DRA-2-02/CON-13-02 CO:R:C:E 223846 DH
Regional Commissioner of Customs
Attn: Chief, Region Drawback Branch
610 Canal Street
Chicago, Illinois 60607
RE: Internal advice request; Same condition drawback; 19 U.S.C.
1313(j)(1); Vessel Equipment; 19 U.S.C. 1446; 19 U.S.C. 1309;
Exporter's summary procedures
Dear Sir:
This is in reference to your memorandum, dated March 24,
1992, inquiring whether chinaware imported into the United
States, by Northwest Airlines, is considered a vessel supply;
whether Northwest Airlines is entitled to receive drawback under
19 U.S.C. 1313(j); and whether exporter's summary procedures are
applicable under the facts.
FACTS:
August 21, 1990 - Northwest Airlines submitted a request to
use exporter's summary procedure (19 CFR 191.53) to expedite its
claims for same condition drawback for chinaware and other
supplies sent to foreign airport locations for use in those
locations.
October 3, 1990 - Request was approved, retroactive to
September 7, 1990.
June 7, 1991 - Northwest Airlines submitted a request to
amend the exporter's summary procedure to include chinaware used
on-board its international flights as in-flight equipment.
Additionally, Northwest Airlines requested permission to use a
caterer's list of specific items boarded as the cargo manifest.
The chinaware, covered by this amendment, is used on its
international flight route between Narita, Japan, Minneapolis,
Minnesota, and London, England. In each of these areas, the
china is removed from the aircraft, washed and refilled with food for the subsequent flight. The items are in continuous use, only
on this international route, through the U.S.
June 14, 1991 - Request to amend the exporter's summary
procedure was denied because the information on the cargo
manifest was inaccurate (flight destination was not shown) to
serve in place of an airway bill.
January 24, 1992 - Additional consideration is requested, by
Northwest Airlines, to be given to the amendment of the
exporter's summary procedure. Northwest Airlines requests
permission to substitute the in-flight service report (which will
supply the information Customs requested in its denial) in place
of the cargo manifest.
March 24, 1992 - Your office requests internal advice
regarding the following issues.
ISSUES:
Does the chinaware qualify for duty-free entry as equipment
of the aircraft?
Does the chinaware qualify for same condition drawback?
Should the exporter's summary procedure be approved?
LAW AND ANALYSIS:
Does the chinaware qualify for duty-free entry as equipment of
the aircraft?
There is no provision for the duty-free importation of a
shipment of chinaware for subsequent use as equipment aboard a
United States civil aircraft in international traffic. The
relevant statutory provisions include 19 U.S.C. 1446 and 19
U.S.C. 1309.
Title 19, United States Code, section 1446, made applicable
to aircraft by section 122.2 of the Customs Regulations (19 CFR
122.2), provides, in pertinent part, that "equipment 'landed' and
'delivered' from a vessel shall be considered and treated as
imported merchandise: provided, ... the legitimate equipment of
vessels belonging to regular lines plying between foreign ports
and the United States, which are delayed in port for any cause,
may be transferred under a permit by the appropriate customs
officer and under customs supervision from the vessel so delayed
to another vessel of the same line and owner, and engaged in the
foreign trade, without the payment of duty thereon."
Chinaware, or crockery, such as plates, cups and saucers are
considered equipment under 19 U.S.C. 1446. See, H.E. Warner,
Trustee, American Mail Line, Ltd. v. United States, 28 CCPA 143
(1940). Chinaware temporarily removed from an aircraft under
Customs supervision for cleaning purposes and then returned to
the same aircraft would not be considered to have been
"delivered" for purposes of 19 U.S.C. 1446. If chinaware is
removed from an aircraft in the United States for cleaning and
resupplying the galley of another aircraft, the chinaware will be
considered landed and delivered for purposes of 19 U.S.C. 1446
and treated as imported merchandise subject to applicable duty.
HR 106221, dated June 14, 1983.
The proviso, to section 1446, is inapplicable to the
situation at hand. The aircraft will not be delayed in
Minneapolis, as required by the proviso, but will be on a
scheduled stop. Furthermore, the proviso contemplates direct
transshipment from one aircraft to another without intermediate
processing as is involved in the present matter.
Section 309 of the Tariff Act of 1930, as amended, 19 U.S.C.
1309, provides in pertinent part that articles of foreign origin
may be withdrawn, from any customs bonded warehouse or from
continuous customs custody elsewhere than in a bonded warehouse,
duty-free for supplies (not including equipment) of aircraft
registered in the United States and engaged in foreign trade or
trade between the United States and any of its possessions.
(emphasis added)
The Customs Service has consistently regarded chinaware as
equipment for purposes of section 309. See T.D. 49815(4). Also
see, C.I.E. 1006/61, wherein chinaware imported to replace pieces
of china broken, while in use on an aircraft, was classifiable as
equipment of the aircraft, rather than as supplies, preventing
the application of duty-free status under 19 U.S.C. 1309.
The chinaware, under the circumstances, will be imported
into the United States on one aircraft and leave the United
States on another aircraft. Therefore, in accordance with HR
106221 and H.E. Warner, supra, the chinaware is considered
"equipment" which is imported and dutiable under 19 U.S.C. 1446.
The chinaware is, also, precluded from withdrawal from the
aircraft as duty-free, since it retains the status of "equipment"
under 19 U.S.C. 1309.
Does the chinaware qualify for same condition drawback?
Section 313(j) of the Tariff Act of 1930, as amended (19
U.S.C. 1313(j)(1)), provides for a refund of duties 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.
It is well established that drawback laws confer a
privilege, not a right. Swan & Finch Company v. United States,
190 U.S. 143, 23 Sup. Ct. 702 (1903). When merchandise is
imported and a drawback statute may potentially be applicable, an
accruing or inchoate right may be said to arise. However, the
right to recover drawback ripens only when all provisions of the
statute and applicable regulations prescribed under its authority
have been met. Romar Trading Co., Inc. v. United States, 27
Cust. Ct. 34 (1951); General Motors Corporation v. United States,
32 Cust. Ct. 94 (1954). Drawback claimants must strictly adhere
to the requirements set forth in the statutes and applicable
regulations. United States v. W. C. Hardesty Co, Inc., 36 CCPA
47, C.A.D. 396 (1949); Spencer, Kellogg & Sons (Inc.) v. United
States, 13 CCPA 612 (1926).
"Exportation" is defined in 19 CFR 101(k) as "a severance of
goods from the mass of things belonging to this country with the
intention of uniting them to the mass of things belonging to some
foreign country..." Swan & Finch Co. v. United States, supra.
In this case, Northwest Airlines has no intention of uniting the
chinaware used on the aircraft for food service for its
passengers, with the mass of things used in Japan or England.
Its sole intention, in removing the chinaware temporarily from
the aircraft, in the foreign country, was to service it, and
immediately return it to an aircraft, for the benefit of its
passengers.
This conclusion is supported by C.I.E. 1006/61, which
states: "The lading of imported articles on an aircraft for use
thereon during the outward flight does not constitute an
exportation within the general meaning of that term, under the
Customs laws, even though the articles may be unladen at the
foreign destination for cleaning or other purposes."
Finally, the chinaware has not been exported, for drawback
purposes, within the provisions of 19 U.S.C. 1309(b), since the
chinaware does not fall within the definition of "supplies."
Should the exporter's summary procedure be approved?
Since there is no exportation, the use of the exporter's
summary procedure does not apply to the stated facts.
HOLDING:
Foreign chinaware used as equipment on an aircraft which is
temporarily removed from the aircraft for cleaning and refilling
purposes and subsequently returned to another aircraft is
considered imported and dutiable under the provisions of 19
U.S.C. 1446 and 19 U.S.C. 1309.
The chinaware, in question, does not qualify for same
condition drawback, under 19 U.S.C. 1313(j), since there is no
exportation.
Finally, since no "exportation" occurs, under these facts,
the exporter's summary procedure is inapplicable.
Sincerely,
John Durant, Director
Commercial Rulings Division