CBP Finds Satellite Propellant Eligible for Drawback Following Launch

Fuel for satellites used after they are launched into space is eligible for duty drawback because the launch is considered export, CBP said in a Feb. 24 ruling (here). Satellite manufacturer Thales Alenia Space asked CBP about drawback eligibility for satellite propellant, which "is solely utilized to power a satellite’s thruster system after the satellite has been launched into orbit and activated." Thales also sought CBP input on what documentation is necessary to prove export through launch.

Thales "contracts with launch companies around the world in order to launch its satellites into orbit" and, "in order to launch its satellites from" the U.S., the company imports the satellites and the propellant, CBP said. "Once a satellite reaches a designated orbit, its ownership transfers to the satellite’s purchaser," it said. While Thales asserted the fuel is eligible for drawback because it is unused prior to export, CBP disagreed. Only the spare propellant that is never loaded into the satellite's thruster system can be considered unused for drawback purposes if it's repackaged and exported from the U.S. within five years, the agency said.

The fuel loaded onto a satellite is treated differently, but still eligible for drawback, CBP said. That fuel "constitutes manufacturing because the operation is necessary to render the satellite fit for its intended use in orbit, and critically affects the performance of the satellite," CBP said. Instead, the fuel may be eligible for drawback under separate provisions that allow for drawback for final manufactured articles "unused and exported or destroyed under the supervision of CBP within five (5) years from the date its components were imported," the agency said. CBP considers satellites and its components to be "exported for drawback purposes despite the satellite’s exportation destination not being within a foreign country," CBP said. As such, "we find that due to the commercialized technology and business conditions of communications satellite manufacture and launch, the definition of exportation includes satellites that are launched into permanent orbit from the territory of the United States by private entities."

There's no "single form or document required to prove exportation," CBP said. Instead, "submission of multiple documents corroborating the fact and date of exportation, describing the merchandise, and identifying the ultimate purchaser of the satellite may serve as sufficient proof of exportation," it said. Thales may also need to submit documentation on "the quantity of imported fuel within the exported satellite and whether any amount of fuel injected into a satellite’s thruster system was lost or wasted," it said.