HQ 0223791 - Proof of exportation documentation for purposes of same condition drawback for merchandise to be sold in duty-free shops on a cruise vessel; 19 U.S.C. 1313(j); 19 C.F.R. 101.1(K); 191 C.F.R. Subpart E; C.S.D. 84-6; HQ 222284 - United States International Trade Commision Rulings

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HQ 223791
April 15, 1992

DRA-2-02-CON-13-CO:R:C:E 223791 SR

CATEGORY: DRAWBACK

Mr. Gordon C. Anderson
Meyer Customs Brokers
8100 Mitchell Rd., Suite 200
Eden Prairie, MN 55344

RE: Proof of exportation documentation for purposes of same condition drawback for merchandise to be sold in duty-free shops on a cruise vessel; 19 U.S.C. 1313(j); 19 C.F.R. 101.1(K); 191 C.F.R. Subpart E; C.S.D. 84-6; HQ 222284

Dear Mr. Anderson:

This is in reference to your letter dated February 20, 1992, concerning proof of export documentation for merchandise to be sold in on cruise ships, for purposes of same condition drawback. Please note that a shop on a vessel is outside the scope of 19 U.S.C. 1555(b), and therefore, can not be considered to be a "duty-free" shop.

FACTS:

The importer is importing miniature replica cruise ships that are made in China. These replica souvenirs will be sold to Carnival Cruise Lines in Florida. Carnival Cruise Lines will sell the replica souvenirs in their duty-free shops on their cruise vessels.

ISSUE:

What documentation is required to show proof of exportation for merchandise that is to be sold in a shop aboard a cruise vessel?

LAW AND ANALYSIS:

In order to qualify for drawback, an exportation must occur. Exportation is defined in 19 C.F.R. 101.1(k) as follow:

A severance of goods from the mass of things belonging to this country with the intention of uniting them to the mass of things belonging to some foreign country. The shipment of merchandise abroad with the intention of returning it to the United States with a design to circumvent provisions of restriction or limitation in the tariff laws or to secure a benefit accruing to imported merchandise is not an
exportation. Merchandise of foreign origin returned from abroad under these circumstances is dutiable according to its nature, weight, and value at the time of its original arrival in this country.

Whether merchandise sold on a cruise ship is considered to be exported depends on the itinerary of the vessel. If the vessel sails out and returns to the United States without stopping at any foreign ports it is called a "cruise to nowhere." Because a cruise to nowhere does not stop at any foreign ports, merchandise sold on the ship is not considered to be exported; therefore, it is not eligible to receive drawback.

If a cruise vessel makes stops at foreign ports it is still not likely that the items in the vessel's store are being exported from the country with the intent of uniting to the mass of things belonging to a foreign country. Souvenirs sold on cruise ships would most likely be bought by the passengers with the intent of bringing them back into the United States. However, the merchandise sold on board a cruise vessel may be considered exported if proof of exportation can be shown. Evidence of exportation for purposes of drawback is provided for in Subpart E of part 191 of the Customs Regulations (enclosed). However, because there is doubt that these goods are actually to be exported, the port may require foreign landing certificates as alternative proof that the goods were exported.

Enclosed are a copy of C.S.D. 84-6 and an information letter HQ 222284, that further discuss our position on this issue.

HOLD:

In order to receive drawback you must show that the souvenir replicas are intended to be exported. If you feel you this requirement is met, the documentation discussed above is necessary to show proof of exportation.

Sincerely,

William G. Rosoff

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