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 > 2000 HQ Rulings > HQ 228272 - HQ 546534 > HQ 228749

Previous Ruling Next Ruling
HQ 228749




August 15, 2000

DRA-2-RR:CR:DR 228749 EAB

CATEGORY: DRAWBACK

James L. Sawyer, Esquire
Katten Muchin Zavis
525 West Monroe Street
Chicago, Illinois 60661-3693

Attn: Ms. Tami Krauskopf

RE: Fujisawa injectables; 19 U.S.C. §1313(a); Anheuser-Busch v. United States; United States v. International Paint Co.; C.J. Holt & Co., Inc. v. United States; Ishimitsu v. United States; C.S.D. 79-40; C.S.D. 80-183; T.D. 77-126; T.D. 53873-0; HQ 220900

Dear Mr. Sawyer:

This is in reference to your ruling request dated March 2, 2000, concerning an operation by your client Fujisawa Healthcare, Inc. You have asked whether the following operation would qualify for manufacturing drawback, or, alternatively, temporary importation under bond.

FACTS:

Aluminum tubes, preprinted and numbered, classifiable in subheading 7612.90.1090, Harmonized Tariff Schedule of the United States (Annotated) (HTSUSA) are imported, then filled with a pharmaceutical ointment ("Protopic®"). Once a given tube is filled, it is mechanically folded and pressed closed, after which it is embossed with an expiration date and batch number. The resulting product is classifiable in subheading 3004.90.9045, HTSUSA, and re-exported to Japan.

ISSUE:

Whether the process described qualifies for manufacturing drawback under 19 U.S.C. §1313(a); if not, then whether the imported tubes may qualify for temporary importation under bond.

LAW AND ANALYSIS:

Under Title 19, United States Code, section 1313(a), drawback is authorized “[u]pon the exportation of articles manufactured or produced in the United States with the use of imported merchandise,” upon compliance with the provisions in 19 U.S.C. §1313 and the Customs Regulations issued thereunder (19 CFR 191). Generally, in determining whether there has been a manufacture or production for drawback purposes, Customs has long used the criteria in the case of Anheuser-Busch v. United States, 207 U.S. 556 (1908). Under that case, a manufacture or production is considered to have occurred when the merchandise under consideration is changed or transformed into a new and different article having a distinctive name, character or use. Since then, in the case of United States v. International Paint Co., 35 CCPA 87, C.A.D. 376 (1948), it has been held that the fact that an exported product does not have a distinctive name different from the imported product does not preclude there being a manufacture or production for drawback purposes.

Your client’s operation as described is an assembly operation. It is well established that assembly operations that result in a new and different product with a distinctive name, character or use constitute a manufacture or production for drawback purposes. See C.J. Holt & Co., Inc. v. United States, 27 Cust. Ct. 88 (1951). In Treasury Decision 77-126 (T.D. 77-126), on whether an assembly of wrist watch parts constituted a “manufacture or production,” Customs cited Ishimitsu v. United States, 11 Ct. Cust. App. 186, T.D. 38963 (1921), in which the Court of Customs Appeals stated that in order to constitute a manufacture or production:

...it must appear that something has been produced so changed or advanced in condition from what it was before being subjected to the processing or treatment that whether of only one material or of more than one, it has attained a distinctive name, character or use, different from that originally possessed by the material or materials before being subjected to the manufacturing process.

In Customs Service Decision (C.S.D.) 80-183, we determined that the transformation of empty unsterilized glass vials into sterile injectables ready for use with hypodermic syringes constitutes a manufacture or production for purposes of drawback. The exported article was still a glass vial, however, with a different character and use, that of an injectable. In C.S.D. 79-40 we found that a manufacture took place in the case of importation of watch movements in watch casings, followed by the removal of the movements from the casings for testing and adjustment, the return of the movements to the casings which were then tested for water resistance, the attachment of metal bracelets and the boxing of the finished products. Customs ruled that a manufacture took place:

The end product is a watch, whereas the imported articles were watch parts. The watch is a new and different article. It has a specific name, character and use different from its component parts unassembled or only partly assembled.

Finally, in T.D. 53873-0, drawback under 19 U.S.C. 1313(a) was allowed where an "empty collapsible tube is placed on a tube holder and automatically filled with toothpaste. The bottom of the tube is then crimped and the tube is inserted in an individual carton."

In this case the exported article is a medicament put up in doses or packings for retail sale, rather than an empty and unfinished tube. As such, we find that the filled and finished article is a new and different article with a distinctive name, character or use, substantially different from that of its component part, the original empty and unfinished tubes. See T.D. 53873-0, supra. We conclude that the subject assembly constitutes a manufacture or production for purposes of obtaining drawback under 19 U.S.C. §1313(a).

In view of the foregoing, the alternative inquiry, regarding temporary importation under bond, is moot.

Your representative samples are returned to you herewith.

HOLDING:

The process of filling an unfinished tubular container with a pharmaceutical ointment in an amount constituting a medicinal dosage, then folding and closing shut the tube to make a finished and filled container which is then embossed with a batch number and expiration date is a manufacture or production for purposes of 19 U.S.C. §1313(a).

Sincerely,

John A. Durant, Director
Commercial Rulings Division


Previous Ruling Next Ruling

See also: