DRA-2-01:CO:R:C:E 224588 AJS
Gail T. Cumins, Esq.
Sharretts, Paley, Carter & Blauvelt
67 Broad Street
New York, NY 10004
RE: Sample handler unit; slide processor unit; blood analyzer; 19
U.S.C. 1313(a); Section 632(a)(1), NAFTA Implementation Act;
C.S.D. 79-40; "manufacture or production".
Dear Ms. Cumins:
This is in reply to your request of March 25, 1993, on
behalf of your client the Eastman Kodak Company, concerning a
sample handler unit and the applicability of drawback.
FACTS:
The subject sample handler unit is imported from Germany.
It is designed to receive and deliver to an exact location
samples of a patient's blood and/or other body fluids. After
importation into the United States, the sample handler unit is
connected to the slide processor unit in an assembly operation.
When the sample handler is precisely aligned with the slide
processor, a metering tube from the slide processor is lowered
into the blood or other fluid and draws a preset precise quantity
of fluid from the sample container located in the sample handler.
The intelligence (software) for the blood analyzer is located in
the slide processor, while the power source is located in the
sample handler. The blood analyzer is designed to analyze,
through a unique and proprietary dry chemistry method, precise
quantities of blood and other fluids that must be delivered to
the analysis slides in exact quantities. The metering tube that
moves from the slide processor to the sample handler is very
carefully programmed to move to the precise
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location where the sample is positioned and to draw an exact
quantity of fluid, and then deliver that quantity to the
appropriate test slide.
It is claimed that the sample handler unit is neither
marketed nor sold separately from the blood analyzer and has no
use other than as a component of the analyzer. The slide
processor is also of no commercial value by itself. Before
assembly, neither unit functions separately. After assembly,
each unit functions together to analyze blood or other fluids.
ISSUE:
Whether the subject assembly operation constitutes a
"manufacture or production" within the meaning of 19 U.S.C.
1313(a).
LAW AND ANALYSIS:
19 U.S.C. 1313(a), as amended by section 632(a)(1) of the
North American Free Trade Agreement (NAFTA) Implementa- tion Act
of 1993, provides that "[u]pon the exportation . . . of articles
manufactured or produced in the United States with the use of
imported merchandise, provided that those articles have not been
used prior to such exportation . . ., the full amount of duties
paid upon the merchandise so used shall be refunded as drawback,
less 1 per centum of such duties . . ." Your request claims that
the subject sample handling unit is eligible for manufacturing
drawback under this provision.
In C.S.D. 79-40, Customs stated that "[m]anufacture or
production is defined for drawback as the process or processes
which, through labor and manipulation, change or transform an
article or articles into a new and different article having a
distinctive name, character or use." See, for example, Anheuser-
Busch Brewing Association v. United States, 207 U.S. 556 (1907).
In this case, an imported sample handler unit is assembled with a
slide processor unit to produce a blood analyzer. This analyzer
is a new and different article. Before assembly, each unit
cannot function separately and is not sold separately. After
assembly, the units are sold together as a blood analyzer and
function together to perform the blood analyzing function.
Therefore, a manufacture or production has taken place.
Consequently, the subject sample handler unit is eligible for
drawback pursuant to section 1313(a).
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HOLDING:
The subject handling unit is eligible for drawback within
19 U.S.C. 1313(a). The described assembly operation is a
manufacture or production for drawback purposes.
Sincerely,
John Durant, Director