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HQ 222609

November 7, 1990

DRA-4-CO:R:C:E 222609 CB

CATEGORY: DRAWBACK PROTEST

Regional Commissioner
U.S. Customs Service
300 N. Los Angeles Street
Los Angeles, CA 90012

RE: Application for further review of Protest No. 3001- 000006 under 19 U.S.C. 1313(j)

Dear Sir:

The above-referenced protest was forwarded to this office for further review. We have considered the points raised and our decision follows.

FACTS:

Protest is made against Customs refusal to pay a claim for drawback. Protestant claims that examination of the subject merchandise was waived by Customs in accordance with 19 CFR 191.141(b)(2)(ii) and that it is entitled to payment of drawback.

At issue are eight entries made between February 18, 1983, and February 12, 1986. The drawback claims were liquidated in October of 1989. Customs has taken the position that the entries were filed subsequent to the exportation of the subject merchandise, depriving Customs of an opportunity to examine the merchandise. It is protestant's position that examination of the merchandise was waived by the appropriate Customs officer. According to the protestant, the practice of the District was to allow retroactive waiver. Protestant continued to file in this manner until 1987 when the Los Angeles region informed protestant that it would no longer permit waiver of examination.

ISSUE:

Whether a drawback claim can be denied on the basis of Customs inability to examine merchandise prior to exportation as required by 19 CFR 191.141(b)(3)?

LAW AND ANALYSIS:

Section 313(j), of the Tariff Act of 1930, as amended (19 U.S.C. 1313(j)), generally provides for drawback on imported merchandise exported in the same condition as when imported, or destroyed under Customs supervision, and not used within the United States before such exportation or destruction. Customs administration of the same condition drawback laws is governed by 19 CFR 191.141. Generally, the regulations provide that merchandise must be exported, or destroyed under Customs supervision, within three years of importation; claimant must file the required documentation at least five working days prior to exportation; and Customs must be given an opportunity to examine the merchandise prior to exportation. In some instances, prior notice of intent to export may be waived by Customs.

You have based your denial of the subject drawback claim on C.S.D. 86-25 dated December 9, 1986. In that decision, Customs held that unless a retroactive waiver is given, a drawback claimant who exports without filing a notice of intent to export assumes the risk of a denial of drawback. C.S.D. 86-25 was clarified by C.S.D. 88-14 dated May 4, 1988. In that decision, Customs ruled that the requirement of prior notice may be waived by Customs "...at any time for any exporter-claimant....This would include retroactive waivers as provided for 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." In the instant case, all of the subject entries were granted waivers. Although the waivers were granted after exportation of the merchandise, the fact remains that they were granted. In view of C.S.D. 88-14, we see no reason or basis for a blanket denial of the subject drawback claims.

However, with respect to drawback entry 85-553113-5, drawback should be disallowed on import entry 81-543939-0 because the merchandise was exported more than three years after importation. The statute clearly requires that merchandise must be exported or destroyed before the close of the three-year period beginning on the date of importation in order to qualify for drawback. See 19 U.S.C. 1313(j). The records indicate that this particular import entry was made on September 12, 1981, but was not exported until October 5, 1984. Therefore, import entry 81-543939-0 is ineligible for drawback.

HOLDING:

Failure to file a notice of intent to export is not a basis to deny a drawback claim, if a valid waiver of notice has been issued by Customs.

This protest should be APPROVED except for entry No. 85- 553113-5. The protest must be DENIED as to entry no. 85-553113- 5.

Sincerely,

JOHN DURANT, Director

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