HQ 0222017 - 19 USC 1558(b); 19 CFR 158.45; refund of duty on exportation of merchandise; 19 USC 1313(j); same condition drawback; no conflict between 19 USC 1558 and 19 USC 1313 - United States International Trade Commision Rulings

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HQ 222017

July 31, 1991

ENT-1-03 CO:R:C:E 222017 C

CATEGORY: DRAWBACK

Gary A. Ryan
President
AIRPORT BROKERS CORPORATION
P.O. Box 68668
Seattle, WA 98148

RE: 19 USC 1558(b); 19 CFR 158.45; refund of duty on exportation of merchandise; 19 USC 1313(j); same condition drawback; no conflict between 19 USC 1558 and 19 USC 1313

Dear Mr. Ryan:

This responds to your letter of December 22, 1989, concerning section 158.45(d) of the Customs Regulations. You suggested that the provision be deleted from the regulations because it conflicts with the same condition drawback law, 19 U.S.C. 1313(j).

You stated that your client was unable to benefit from the provision of section 158.45, which authorizes the refund of duty upon the exportation of merchandise in certain circumstances. The refund applies to merchandise in Customs custody for which entry has not been completed (158.45(a)), merchandise which has remained in Customs custody that is covered by a liquidated or unliquidated consumption entry (158.45(a)), and merchandise entered in good faith for consumption but later found to be prohibited entry under any law of the United States (158.45(c)). Such merchandise can be exported under Customs supervision, with refund of duty, in accordance with sections 18.25 - 18.27 of the regulations. However, section 158.45(d), pertaining specifically to not legally marked merchandise, treats such merchandise differently. The exportation (or destruction) of merchandise not legally marked "shall not exempt such merchandise from the payment of duties other than the marking duties." 19 CFR 158.45(d). Your client's merchandise was not legally marked, and he was unable to recover regular duties upon its exportation.

Based on your client's experience, you suggest that section 158.45(d) be deleted from the regulations. You posit that if it were deleted, such that not legally marked merchandise could be exported with refund of duty in the circumstances contemplated under section 158.45, an importer of such merchandise would not have to go to the trouble of completing the entry process in order to obtain a refund of duty through the same condition drawback provisions. This would be a convenience for Customs as well.

Subsection 158.45(d) of the Customs Regulations is based upon statutory authority. It implements the provision of 19 U.S.C. 1558(b). Customs is obligated to implement the statutory provision. Therefore, the regulation cannot be deleted from the Customs regulations without an amendment of the statute. Customs does not have the authority to amend the statute.

Not only does Customs lack the authority to amend the statute, or to simply delete the regulation so as to render the statutory provision inoperative, we see no reason to do so. Not only are 19 U.S.C. 1558 and 19 U.S.C. 1313, the drawback law, not in conflict with one another, they in fact complement one another. Under 19 U.S.C. 1558(a)(1), an exception to the prohibition against (exportation based) duty refunds for merchandise that has been released from Customs custody is provided for articles exported under drawback conditions. This is provided by regulation under subsection 158.45(b). Further, we see no conflict between subsection 158.45(d) and 19 U.S.C. 1313(j). The same condition drawback provision was not enacted to accommodate not legally marked merchandise that is precluded from a duty refund (other than marking duties) under 19 U.S.C. 1558(b) and subsection 158.45(d) of the regulations. If Congress had such an intent, and there is no evidence of such intent, we suppose that it would have amended 19 U.S.C. 1558(b) at the time it enacted the same condition drawback provision. Congress did not do so.

Although not legally marked merchandise, in some circumstances, can be exported under drawback conditions, the fact that an importer, who fails to return such merchandise to Customs custody and pays a marking duty instead, would have to meet the regulatory requirements under drawback (in order to obtain a drawback refund) is not evidence of a conflict between 19 U.S.C. 1558(b) and the same condition drawback provision. The two statutes and their respective implementing regulations are separate and distinct schemes with separate and distinct purposes. To the extent there is interplay, it is complementary, not contradictory.

Based on the foregoing, we respectfully conclude that there is no merit to the suggestion that subsection 158.45(d) should be deleted from the regulations. Even if we were persuaded that there is an inconsistency, we could not simply delete the regulation and ignore the statutory provision it implements.

If you have further questions regarding the marking law, contact the Value and Marking Branch (202/566-2938). Questions concerning drawback can be addressed to the Entry Rulings Branch (202/566-5856).

Sincerely,

William G. Rosoff

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