OT:RR:CTF:EPDR
H298174 SLJ
Center Director
Electronics Center for Excellence and Expertise
1 World Trade Center, Suite 741
Long Beach, CA 90831
RE: Protest number 5301-18-100335; Vestas American Wind Technology, Inc., 19 U.S.C. 1313(j)(1); direct identification unused merchandise drawback
Dear Center Director,
The following is in response to the Application for Further Review ("AFR") of protest number 5301-18-100335, filed on behalf of Vestas American Wind Technology, Inc. ("Vestas"). The decision follows.
FACTS:
The protestant, Vestas, filed drawback claim XXX-XXXXX01-7 concerning multiple entries of merchandise entered between April 29, 2017 and June 13, 2017. The merchandise is identified by Vestas and shipping documents as rail shipping brackets, also known as tower feet.
According to Vestas, rail shipping brackets support wind turbine towers while the towers are transported. The rail shipping brackets that are the subject of the drawback claim were imported and delivered to a job site in Warrensburg, Illinois. When the wind turbine towers were erected at the job site, Vestas stated that "the tower feet were separated from the towers." After this separation, most of the imported tower feet were then exported to Canada. Vestas filed for drawback on December 11, 2017, under 19 U.S.C. 1313(j)(1) for direct identification unused merchandise for the rail shipping brackets.
In a letter dated January 30, 2018, in response to U.S. Customs and Border Protection's ("CBP") request for more information, Vestas stated that "due to the extreme weight of the towers, some brackets are no longer useable and are scrapped. The brackets that are re-useable are shipped to other locations for use in transporting other towers by rail." The drawback claim was liquidated on March 23, 2018. The claim was denied for a failure to provide supporting documentation that would have allowed CBP to trace the merchandise from importation to exportation as required for drawback claims made under 19 U.S.C. 1313(j)(1) for direct identification unused merchandise.
Vestas then filed this protest on May 14, 2018, arguing that the presented documentation was sufficient to track the merchandise from importation through to exportation. Upon further review, our office has determined that the threshold issue of whether the merchandise has been used is determinative to whether the merchandise is eligible for drawback.
ISSUE:
Whether the imported merchandise has been used for purposes of direct identification unused merchandise drawback under 19 U.S.C. 1313(j)(1).
ANALYSIS:
As an initial matter, we note that this protest was timely filed. Pursuant to 19 U.S.C. 1514(c)(3)(A), a party must file a protest within 180 days after the date of liquidation. Here, CBP liquidated the subject drawback entry on March 23, 2018, and this protest was filed on May 14, 2018, within 180 days of that liquidation. Additionally, we also find that this protest meets the criteria for further review. Pursuant to 19 C.F.R. 174.24(b), this protest raises questions of law and fact concerning the liquidation of drawback claim XXX-XXXXX01-7, which have not been ruled upon by the Commissioner of CBP or his designee or by the Customs courts.
Drawback is the refund of certain duties, taxes, and fees imposed on imported merchandise that is granted when all applicable legal requirements are met. 19 U.S.C. 1313. Compliance with all applicable legal requirements is subject to verification by CBP. 19 C.F.R. 190.61(a). Under 19 U.S.C. 1313(j)(1)(B), drawback is permitted for merchandise that "is not used within the United States before such exportation or destruction." Thus, merchandise must be unused in order to qualify for drawback under this provision. Additionally, 19 U.S.C. 1313(j)(3) identifies certain operations that are not treated as a "use" of the merchandise for purposes of 1313(j)(1), "including, but not limited to, testing, cleaning, repacking, inspecting, sorting, refurbishing, freezing, blending, repairing, reworking, cutting, slitting, adjusting, replacing components, relabeling, disassembling, and unpacking." These additional operations are not considered a "use" for purposes of unused merchandise drawback, and as such, merchandise may still be eligible for drawback even if it has undergone operations such as those identified in 1313(j)(3).
CBP has defined unused merchandise in its regulations. Pursuant to 19 C.F.R. 190.2,
Unused merchandise means, for purposes of unused merchandise drawback claims, imported merchandise or other merchandise upon which either no operations have been performed or upon which any operation or combination of operations has been performed (including, but not limited to, testing, cleaning, repacking, inspecting, sorting, refurbishing, freezing, blending, repairing, reworking, cutting, slitting, adjusting, replacing components, relabeling, disassembling, and unpacking), but which does not amount to a manufacture or production for drawback purposes under 19 U.S.C. 1313(a) or (b).
CBP has further defined in its rulings that merchandise has been used for purposes of drawback when it has been employed for its intended purpose. Under this definition, "a finished article remains unused if subjected to an operation that does not result in the article being employed for the purpose for which it was intended and manufactured." Headquarters Ruling ("HQ") H292054 (Sept. 26, 2022). In H292054, a company wished to claim unused merchandise drawback on exported jewelry that was displayed in a retail store and tried on by prospective customers but was never sold. CBP determined that because the intended purpose of the jewelry is "to be worn for personal adornment by an end customer upon purchase," the jewelry was unused even after displaying the jewelry in store cases and potential customers trying the jewelry for fit. Thus, the jewelry, upon exportation, was eligible for unused merchandise drawback under 1313(j) because it had not been employed for its intended purpose.
In this case, Vestas imported rail shipping brackets to a job site in Illinois. The brackets were then separated from wind turbine towers and subsequently exported to Canada. Vestas states that the purpose of rail shipping brackets is "to support wind turbine towers while the towers are being transported." Thus, the intended purpose of the rail shipping brackets is to support wind turbine towers during transportation. Because Vestas states that the rail shipping brackets were separated from the wind turbine towers upon arrival at the job site in Illinois, we can conclude that the rail shipping brackets were attached prior to arrival in Illinois and during transportation to the job site.
Unlike the jewelry in H292054, which was not employed for its intended purpose even though it was displayed in store and tried on by customers, the rail shipping brackets have been employed according to their intended purpose. The rail shipping brackets are meant to support wind turbine towers during transportation, and the rail shipping brackets were in fact attached to wind turbine towers during transportation. Vestas stated in its own words that brackets are exported if they are "re-useable," further suggesting that the rail shipping brackets have been employed according to their purpose and used. Additionally, the use of the brackets to protect the towers does not align with any of the permissible operations contemplated by 1313(j)(3).
Because the rail shipping brackets have been used, they are ineligible for unused merchandise drawback under 1313(j). As such, we do not need to reach the issue of whether the documentation provided by Vestas is sufficient for purposes of a drawback claim.
HOLDING:
Based on the foregoing, the imported merchandise has been used for purposes of direct identification unused merchandise drawback under 19 U.S.C. 1313(j)(1). The merchandise is ineligible for drawback and the protest should be DENIED in full.
You are instructed to notify the Protestant of this decision no later than 60 days from the date of this decision. Any reliquidation of the entry or entries in accordance with the decision must be accomplished prior to this notification. Sixty days from the date of the decision, the Office of Trade, Regulations and Rulings will make the decision available to CBP personnel and the public on the Customs Rulings Online Search System ("CROSS") at https://rulings.cbp.gov/, or other methods of public distribution.
Sincerely,
For Yuliya A. Gulis, Division Director
Commercial and Trade Facilitation Division