HQ 0223846 - Internal advice request; Same condition drawback; 19 U.S.C. 1313(j)(1); Vessel Equipment; 19 U.S.C. 1446; 19 U.S.C. 1309; Exporter's summary procedures - United States International Trade Commision Rulings

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HQ 223846
May 23, 1993

DRA-2-02/CON-13-02 CO:R:C:E 223846 DH

CATEGORY: DRAWBACK CONDITIONALLY FREE

Regional Commissioner of Customs
Attn: Chief, Region Drawback Branch
610 Canal Street
Chicago, Illinois 60607

RE: Internal advice request; Same condition drawback; 19 U.S.C. 1313(j)(1); Vessel Equipment; 19 U.S.C. 1446; 19 U.S.C. 1309; Exporter's summary procedures

Dear Sir:

This is in reference to your memorandum, dated March 24, 1992, inquiring whether chinaware imported into the United States, by Northwest Airlines, is considered a vessel supply; whether Northwest Airlines is entitled to receive drawback under 19 U.S.C. 1313(j); and whether exporter's summary procedures are applicable under the facts.

FACTS:

August 21, 1990 - Northwest Airlines submitted a request to use exporter's summary procedure (19 CFR 191.53) to expedite its claims for same condition drawback for chinaware and other supplies sent to foreign airport locations for use in those locations.

October 3, 1990 - Request was approved, retroactive to September 7, 1990.

June 7, 1991 - Northwest Airlines submitted a request to amend the exporter's summary procedure to include chinaware used on-board its international flights as in-flight equipment. Additionally, Northwest Airlines requested permission to use a caterer's list of specific items boarded as the cargo manifest.

The chinaware, covered by this amendment, is used on its international flight route between Narita, Japan, Minneapolis, Minnesota, and London, England. In each of these areas, the china is removed from the aircraft, washed and refilled with food for the subsequent flight. The items are in continuous use, only on this international route, through the U.S.

June 14, 1991 - Request to amend the exporter's summary procedure was denied because the information on the cargo manifest was inaccurate (flight destination was not shown) to serve in place of an airway bill.

January 24, 1992 - Additional consideration is requested, by Northwest Airlines, to be given to the amendment of the exporter's summary procedure. Northwest Airlines requests permission to substitute the in-flight service report (which will supply the information Customs requested in its denial) in place of the cargo manifest.

March 24, 1992 - Your office requests internal advice regarding the following issues.

ISSUES:

Does the chinaware qualify for duty-free entry as equipment of the aircraft?

Does the chinaware qualify for same condition drawback?

Should the exporter's summary procedure be approved?

LAW AND ANALYSIS:

Does the chinaware qualify for duty-free entry as equipment of the aircraft?

There is no provision for the duty-free importation of a shipment of chinaware for subsequent use as equipment aboard a United States civil aircraft in international traffic. The relevant statutory provisions include 19 U.S.C. 1446 and 19 U.S.C. 1309.

Title 19, United States Code, section 1446, made applicable to aircraft by section 122.2 of the Customs Regulations (19 CFR 122.2), provides, in pertinent part, that "equipment 'landed' and 'delivered' from a vessel shall be considered and treated as imported merchandise: provided, ... the legitimate equipment of vessels belonging to regular lines plying between foreign ports and the United States, which are delayed in port for any cause, may be transferred under a permit by the appropriate customs officer and under customs supervision from the vessel so delayed to another vessel of the same line and owner, and engaged in the foreign trade, without the payment of duty thereon."

Chinaware, or crockery, such as plates, cups and saucers are considered equipment under 19 U.S.C. 1446. See, H.E. Warner, Trustee, American Mail Line, Ltd. v. United States, 28 CCPA 143 (1940). Chinaware temporarily removed from an aircraft under Customs supervision for cleaning purposes and then returned to the same aircraft would not be considered to have been "delivered" for purposes of 19 U.S.C. 1446. If chinaware is removed from an aircraft in the United States for cleaning and resupplying the galley of another aircraft, the chinaware will be considered landed and delivered for purposes of 19 U.S.C. 1446 and treated as imported merchandise subject to applicable duty. HR 106221, dated June 14, 1983.

The proviso, to section 1446, is inapplicable to the situation at hand. The aircraft will not be delayed in Minneapolis, as required by the proviso, but will be on a scheduled stop. Furthermore, the proviso contemplates direct transshipment from one aircraft to another without intermediate processing as is involved in the present matter.

Section 309 of the Tariff Act of 1930, as amended, 19 U.S.C. 1309, provides in pertinent part that articles of foreign origin may be withdrawn, from any customs bonded warehouse or from continuous customs custody elsewhere than in a bonded warehouse, duty-free for supplies (not including equipment) of aircraft registered in the United States and engaged in foreign trade or trade between the United States and any of its possessions. (emphasis added)

The Customs Service has consistently regarded chinaware as equipment for purposes of section 309. See T.D. 49815(4). Also see, C.I.E. 1006/61, wherein chinaware imported to replace pieces of china broken, while in use on an aircraft, was classifiable as equipment of the aircraft, rather than as supplies, preventing the application of duty-free status under 19 U.S.C. 1309.

The chinaware, under the circumstances, will be imported into the United States on one aircraft and leave the United States on another aircraft. Therefore, in accordance with HR 106221 and H.E. Warner, supra, the chinaware is considered "equipment" which is imported and dutiable under 19 U.S.C. 1446. The chinaware is, also, precluded from withdrawal from the aircraft as duty-free, since it retains the status of "equipment" under 19 U.S.C. 1309.

Does the chinaware qualify for same condition drawback?

Section 313(j) of the Tariff Act of 1930, as amended (19 U.S.C. 1313(j)(1)), provides for a refund of duties on imported merchandise exported in the same condition as when imported, or destroyed under Customs' supervision, and not used within the United States before such exportation or destruction.

It is well established that drawback laws confer a privilege, not a right. Swan & Finch Company v. United States, 190 U.S. 143, 23 Sup. Ct. 702 (1903). When merchandise is imported and a drawback statute may potentially be applicable, an accruing or inchoate right may be said to arise. However, the right to recover drawback ripens only when all provisions of the statute and applicable regulations prescribed under its authority have been met. Romar Trading Co., Inc. v. United States, 27 Cust. Ct. 34 (1951); General Motors Corporation v. United States, 32 Cust. Ct. 94 (1954). Drawback claimants must strictly adhere to the requirements set forth in the statutes and applicable regulations. United States v. W. C. Hardesty Co, Inc., 36 CCPA 47, C.A.D. 396 (1949); Spencer, Kellogg & Sons (Inc.) v. United States, 13 CCPA 612 (1926).

"Exportation" is defined in 19 CFR 101(k) as "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..." Swan & Finch Co. v. United States, supra. In this case, Northwest Airlines has no intention of uniting the chinaware used on the aircraft for food service for its passengers, with the mass of things used in Japan or England. Its sole intention, in removing the chinaware temporarily from the aircraft, in the foreign country, was to service it, and immediately return it to an aircraft, for the benefit of its passengers.

This conclusion is supported by C.I.E. 1006/61, which states: "The lading of imported articles on an aircraft for use thereon during the outward flight does not constitute an exportation within the general meaning of that term, under the Customs laws, even though the articles may be unladen at the foreign destination for cleaning or other purposes."

Finally, the chinaware has not been exported, for drawback purposes, within the provisions of 19 U.S.C. 1309(b), since the chinaware does not fall within the definition of "supplies."

Should the exporter's summary procedure be approved?

Since there is no exportation, the use of the exporter's summary procedure does not apply to the stated facts.

HOLDING:

Foreign chinaware used as equipment on an aircraft which is temporarily removed from the aircraft for cleaning and refilling purposes and subsequently returned to another aircraft is considered imported and dutiable under the provisions of 19 U.S.C. 1446 and 19 U.S.C. 1309.

The chinaware, in question, does not qualify for same condition drawback, under 19 U.S.C. 1313(j), since there is no exportation.

Finally, since no "exportation" occurs, under these facts, the exporter's summary procedure is inapplicable.

Sincerely,

John Durant, Director

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