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HQ 228970




August 29, 2001

DRA-4 RR:CR:DR 228970 LLB

CATEGORY: DRAWBACK

Jill R. Harding
Account Manager
J.M. Rodgers Co., Inc.
245 Woodport Road
Sparta, New Jersey 07871

RE: Commercial Interchangeability; 19 U.S.C. §§ 1313(j)(2), 1313(q), and 1558(a); C.S.D. 81-222, 82-135, 81-65; packaging material; United States v. Border Brokerage Co., 48 C.C.P.A. 10, 13 (1960)

Dear Ms. Harding:

This letter is in response to your September 22, 2000, request to issue a ruling concerning the commercial interchangeability of “Resin Super Sacks” imported and exported by your client, General Electric Company. Our decision follows.

FACTS

G.E. Plastics (GEP), an operating component of General Electric Company,

You indicated in your August 13, 2001, telephone conversation with LaToya Burley, an attorney in this office, that GE Plastics is an unincorporated division of General Electric Company. See also HQ 228970 (August 3, 1999). We also note you have asserted that General Electric Company and GE Plastics Mt. Vernon, Inc. are separate corporate entities. See HQ 229129 (April 6, 2001). purchases imported baffle bags, a.k.a. Resin Super Sacks(sacks) from vendors who supply GEP with certificates of delivery. GEP fills the imported sacks or substituted sacks with resins and then, exports the filled sacks to various countries. GE Plastics wishes to claim drawback pursuant to 19 U.S.C. § 1313(j)(2) on the sacks.

ISSUE

Whether a refund of duties is permissible under 19 U.S.C. § 1558(a)(1)

LAW AND ANALYSIS

In pertinent part, 19 U.S.C. § 1558(a) provides that: “No remission, abatement, or drawback of estimated or liquidated duty shall be allowed because of the exportation or destruction of any merchandise after its release from the custody of the Government, except in the following cases:

(1) When articles are exported with respect to drawback of duties is expressly provided for by law . . .

The drawback provisions are found in 19 U.S.C. § 1313. Particularly, GEP wishes to obtain drawback under the provisions of § 1313(j)(2), which provides that substitution unused merchandise drawback may be granted if there is, with respect to imported, duty-paid merchandise, any other merchandise that is commercially interchangeable with the imported merchandise provided certain requirements are met. The other merchandise must be exported or destroyed within 3 years from the date of importation of the imported merchandise. Before the exportation or destruction, the other merchandise may not have been used in the United States and must have been in the possession of the drawback claimant.

In C.S.D. 81-222, a company sought drawback under § 1313(j) for cardboard, boxes, cans, and bottles, which it imported, subsequently filled with processed foods and beverages, and exported. Customs held that the articles were not eligible for drawback under § 1313(j) insofar as the articles were used when they were employed for the purpose for which they were manufactured and intended, i.e. “to act as containers for the transportation and ultimate sale of merchandise.” Likewise, GEP takes the imported and substituted sacks, fills them with resins and then exports the filled sacks to various countries. Pursuant to 6305.32.00.10, HTSUS (2000), the provision under which the bags were entered, the bags are described as “Sacks and bags, of a kind used for the packing of goods: Of man-made textile materials : Flexible intermediate bulk containers.” The foregoing definition supports that the intended purpose of merchandise is “for the packing of goods.” Inasmuch as the bags are used to hold and transport the resin, we conclude that the bags are used and therefore, not eligible for unused merchandise drawback under § 1313(j).

Pursuant to § 1313(q),

Packaging material, when used on or for articles or merchandise exported or destroyed under subsection (a), (b), (c), or (j) of this section, shall be eligible under such subsection for a refund, as drawback, of 99 percent of any duty, tax, or fee imposed under Federal law on the importation of such material.

(emphasis added). Because no information has been provided with regard to the eligibility of the resin for drawback under § 1313(a),( b), (c), or (j), we cannot conclude that the sacks would be eligible for drawback under § 1313(q).

We also note that the bags would not be eligible for drawback under § 1313(a) or (b), the manufacturing drawback provisions, because we have held that mere filling of sacks does not constitute a manufacture or production. See C.S.D. 81-65(holding that filling, sewing, and labeling of bags did not constitute a manufacture or production); United States v. Border Brokerage Co., 48 C.C.P.A. 10, 13 (1960)(holding that the change in condition of entered containers as a result of being filled was merely incidental to the purpose of their entry, therefore no manufacture or production occurred). Based on the facts presented in this case, there are no other provisions under § 1313 for which the sacks are eligible for drawback. Therefore, pursuant to § 1558, since the sacks are not eligible for drawback, GEP may not receive a refund of its duties upon the exportation of the sacks.

HOLDING

General Electric Plastics is precluded by 19 U.S.C. § 1558(a) from receiving drawback duties on the sacks described herein inasmuch as they are not eligible for drawback under the provisions of 19 U.S.C. § 1313.

Sincerely,

John Durant, Director
Commercial Rulings Division

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