OT: RR:CTF:EF H153066 TT
Carmichael International Service
533 Glendale Blvd.
Los Angeles, CA 90026-5097
Dear Mr. Meylor:
This is in response to your ruling request dated, March 2, 2011, on behalf of Worldwise, Inc. (“Worldwise”) regarding whether its proposed procedure constitutes a “use” as 19 U.S.C. § 1313(j) unused merchandise drawback. Please find our office’s determination below.
Worldwise creates various products for pets and pet owners. At issue in this ruling is whether filling an empty pillow shell with polyester fiber and then zipping it closed is a “use” within the meaning of 19 U.S.C. § 1313(j), unused merchandise drawback. Worldwise proposes to import the empty pillow shells, which are later processed and sold as pillow-style pet bed. When imported, the shell is made of two rectangular pieces of fabric that are sewn together on three of the four sides, with an open zipper on the fourth side. The top piece is composed of 100% polyester, while the bottom piece is 100% polypropylene. In its flat empty condition, the merchandise is imported under subheading 6307.90.9889, Harmonized Tariff Schedule of the United States (“HTSUS”). Worldwise intends to fill this product with polyester fiber and then zip it closed before it is exported under the same HTSUS classification. In its request, Worldwise included pictures of its product in its empty flat state, as well as its condition when filled and zipped with polyester. Worldwise requested this ruling to determine whether this operation would permit the merchandise to qualify as unused merchandise for drawback purposes.
Whether filling and zipping closed a pillow casing is a prohibited use for unused merchandise drawback per 19 U.S.C. § 1313(j).
LAW AND ANALYSIS:
Worldwise asserts that stuffing an empty pillow shell is not a “use” of the merchandise. However, this processing is considered a manufacture because the stuffed and zipped pillow is fit for a particular use. See 19 C.F.R. § 191.2(q). The stuffing and zipping of the pillow shell make the shell into a pet bed and thus, fit for a particular use.
Under 19 U.S.C. § 1313(j)(1), drawback is authorized if imported merchandise on which was paid any duty, tax, or fee imposed under federal law because of its importation, is within three years of the date of importation, exported or destroyed under CBP supervision and was not used in the United States before such exportation or destruction. The statute, in 19 U.S.C. § 1313(j)(3), explains that:
The performing of any operation or combination of operations (including, but not limited to, testing, cleaning, repacking, inspecting, sorting, refurbishing, freezing, blending, repairing, reworking, cutting, slitting, adjusting, replacing components, relabeling, disassembling, and unpacking), not amounting to manufacture or production for drawback purposes under the preceding provisions of this section on-- (A) the imported merchandise itself in cases to which
paragraph (1) applies, or (B) the commercially interchangeable merchandise in cases to
which paragraph (2) applies,
shall not be treated as a use of that merchandise for purposes of applying
paragraph (1)(B) or (2)(C).
(emphasis added). In order for Worldwise to claim drawback under 19 U.S.C. § 1313(j), the processes it performs on the merchandise while in the United States cannot be considered a “use” within the meaning of the statute. Certain processes are permitted, but they cannot rise to the level of a manufacture. Therefore, an operation or series of operations that is deemed to be a ‘manufacture or production’ would disqualify the pet beds from this type of drawback.
CBP regulation, 19 C.F.R. § 191.2(q) defines “manufacture or production” within the drawback context as follows:
(q) Manufacture or production. Manufacture or production means: . . . (2) A process, including, but not limited to, an assembly, by which merchandise is made fit for a particular use even though it does not meet the requirements of paragraph (q)(1) of this section.
C.S.D. 82-67 (1981) adopts the “fit for a particular use” standard established by the former Court of Customs and Patent Appeals in United States v. International Paint Co., Inc., 35 C.C.P.A. 87, 94 (1948). C.S.D. 82-67 states that the decision in International Paint:
appears to support Customs more recent interpretation of “manufacture” as a process brought about by significant investment of capital and labor to produce articles or commodities which, despite the fact they are in some cases much the same as their conditions prior to processing, have been made suitable for a particular intended use. In determining what constitutes a manufacture, we have held in our administrative rulings that if an operation involves special treatment of merchandise to obtain certain properties required for a specific use by the entity performing the operation or his customers and the operation involves significant capital and labor expenditure, then that operation is a manufacture or production.
Therefore, in determining whether there is a manufacture it is important to examine whether the merchandise has been made fit for a particular use.
In this case, the operations listed by Worldwise would constitute a manufacture or production within the meaning in 19 C.F.R. § 191.2(q). Upon importation, the merchandise is a piece of fabric with an opening, essentially an open pillow shell, which is unsuitable for use as a pet bed as there is no padding or support. After processing, the merchandise is filled with polyester fiber and zipped closed to become a pillow and to function as a pet bed. The zipped polyester-filled merchandise creates padding and support ideal for the rest and sleep of pets. Thus, it is made fit for a particular use within the meaning of 19 C.F.R. § 191.2(q).
Moreover, International Paint explained that, “if an operation performs the function of fitting a substance for a use for which otherwise it is wholly unfitted, it falls within the letter and the spirit of the term ‘manufactured. . . .’” 35 C.C.P.A. at 94. In this case, upon importation the merchandise is empty and flat with no support or cushioning to serve as a pillow. The imported pillow shell is wholly unfit for use as a pet bed. Worldwise’s proposed operation of stuffing the merchandise with polyester fiber and zipping it closed “performs the function of fitting” the merchandise for a use that was originally “wholly unfit.” Id. It is the stuffing and closing of the pillow shell that makes it fit for use as a pet bed. Thus, Worldwise’s proposed operations are a manufacture or production and the exported merchandise is not “unused within the meaning of 19 U.S.C. § 1313(j).
In support of its belief that the proposed operations are not a manufacture, Worldwise explains that there would be no change in the merchandise’s classification under the Harmonized Tariff Schedule of the United States (“HTSUS”). However, this fact alone is not dispositive of whether the operations are a manufacture as CBP regulations make no such requirement, nor do they mention classification in defining “manufacture.” See 19 C.F.R. § 191.2(q).
Consequently, the stuffing and zipping of the pillow shell constitute a manufacture because they make the pillow shell fit for particular use as a pet bed. Processes which amount to a manufacture are a use of the goods which is precluded by 19 U.S.C. § 1313(j), unused merchandise drawback. Therefore, the exported pet beds are not eligible for drawback per 19 U.S.C. § 1313(j). We note that the exported article may qualify for drawback under 19 U.S.C. § 1313(b), manufacturing drawback.
For the reasons discussed above, Worldwise may not claim drawback under 19 U.S.C. § 1313(j) for its pet beds, because the processing performed on the imported merchandise constitutes a “use.”
Myles B. Harmon,
Commercial and Trade Facilitation Division