DRA-4-R:IT:EC 226295 IOR
Port Director of Customs
Drawback Unit
10 Causeway St.
Boston, MA 02222-1059
RE: Microscope; unused merchandise drawback; 19 U.S.C.
1313(j)(1); 19 U.S.C.(j)(3); checking; screwing in
objectives; manufacture or production; use
Dear Sir:
This is in response to a ruling request submitted on behalf
of the claimant, by letter dated March 20, 1995 (and follow up
letter dated July 5, 1995). We are in receipt of your memorandum
dated October 20, 1995, commenting on the claimant's request.
From the information presented this appears to be a current
transaction. Pursuant to 19 CFR 177.1(a) a ruling may only be
issued only with respect to prospective transactions. Therefore,
this request is being treated as an internal advice request,
pursuant to 19 CFR 177.11.
FACTS:
The claimant is an importer of microscopes, microscope
components and accessories. Drawback has been and will be
claimed at your regional office. The exported items at issue
consist of a number of imported components that are simply
packaged together, and not assembled. In response to a
microscope order, the components required to fill the specific
order, are pulled together from inventory. Prior to packaging,
the objective lenses are screwed into place for the purpose of
checking alignment and then unscrewed and put into their
designated place in the standard Styrofoam packing frame.
Considering the recent changes in drawback, specifically the
institution of unused drawback, the claimant feels there may be
operational savings if, after the alignment check, the objective
lenses were left screwed in. Photographs submitted by the
claimant show 1) the unassembled microscope components packaged
with the objectives in tubes, alongside of the nosepiece, in the
foam container for shipment, and 2) the unassembled microscope
components with the objectives screwed into the nosepiece,
packaged in the foam container for shipment.
In your memorandum dated October 20, 1995, you state that
the issue is whether the screwing in of the objectives is an
incidental operation allowable under unused merchandise drawback
or a simple assembly which constitutes a manufacture.
According to information received from the claimant's
broker, in a November 8, 1995 telephone conversation with a
member of the Entry and Carrier Rulings Branch staff, the
claimant is currently allowed drawback under 1313(j)(1), when the
objectives are unscrewed from the nosepiece prior to exportation.
ISSUE:
Whether the merchandise at issue is eligible to receive
drawback under 19 U.S.C. 1313(a) or (j)(1).
LAW AND ANALYSIS:
19 U.S.C. 1313(j)(1) provides that if imported merchandise,
on which was paid any duty, tax, or fee imposed under Federal Law
because of its importation is, before the close of the 3-year
period beginning on the date of importation, exported and is not
used within the United States before such exportation; then upon
such exportation 99 percent of the amount of each duty, tax or
fee so paid shall be refunded as drawback. Section 1313(j)(3)
provides that:
The performing of any operation or combination of
operations (including, but not limited to, testing,
cleaning, repacking, inspecting, sorting, refurbishing,
freezing, blending, repairing, reworking, cutting,
slitting, adjusting, replacing components, relabeling,
disassembling, and unpacking), not amounting to
manufacture or production for drawback purposes under
the preceding provisions of this section on--
(A) the imported merchandise itself in cases
to which paragraph (1) applies,...
shall not be treated as a use of that merchandise....
The claimant proposes to gather the requisite microscope
components for the microscope ordered, screw the objective lenses
into the nosepiece of the microscope for the purpose of checking
the alignment and export the unassembled microscope components
with the objective lenses screwed in, as opposed to alongside of
the microscope nosepiece. The "checking" operation is included
within the exemplars listed in section 1313(j)(3), under
"testing." The word "checking" is described as "to test or
examine, as for accuracy or efficiency." The American Heritage
Dictionary, 262 (2d ed. 1982). According to the information
submitted, the separate microscope components are pulled from
inventory and packaged together as the components of a complete
microscope. This operation is not one included within the
exemplars listed in section 1313(j)(3), furthermore, similar
operations have previously been determined to be manufactures or
productions.
Section 1313(j)(3) provides that the permitted operations
cannot amount to a "manufacture or production." A "manufacture
or production" has been defined as a process which transforms an
article into a new and different article with a different name,
character or use. Anheuser Busch v. United States, 207 U.S. 556
(1907). This office has previously approved manufacturing and
production drawback proposals relating to microscopes. In T.D.
57-54288-E (HQ control number 275177, January 10, 1957), Customs
approved a drawback allowance under 19 U.S.C. 1313(a) on imported
microscope parts consisting of nose pieces, objectives, and
condensor mounts. The manufacturing or production process
approved consisted of fitting, matching, adjusting and adapting
the imported parts for mounting into microscopes, involving the
specific alignment of all parts to each other and to a certain
type of stand. The imported parts were assembled and modified as
required by each customer. The complete microscope was
disassembled and arranged in a carrying case for exportation. In
T.D.63-55888-C (HQ control number 275708, dated April 17, 1963),
Customs approved a drawback allowance under 19 U.S.C. 1313(a) on
imported microscope parts, manufactured into complete
microscopes. The manufacturing process consisted of assembling
the microscopes by dropping the eyepiece into the head, screwing
the objectives into the nose piece, bolting or screwing an
attachment to the stage and adjusting the microscope. Both of
these approved drawback contracts entailed the importation of
microscope parts, which were transformed into new and different
articles-- the complete microscopes.
The merchandise at issue entails the importation of
microscope components and the exportation of complete but
disassembled microscopes. We find that as in the foregoing
T.D.'s, the packaging together of microscope components into a
disassembled complete microscope, is a manufacture or production
under 19 U.S.C. 1313(a). The subject uniting of microscope parts
and packaging operations result in a new and different article--
a complete disassembled microscope. The exported disassembled
complete microscope also has a different character and use. In
C.S.D. 80-58, Customs determined that "[t]he requirements that a
manufactured article have a different character or use are
satisfied when an imported article which is not suited for
commercial use is further manufactured into one that is suited
for commercial use." In C.S.D. 80-58, eyeglass frames were found
not suited for commercial use when imported, whereas sunglasses
were found to be so suited when exported. In this case, the
disassembled complete microscope can be purchased for assembly
and use as a microscope, whereas the separately imported
components cannot be used as a microscope unless the purchaser
has special knowledge regarding the matching of components for
particular uses and has access to all of the parts needed.
Although the claimant's operation does not entail a complete
assembly of the microscopes, as in the foregoing T.D.'s, it does
involve the matching and selecting of specific microscope
components to fit the requirements of the customer order, an
alignment check and arrangement of the disassembled microscope
parts in a single container for exportation.
Based on the foregoing, uniting necessary microscope
components which result in a disassembled complete microscope,
and packaging the united components together is a manufacture
which is eligible for drawback under 19 U.S.C. 1313(a). The
operation is a manufacture or production whether or not the
objectives are left screwed into the nosepiece or unscrewed and
packaged separately alongside the other components.
HOLDING:
The subject operation of uniting microscope components for a
disassembled complete microscope is a manufacture under 19 U.S.C.
1313(a).
Sincerely,
Director,
International Trade
Compliance Division