DRA-4-CO:R:C:E 221415 GG
Alfred J. D'Amico
Vice President
Duty Drawback Service, Inc.
42925 Nine Mile Road
P.O. Box 357
Novi, Michigan 48050
RE: Eligibility of mold and plastic blow molding machine for
same condition drawback when imported assembled and exported
separately
Dear Mr. D'Amico:
This is in response to your letter dated May 1, 1989, in
which you ask whether same condition drawback can be claimed
against the separate exportations of a plastic blow molding
machine and mold, which were imported with the mold installed in
the machine but were entered under different tariff item numbers.
FACTS:
A U.S. producer of plastic blow molding machines decided to
exhibit and demonstrate a machine in the United States. In order
to do so, it requested that its West German parent company send
it a prototype machine. The parent company had the prototype
machine in stock, but had to borrow the required mold from an
overseas customer. It then installed the borrowed mold in the
machine and shipped it to Chicago for the exhibition. Upon entry
into the United States, the mold, although installed in the
machine, was entered under a separate Tariff Schedules of the
United States (TSUS) item number. Following the exhibit, the
machine - with mold installed - was shipped to Michigan and
placed in the showroom of the U.S. company for the purpose of
further demonstration. Several months later, the overseas owner
of the mold requested its return; the mold was removed from the
machine and exported separately. Without the mold, the machine's
usefulness as a demonstration model was limited and it, too, was
subsequently exported.
ISSUE:
Whether a mold and and plastic blow molding machine, which
were imported assembled but under different TSUS item numbers,
and were then disassembled and exported separately, are eligible
for same condition drawback under 19 U.S.C. 1313(j)?
LAW AND ANALYSIS:
19 U.S.C. 1313(j) permits the refund of duties paid on
imported merchandise which is exported in the same condition
within 3 years of importation and has not been used while in the
United States. Certain incidental operations not amounting to a
use may be performed on the imported merchandise without altering
its eligibility for drawback.
Customs has previously held that a part removed from a
machine is no longer in the same condition as when imported. See
Headquarters letter ruling DRA-1-09:CO:R:CD:D 214820 B, August 4,
1982. That ruling stated in pertinent part that "[a] part
assembled into a machine cannot be said to be in the same
condition as imported. Likewise, a part removed from a machine
cannot be said to be in the same condition as imported . . . That
which was imported is not that which is to be exported, and the
law requires that the article imported be the article exported."
The removal of the mold from the blow molding machine resulted in
a change in its condition; consequently, it would be erroneous
for the exporter-claimant to certify on Customs Form 7539 that
the mold was in the same condition as when imported, which is a
requirement of 19 CFR 141(b), when, as here, the parts were not
reassembled prior to exportation.
Similarly, the exportation of the machine will not give rise
to a valid drawback claim. The machine when imported was capable
of performing its intended function, i.e., producing articles of
plastic. This capablitily ceased to exist when the mold, an
integral part, was removed. The exported machine was not in the
same condition as when originally imported.
Entering each article under a different tariff item number
is a Customs requirement for classification purposes, but it does
not alter the fact that the condition of both articles is changed
for drawback purposes after undergoing a disassembly operation.
Customs Service Decision 82-135 provides further guidance in
the resolution of this matter. In that decision, Customs held
that articles imported assembled and then disassembled as an
incidence to an allowable operation under the same condition
drawback law, must be reassembled prior to exportation to be
eligible for the benefits of that law. When applied to this
case, drawback would have been permitted if the plastic blow
molding machine and mold had been imported intact, then were
dissassembled for testing, cleaning, inspecting or other
authorized purposes, and finally were reassembled prior to
exportation. Here, however, the exporter-claimant is not
entitled to drawback, because the mold was not removed as an
incidence to an allowable operation (rather it was removed to
accomodate the owner's request for its return) and there was no
reassembly before exportation. To reiterate, neither the machine
nor the mold were in the same condition when exported, therefore
the exporter-claimant is not entitled to a refund of duties.
HOLDING:
The removal, after importation, of a mold from a plastic
blow molding machine results in a change in condition of both the
mold and the machine, and their subsequent separate exportations
render both ineligible for drawback under 19 U.S.C. 1313(j).
Sincerely,
John Durant
Director, Commercial