a customer care contract. Repair and overhaul services performed under both the customer care and T&M processes involve the same types of parts imported from the same facility owned by the Manufacturer. However, the Requestor argues that those parts imported pursuant to a customer care contract are not subject to a bona fide sale that can form the basis of a transaction value appraisal. As such, the Requestor seeks to appraise the imported customer care parts on the basis of the transaction value of identical or similar goods, which would be those parts sold under the T&M arrangement. In so doing, however, the Requestor also asserts that the customer care parts are purchased at a different “commercial level” than those imported for T&M repairs, and that the 85% discount should be deducted for those parts imported pursuant to a customer care contract. ISSUE: What is the correct method of appraisement for the subject aircraft parts imported by the MRO pursuant to a customer care contract? LAW AND ANALYSIS: Merchandise imported into the United States is appraised for customs purposes in accordance with Section 402 of the Tariff Act of 1930, as amended by the TAA (19 U.S.C. § 1401a). The primary method of appraisement is transaction value, which is defined as “the price actually paid or payable for the merchandise when sold for exportation to the United States,” plus amounts for certain statutorily enumerated additions to the extent not otherwise included in the price actually paid or payable (e.g., royalti

Merchandise imported into the United States is appraised for customs purposes in accordance with Section 402 of the Tariff Act of 1930, as amended by the TAA (19 U.S.C. § 1401a). The primary method of appraisement is transaction value, which is defined as “the price actually paid or payable for the merchandise when sold for exportation to the United States,” plus amounts for certain statutorily enumerated additions to the extent not otherwise included in the price actually paid or payable (e.g., royalties, assists, proceeds of subsequent resale that accrue to the seller). See 19 U.S.C. § 1401a(b)(1). When transaction value cannot be applied, then the appraised value is determined based on the alternative valuation methods in the order specified in 19 U.S.C. § 1401a(a): the transaction value of identical or similar merchandise, deductive value, computed value, and, if the preceding are not available, on the basis of a method derived from the prior methods reasonably adjusted to the extent necessary to arrive at a value (i.e., “fallback value”) . The valuation statute further enumerates certain prohibited bases of 3 

appraisement, including the selling price of merchandise produced in the United States, minimum values, and arbitrary or fictitious values. 19 U.S.C. § 1401a(f)(2). To use transaction value, there must be a bona fide sale for exportation to the United States. In VWP of America, Inc. v. United States, 175 F.3d 1327 (Fed. Cir. 1999), the Court of Appeals for the Federal Circuit found that the term “sold” for purposes of 19 U.S.C. § 1401a(b)(1) means a transfer of title from one party to another for consideration, (citing J.L. Wood v. United States, 62 C.C.P.A. 25, 33, C.A.D. 1139, 505 F.2d 1400, 1406 (1974)). In determining whether property or ownership has been transferred, CBP considers whether the potential buyer has assumed the risk of loss and acquired title to the imported merchandise. See Headquarters Ruling (“HQ”) 548239, dated June 5, 2003. Contra