HQ 223572: Protest #3001-91-100699 concerning denial of rejectedmerchandise drawback claim; 19 U.S.C. 1313(c) and (j).

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 223572

                         August 31, 1992


DRA-4/PRO-4 CO:R:C:E 223572  TLS

CATEGORY: Entry

District Director
U.S. Customs Service
909 First Avenue  Room 2039
Seattle, Washington  98174

RE: Protest #3001-91-100699 concerning denial of rejected
merchandise drawback claim; 19 U.S.C. 1313(c) and (j).


Dear Sir:

     The above-referenced protest has been forwarded to this
office for further review.  We have considered the points raised
by the protestant and your office.  Our decision follows.

FACTS:

     The protestant imports audio system components such as
radios, amplifiers, and speakers for automobiles to be sold as
after-market products in retail outlets.  The protestant's
supplier has a subsidiary based in California to handle, among
other things, its repair operations.  The supplier has a warranty
program which allows its customers to return defective
merchandise to the company for repair without additional charge.

     The protestant sends monthly shipments of defective
merchandise to the supplier for repair.  Those units that were
repaired or irreparable but not defective were sent back to the
protestant while those found to be irreparable are sent to the
protestant's customs broker in Seattle.  In this case, the units
in the broker's possession were then destroyed under Customs
supervision, as they were found to have no commercial value, even
as scrap.  The protestant at that point made five claims for
drawback on the destroyed merchandise under 19 U.S.C. 1313(j). 
The five claims were liquidated without drawback on May 19, 1991. 
The protestant acknowledges that it is uncertain about the extent
to which the defective units were used by the customers before
being returned.

     The protestant offers two types of warranties to its
customers.  A 12-month limited warranty on all merchandise listed
in its "Auto Sound" and "HI-COMP" catalogs applies to goods
proven to be defective under normal use and conditions in
material or workmanship within 12 months from the date of
original purchase.  "Special Performance Series" merchandise is
covered by a limited warranty applicable to the original
purchasers during the lifetime of the automobiles in which they
were first installed.  All other terms and conditions are the
same for each warranty.

     Customs considered the destroyed merchandise not eligible
for drawback under 1313(j) because the previous use of the goods
rendered them to be not in the same condition as imported.  The
protestant now wishes to obtain drawback under 1313(c) pursuant
to the rejected merchandise provision of that subsection.  This
protest was timely filed on June 14, 1991.  Because no import
entries were submitted, this ruling does not address issues such
as timeliness or the condition of the merchandise as imported.

ISSUE:

     Whether the subject merchandise is eligible for drawback
under 19 U.S.C. 1313(c) after having been used and returned by
the ultimate purchaser, found irreparable by the importer's
supplier of the goods, and then destroyed under Customs
supervision without exportation.

LAW AND ANALYSIS:

     Section 313(c) of the Tariff Act of 1930 (19 U.S.C. 1313(c))
covers situations involving claims for drawback on rejected
merchandise.  The statute reads in pertinent part as such:

     (c) Upon exportation of merchandise not conforming to
     sample or specifications... upon which the duties have
     been paid and which have been entered or withdrawn for
     consumption and, within ninety days after release from
     customs custody, unless the Secretary authorizes in
     writing a longer time, returned to customs custody for
     exportation, the full amount of the duties paid upon
     such merchandise shall be refunded as drawback, less 1
     per centum of such duties.  (Emphasis added.)

That the subject merchandise was rejected is not in dispute.  We
agree with the district's findings, that same condition drawback
under 19 U.S.C. 1313(j) cannot be granted because the goods are
not in the same condition that they were when imported, as is
required by that provision.  The importer itself acknowledges
such, noting that the goods have been used and attempted repairs
were futile.  Therefore, same condition drawback under section
313(j) cannot be had in this case.

     The importer contends that drawback should be allowed under
section 313(c) pursuant to the rejected merchandise provision. 
Specifically, the importer claims that while the provision does
not allow for drawback on merchandise that was destroyed but not
exported, Customs has allowed drawback for such when exportation
proved to be either impossible or futile.  The claimant cited
C.S.D. 83-104 (June 24, 1983) to support this proposition; the
ruling holds that drawback under 19 U.S.C. 1313(c) may not be had 
for merchandise not exported within five years of importation as
required by 19 U.S.C. 1313(i).

     The situation that was addressed in HQ 200059 differs from
the present situation.  In the former situation, the aircraft was
destroyed accidentally during a test flight.  In the present
case, the merchandise was destroyed deliberately in an attempt to
recover drawback under 19 U.S.C. 1313(j).  Moreover, neither
decision discussed the legal basis for disregarding the express
requirement in 19 U.S.C. 1313(c) for exportation to establish
drawback eligibility.  Further, in the recent case of B.F.
Goodrich v. U.S., CIT slip op. 92-68, reprinted in 26 Cust. Bull.
no. 24, p. 11, 16 (June 10, 1992), the court refused to allow
Customs to graft language onto a drawback statute that was
omitted by Congress.  Unlike 19 U.S.C. 1313(j) which conditions
drawback eligibility on exportation or destruction, 19 U.S.C.
1313(c) conditions eligibility on exportation alone.  It is clear
that goods here were not exported, as defined by the court in
Swan & Finch Co. v. U.S., 23 S. Ct. 702 (1903) or U.S. v.
National Sugar Refining Co., 39 C.C.P.A. 96 (1952).  Customs
lacks authority to impose requirements not set by Congress or to
disregard express requirements set by Congress.

     The importer has also submitted an affidavit of one of its
employees who claims that a Customs import specialist expressed
no problems with the importer's eligibility for drawback in this
case.  We find the affidavit unpersuasive in this case, given
that it avers to an informal conversation between the affiant and
a Customs import specialist, a Customs official who is not in a
position to make such determinations.  Consequently, we find no
basis to grant relief in this case.  Thus, inasmuch as the
exportation requirement has not been met, we do not find it
necessary to consider other points raised by the claimant.

HOLDING:

     The importer has failed to meet the exportation requirement
of 19 U.S.C. 1313(c) and therefore is not eligible to receive
rejected merchandise drawback on the subject merchandise.  The
Customs Service does not have legal authority to waive the
express statutory requirement of exportation under 19 U.S.C.
1313(c).  The merchandise is also not eligible for same condition
drawback under 19 U.S.C. 1313(j) because of its previous use.  






Accordingly, this protest should be denied in full.  A copy of
this decision should be attached to the Customs Form 19 and
provided to the protestant as part of the notice of action on the
protest.

                               Sincerely,




                               John Durant, Director