HQ 0224391 - Manufacturing drawback; 19 U.S.C. 1313(a) - United States International Trade Commision Rulings

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HQ 224391

April 6, 1993

DRA-2-01-CO:R:C:E 224391 CB

CATEGORY: DRAWBACK

Mr. Michael R. Smiszek
International Licensing & Compliance
General Electric Aircraft Engines
1000 Western Avenue, MD-37454
Lynn, MA 01910-0001

RE: Manufacturing drawback; 19 U.S.C. 1313(a)

Dear Mr. Smiszek:

This is in response to your letter of January 7, 1993, wherein you requested a ruling on whether certain operations constitute a manufacture for drawback purposes.

FACTS:

Your company imports an Accessory Gearbox (AGB) which is a fixed-ratio speed changer manufactured in Japan. The function of the AGB is to provide mechanical power to the various integral sub-units necessary for the proper operation of a marine and industrial gas turbine engine, such as the fuel and lubrication pumps, and as a means of transmitting torque to the engine during start-up. The AGB must be physically attached to the exterior of the main body of the gas generator in order for the AGB to perform its required functions, but this attachment can only be accomplished if the AGB is configured to be compatible with the gas generator. Compatibility is achieved by installing onto the AGB various connecting parts such as nipples, tubes, elbows, nuts, packings, washers, brackets, chip detectors, plug and bleeders, and oil strainers. The AGB assembly is then installed on the engine. Both the AGB and the engine are tested prior to exportation and then the assembled engine and gearbox are exported to Canada.

ISSUE:

Whether the above described process constitutes a manufacture for drawback purposes?

LAW AND ANALYSIS:

Section 313(a) of the Tariff Act of 1930, as amended (19 U.S.C. 1313(a)), provides that upon the exportation of articles manufactured or produced in the United States with the use of
imported merchandise, ninety-nine percent of the duties paid upon the merchandise so used shall be refunded as drawback.

Generally, a manufacture or production changes or transforms an article into a new and different article having a distinctive character or use. See Anheuser-Busch v. U.S., 207 U.S. 556. The Customs Service has held that assembly is a manufacture for drawback purposes in some situations, depending on the facts and circumstances involved. In C.S.D. 80-58, Customs ruled that an assembly satisfies the requirement that a manufactured article have a different character or use if an imported article which is not suited for commercial use is further manufactured into one that is suited for commercial use. See also C.S.D. 79-39 (watch parts assembled into a watch constitute a manufacture).

On the facts presented, the marine and industrial turbine gas engine is not suited to its commercial use without the AGB. The AGB must be configured before it can be attached to the engine. The configuration requires the installation of numerous parts and components (as listed above). After these parts are installed, the AGB is physically attached to the main body of the engine in order to be suited for commercial use. The finished product performs a function which is essentially different as that performed by the parts individually. Based on the available information, the described process constitutes a manufacture for drawback purposes.

HOLDING:

The installation of numerous connecting parts and components onto an accessory gearbox which is then installed in an engine constitutes a "manufacture or production" for manufacturing drawback purposes under 19 U.S.C. 1313(a).

Sincerely,

William G. Rosoff, Chief

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