The U.S. Air Force has developed a new, secret Stealth aircraft, XP-070. It is being sent to an undisclosed location in Germany for extensive testing, evaluation, and modification. Upon arrival in Germany, the new Stealth aircraft engine did not fire up and the foreign agency refused to take possession. The carrier shipped it back to the United States. to the U.S. Air Force. Entry was made in the port of Buffalo, and the U.S. Air Force filed all the necessary paperwork to clear the shipment. Which of the following is a true statement?
A. The U.S. Air Force should pay duty on the Stealth aircraft because the merchandise is not a civil aircraft including parts, components, and subassemblies.
B. The U.S. Air Force should pay duty on XP-070 because it is subject to duty, taxes, and fees upon its arrival in the U.S.
C. The U.S. Air Force should not pay duty because even though the Stealth XP-070 is an aircraft, the Air Force is part of the U.S Government and does not pay duty to itself.
D. The U.S. Air Force should not pay duty because the Stealth XP-070 is exempt from duty.
E. The U.S. Air Force should pay duty, taxes and fees on Stealth XP-070, and subsequently file a protest because the merchandise is not subject to any exemptions in the Harmonized Tariff Schedule of the United States.
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The Answer is: D
Citation: HTSUS General Note 6(b)(i)(A)
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