DRA-2-01-CO:R:C:E 224824 AJS
Ms. Barbara Seward
Fritz Companies, Inc.
40 Exchange Place, 12th Floor
New York, NY 10005
RE: Complementary records; 19 CFR 191.22(d); Bureau Circular
Letter 014; 15 Customs Bulletin 720; T.D. 81-300; T.D. 81-181;
bankrupt agent.
Dear Ms. Seward:
This is in reply to your request of July 1, 1993, that Sony
Professional Products Company (SPPC) be recognized as a
complimentary record-keeper for the Dorez Corporation pursuant to
19 CFR 191.22.
FACTS:
SPPC is a drawback claimant under T.D. 81-300. It is
claimed that certain agents perform a portion of their
manufacturing process. Dorez submitted a contract as an agent
for SPPC under T.D. 81-181 to the Regional Commissioner of
Customs in Miami on August 30, 1990. Your submission of April
27, 1993, states that Dorez has declared bankruptcy. You claim
that the drawback records of Dorez are not readily available and
SPPC desires to provide complimentary records for those required
to be produced by Dorez as its agent.
ISSUE:
Whether section 191.22(d), Customs Regulations, enables a
manufacturer to use its own manufacturing records in lieu of the
production records of the manufacturer's agent.
Whether the manufacturer's own records are sufficient to
establish that the exported articles were made with the use of
duty-paid, imported merchandise.
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LAW AND ANALYSIS:
19 CFR 191.22(d), Customs Regulations, has remained
substantially unchanged since its promulgation as section 22.4(e)
of the Customs Regulations of 1943. The purpose of the section
was to permit the person, other than a manufacturer, for whom the
manufacturer was making the articles to keep drawback records.
See Bureau Circular Letter 014 of June 21, 1943. The section
requires the abstracts of those records to be filed with the
drawback claim.
In this situation, SPPC chose to operate under the general
component parts contract published as T.D. 81-300. In this case,
SPPC is the manufacturer. The agent employed by SPPC is not the
manufacturer. Since operation under a general contract does not
require any approval by the Customs Service, SPPC is bound by the
recordkeeping agreements as set forth in T.D. 81-300. Under that
contract SPPC agreed to keep records to establish:
(1) The identity and specifications of the merchandise we
designate;
(2) The quantity of merchandise of the same kind and quality
as the designated merchandise we used to produce the exported
articles;
(3) That, within 3 years after receiving it at our factory,
we used the designated merchandise to produce articles. During
the same three-year period, we produced the exported articles.
See 15 Customs Bulletin 720, 721 (1981).
Under the circumstances, since SPPC asserts that it is the
manufacturer for drawback purposes, it cannot be a person for
whom the manufacturer was making the articles. The agent of
SPPC, if there is a bona fide agency relationship, is viewed for
the purposes of 19 U.S.C. 1313(b) as being no more than an
additional factory of SPPC. Consequently, section 191.22(d),
Customs Regulations, simply does not apply to the presented
facts.
The agent of SPPC, Dorez, filed the general agent's contract
set forth in T.D. 81-181 with Customs. Again, as in the case of
T.D. 81-300, no approval from Customs was needed or given in
order for Dorez to operate. Dorez is alleged to be bankrupt.
However, no evidence was presented to show that
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the records Dorez agreed to keep with respect to its activities
as agent are unavailable for Customs verification. Consequently,
even if Dorez was the manufacturer of the exported articles for
the purpose of compliance with 19 U.S.C. 1313(b), the bankruptcy
of Dorez alone would not provide satisfactory evidence under
section 191.22(d), Customs Regulations. In any event SPPC
asserts that it, rather than Dorez, is the manufacturer for the
purpose of 19 U.S.C. 1313(b) and, therefore, SPPC is outside the
scope of section 191.22(d), Customs Regulations. Moreover, under
T.D. 81-181, Dorez, the agent of SPPC, agreed to keep records to
show the identity and specifications of the merchandise it
received from SPPC. It agreed to keep records as to the date it
received the merchandise from SPPC, the date it processed that
merchandise into articles, and the date it returned those
articles to SPPC.
Assuming that Dorez complied with its agreement, the
subsequent bankruptcy of Dorez would not necessarily result in a
loss of those records. In any event no evidence was presented to
show that those records are unavailable.
The next consideration is whether the records kept by SPPC
are sufficient to show compliance with 19 U.S.C. 1313(b) by
SPPC.
The available evidence, which is stated by SPPC to be an
accurate representation of the work performed by Dorez for SPPC,
shows that Dorez received components in kit form from SPPC and
assembled those kits into a subassembly. Although the invoices
from Dorez were set in terms of a sold price, SPPC furnished cost
data which tends to show that the money received by Dorez was
payment for services rather than a sales price. We assume the
accuracy of that information for the purpose of this ruling. We
also assume that evidence is representative of the SPPC-Dorez
relationship for the purpose of this ruling.
The evidence shows the identity of the kit imported by SPPC
from Japan; it shows receipt of components from SPPC, subsequent
to importation, by Dorez; it shows that the items received by
Dorez were subsequently returned by Dorez to SPPC as an assembly
and that SPPC used that assembly to make an article that was
exported to Canada. Consequently, those records if verified as
accurate, would be sufficient to show compliance by SPPC.
This ruling does not preclude Customs access to the records
of Dorez for the purpose of verification of SPPC's records.
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HOLDING:
Section 191.22(d), Customs Regulations, does not enable a
manufacturer to use its own manufacturing records in lieu of the
production records of the manufacturer's agent. However, the
manufacturer's own records may be sufficient to establish that
the exported articles were made with the use of duty-paid,
imported merchandise.
Sincerely,
John Durant, Director