H309489

90 K Street, N.E., Washington, D.C. 20229-1177 U.S. Customs and Border Protection HQ H309489 June 11, 2021 DRA 2-01 OT:RR:CTF:ER H309489 CC John P. Donohue, Esq. Ciardi Ciardi & Astin One Commerce Square 2005 Market St., Suite 3500 Philadelphia, PA 19103 Re: Ruling Request Regarding Eligibility of Consolidated Corporation to Claim Substitution Unused Merchandise Drawback; 19 U.S.C. §1313(j)(2); 19 C.F.R. § 190.32 Dear Mr. Donohue: This responds to your February 3, 2020, request for a prospective ruling under 19 C.F.R. § 177.1(a)(1) on behalf of Volvo Car USA LLC (“Volvo Car USA”) regarding its eligibility to make claims for substitution unused merchandise drawback pursuant to 19 U.S.C. § 1313(j)(2) on Volvo passenger vehicles produced in the United States and exported against passenger vehicles it has previously imported from overseas. FACTS: Volvo Car USA LLC (“Volvo Car USA”) or its predecessor companies, has been importing finished Volvo automobiles and genuine Volvo car parts into the United States since 1955. In 2015, Volvo Car US Operations Inc. (“Volvo Car US Operations”) was established in Ridgeville, South Carolina to manufacture passenger vehicles. Both Volvo Car USA and Volvo Car US Operations were wholly owned subsidiaries of Volvo Car North America, LLC (“VCNA”). In 2016, VCNA was restructured to drop down most of its assets into Volvo Car USA so that VCNA would be the holding company of both Volvo Car USA and Volvo Car US Operations. In December 2019, Volvo Car US Operations and Volvo Car USA consolidated such that Volvo Car USA was the surviving corporate entity and Volvo Car US Operations became a division of Volvo Car USA. For legacy and marketing reasons, the U.S. production facility in Ridgeville, SC, may sometimes be referred to as “Volvo Car USA d/b/a Volvo Car US Operations.” You state, however, that Volvo Car US Operations ceased to exist as a separate legal entity and Volvo Car USA has now assumed the responsibility for all Volvo passenger vehicle import activity, Volvo passenger vehicle production in the United States, and subsequent export activity of Volvo products from the United States. You also indicate that since the reorganization, Volvo Car USA remains as the only corporation with only one board of directors, one C-suite, and operates as the sole importer and exporter of Volvo passenger vehicles in the United States. Volvo Car USA intends to export passenger vehicles produced by its division, Volvo Car US Operations. Volvo Car USA expects to file unused merchandise substitution drawback claims under 19 U.S.C. § 1313(j)(2) and it will match exports of Volvo automobiles produced in Ridgeville against automobiles previously imported by Volvo Car USA. These vehicles will be classified in the same the eight-digit Harmonized Tariff Schedule (“HTS”) subheading number as Volvo vehicles imported by Volvo Car USA. You write that “Volvo Car USA LLC will be the owner of both the imported and designated export merchandise.” In support of that statement, you assert that Volvo Car USA owns and controls the imported merchandise, it owns and controls the US production facility, and it owns and controls that facility’s output. ISSUES: Whether Volvo Car USA may claim drawback under 19 U.S.C. § 1313(j)(2) for substituted exported merchandise produced by its division Volvo Car US Operations. Whether the use of a formerly separate corporate entity name, Volvo Car US Operations, to identify the Ridgeville facility will restrict Volvo Car USA’s drawback rights. LAW AND ANALYSIS: As an initial matter, we note that this prospective ruling request does not implicate the drawback successorship provisions of 19 U.S.C. § 1313(s) because although Volvo Car USA consolidated with the formerly separate Volvo Car US Operations in 2019 and could be considered a drawback successor, the current iteration of Volvo Car USA will not be designating (A) imported merchandise which the predecessor, before the date of succession, imported; or (B) subject to . . . [19 U.S.C. §1313(j)(5) and (6)], imported merchandise, other merchandise classifiable under the same 8-digit HTS subheading number as such imported merchandise, or any combination of such imported merchandise and such other merchandise, that the predecessor received, before the date of succession, from the person who imported and paid any duties, taxes, and fees due on the imported merchandise; as the basis for drawback on merchandise possessed by the drawback successor after the date of succession. 19 U.S.C. § 1313(s)(2) (emphasis added); see also 19 C.F.R. § 190.32(f)(1). In this case, there is no statement in your request that Volvo Car USA, which includes the Volvo Car US Operations division, plans to claim substitution unused merchandise drawback on passenger vehicles which it has imported before the date of its consolidation with Volvo Car US Operations in 2019 and you note that “[n]o drawback application or drawback entry has been filed since the completion of the [2016] corporate reorganization . . .” Consequently, the drawback successor provisions of 19 U.S.C. § 1313(s) and 19 C.F.R. § 190.32(f) would not apply to the transactions planned by Volvo Car USA because the relevant import and export operations will all take place within a single successor corporation. Whether Volvo Car USA may claim drawback under 19 U.S.C. § 1313(j)(2) for substituted exported merchandise produced by its division Volvo Car US Operations. In relevant part, 19 U.S.C. §1313(j)(2) provides that: [I]f there is, with respect to imported merchandise on which was paid any duty, tax, or fee imposed under Federal law upon entry or importation, any other merchandise (whether imported or domestic), that— (A) is classifiable under the same 8-digit HTS subheading number as such imported merchandise; (B) is, before the close of the 5-year period beginning on the date of importation of the imported merchandise and before the drawback claim is filed, either exported or destroyed under customs supervision; and (C) before such exportation or destruction— (i) is not used within the United States, and (ii) is in the possession of, including ownership while in bailment, in leased facilities, in transit to, or in any other manner under the operational control of, the party claiming drawback under this paragraph, if that party— (I) is the importer of the imported merchandise, or (II) received the imported merchandise, other merchandise classifiable under the same 8-digit HTS subheading number as such imported merchandise, or any combination of such imported merchandise and such other merchandise, directly or indirectly from the person who imported and paid any duties, taxes, and fees imposed under Federal law upon importation or entry and due on the imported merchandise (and any such transferred merchandise, regardless of its origin, will be treated as the imported merchandise and any retained merchandise will be treated as domestic merchandise); then, notwithstanding any other provision of law, upon the exportation or destruction of such other merchandise an amount calculated pursuant to regulations prescribed by the Secretary of the Treasury under subsection (l) shall be refunded as drawback. Similarly, CBP’s implementing regulation, 19 C.F.R. § 190.32(a), provides that: Section 313(j)(2) of the Act, as amended (19 U.S.C. 1313(j)(2)), provides for drawback of duties, taxes, and fees paid on imported merchandise based on the export or destruction under CBP supervision of substituted merchandise (as defined in §?190.2, pursuant to 19 U.S.C. 1313(j)(2)), before the close of the 5-year period beginning on the date of importation of the imported merchandise and before the drawback claim is filed, and before such exportation or destruction the substituted merchandise is not used in the United States (see paragraph (e) of this section) and is in the possession of the party claiming drawback. The amount of duties, taxes, and fees eligible for

As an initial matter, we note that this prospective ruling request does not implicate the drawback successorship provisions of 19 U.S.C. § 1313(s) because although Volvo Car USA consolidated with the formerly separate Volvo Car US Operations in 2019 and could be considered a drawback successor, the current iteration of Volvo Car USA will not be designating (A) imported merchandise which the predecessor, before the date of succession, imported; or (B) subject to . . . [19 U.S.C. §1313(j)(5) and (6)], imported merchandise, other merchandise classifiable under the same 8-digit HTS subheading number as such imported merchandise, or any combination of such imported merchandise and such other merchandise, that the predecessor received, before the date of succession, from the person who imported and paid any duties, taxes, and fees due on the imported merchandise; as the basis for drawback on merchandise possessed by the drawback successor after the date of succession.19 U.S.C. § 1313(s)(2) (emphasis added); see also 19 C.F.R. § 190.32(f)(1). In this case, there is no statement in your request that Volvo Car USA, which includes the Volvo Car US Operations division, plans to claim substitution unused merchandise drawback on passenger vehicles which it has imported before the date of its consolidation with Volvo Car US Operations in 2019 and you note that “[n]o drawback application or drawback entry has been filed since the completion of the [2016] corporate reorganization . . .” Consequently, the drawback successor provisions of 19 U.S.C. § 1313(s) and 19 C.F.R. § 190.32(f) would not apply to the transactions planned by Volvo Car USA because the relevant import and export operations will all take place within a single successor corporation.Whether Volvo Car USA may claim drawback under 19 U.S.C. § 1313(j)(2) for substituted exported merchandise produced by its division Volvo Car US Operations. In relevant part, 19 U.S.C. §1313(j)(2) provides that:[I]f there is, with respec