HQ 0224997 - 19 U.S.C. 1313(j)(2); Section 632(j)(2) NAFTA Implementation Act; Section 632(u) NAFTA Implementation Act. - United States International Trade Commision Rulings

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HQ 224997

February 18, 1994

DRA-4-CO:R:C:E 224997 AJS

CATEGORY: DRAWBACK

Mr. Edward P. Denninger, Jr.
J.G. Eberlein & Co., Inc.
90 West Street
New York, NY 10006

RE: 19 U.S.C. 1313(j)(2); Section 632(j)(2) NAFTA Implementation Act; Section 632(u) NAFTA Implementation Act.

Dear Mr. Denninger:

This is in reply to your request of October 6, 1993, concerning foreign trade zones and drawback under 19 U.S.C.

FACTS:

Your request states that imported merchandise will be brought into a Foreign Trade Zone (FTZ) under Privileged Foreign status. Subsequently, this merchandise is withdrawn and exported from the United States under a Transportation and Exportation entry.

ISSUE:

Assuming commercial interchangeability and all other applicable requirements in the statutes and regulations are met, may the exportation of the subject merchandise be substituted as the basis of drawback claims against previously imported duty- paid merchandise under 19 U.S.C 1313(j)(2).

LAW AND ANALYSIS:

19 U.S.C. 1313(j)(2) has been amended by section 632(j)(2) of the North American Free Trade Agreement (NAFTA) Implementation Act of 1993. The name of this provision has been changed from "same condition drawback" to "unused merchandise". It order to qualify for unused merchandise drawback the "other merchandise" referred to in this provision must be exported or destroyed under Customs supervision.

Section 1313(j)(2) was also amended by section 632(u) of the NAFTA Implementation Act to provided that "[i]mported merchandise that has not been regularly entered or withdrawn for consumption shall not satisfy any requirements for use, exportation, or destruction under this section." The legislative history to section 632 states that this provision codifies current Customs practice against "piggybacking" other duty exemption benefits (foreign-trade zones, bonded warehouses and duty-free temporary importation) onto drawback benefits.

Your request claims that the subject merchandise will be withdrawn and exported from a FTZ under a Transportation and Exportation entry. Such merchandise is not considered regularly entered or withdrawn for consumption. Therefore, the subject merchandise would not be exported as required under section 1313(j)(2). Consequently, this merchandise may not be used as the basis for drawback claims.

HOLDING:

The subject merchandise is not exported for the purposes of 19 U.S.C. 1313(j)(2) and thus may not be substituted as the basis for drawback claims against previously imported duty-paid merchandise.

Sincerely,

John Durant, Director

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