CBP Ruling H130976

HQ H130976 December 5, 2011 OT:RR:CTF:ER H130976 WAS Mr. Matthew Anderson Charter Brokerage 22762 Westheimer Parkway, Suite 530 Katy, TX 77450 Dear Mr. Anderson: This is in response to your letter dated October 29, 2010, concerning the approval for drawback successorship under 19 U.S.C. 1313(s)(2) for Evonik Cyro LLC. We note that Section 1313(s) applies to drawback claims made under 19 U.S.C. 1313(b) and 1313(j)(2). In your submission, you state that you intend to claim drawback under 19 U.S.C. 1313(b) and 1313(j)(2). Please note that in connection with your request, you will need to seek a modification of any 19 U.S.C. 1313(b) rulings that have been issued in the name of the predecessor. FACTS: Cyro Industries L.P. (hereinafter "Cyro Industries" or "predecessor") was a limited partnership in the state of New Jersey, which through various entities was owned by Evonik Degussa Corporation. Cyro Industries was converted from a New Jersey limited partnership to a Delaware limited liability company effective on June 30, 2008. Upon the conversion to Evonik Cyro LLC, Cyro Industries L.P. assigned by operation of law all rights, privileges, immunities, powers, duties, assets and liabilities from Cyro Industries L.P. to Evonik Cyro LLC. Evonik Cyro is a specialty chemical manufacturer and manufactures, methyl methacrylate monomer (MMA), polymethyl methacrylate (PMMA), other acrylic polymers and acrylic sheets. You state that Evonik Cyro LLC will designate the following: 1) Imported merchandise used by the predecessor before the date of succession as the basis for drawback on articles manufactured by the drawback successor after the date of succession; 2) Imported entries made by the predecessor, before the date of succession; and 3) Imported, commercially interchangeable merchandise for which the predecessor received, before the date of succession, from an importer who imported and paid any duty or fees due on the imported merchandise, a certificate of delivery transferring to the predecessor such merchandise. Furthermore, you state that Evonik Cyro LLC certifies as follows: 1) The transferred merchandise was not and will not be claimed by the predecessor; and 2) The predecessor did not and will not issue any certificate to any other person that would enable that person to claim drawback upon the transferred merchandise. You have provided the following documentary evidence: a certificate from the Secretary of the State of Delaware certifying that the attached Certificate of Conversion is a true and correct copy; a Certificate of Conversion of a New Jersey limited partnership under the name of "Cyro Industries" to a Delaware limited liability company, changing its name from "Cyro Industries" to "Evonik Cyro LLC"; a Certificate from the Secretary of the State of Delaware certifying that the attached Certificate of formation of "Evonik Cyro LLC" is a true and correct copy; a Certificate from the State of Delaware of the formation of the limited liability company "Evonik Cyro LLC." ISSUE: Whether Evonik Cyro has established a right to claim drawback under 19 U.S.C. § 1313(s). LAW AND ANALYSIS: Evonik submitted a letter dated October 29, 2010, that was revised on January 4, 2011, requesting the designation of merchandise by successor pursuant to 19 U.S.C. § 1313(s). Section 1313(s) of Title 19 sets forth the requirements for successorship. 19 U.S.C. § 1313(s)(1) provides as follows: For purposes of section 1313(b), a drawback successor may designate imported merchandise used by the predecessor before the date of succession as the basis for drawback on articles manufactured by the drawback successor after the date of succession. See also 19 C.F.R. § 191.32(f). 19 U.S.C. § 1313(s)(2) provides that for purposes of section 1313(j)(2): A drawback successor may designate: (A) imported merchandise which the predecessor, before the date of succession, imported; or (B) imported merchandise, commercially interchangeable merchandise, or any combination of imported and commercially interchangeable merchandise for which the predecessor received, before the date of succession, from the person who imported and paid any duty due on the imported merchandise a certificate of delivery transferring to the predecessor such merchandise; as the basis for drawback on merchandise possessed by the drawback successor after the date of succession. See also 19 C.F.R. § 191.32(f)(1). Pursuant to 19 U.S.C. § 1313(s)(3), a drawback successor means: An entity to which another entity (in this section referred to at the 'predecessor') has transferred by written agreement, merger or corporate resolution - (A) all or substantially all of the rights and privileges, immunities, powers, duties, and liabilities of the predecessor; or (B) the assets and other business interests of a division, plant, or other business unit of such predecessor, but only if in such transfer the value of the transferred realty, personalty, and intangibles (other than drawback rights, inchoate or otherwise) exceeds the value of all transferred drawback rights inchoate or otherwise. See also, 19 C.F.R. §§ 191.22(d)(2) and 191.32(f)(2). Evonik states that upon the conversion to Evonik Cyro LLC, Cyro Industries L.P. assigned by operation of law all rights, privileges, immunities, powers, duties, assets and liabilities from Cyro Industries L.P. to Evonik Cyro LLC. Evonik provided a certificate of conversion from the State of Delaware showing the conversion of a New Jersey limited partnership under the name of "Cyro Industries" to a Delaware limited liability company, changing its name from "Cyro Industries" to "Evonik Cyro LLC" as of June 27, 2008. Evonik also submitted a Cyro Balance Sheet for the period January 2009 through December 2009, which shows that the value of the transferred realty, personalty, and intangibles from Cyro Industries to Evonik Cyro LLC was valued at an amount that exceeds the value of all transferred drawback rights. Accordingly, Evonik has satisfied the requirements of 19 U.S.C. §§ 1313(s)(3)(A) and (B). Pursuant to 19 C.F.R. §§ 191.22(d)(3)(iii) and 191.32(f)(3)(iii), in instances in which assets and other business interests of a division, plant or other business unit of a predecessor are transferred, the predecessor or successor must specify, and maintain supporting records to establish, the value of the drawback rights and the value of all other transferred property. Evonik states that as the successor, it will maintain supporting records to establish, the value of the drawback rights and the value of all other transferred property. Accordingly, Evonik has satisfied the requirements of 19 C.F.R. §§ 191.22(d)(3)(iii) and 191.32(f)(3)(iii). Specifically, certain certifications and evidence are required to establish claims under section 1313(s) and the CBP regulations. The statute, in 19 U.S.C. § 1313(s)(4) provides that no drawback will be paid under this subsection until either the predecessor or the drawback successor certifies that the successor is in possession of the predecessor's records that are necessary to establish the right to drawback under the law and regulations with respect to the merchandise or drawback product. In its letter, Evonik Cyro LLC asserts that "it is in possession of the predecessor's records which are necessary to establish the right to drawback under the law and regulations." Therefore, Evonik has provided the requisite certification pursuant to 19 U.S.C. 1313(s)(4). See also 19 C.F.R. § 191.32(f)(3)(i). In 19 U.S.C. § 1313(s)(4)(A), the statute provides that no drawback will be paid under this subsection until either the predecessor or the drawback successor certifies that the transferred merchandise was not and will not be claimed by the predecessor. Evonik states in its letter that "[t]he transferred merchandise was not and will not be claimed by the predecessor." Based on these statements, Evonik has provided the requisite certification set forth in 19 U.S.C. § 1313(s)(4)(A). See also 19 C.F.R. § 191.32(f)(3)(ii). The statute in 19 U.S.C. 1313(s)(4)(B), provides that no drawback will be paid under this subsection until either the predecessor or the drawback successor certifies that the predecessor did not and will not issue any certificate to any other person that would enable that person to claim drawback. Evonik states in its letter that "[t]he predecessor did not and will not issue any certificate to any other person that would enable that person to claim drawback upon the transferred merchandise." Based on this statement, Evonik has provided the requisite certification set forth in 19 U.S.C. 1313(s)(4)(B). See also 19 C.F.R. § 191.32(f)(3)(ii). HOLDING: Based on our review of the facts and supporting documents in this case, Evonik Cyro is the drawback successor of Cyro Industries for purposes of 19 U.S.C. 1313(s) and may be entitled to a drawback claim pursuant to 19 U.S.C. 1313 (b) and 1313(j)(2), provided that all of the other requirements under these provisions have been met. If you have any further questions, please do not hesitate to contact Wende Schuster of my office at (202) 325-0008. Sincerely, Myles B. Harmon, Director Commercial & Trade Facilitation Division 2