HQ 225897: 19 U.S.C. 1313(b); 19 CFR 191.34, 191.65 and 191.66; agency agreement; Certificate of Delivery; Certificate of Manufacture and Delivery

Native CBP ruling rendition. Applicability is fact-specific; modification/revocation relationships and original publisher date are retained. Publisher sentinel year0001 means unknown date, not a historical legal adoption.

                            HQ 225897
                        December 28, 1995

DRA-2-01-RR:IT:EC 225897 IOR

CATEGORY: Drawback

Judy L. Wells
Cardinal Stabilizers, Inc.
Post Office Box 345
Columbia, SC 29202

RE:  19 U.S.C. 1313(b); 19 CFR 191.34, 191.65 and 191.66; agency
     agreement; Certificate of Delivery; Certificate of
     Manufacture and Delivery

Dear Ms. Wells:

     This is in response to your letter dated December 23, 1994,
in which you request a ruling regarding manufacturing drawback
claims made by Cardinal Stabilizers, Inc. ("CSI") pursuant to a
manufacturing drawback contract approved under 19 U.S.C. 1313(b).

FACTS:

     CSI purchases through a variety of metals brokers imported,
duty-free, raw tin metal of various origin.  CSI then either has
its own trucks or a common carrier pick up and deliver said tin
metal to one of two locations of a domestic producer ("A") where
it is further processed into Stannic Chloride on a toll basis and
delivered to CSI's premises for manufacture into the exported
articles.  CSI maintains title to the tin metal throughout this
process.  Simultaneously, CSI imports Stannic Chloride of the
same kind and quality as that which is domestically produced from
imported, duty-free merchandise.  

     Cardinal Manufacturing, Inc.("CMI") has an approved drawback
contract (the abstract of the approval is published in T.D. 95-10(F)), which provides for the manufacture of various products
(Tetrabutyltin etc.) with the use of Stannic Chloride.  According
to the General Statement in the drawback statement signed August
1, 1994, CMI manufactures under contract for CSI on CSI's
premises, utilizing CSI personnel.  CSI will furnish CMI
Certificates of delivery for designated merchandise for
manufacture and CMI will furnish CSI Certificates of manufacture
and delivery for the manufactured products.  CSI will be the
exporter of the finished articles and the drawback claimant.

     You request our determination whether: 1) CSI must have an
agency agreement in place with A, since A is in fact using a
duty-free imported merchandise to produce the Stannic Chloride,
as opposed to A producing Stannic Chloride from domestically
sourced materials; and 2) CSI must require A to furnish CSI
Certificates of Manufacture and Delivery or Certificates of
Delivery for the merchandise which A produces.

ISSUE:

     Are Customs drawback regulations 19 CFR 191.34, 191.65 and
191.66, applicable to transactions and processing relating to
materials which are not "merchandise' or "articles" that are the
subject of the drawback statement.

LAW AND ANALYSIS:

     19 U.S.C. 1313(b) states:
     
     If imported duty-paid merchandise and any other
     merchandise (whether imported or domestic) of the same
     kind and quality are used in the manufacture or
     production of articles within a period not to exceed
     three years from the receipt of such imported
     merchandise by the manufacturer or producer of such
     articles, there shall be allowed upon the exportation,
     or destruction under customs supervision, of any such
     articles, notwithstanding the fact that none of the
     imported merchandise may actually have been used in the
     manufacture or production of the exported or destroyed
     articles, an amount of drawback equal to that which
     would have been allowable had the merchandise used
     therein been imported, but only if those articles have
     not been used prior to such exportation or destruction; 
     but the total amount of drawback allowed upon the
     exportation or destruction under customs supervision of
     such articles, together with the total amount of
     drawback allowed in respect of such imported
     merchandise under any other provision of law, shall not
     exceed 99 per centum of the duty paid on such imported
     merchandise.

     CMI's approved drawback statement pertains to the use of
Stannic Chloride in the manufacture or production of various
products, Tetrabutyltin, etc.  In the parallel columns of the
drawback statement, the Stannic Chloride is identified as
"Imported Merchandise" in the first column, and as "Duty-paid,
Duty-Free, or Domestic Merchandise" in the second column.  In the
drawback statement certain "articles" (Tetrabutyltin, etc.) are
identified as "Exported Articles On Which Drawback Will Be
Claimed."  In the context of the statutory language of 1313(b)
and applicable regulatory language, the term "merchandise" refers
to the merchandise identified in the parallel columns, and the
term "article" or "articles" refers to the articles described in
the "Exported Articles On Which Drawback Will Be Claimed"
section.

     To qualify for drawback under 19 U.S.C. 1313(b), the same
legal entity which used substituted merchandise to manufacture or
produce the exported articles must also use in manufacture or
production the duty-paid merchandise which is designated as the
basis for the claim.  See C.S.D. 89-12.  Customs Regulations
191.34(a) (19 CFR 191.34(a) provides, in pertinent part, that if
an owner of imported or domestic merchandise furnishes this
merchandise to an agent in accordance with a contract between the
two parties, and the agent manufactures from it articles for the
owner's account, the owner shall be considered the user of the
merchandise.  It is in this context that an agency agreement is
required between the parties.  As the "imported merchandise," the
raw tin metal, which is processed by A in this case is not the
"merchandise" which is the subject of the drawback statement,
there is no requirement for an agency agreement between A and CSI
or CMI.

     With respect to Certificates of Delivery and Certificates of
Manufacture and Delivery, Customs Regulations provide as follows:

     191.65   Certification of delivery.

     (a) When required. If the merchandise used in the
     manufacture of the exported articles was not imported
     by the manufacturer of the articles, no drawback shall
     be allowed until the drawback claimant files with the
     regional commissioner where the claim is to be
     liquidated a manufacturing drawback entry and/or
     certificate in duplicate on Customs Form 331, or
     official evidence of the existence of the form filed at
     another place. The form must describe the merchandise
     delivered, tracing it from the custody of the importer
     to the custody of the manufacturer.

     191.66   Certificates of manufacture and delivery.

     (a) When required. If the imported merchandise has
     undergone some process of manufacture before delivery,
     and the wholly or partially manufactured article
     thereafter is used in the manufacture of some other
     article for exportation, or when completely
     manufactured articles are purchased for exportation
     without further manipulation, the drawback claimant,
     whether the manufacturer or the exporter, shall file a
     manufacturing drawback entry and/or certificate on
     Customs Form 331.

Again, in the context of the regulations, the term "merchandise"
refers to the merchandise identified in the drawback statement,
i.e. the Stannic Chloride, and the term "articles" refers to the
articles identified in the drawback statement, i.e. the
Tetrabutyltin, etc.  The regulations do not apply to transactions
or processing relating to materials other than those which are
the subject of the drawback statement.  The regulations therefore
do not apply to the transactions and processing relating to the
raw tin metal.  Under the facts presented, no Certificates of
Delivery or Certificates of Manufacture and Delivery are required
to or from A.

     With respect to the substitute Stannic Chloride, imported
duty-free, CSI must be able to establish that the Stannic
Chloride is of the same kind and quality as the designated
Stannic Chloride, that it was used within three years from the
receipt of the designated imported merchandise and that the
completed articles were exported within five years after
importation of the designated merchandise.  19 U.S.C. 1313(b) and
(i).

HOLDING:

     Customs drawback regulations 19 CFR 191.34, 191.65 and
191.66 do not require an agency contract between A and CSI or
CMI, or Certificates of Delivery and Certificates of Manufacture
and Delivery for the processing of raw tin metal into Stannic
Chloride.






                                   Director
                                   International Trade
                                   Compliance Division