CLA-2 CO:R:C:S W557111 RA
Mr. Bruce H. Leeds
Manager, Export/Import Operations RC/R50/J562
Hughes Aircraft Company 6775 Centinela Ave.
Los Angeles, California 90094
RE: Dutiable status of debris from a U.S.-made communications 'satellite which exploded shortly after launch in China
Dear Mr. Leeds:
This is in response to your letter of January 18, 1993, regarding the classification of recovered pieces of a satellite exported from the U.S. to China for launching into space.
FACTS:
A communications satellite built by your company in California with imported, duty-paid components was sent to China for launching in order to provide commercial telecommunications capabilities for Australia, New Zealand and New Guinea. However, due to a malfunction, the satellite exploded shortly after it was launched on December 21, 1992. Pieces which fell to Earth downrange from the launch site have been collected for shipment to the U.S. as required by the export license for the project.
Your question as to the eligibility of the exported satellite for drawback was answered in our letter to you dated May 12, 1993.
We stated in that letter that the satellite was "exported" from the U.S. within the meaning of 10 u.s.c. 1313(a) and, therefore, it qualifies for drawback under that statute.
ISSUE:
What is the dutiable status of the satellite debris when returned to the U.S.?
LAW AND ANALYSIS:
You express the belief that the imported recovered satellite debris should be considered metal waste or scrap as it is chiefly made up of metal. Further, you contend that it should be classified under subheading 9801.00.80, Harmonized Tariff Schedule of the United States (HTSUS), with duty not exceeding the amount of any drawback allowed on the exportation of the satellite.
Subheading 9801.00.80, HTSUS, applies to articles previously exported from the U.S. which, except for U.S. note 1 of subchapter I, Chapter 98, HTSUS, would qualify for free entry under one of the preceeding subheadings in the subchapter and are not otherwise free of duty. The duty column for this provision provides for "[a] duty equal to the duty upon the importation of like articles not previously exported, but in no case in excess of the sum of (a) any customs drawback proved to have been allowed on such exportation, and (b) any internal revenue tax imposed..." U.S. note 1 of subchapter I provides, in pertinent part, that the provisions in subchapter I (except subheadings 9801.00.70 and 9801.00.80) do not apply to any article exported with benefit of drawback.
Subheading 9801.00.10, HTSUS, accords duty-free treatment to products of the U.S. which are returned without having been advanced in value or improved in condition while abroad. It is your contention that had no drawback been involved on the exportation of the satellite, the returned debris would be entitled to free entry under subheading 9801.00.10, HTSUS.
However, under this tariff provision, the same article must be returned as was exported. Shell Oil Company of Canada, Ltd.
v. United States, 27 CCPA 94, C.A.D. 68 (1939). We believe that this requirement is not satisfied in this case where a completed communications satellite was exported and only metal scrap is returned. Accordingly, we are of the opinion that subheading 9801.00.80, HTSUS, would not be applicable.
Thus, the recovered debris would be classified as metal waste or scrap according to the particular metallic content involved. You will note that most HTSUS provisions encompassing metal waste or scrap contain a free rate of duty. Section note 5 of the Explanatory Notes relating to Section XV, HTSUS, states in regard to the classification of composite articles that where an article contains two or more base metals it is treated as an article of the metal predominating by weight over each of the other metals.
HOLDING:
The provisions of subheading 9801.00.80, HTSUS, do not apply to imported debris from a U.S.-made satellite destroyed upon launching abroad as it is not the same product as was exported.
However, the debris would be classifiable as metal waste or scrap according to the particular metallic content involved.
Pursuant to our January 27, 1993, letter to your office, we are treating this entire ruling as confidential. The ruling will not be readily available to customs field offices through the customs Ruling Module under the Automated Commercial System (ACS). Accordingly, your company is responsible for providing a copy of this ruling to the pertinent customs field offices.
Sincerely,
John Durant, Director
Commercial Rulings Division