Overview
FAR 25.903 identifies specific supplies that are eligible for exemptions from customs duties and internal revenue taxes when imported under a government contract. It outlines the administrative certification requirements and statutory authorities necessary to claim these exemptions through U.S. Customs.
Key Rules
- Harmonized Tariff Schedule (HTS) Alignment: Exemptions are primarily governed by Subchapters VIII and X of Chapter 98 of the HTS (19 U.S.C. 1202).
- Agency Certification: For specific HTS-listed supplies, the contracting agency is required to certify to the Commissioner of Customs that the items are being used for the specific purposes stated in the schedule.
- Vessel and Aircraft Supplies: Supplies (excluding equipment) intended for government-operated vessels or aircraft are exempt from duties and taxes under 19 U.S.C. 1309 and 1317.
- Withdrawal Locations: Eligible vessel/aircraft supplies may be withdrawn duty-free from customs-bonded warehouses, continuous customs custody, or foreign-trade zones.
- Documentation: The contracting activity must explicitly cite the applicable legal authority on the relevant customs forms during the purchase process.
Practical Implications
- Contracting officers must coordinate closely with U.S. Customs and provide formal certifications to ensure the government benefits from cost savings associated with duty-free importations.
- Contractors supporting maritime or aviation operations should ensure that duty-free withdrawal authorities are correctly cited on customs documentation to prevent unnecessary tax assessments on eligible supplies.