HQ 0221415 - Eligibility of mold and plastic blow molding machine for same condition drawback when imported assembled and exported separately - United States International Trade Commision Rulings

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HQ 221415

February 23, 1990

DRA-4-CO:R:C:E 221415 GG

CATEGORY: DRAWBACK

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

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