HQ 224526: Ruling request concerning possession requirement to qualifyfor drawback under 19 U.S.C. 1313(j)(2); B.F. Goodrich Co. v.United States, CIT slip op. 92-68 (1992); C.S.D. 87-18 (June 15,1987).

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 224526

                          July 13, 1993


DRA-4 CO:R:C:E 224526  TLS

CATEGORY: Entry

Mr. Patrick D. Gill
Rode & Qualey
295 Madison Avenue
New York, New York  10017


RE: Ruling request concerning possession requirement to qualify
for drawback under 19 U.S.C. 1313(j)(2); B.F. Goodrich Co. v.
United States, CIT slip op. 92-68 (1992); C.S.D. 87-18 (June 15,
1987).


Dear Mr. Gill:

     This office has received the above-referenced request for a
ruling and has considered the points raised in your submissions. 
Our decision is as follows:

FACTS:

     Gelatin is imported for use in the importer's manufacturing
facilities in the United States.  The claimant also purchases
gelatin from a domestic manufacturer for use in its domestic and
overseas facilities.  It is claimed that the imported and
domestic gelatins are fungible and are used interchangeably.

     The claimant plans to hire a freight forwarder to act as its
agent and take possession of the gelatin material from the vender
for shipment overseas.  These shipments are accounted for by the
claimant as "in-transit inventory."  The claimant proposes to
claim substitution same condition drawback on the importations.

ISSUE:

     Whether the purchased domestic merchandise in this case is
within the possession of the drawback claimant sufficient enough
to sustain a substitution same condition drawback claim.

LAW AND ANALYSIS:

     Under 19 U.S.C. 1313(j)(2)(C), a drawback claimant must
export substituted merchandise in the same condition as the
imported merchandise upon its importation within three years of
the importation.  This merchandise must not have been used within
the United States before exportation and must have been within
the possession of the party claiming drawback.

     In B.F. Goodrich Co. v. United States, CIT slip op. 92-68
(1992), the court held that while possession of the imported
merchandise is not required of the drawback claimant, the
claimant must obtain possession of the exported substituted
merchandise to sustain a successful drawback claim.

     In this case, the claimant has hired a freight forwarder to
take possession of the purchased merchandise for shipment to
Europe on its behalf.  The exporter contends that it will
maintain complete control over the merchandise even though it
will not take physical possession of such except to export it. 
In cases where possession was at issue, Customs has made the
determining factor whether or not the claimant has complete
control over the merchandise on premises or locations where the
possessor can put the merchandise to any use chosen.  C.S.D. 85-52 (August 16, 1985); see also C.S.D. 81-76; C.S.D. 81-218.  From
the facts presented here, we find that the claimant does not have
such control over the subject merchandise.

     The concern in these types of cases is that commercial paper
is traded merely to establish a climate of drawback when no true
dominion over the merchandise is taken.  C.S.D. 81-76.  Whether
or not the exporter takes ownership directly itself or through an
agent is irrelevant to the question of possession.  The
establishment of ownership alone will not satisfy the possession
requirement.  Possession requires at least the possibility of
putting the merchandise to its intended use while in the physical
control of the possessor.

     The facts of this case indicate that such is not true here. 
The agent of the exporter is apparently only obtaining commercial
paper and rerouting the merchandise for immediate transport
overseas.  Clearly, the merchandise cannot be put to any use,
intended or otherwise, while in transport.  As noted above, the
B.F. Goodrich case left intact the possession requirement with
regards to exported merchandise in drawback claims.  Therefore,
we are compelled to find that the claimant in this case has not
met the all the requirements for drawback under 19 U.S.C.
1313(j)(2).

HOLDING:

     The exporter of the subject merchandise is not eligible for
substitution same condition drawback in this case because it did
not take possession of the exported merchandise as required under
19 U.S.C. 1313(j)(2).  This ruling is limited to the facts of
this case.

                    Sincerely,




                    John Durant, Director
                    Commercial Rulings Division