Computer work station reworked for the European marketcannot receive manufacturing drawback; 19 U.S.C. 1313(a)

HQ 223147 July 24, 1991 DRA-4-CO:R:C:E 223147 SR CATEGORY: Drawback Mr. Kevin M. Diran Armen Cargo Services Inc. S.F.I.A. BLDG. 8 P.O. Box 280661 San Francisco, CA. 94128 RE: Computer work station reworked for the European market cannot receive manufacturing drawback; 19 U.S.C. 1313(a) Dear Mr. Diran: This is in reference to your letter dated April 15, 1991, concerning manufacturing drawback for computer work stations imported from Korea that are reworked for the European market. FACTS: The merchandise at issue is computer work stations that are imported from Korea. In the United States they are altered to conform to European requirements. The following processes are performed on the computer work stations prior to their exportation to Europe: 1. A new substantially upgraded logic board is installed with a BIOS. The language displayed on the screen is also changed from English to German, French, Spanish or another appropriate language. 2. The power supply is changed to adapt to European current requirements. 3. New and appropriate "keyboard characters" are installed depending on the foreign language utilized. ISSUE: Whether the reworked computer work stations qualify for manufacturing drawback. -2- LAW AND ANALYSIS: Drawback for articles that are manufactured or produced in the United States is provided for in 19 U.S.C. 1313(a) which reads as follows: (a) Upon the exportation of articles manufactured or produced in the United States with the use of imported merchandise, the full amount of the duties paid upon the merchandise so used shall be refunded as drawback, less 1 per centum of such duties. In order for a procedure to be considered a manufacture or production a transformation must occur; a new and different article must emerge having a distinctive name, character or use (Anheuser-Busch Brewing Association v. United States, 207 U.S. 556(1907)). Articles that are reconditioned, reworked, or adjusted are not considered to be manufactured or produced for drawback purposes. An article that is reconditioned, reworked, or adjusted may have some new functions or uses; however, the general use of the article is not changed and the new use is not distinctive. In the case at issue the computer work stations are altered so that they can be used in Europe; however, they still function as computer work stations. Headquarters Ruling Letter 221569, dated August 21, 1990, concerns printers that were imported and then put through a conversion process which allowed them to perform more functions. This ruling held that the process performed was in the nature of a mechanical adjustment or rework operation that enhances the capability of a fully manufactured article. The essential nature, character, and utility remain unchanged; therefore the printers were not manufactured or produced for drawback purposes. In C.S.D. 89-73, ultrasound units from Japan are imported and altered to bring them into compliance with European regulatory requirements. All labels were replaced with labels in German; wiring, external power cord, footswitch and fuses were all exchanged with compliant parts. These procedures constituted a reworking or reconditioning and were not considered a manufacture or production for drawback purposes. HOLDING: The procedures performed to the computer work stations are considered a reworking. The altered computer stations do not -3- have a distinctive name, character, or use. They do not qualify for manufacturing or production drawback under 19 U.S.C. 1313(a). Sincerely, John Durant Director Commercial Rulings Division