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HQ 229692




November 25, 2002

DRA-2-RR:CR:DR

229692RDJ

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

RE: Fujisawa Injectables; 19 USC 1313(a)
Revocation by Operation of Law of HQ228749 19 U.S.C. 1625(c)
Dear Mr. Sawyer:

The following information concerns one of your clients: Fujisawa Healthcare, Inc. (“Fujisawa”).

On August 15, 2000, the US Customs Service approved, for the benefit of Fujisawa, a manufacturing drawback ruling (HQ 228749) under the provisions of 19 U.S.C. 1313(a). This letter is intended to inform your client, that on September 11, 2002, a Notice of Revocation of a similar assembly process was published in the Customs Bulletin. The Notice of Revocation revoked our treatment that had been accorded to “filling procedures” as “a manufacturing process “ for drawback purposes. As a result, we hereby inform that HQ228749 has been revoked by operation of law under the provisions of 19 U.S.C. 1625(c). Fujisawa can no longer claim manufacturing drawback under 1313(a) for the operation that had been approved under HQ 228749.

FACTS:

As stated, this office authorized HQ228749 on August 15, 2000, allowing Fujisawa to claim drawback under the provisions of 19 U.S.C. 1313(a), direct identification manufacturing drawback. The process consisted of an assembly operation which Customs had, at that time, qualified as a “manufacture” for drawback purposes. The process was described as follows:

“Aluminum tubes, preprinted and numbered, classifiable in subheading 7612.90.1090, HTSUSA, are imported [from Japan], then filled with 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: Does the stated operation qualify as a manufacturing operation under 1313(a)?

LAW AND ANALYSIS:

On March 20, 2002, pursuant to Section 625(c), Tariff Act of 1930, as amended (19 U.S.C. 1625(c), Customs published a Notice of Proposed Revocation in the Customs Bulletin, Volume 36, No. 12, proposing to revoke (ACS) Ruling Letter #44-04385-001 dated August 26, 1999 and (ACS) Ruling letter # 44-04385-000 dated September 29, 1995. The purpose of the notice was to notify the importing community that Customs intended to revoke similar treatments under the provisions of 19 U.S.C. 1625. The notice conferred 60 days for interested parties to submit their comments on the proposed revocation prior to Customs issuing a final decision. Several comments were received.

The facts involving the proposed revocation (HQ 228918) were very similar to those of Fujisawa (HQ228749). The above-identified rulings had previously allowed a certain party to claim drawback by filling cosmetic products (such as beauty lotions, creams and powders) into imported containers (such as tubes, plastic bottles, jars and godets) under the provisions of 19 U.S.C. 1313(b). The notice indicated our intention to revoke the identified rulings to reflect Customs’ policy that the process of filling imported already-made containers with domestic products (not-eligible for drawback) could no longer be considered a “manufacturing process” that would qualify for drawback.

Our focus was whether a filling procedure constituted a sufficient manufacturing process so that a party could claim drawback upon exportation under 1313(b). We determined that the importation of plastic tubes served their intended purpose, which was to contain the cosmetic product. These were specifically designed abroad, wholly manufactured and imported to be used as containers. Customs understood that the process of filling containers such as tubes, bottles, etc. did not rise to the level of a “manufacture”. We received several comments which were addressed in the final revocation notice. Upon review of the comments, Customs determined that it should proceed to revoke the treatment initially accorded under 1313(b). The simple filling of a container did not result in the use of that container to make another new article of commerce which could claim manufacturing drawback upon its exportation.

In accordance to section 625(c), Tariff Act of 1930, as amended (19 U.S.C. 1625(c), the Notice of Revocation was published in the Customs Bulletin, Vol. 36 No. 37 dated September 11, 2002. The notice stated:

“Customs now revokes the identified ruling and any other treatment based on those rulings. Customs has determined at the filling process described does not rise to the level of manufacture that is required in order to claim manufacturing drawback under 1313(b).”

Accordingly, HQ 228749 (dated August 15, 2000) was revoked by operation of law by the foregoing final notice. While Customs is under no obligation to issue a new ruling as a result of the foregoing action, as a courtesy to you and the importing community the following analysis sets forth our policy concerning the process understood to be a filling process under 1313(a) and 1313(b).

In Fujisawa’s case, HQ 228749, an assembly operation allowed medicated doses to be placed inside a imported tube and closed, secured and embossed with a batch number and expiration date. The issue is whether the designated merchandise was subjected to a process of manufacture that resulted in the creation or transformation of the container into a new and different article. To allow drawback under 1313(a), the designated goods must be used to manufacture or produce new articles for exportation. By importing tubes and subjecting them to a filling process is merely using the tube for its intended purpose. It is not a manufacture. If a new and different article has not emerged from the process, beginning with the use of the imported or substituted merchandise which forms the basis for drawback, then there has not been a manufacture or production for drawback purposes

Upon review of similar processes, Customs concluded that filling procedures such as those exemplified on HQ228918 and HQ228749 did not rise to a level of manufacture because the end result was nothing more than a filled container being packaged for retail purposes. The exported item was not so changed in condition so as to conclude that the container was made into another new article fit for a particular use.

HOLDING:

This ruling revokes HQ 228749 by operation of law in accordance with section 1625(c). Fujisawa Healthcare, Inc. can no longer claim drawback on the processes described under HQ228749. This modification was effective by operation of law by virtue of 19 U.S.C. 1625(c). A Final Notice of Revocation was published in the Customs Bulletin Vol. 36, No. 37 (September 11, 2002) for merchandise entered or withdrawn from warehouse for consumption on or after 60 days from the publication in the Custom Bulletin. As part of your “shared responsibility” under Title VI (Customs Modernization) of the North American Free Trade Agreement Implementation Act (Pub. L. 103-182, 107 Stat. 2057) you should advise the various ports at which drawback entries were filed on or after November 12, 2002 that Fujisawa Healthcare, Inc. can no longer claim manufacturing drawback (19 U.S.C. 1313(a)) since it was revoked by operation of law under the provisions of 19 U.S.C. 1625(c).

Myles Harmon, Acting Director
Commercial Rulings Division


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