DRA-2-01-CO:R:C:E 224391 CB
Mr. Michael R. Smiszek
International Licensing & Compliance
General Electric Aircraft Engines
1000 Western Avenue, MD-37454
Lynn, MA 01910-0001
RE: Manufacturing drawback; 19 U.S.C. 1313(a)
Dear Mr. Smiszek:
This is in response to your letter of January 7, 1993,
wherein you requested a ruling on whether certain operations
constitute a manufacture for drawback purposes.
FACTS:
Your company imports an Accessory Gearbox (AGB) which is a
fixed-ratio speed changer manufactured in Japan. The function of
the AGB is to provide mechanical power to the various integral
sub-units necessary for the proper operation of a marine and
industrial gas turbine engine, such as the fuel and lubrication
pumps, and as a means of transmitting torque to the engine during
start-up. The AGB must be physically attached to the exterior of
the main body of the gas generator in order for the AGB to
perform its required functions, but this attachment can only be
accomplished if the AGB is configured to be compatible with the
gas generator. Compatibility is achieved by installing onto the
AGB various connecting parts such as nipples, tubes, elbows,
nuts, packings, washers, brackets, chip detectors, plug and
bleeders, and oil strainers. The AGB assembly is then installed
on the engine. Both the AGB and the engine are tested prior to
exportation and then the assembled engine and gearbox are
exported to Canada.
ISSUE:
Whether the above described process constitutes a
manufacture for drawback purposes?
LAW AND ANALYSIS:
Section 313(a) of the Tariff Act of 1930, as amended (19
U.S.C. 1313(a)), provides that upon the exportation of articles
manufactured or produced in the United States with the use of
imported merchandise, ninety-nine percent of the duties paid upon
the merchandise so used shall be refunded as drawback.
Generally, a manufacture or production changes or transforms
an article into a new and different article having a distinctive
character or use. See Anheuser-Busch v. U.S., 207 U.S. 556. The
Customs Service has held that assembly is a manufacture for
drawback purposes in some situations, depending on the facts and
circumstances involved. In C.S.D. 80-58, Customs ruled that an
assembly satisfies the requirement that a manufactured article
have a different character or use if an imported article which is
not suited for commercial use is further manufactured into one
that is suited for commercial use. See also C.S.D. 79-39 (watch
parts assembled into a watch constitute a manufacture).
On the facts presented, the marine and industrial turbine
gas engine is not suited to its commercial use without the AGB.
The AGB must be configured before it can be attached to the
engine. The configuration requires the installation of numerous
parts and components (as listed above). After these parts are
installed, the AGB is physically attached to the main body of the
engine in order to be suited for commercial use. The finished
product performs a function which is essentially different as
that performed by the parts individually. Based on the available
information, the described process constitutes a manufacture for
drawback purposes.
HOLDING:
The installation of numerous connecting parts and components
onto an accessory gearbox which is then installed in an engine
constitutes a "manufacture or production" for manufacturing
drawback purposes under 19 U.S.C. 1313(a).
Sincerely,
William G. Rosoff, Chief
Entry Rulings Branch