HQ 224434: Internal Advice request concerning same condition drawback onimported vessel; 19 U.S.C. 1313(j)(1); Customs ruling HQ 222262(April 5, 1990).

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 224434

                          June 3, 1993


DRA-4 CO:R:C:E 224434  TLS

CATEGORY: Entry

Chief, Drawback Branch
U.S. Customs Service
New York Region
6 World Trade Center
New York, New York  10048-0945

RE: Internal Advice request concerning same condition drawback on
imported vessel; 19 U.S.C. 1313(j)(1); Customs ruling HQ 222262
(April 5, 1990).


Dear Madam:

     This office has received the above-referenced request for
internal advice as provided for under Customs regulations.  We
have considered the request and made the following decision.

FACTS:

     A yacht was imported and then transported to the importer's
premises via truck and trailer hitch.  Once there, additional
equipment was installed on the boat, which includes the mast,
rigging, sails, safety equipment, and spare parts for all
systems.  The additional equipment was not imported with the
yacht.

     After the installations, the boat was then tested and put
through sea trials.  It was subsequently sold pursuant to a
contract and exported to the purchaser after being examined by a
Customs official.  The yacht was exported over sea using its own
power.

ISSUE:

     Whether the yacht qualifies for same condition drawback when
additional equipment was installed after importation.

LAW AND ANALYSIS:

     The relevant law in this case, 19 U.S.C. 1313(j)(1) and (4),
provides for the following:

       (1) If imported merchandise, on which was paid any
     duty, tax, or fee imposed under Federal law because of
     its importation--
          (A) is, before the close of the three-year
          period beginning on the date of importation-
               (i) exported in the same condition
               as when imported,... and 
          (B) is not used within the United States
          before such exportation or destruction; 
     then upon such exportation or destruction 99 per centum
     of the amount of each such duty, tax, and fee so paid
     shall be refunded as drawback....

       (4) The performing of incidental operations
     (including, but not limited to, testing, cleaning,
     repacking, and inspecting) on--
          (A) the imported merchandise itself in cases
          to which paragraph (1) applies,...
     that does not amount to manufacture or production for
     drawback purposes under the preceding provisions of
     this section shall not be treated as a use of that
     merchandise for purposes of applying paragraph (1)(B)
     or (2)(C).  (Emphasis added.)

     We have determined in previous cases what constitutes a
manufacture or production that would preclude drawback.  In one
case, drawback was denied because a vehicle was fitted with
equipment after importation to prepare it for a particular
market.  HQ 222262 (April 5, 1990).  It was ruled that the
equipment installation constituted a change of condition. 
Customs rulings HQ 222470 (August 20, 1990) and HQ 221415
(February 23, 1990) also found a change of condition under
similar circumstances.

     In the present case, there is no doubt equipment is being
installed after importation.  In fact, the equipment that is
added on is more essential to the operation of the subject vessel
than was the equipment for the vehicle in HQ 222262.  This goes
beyond incidental operations as allowed under statute.  While the
imported product might not be identifiable as anything but a
yacht, the installation of parts to make it seaworthy violates
the same condition requirement.  Thus, the assembly alone changes
the yacht's condition to the extent that the subject transaction
is ineligible for drawback.

     For the importer's future information, this type of
transaction is well suited for a temporary importation bond
(TIB).  TIBs are posted in situations like the present where the
imported will certainly be exported after alterations have been
made.  We have enclosed various pamphlets to be passed along to
the importer for its future benefit, which explain the TIB
process and other procedures in more detail.

HOLDING:

     The installation of equipment on the vessel after
importation changes its condition, rendering ineligible for
drawback under 19 U.S.C. 1313(j)(1).


                    Sincerely,




                    John Durant, Director
                    Commercial Rulings Division