HQ 0219828 - Internal Advice Regarding the Use of the Exporter's Summary Procedure for Same Condition Drawback; C.S.D. 84- 95 Reconsidered - United States International Trade Commision Rulings

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HQ 219828

May 4, 1988

DRA-1-03 CO:R:C:E 219828 RB

CATEGORY: DRAWBACK

Regional Commissioner of Customs
Southwest Region
Houston, Texas 77057

RE: Internal Advice Regarding the Use of the Exporter's Summary Procedure for Same Condition Drawback; C.S.D. 84- 95 Reconsidered

Dear Sir:

This is in reference to your request for internal advice dated September 17, 1987, file DRA-4-O:C JWB:lcs, with attachments, requesting a review of Customs Service Decision (C.S.D.) 84-95 which permitted a "claimant" other than the exporter to use the exporter's summary procedure when filing for same condition drawback.

FACTS:

Company H imported certain merchandise, duty-paid, which it agreed to sell to Company G for export only. The merchandise was moved into a foreign-trade zone in several shipments, and thereafter sold to Company G. During this time the merchandise had no official zone status, not having yet been formally admitted to the zone (19 CFR 146.22(c)). Following its physical segregation therein, the merchandise was formally transferred to the zone in zone-restricted status on Customs Form (CF) 214, so as to be considered exported for purposes of same condition drawback under 19 U.S.C. 1313(j)(1), the transferor in this situation, or exporter, being G company, as noted on the CF 214 as well as on the same condition claim form, CF 7539. G authorized H to make entry for and collect the drawback (Block 26 on CF 7539).

No prior notice of an intent to export in this manner was given to Customs as ordinarily required (19 CFR 191.141(b)(2)(i)), but H declares in essence that none was necessary because, as the drawback claimant, it had been authorized to use the exporter's summary procedure (19 CFR 191.53), which, under the circumstances, operated as a waiver of the prior notice requirement in same condition drawback (see 19 CFR 191.141(d)). Citing C.S.D. 84-95 which held that a "claimant" other than the exporter could be allowed use of the exporter's summary procedure, H maintains that this "claimant," and not the transferor or exporter, is the party responsible for either complying with the prior notice requirement or obtaining a waiver thereof (19 CFR

ISSUES:

Whether the exporter is the party obligated either to satisfy, or obtain a waiver of, the regulatory requirement of giving prior notice of intent to export under the same condition drawback law, 19 U.S.C. 1313(j); and whether a "claimant" other than the exporter may be authorized to use the exporter's summary procedure for same condition drawback.

LAW AND ANALYSIS:

Merchandise eligible for same condition drawback, 19 U.S.C. 1313(j)(1), may be transferred to a foreign-trade zone in zone-restricted status pursuant to the fourth proviso to section 3 of the Foreign-Trade Zones Act (FTZA), as amended, 19 U.S.C. 81c(a), and 19 CFR 146.44(c)(1), and thereby be considered exported for drawback purposes. The regulation governing same condition drawback in this respect is 19 CFR 191.165 which states that the procedures described in 19 CFR 191.141 for same condition drawback generally shall be followed as applicable.

Notably, there is a regulatory prerequisite in same condition drawback whereby prior notice of an intent to export must be given to Customs, as prescribed in {191.141(b)(2)(i). No such notice was given in this case, nor was it validly waived by Customs ({191.141(b)(2)(ii)). In this connection, pursuant to 19 CFR 191.166 (and 19 CFR 191.73; and see 19 Op. Atty. Gen. 638 (1890), reprinted in T.D. 10186), it is the transferor, or exporter [company G in this case], which is the sole principal party entitled as such to claim same condition drawback. Any other party filing for same condition drawback in this regard does so only as an agent of the exporter. In other words, the real party-in-interest, or "claimant" as it were, would, under the law, be the exporter. Treating "exporter" and "claimant" as separate and distinct parties in {{191.53 and 191.141 would irreconcilably collide with this longstanding regulatory scheme.

It is sufficient to say that the owner and shipper to the foreign port, i.e., the exporter, may collect the drawback, and he may collect it by his duly authorized agent (emphasis added)(19 Op. Atty. Gen. 638, 643 (1890); also see Headquarters letter dated March 7, 1988, file 219978; and Headquarters letter dated August 14, 1987, file 219467, p.2).

Along these very lines, an "exporter-claimant" in {191.53 plainly refers to "[c]laimants who are the exporters of the articles on which they claim drawback" (Proposed Rule Making, Drawback, Proof of Export, 36 F.R. 4046 (1971); T.D. 72-310).

It is well settled that drawback regulations are mandatory, have the force and effect of law, and that compliance therewith is a condition precedent to the right of recovery (see, e.g., Swift & Co. v. United States, 10 Cust. Ct. 198, 200 (1943)).

The requirement of prior notice in same condition drawback may, however, be waived by the appropriate Customs office in the reasonable exercise of its discretion "at any time for any exporter-claimant" (emphasis added) ({191.141(b)(2)(ii)). This would include retroactive waivers as provided in C.S.D. 85-35. To this end, in the absence of a clear abuse of discretion, Customs Headquarters will not substitute its judgment for that of the appropriate field office (see C.S.D. 83-1; C.S.D. 83- 68).

HOLDING:

The exporter is the party obligated either to satisfy or obtain a waiver of the prior notice requirement in same condition drawback, {1313(j). The only "claimant" in same condition drawback is the exporter.

EFFECT ON OTHER RULINGS:

C.S.D. 84-95 is hereby modified accordingly. Also, C.S.D. 86-25, which appears to preclude retroactive waivers of the prior notice requirement, is modified in conformance with C.S.D. 85-35.

Sincerely,

John A. Durant
Acting Director
Commercial Rulings Division

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