HQ 224752

October 29, 1993

DRA-4-CO:R:C:E 224752 AJS

CATEGORY: Drawback

Deputy Regional Director

Commercial Operations

Pacific Region

U.S. Customs Service

One World Trade Center, Ste. 705

Long Beach, CA 90831-0700

RE: Protest for further review number 2809-92-100970; Same

condition drawback; 19 U.S.C. 1313(j)(1); 19 U.S.C. 1313(j)(4);

incidental operations; testing; C.S.D. 82-7; \"manufacture or

production\"; Anheuser Busch v. U.S.

Dear Sir or Madame:

This is our decision in protest for further review number

2809-92-100970, dated May 27, 1992, concerning the issue of same

condition drawback.

FACTS:

The subject merchandise consists of notebook computers for

which the protestant seeks a refund under the same condition

drawback law. These computer were sold to distributors of

computer peripherals. After this sale, the computers were tested

and evaluated by the distributors. The testing and evaluation

involved the computers compatibility with software applications,

hard disk drive performance, battery depletion rate, and

reliability of the computers over a period of days. The

computers did not perform these operations to the satisfaction or

the specifications of the distributors and were returned to the

protestant for a credit. It is claimed that the condition of the

computers was not changed in any manner by this testing, and that

the computers could be properly used again.

ISSUE:

Whether the subject computers were in the same condition

upon exportation as importation within the meaning of 19 U.S.C.

1313(j)(1). More specifically, whether the subject operations

performed on the computers constitute incidental operations

within the meaning of 19 U.S.C. 1313(j)(4).

-2-

LAW AND ANALYSIS:

19 U.S.C. 1313(j) provides that: (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, or

\(ii\) destroyed under Customs supervision; 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. The specific issue in this case is whether the

subject computers were used in the United States and thus

ineligible for same condition drawback.

19 U.S.C. 1313(j)(4) partially provides that: 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). The protestant argues that because the subject

computers were merely tested by the distributors, that therefore

they were subject to only incidental operations, and thus not

used in the United States. In this case, the computers were

subject to various types of tests to determine if they would

operate to the distributor\'s satisfaction and specifications.

These tests did not effect a change in the condition of the

computers nor did the tests prevent them from being properly used

again.

In C.S.D 82-7, we ruled that the testing and inspecting of

television sets were incidental operations. Therefore, we

conclude that the described testing of the subject computers is

an incidental operation within the meaning of section 1313(j)(4)

and did not change the condition of the computers in this

instance.

-3-

Section 1313(j)(4) requires that an incidental operation

performed on an article also cannot amount to a \"manufacture or

production\". A \"manufacture or production\" has been defined as a

process which transforms an article into a new and different

article with a different name, character or use. Anheuser Busch

v\. United States, 207 U.S. 556 (1907). In this instance, the

testing of the computers did not transform them into a new and

different article. After testing, the computers are still the

same computers. Accordingly, the testing in question does not

amount to a \"manufacture or production\" of the subject computers

nor does the testing change the condition of the computers.

Consequently, the computers are in the same condition upon

exportation as importation within the meaning of section

1313(j)(1).

HOLDING:

The protest is granted. The subject computers are eligible

for same condition drawback pursuant to 19 U.S.C. 1313(j)(1)

because they were subject to only incidental operations and thus

cannot be considered used within the United States before

exportation.

In accordance with Section 3A(11)(b) of Customs Directive

099 3550-065, dated August 4, 1993, Subject: Revised Protest

Directive, this decision should be mailed by your office to the

protestant no later than 60 days from the date of this letter.

Any reliquidation of the entry in accordance with the decision

must be accomplished prior to mailing of the decision. Sixty

days from the date of the decision the Office of Regulations and

Rulings will take steps to make the decision available to customs

personnel via the Customs Rulings Module in ACS and the public

via the Diskette Subscription Service, Lexis, Freedom of

Information Act and other public access channels.

Sincerely,

John Durant, Director

Commercial Rulings Division