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HQ 223458


March 31, 1992

DRA-2-02 CO:R:C:E 223458 TLS

CATEGORY: ENTRY

Ms. Nancy Woo
Citizen Watch Company of America
8506 Osage Avenue
Los Angeles, California 90045

RE: Ruling request concerning status under drawback laws of merchandise shipped from the 50 states of the United States to the U.S. Virgin Islands; 19 CFR 191.8; 19 CFR 191.13; C.S.D 81- 225.

Dear Ms. Woo:

The above-referenced ruling request has been received by this office for consideration. We have considered the points raised and our decision follows.

FACTS:

You state that you need information on whether drawback can be obtained on merchandise shipped from the 50 states to the U.S. Virgin Islands. Apparently there has been some conflict about this issue.

ISSUE:

Whether a shipment of merchandise from this country to the U.S. Virgin Islands is considered an exportation for drawback purposes.

LAW AND ANALYSIS:

The subject issue has been addressed before in court cases. It has been held that "exportation", as the term is used in Customs laws, means the transportation of goods from this country to a foreign country. Rothschild & Co. v. United States, 16 Ct. Cust. App. 442, 446, T.D. 43190 (1929). The court went on to find that U.S. territories such as the Virgin Islands, Guam, etc., are not foreign countries within the meaning of that definition. Id. That ruling was followed in a more recent Customs Court case on the same issue. In that case, it was held that while U.S. territories might sometimes be recognized as distinct from the states under certain Customs laws (tariff duties, for instance), shipments to those territories nonetheless do not constitute exportation to a foreign country for drawback purposes. Mitsubishi International Corp. v. United States, 55 Cust. Ct. 319,324, C.D. 2597 (1965).

The law has become more defined under Customs regulations recently. Under 19 CFR 191.8, the following is provided for:

(c) Merchandise in continuous Customs custody. Drawback shall be allowed on imported merchandise which is exported, or shipped from continuous Customs custody to the Virgin Islands, American Samoa, Wake Island, Midway Islands, Kingman Reef, Johnston Island, or Guam, only if exported or shipped within 5 years after the date of importation. (Emphasis added.)

Under 19 CFR 191.13, the following is further provided for:

Guantanamo Bay, insular possessions, trust territories. Guantanamo Bay Naval Station shall be considered foreign territory for drawback purposes. However, under 19 U.S.C. 1313, there is no authority of law for the allowance of drawback of Customs duty on articles manufactured or produced in the United States and shipped to Puerto Rico, the Virgin Islands, American Samoa, Wake Island, Midway Islands, Kingman Reef, Guam, Canton Island, Enderbury Island, Johnston Island, or Palmyra Island. (Emphasis added.)

Reading these regulations literally, drawback may be obtained on merchandise shipped from this country to the Virgin Islands only if it had already been previously imported to this country and remained in continuous Customs custody. If the goods are manufactured in this country, then the shipment is not an exportation to the Virgin Islands for the purposes of drawback. The Virgin Islands is an insular possession of the United States and as such does not retain the status of foreign country within the meaning of our tariff acts. See Customs ruling HQ 221990 (January 8, 1990), citing Mitsubishi.

We also refer to a Customs Service decision on a similar set of facts. Customs ruled in a 1981 case that goods shipped to the Virgin Islands from this country are eligible for same condition drawback if they were originally shipped from the Virgin Islands. C.S.D. 81-225 (June 4, 1981); Customs ruling HQ 213073. Thus, if the goods in this case are shipped from the U.S. Virgin Islands to this country and then back to the Virgin Islands, then the exporter may successfully claim drawback on the goods. Therefore, drawback may be obtained on duty-paid imported merchandise shipped to the Virgin Islands only if it remains in continuous Customs custody and it is shipped within five years of the date of importation, or, alternatively, when the goods were originally shipped from the Virgin Islands to this country and are shipped back to the Virgin Islands. Only under these circumstances may drawback be obtained on shipments to the Virgin Islands from this country.

HOLDING:

Drawback is eligible on duty-paid imported merchandise shipped to the Virgin Islands only if it remains in continuous Customs custody and it is shipped within five years of the date of importation, pursuant to 19 CFR 191.8(c), or if the merchandise was originally shipped from the Virgin Islands to this country and subsequently shipped back to the Virgin Islands, pursuant to C.S.D. 81-225. Under no other circumstances is drawback allowed on shipments to the Virgin Islands from this country.

Sincerely,

John Durant, Director

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