CON 12
OT:RR:CTF:ER
H282698 KF
Pierre Borie Thales Alenia Space France Establissement de Cannes
5 allee des Gabians, B.P. 99
06156 Cannes la Bocca Cedex France
RE: Petroleum imported for use in the manufacture of a satellite thruster system; use or repackaging of imported petroleum; exportation of an imported satellite; 19 U.S.C. § 1313(j)(1); 19 U.S.C. § 1313(a); proof of export.
Dear Mr. Borie:
This is in response to your letter, dated December 21, 2016, requesting a ruling on the drawback eligibility of propellant imported to power the thrusters of commercial communications satellites after launch into orbit and the documentary requirements to prove exportation.
FACTS:
Thales Alenia Space (“TAS”) is engaged in the manufacture and launch of commercial communications satellites. TAS contracts with launch companies around the world in order to launch its satellites into orbit. In order to launch its satellites from the territory of the United States, TAS imports its satellites and various types of propellant.
TAS states that it imports its satellites duty free under subheading 8802.60.30, Harmonized Tariff Schedule of the United States (“HTSUS”). TAS maintains that satellites may be imported duty free under subheading 8802.60.30, HTSUS, because they are exported when launched into space. TAS explains that once a satellite reaches a designated orbit, its ownership transfers to the satellite’s purchaser. Purchasers may be foreign or United States based satellite operators.
The type of propellant TAS imports is contingent upon the particular thruster system within a satellite being prepared for launch. Regardless of the type of propellant necessary for a satellite’s thruster system, TAS explains that it implements a consistent and singular importation process:
The propellant is shipped to the port of entry nearest to the launch facility, generally by ship in drums[,] in sea-containers that meet appropriate EPA standards. The containers are transported by land to the launch site, where generally about 2/3s of the propellant is loaded onto the satellite thrusters, and the 1/3 or so that is considered a “spare part” is returned to the country of origin...in the same containers.
TAS states that no quantity of the imported propellant is utilized during the launch of its satellites. The propellant is solely utilized to power a satellite’s thruster system after the satellite has been launched into orbit and activated.
ISSUES:
Whether propellant imported to power the thrusters of a commercial communications satellite launched into orbit from the territory of the United States, and unused propellant exported back to its country of origin, is eligible for drawback.
What documents are required to prove exportation of imported propellant within a satellite launched into orbit?
LAW AND ANALYSIS:
Whether propellant imported to power the thrusters of a commercial communications satellite launched into orbit from the territory of the United States, and unused propellant exported back to its country of origin, is eligible for drawback.
19 U.S.C. § 1313(j)(1) permits an importer to receive drawback on the duties, taxes, and fees paid on imported merchandise upon its entry or importation, so long as the merchandise is not used within the United States. The unused merchandise must be exported from the United States or destroyed under the supervision of United States Customs and Border Protection (“CBP”) within five years of its importation date. Id.
An article is used “if it is put to the purpose for which it was built,” or, used in the manufacture or production of another article. See HQ H258306 (May 28, 2015); and HQ H255109 (October 21, 2015). An article is not deemed used if subjected to the following operations, which may occur in combination: “testing, cleaning, repacking, inspecting, sorting, refurbishing, freezing, blending, repairing, reworking, cutting, slitting, adjusting, replacing components, relabeling, disassembling, and unpacking.” See HQ H255109 (quoting 19 U.S.C. §1313(j)(3)). We find that the process described by TAS of removing propellant from the drums or sea-containers in which it is imported, and transferring the portion of propellant not utilized within a thruster system to other containers in which it will be exported, constitutes a form of repacking. See HQ W229488 (December 23, 2002) (finding that removing toner ink from drums or barrels and pouring it into smaller containers for transport constituted repacking because the smaller containers were not made to fit a specific machine or commercial purpose, such that no change in the name, character, or use of the toner ink had occurred); see also HQ H073996 (November 30, 2009) (finding that pouring a chemical from one container into another container with distinct valves and connectors, for purposes of exportation, did not constitute a use because the essential characteristics of the chemical remained unchanged). In HQ H053646 (July 24, 2009), CBP found that “[b]iodiesel is manufactured to power diesel engines” such that biodiesel exported without being injected into an engine was not used. TAS explains that its spare propellant, never utilized within a satellite’s thruster systems, is exported back to its country of origin. Consequently, we find that the spare propellant imported by TAS which is not loaded into the thruster system of a satellite is unused and eligible for drawback under 19 U.S.C. § 1313(j)(1) if repackaged and exported from the United States within five years of the date of importation.
Akin to the biodiesel in HQ H053646, propellant is manufactured to power satellite thruster systems. Propellant therefore becomes used at the moment of its injection into a satellite thruster system. Id. Additionally, CBP has determined that an operation constitutes manufacturing if it “renders a commodity or article fit for a use for which it was not otherwise fit,” or, is necessary to dedicate an article to its intended use. See HQ 224646 (July 19, 1993) (citing United States v. International Paint Co. Inc., 35 C.C.P.A. 87, C.A.D. 376 (1948)); compare with HQ 223571 (March 19, 1992) (finding that injecting a dye into an article did not amount to manufacturing because the dye “had no effect” on the performance of the article). We find that Thales’ injection of propellant into a thruster system of a satellite constitutes manufacturing because the operation is necessary to render the satellite fit for its intended use in orbit, and critically affects the performance of the satellite. Consequently, we find that the propellant injected by TAS into the thruster systems of its satellites is ineligible for drawback under 19 US.C. § 1313(j)(1) because it is used to manufacture an operable satellite.
The components imported for use in the manufacture of an article may instead be eligible for drawback under 19 U.S.C. § 1313(a) if the final manufactured article is unused and exported or destroyed under the supervision of CBP within five (5) years from the date its components were imported. See CBP, What Every Member of the Trade Community Should Know About: Drawback, December 2004, available at CBP.gov. In HQ 224426 (May 12, 1993), CBP specifically found that drawback could be claimed on the imported and duty-paid parts used to manufacture a satellite in the United States that was subsequently exported to China for launch.
Pursuant to 19 C.F.R. 101(k), goods are exported when severed “from the mass of things belonging to [the United States] with the intention of uniting them to the mass of things belonging to some foreign country.” Though TAS’ satellites are launched from the United States, Customs previously interpreted the definition of exportation in the context of satellite launches in T.D. 68-206(1), finding that “satellites owned and controlled by an international organization which are launched so that they are permanently removed from the United States and are in international commerce are exported for drawback purposes.” See 15 Cust. B. & Dec. 1030. Customs subsequently characterized its decision as standing for the general proposition that “merchandise assembled into a communications satellite sent into permanent orbit in outer space” is exported for drawback purposes despite the satellite’s exportation destination not being within a foreign country. See T.D. 89-4. Customs explained that the policy objective underlying its decision was to “accommodate changing technology and business conditions.” Id. We note that outer space is not within the territory of any nation pursuant to the Treaty on Principles Governing the Activities of States in the Exploration and Use of Outer Space, Including the Moon and Other Celestial Bodies (“Outer Space Treaty”), ratified by the United States in 1967. See United States Department of State, Current Treaties and Agreements, https://www.state.gov/t/isn/5181.htm (last visited January 25, 2017). Article II of the Outer Space Treaty states that “[o]uter space…is not subject to national appropriation.” Id. Accordingly, we find that due to the commercialized technology and business conditions of communications satellite manufacture and launch, the definition of exportation includes satellites that are launched into permanent orbit from the territory of the United States by private entities. See T.D. 68-206(1), 15 Cust. B. & Dec. 1030. We therefore find that TAS’ satellites are exported and eligible for drawback on their duty-paid components under 19 U.S.C. § 1313(a).
What documents are required to prove exportation of imported propellant within a satellite launched into orbit?
Proof of exportation for propellant injected into the thruster system of a satellite launched into orbit may be submitted in the form of a cargo manifest issued by the launch company, accompanied by supporting documentation of launch and the satellite’s entry into orbit. See 19 C.F.R. § 191.72(a). Additional proof of exportation includes, but is not limited to, a loading report, sales invoice, sales contract, and transaction log. See CBP, What Every Member of the Trade Community Should Know About: Drawback, December 2004, 45-46, available at CBP.gov.
There is no single form or document required to prove exportation. Proof of exportation instead requires documentary evidence that “identifies the goods in issue and shows the fact of exportation [,] the date of exportation,” and the exporter. See HQ H082576 (January 18, 2012) (citing 19 C.F.R. § 191.72). Submission of multiple documents corroborating the fact and date of exportation, describing the merchandise, and identifying the ultimate purchaser of the satellite may serve as sufficient proof of exportation. Id. We note that in order to claim drawback under 19 U.S.C. § 1313(a), TAS must submit documents establishing the quantity of imported fuel within the exported satellite and whether any amount of fuel injected into a satellite’s thruster system was lost or wasted. See CBP, What Every Member of the Trade Community Should Know About: Drawback, December 2004, available at CBP.gov (“Drawback Manual”).
We direct you to CBP’s Drawback Manual in response to your general inquiry regarding the requisite procedures and documentation to file a drawback claim. Id. The Drawback Manual contains a comprehensive list of the accounting methods, records, exportation deadlines, and filing deadlines requisite for completing a drawback application under both 19 U.S.C. § 1313(a) and 19 U.S.C. § 1313(j)(1). Id.
HOLDING:
Based on the above, we find that propellant repackaged by TAS and unused from the date of its importation until exported from the United States is eligible for drawback subject to the terms of 19 U.S.C. § 1313(j)(1), and, propellant imported for injection into the thruster system of a satellite that remains unused prior to its exportation is eligible for drawback subject to the terms of 19 U.S.C. § 1313(a).
Please note that 19 C.F.R. § 177.9(b)(1) provides that “[e]ach ruling letter is issued on the assumption that all of the information furnished in connection with the ruling request and incorporated in the ruing letter, either directly, by reference, or by implication, is accurate and complete in every material respect.” If any fact in the transaction varies from the facts stipulated to herein, this decision shall not be binding on CBP, as provided for in 19 C.F.R. § 177.9(b).
Sincerely,
Monika R. Brenner, Acting Chief
Entry Process & Duty Refunds Branch