DRA-4-CO:R:C:E 222638 CB
Regional Commissioner
U. S. Customs Service
Suite 1501
55 East Monroe Street
Chicago, ILL 60603-5790
RE: Application for further review of Protest No. 4501-0-000020
under 19 U.S.C. 1313(j)
Dear Sir:
The above-referenced protest was forwarded to this office
for further review. We have considered the points raised and our
decision follows.
FACTS:
According to the facts statement provided by protestant, in
late 1987 and early 1988 protestant made numerous entries of drug
capsules from Ireland. The capsules were entered in bulk
containers labelled with the name of the drug and an expiration
date. The capsules are cardiovascular drugs and contain one sole
active ingredient. In February of 1989, protestant decided to
export part of the merchandise to its joint venture partner in
Japan. The capsules were exported on March 8, 1989. Protestant
asserts that while in the United States, no activity was
undertaken with regard to the capsules. The merchandise was
merely warehoused.
The Customs Service has denied protestant's drawback claim
on the ground that the merchandise was not in the same condition
when exported because the expiration date had been exceeded.
It is the protestant's position that the subject merchandise
was in the same condition upon exportation. The protestant
claims that no change in condition had occurred as of the time of
exportation although the shelf life of the merchandise had
expired.
ISSUE:
Whether the subject merchandise qualifies for same condition
drawback under 19 U.S.C. 1313(j)?
-2-
LAW AND ANALYSIS:
Section 313(j), of the Tariff Act of 1930, as amended (19
U.S.C. 1313(j)), generally provides for drawback on imported
merchandise exported in the same condition as when imported, or
destroyed under Customs supervision, and not used within the
United States before such exportation or destruction.
Specifically, the statute provides:
(1) If imported merchandise, on which was paid any
duty, tax, or fee imposed under Federal law because of its
importation
(A) is, before the close of the three-year period
beginning on the date of importation
(i) exported in the same condition as when
imported, or
(ii) destroyed under Customs supervision; and
(B) is not used within the United States before such
exportation or destruction;
then upon such exportation or destruction 99 per centum of the
amount of each such duty, tax, and fee so paid shall be refunded
as drawback.
Customs administration of the same condition drawback law is
governed by 19 CFR 191.141. Generally, the regulations provide
that merchandise must be exported, or destroyed under Customs
supervision, within three years of importation; claimant must
file the required documentation at least five working days prior
to exportation; and Customs must be given an opportunity to
examine the merchandise prior to exportation.
Protestant's drawback claim was denied because the District
Director concluded that an expiration date can constitute a date
that the merchandise is no longer in the same condition. In
C.S.D. 83-26 the Customs Service indicated that if deterioration
occurs which significantly changes the condition of the imported
merchandise, same condition drawback law is inapplicable. In the
instant case, the capsules were imported in bulk containers
labelled with a fifteen (15) months expiration date and the
merchandise was exported after the expiration date had been
exceeded. Therefore, it must be determined whether the
merchandise's condition had been changed due to deterioration.
-3-
We have received satisfactory evidence indicating that the
merchandise had a "shelf" life of eighteen (18) months.
Protestant submitted written evidence from the Food and Drug
Administration (FDA) approving the new drug application for said
capsules. Protestant has indicated that the merchandise was
labelled and imported prior to the FDA's official determination
regarding the actual stability of the product. The data supports
protestant's claim of an expiration period of eighteen months
from the date of manufacture of the capsules. Therefore, the
merchandise was in its same condition at the time of exportation.
HOLDING:
In the instant case, the expiration of the fifteen month
shelf life does not render the subject merchandise ineligible for
same condition drawback. You should approve this protest.
Sincerely,
John Durant, Director
Commercial Rulings Division