HQ 225897 - 19 U.S.C. 1313(b); 19 CFR 191.34, 191.65 and 191.66; agency agreement; Certificate of Delivery; Certificate of Manufacture and Delivery - United States International Trade Commision Rulings

United States International Trade Commision Rulings And Harmonized Tariff Schedule

faqs.org Rulings By Number Rulings By Category Tariff Numbers

faqs.org > Rulings and Tariffs Home > Rulings By Number > 1997 HQ Rulings > HQ 114022 - HQ 226416 > HQ 225897

Previous Ruling Next Ruling
HQ 225897

December 28, 1995

DRA-2-01-RR:IT:EC 225897 IOR

CATEGORY: DRAWBACK

Judy L. Wells
Cardinal Stabilizers, Inc.
Post Office Box 345
Columbia, SC 29202

RE: 19 U.S.C. 1313(b); 19 CFR 191.34, 191.65 and 191.66; agency agreement; Certificate of Delivery; Certificate of Manufacture and Delivery

Dear Ms. Wells:

This is in response to your letter dated December 23, 1994, in which you request a ruling regarding manufacturing drawback claims made by Cardinal Stabilizers, Inc. ("CSI") pursuant to a manufacturing drawback contract approved under 19 U.S.C. 1313(b).

FACTS:

CSI purchases through a variety of metals brokers imported, duty-free, raw tin metal of various origin. CSI then either has its own trucks or a common carrier pick up and deliver said tin metal to one of two locations of a domestic producer ("A") where it is further processed into Stannic Chloride on a toll basis and delivered to CSI's premises for manufacture into the exported articles. CSI maintains title to the tin metal throughout this process. Simultaneously, CSI imports Stannic Chloride of the same kind and quality as that which is domestically produced from imported, duty-free merchandise.

Cardinal Manufacturing, Inc.("CMI") has an approved drawback contract (the abstract of the approval is published in T.D. 95-10(F)), which provides for the manufacture of various products (Tetrabutyltin etc.) with the use of Stannic Chloride. According to the General Statement in the drawback statement signed August 1, 1994, CMI manufactures under contract for CSI on CSI's premises, utilizing CSI personnel. CSI will furnish CMI Certificates of delivery for designated merchandise for manufacture and CMI will furnish CSI Certificates of manufacture and delivery for the manufactured products. CSI will be the exporter of the finished articles and the drawback claimant.

You request our determination whether: 1) CSI must have an agency agreement in place with A, since A is in fact using a duty-free imported merchandise to produce the Stannic Chloride, as opposed to A producing Stannic Chloride from domestically sourced materials; and 2) CSI must require A to furnish CSI Certificates of Manufacture and Delivery or Certificates of Delivery for the merchandise which A produces.

ISSUE:

Are Customs drawback regulations 19 CFR 191.34, 191.65 and 191.66, applicable to transactions and processing relating to materials which are not "merchandise' or "articles" that are the subject of the drawback statement.

LAW AND ANALYSIS:

19 U.S.C. 1313(b) states:

If imported duty-paid merchandise and any other merchandise (whether imported or domestic) of the same kind and quality are used in the manufacture or production of articles within a period not to exceed three years from the receipt of such imported merchandise by the manufacturer or producer of such articles, there shall be allowed upon the exportation, or destruction under customs supervision, of any such articles, notwithstanding the fact that none of the imported merchandise may actually have been used in the manufacture or production of the exported or destroyed articles, an amount of drawback equal to that which would have been allowable had the merchandise used therein been imported, but only if those articles have not been used prior to such exportation or destruction; but the total amount of drawback allowed upon the exportation or destruction under customs supervision of such articles, together with the total amount of drawback allowed in respect of such imported merchandise under any other provision of law, shall not exceed 99 per centum of the duty paid on such imported merchandise.

CMI's approved drawback statement pertains to the use of Stannic Chloride in the manufacture or production of various products, Tetrabutyltin, etc. In the parallel columns of the drawback statement, the Stannic Chloride is identified as "Imported Merchandise" in the first column, and as "Duty-paid, Duty-Free, or Domestic Merchandise" in the second column. In the drawback statement certain "articles" (Tetrabutyltin, etc.) are identified as "Exported Articles On Which Drawback Will Be Claimed." In the context of the statutory language of 1313(b) and applicable regulatory language, the term "merchandise" refers to the merchandise identified in the parallel columns, and the term "article" or "articles" refers to the articles described in the "Exported Articles On Which Drawback Will Be Claimed" section.

To qualify for drawback under 19 U.S.C. 1313(b), the same legal entity which used substituted merchandise to manufacture or produce the exported articles must also use in manufacture or production the duty-paid merchandise which is designated as the basis for the claim. See C.S.D. 89-12. Customs Regulations 191.34(a) (19 CFR 191.34(a) provides, in pertinent part, that if an owner of imported or domestic merchandise furnishes this merchandise to an agent in accordance with a contract between the two parties, and the agent manufactures from it articles for the owner's account, the owner shall be considered the user of the merchandise. It is in this context that an agency agreement is required between the parties. As the "imported merchandise," the raw tin metal, which is processed by A in this case is not the "merchandise" which is the subject of the drawback statement, there is no requirement for an agency agreement between A and CSI or CMI.

With respect to Certificates of Delivery and Certificates of Manufacture and Delivery, Customs Regulations provide as follows:

?191.65 Certification of delivery.

(a) When required. If the merchandise used in the manufacture of the exported articles was not imported by the manufacturer of the articles, no drawback shall be allowed until the drawback claimant files with the regional commissioner where the claim is to be liquidated a manufacturing drawback entry and/or certificate in duplicate on Customs Form 331, or official evidence of the existence of the form filed at another place. The form must describe the merchandise delivered, tracing it from the custody of the importer to the custody of the manufacturer.

?191.66 Certificates of manufacture and delivery.

(a) When required. If the imported merchandise has undergone some process of manufacture before delivery, and the wholly or partially manufactured article thereafter is used in the manufacture of some other article for exportation, or when completely manufactured articles are purchased for exportation without further manipulation, the drawback claimant, whether the manufacturer or the exporter, shall file a manufacturing drawback entry and/or certificate on Customs Form 331.

Again, in the context of the regulations, the term "merchandise" refers to the merchandise identified in the drawback statement, i.e. the Stannic Chloride, and the term "articles" refers to the articles identified in the drawback statement, i.e. the Tetrabutyltin, etc. The regulations do not apply to transactions or processing relating to materials other than those which are the subject of the drawback statement. The regulations therefore do not apply to the transactions and processing relating to the raw tin metal. Under the facts presented, no Certificates of Delivery or Certificates of Manufacture and Delivery are required to or from A.

With respect to the substitute Stannic Chloride, imported duty-free, CSI must be able to establish that the Stannic Chloride is of the same kind and quality as the designated Stannic Chloride, that it was used within three years from the receipt of the designated imported merchandise and that the completed articles were exported within five years after importation of the designated merchandise. 19 U.S.C. 1313(b) and

HOLDING:

Customs drawback regulations 19 CFR 191.34, 191.65 and 191.66 do not require an agency contract between A and CSI or CMI, or Certificates of Delivery and Certificates of Manufacture and Delivery for the processing of raw tin metal into Stannic Chloride.

Director
International Trade
Compliance Division

Previous Ruling Next Ruling