HQ 0224588 - Sample handler unit; slide processor unit; blood analyzer; 19 U.S.C. 1313(a); Section 632(a)(1), NAFTA Implementation Act; C.S.D. 79-40; "manufacture or production". - United States International Trade Commision Rulings

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HQ 224588

February 7, 1994

DRA-2-01:CO:R:C:E 224588 AJS

CATEGORY: DRAWBACK

Gail T. Cumins, Esq.
Sharretts, Paley, Carter & Blauvelt
67 Broad Street
New York, NY 10004

RE: Sample handler unit; slide processor unit; blood analyzer; 19 U.S.C. 1313(a); Section 632(a)(1), NAFTA Implementation Act; C.S.D. 79-40; "manufacture or production".

Dear Ms. Cumins:

This is in reply to your request of March 25, 1993, on behalf of your client the Eastman Kodak Company, concerning a sample handler unit and the applicability of drawback.

FACTS:

The subject sample handler unit is imported from Germany. It is designed to receive and deliver to an exact location samples of a patient's blood and/or other body fluids. After importation into the United States, the sample handler unit is connected to the slide processor unit in an assembly operation. When the sample handler is precisely aligned with the slide processor, a metering tube from the slide processor is lowered into the blood or other fluid and draws a preset precise quantity of fluid from the sample container located in the sample handler. The intelligence (software) for the blood analyzer is located in the slide processor, while the power source is located in the sample handler. The blood analyzer is designed to analyze, through a unique and proprietary dry chemistry method, precise quantities of blood and other fluids that must be delivered to the analysis slides in exact quantities. The metering tube that moves from the slide processor to the sample handler is very carefully programmed to move to the precise
location where the sample is positioned and to draw an exact quantity of fluid, and then deliver that quantity to the appropriate test slide.

It is claimed that the sample handler unit is neither marketed nor sold separately from the blood analyzer and has no use other than as a component of the analyzer. The slide processor is also of no commercial value by itself. Before assembly, neither unit functions separately. After assembly, each unit functions together to analyze blood or other fluids.

ISSUE:

Whether the subject assembly operation constitutes a "manufacture or production" within the meaning of 19 U.S.C. 1313(a).

LAW AND ANALYSIS:

19 U.S.C. 1313(a), as amended by section 632(a)(1) of the North American Free Trade Agreement (NAFTA) Implementa- tion Act of 1993, provides that "[u]pon the exportation . . . of articles manufactured or produced in the United States with the use of imported merchandise, provided that those articles have not been used prior to such exportation . . ., the full amount of duties paid upon the merchandise so used shall be refunded as drawback, less 1 per centum of such duties . . ." Your request claims that the subject sample handling unit is eligible for manufacturing drawback under this provision.

In C.S.D. 79-40, Customs stated that "[m]anufacture or production is defined for drawback as the process or processes which, through labor and manipulation, change or transform an article or articles into a new and different article having a distinctive name, character or use." See, for example, Anheuser- Busch Brewing Association v. United States, 207 U.S. 556 (1907). In this case, an imported sample handler unit is assembled with a slide processor unit to produce a blood analyzer. This analyzer is a new and different article. Before assembly, each unit cannot function separately and is not sold separately. After assembly, the units are sold together as a blood analyzer and function together to perform the blood analyzing function. Therefore, a manufacture or production has taken place. Consequently, the subject sample handler unit is eligible for drawback pursuant to section 1313(a).

HOLDING:

The subject handling unit is eligible for drawback within 19 U.S.C. 1313(a). The described assembly operation is a manufacture or production for drawback purposes.

Sincerely,

John Durant, Director

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