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HQ 223572

August 31, 1992

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


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.


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.


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.


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.


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.


John Durant, Director

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