HQ 0224879 - Protest 0401-93-100374; tantalum metal ingots; 19 U.S.C. 1313(b); 19 U.S.C. 1313(l); 19 CFR 191.61; 19 U.S.C. 1313 (r)(1); T.D. 53654; Lockheed Petroleum Services, Ltd. v. U.S. - United States International Trade Commision Rulings

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HQ 224879

March 31, 1994

DRA-2-01-CO:R:C:E 224879 AJS

CATEGORY: DRAWBACK

District Director
U.S. Customs Service
10 Causeway Street
Boston MA 02222-1059

RE: Protest 0401-93-100374; tantalum metal ingots; 19 U.S.C. 1313(b); 19 U.S.C. 1313(l); 19 CFR 191.61; 19 U.S.C. 1313 (r)(1); T.D. 53654; Lockheed Petroleum Services, Ltd. v. U.S.

Dear Sir or Madame:

This is our decision on Protest 0401-93-100374, dated June 30, 1993, concerning the liquidation on April 2, 1993, of seven drawback entries.

FACTS:

The protestant entered seven shipments of tantalum powder between April 1984 and May 1985 under the duty free provision for scrap metal in item 870.60, Tariff Schedules of the United States (TSUS). Customs officials determined that item 870.60, TSUS, was inapplicable and liquidated the entries under a dutiable provision. The only entry for which we possess documentation was liquidated on May 31, 1985. A bill for duties owed was also sent to the protestant on May 31. A protest was timely filed against this liquidation on August 6, 1985. In May of 1987, the protest was approved for further review. In March of 1991, an adverse decision on the application for further review was issued.

The protestant asserts that it believed there was a substantial probability of ultimate approval of the classification protest and thus did not pay the duties assessed in May of 1985. In May of 1989, the protestant determined that it should pay the still outstanding bills for additional duties. Customs records indicate that the bill was paid on January 30, 1989. Contemporaneously, the protestant prepared and filed the subject drawback claims, since some of the imported material had been used to
manufacture product for export. The protestant believed that it would have been improper to file drawback claims before this time because the duties on the underlying consumption entries had neither been paid nor ultimately determined.

The Customs Form (CF) 331 for drawback was filed on February 10, 1989. This CF states that the date of import for the relevant material was March 30, 1984, the date of use in manufacture was April 15, 1984, the date of export for the finished product was May 30 and June 18, 1984. A Treasury Decision (T.D.) number is not given in box number 16 of the CF 331. We note that T.D. 77-293(P) was issued to the protestant for tantalum ingot.

The sole basis for the denial of drawback is that the drawback claims were not filed within three years of export as specified in 19 CFR 191.61.

ISSUE:

Whether a Customs officer was responsible for the untimely filing of the protestant's drawback claims, thus permitting the extension of the 3-year filing requirement of 19 CFR 191.61. More specifically, whether awaiting results of a protest establishes a Customs officer responsibility for untimely filing even though the protestant possessed sufficient information to timely file its drawback claim.

LAW AND ANALYSIS:

Initially, we note that the protest was timely filed pursuant to 19 U.S.C. 1514. The subject drawback entries were liquidated on April 2, 1993, and the protest of this decision was filed on June 30, 1993. We note that the refusal to pay a claim for drawback is a protestable issue pursuant to 19 U.S.C.

19 U.S.C. 1313(l) states that "[a]llowances of the privileges provided for in this section shall be subject to compliance with such rules and regulations as the Secretary of the Treasury shall prescribe, which may include, but need not be limited to, the fixing of a time limit within which drawback entries . . . shall be filed and completed . . ."

19 CFR 191.61, which implements section 1313(l), provides that a drawback entry and all documents necessary to complete a drawback claim, including those issued by one Customs officer to another, shall be filed or applied for, as applicable, within 3 years after the date of exportation of the articles on which drawback is claimed. In addition, this section states that claims not completed within the 3-
year period shall be considered abandoned. Furthermore, no extension will be granted unless it is established that a Customs officer was responsible for the untimely filing.

Section 191.61 was codified in the amendment of 19 U.S.C. 1313 by section 632(r)(1) of the North American Free Trade Agreement Implementation Act (Act), Public Law 103-182, 107 Stat. 2057 (December 8, 1993). Section 692 provided that this codification was effective on the date of enactment of the Act. T.D. 53654 states that requirements of regulations which may be waived in accordance with law may be waived by the Commissioner of Customs. Assuming that the requirements of section 191.61 could have been waived under T.D. 53654 prior to December 8, 1993, such waiver is no longer possible due to the codification of section 191.61. Therefore, Customs may only extend the subject 3-year filing period if a Customs officer was responsible for the untimely filing.

A search of Customs computer records for the subject drawback entry indicates that a bill was sent to the protestant upon liquidation of the consumption entry on May 31, 1985, and that this bill was paid on January 30, 1989. The protestant argues it would have been improper to timely file its drawback claims because the duties on the consumption entry had neither been paid nor ultimately determined until March of 1991. We do not agree with this assertion. Once a bill was sent on May 31, 1985, the protestant was aware of the amount of drawback applicable to its drawback entry. From this date, approximately two years remained for the protestant to timely file for drawback. These circumstances do not establish that a customs officer was responsible for the protestant's untimely filing. Consequently, the granting of an extension to the 3-year filing period pursuant to section 191.61 is not warranted in this instance.

The protestant cites to Lockheed Petroleum Services, Ltd. v. United States, 4 CIT 25 (1982), rev'd 1 CAFC 63 (1983), in support of its claim. In that case, Lockheed was denied drawback because it failed to comply with 19 CFR 22.4(g) which required that an abstract of manufacture be filed before a vessel's departure from the United States. The abstract arrived late due to the claimed unforeseen occurrence of slow mail delivery. The Court of International Trade (CIT) concluded that equitable relief was appropriate because Lockheed was not to blame for the late arrival of the abstract. In this instance, the protestant claims that it should receive drawback because it was not to blame for the failure to timely file its drawback claims. The protestant asserts that the extended time period required to resolve the classification protest led to its failure to satisfy the 3-year deadline for filing drawback claims.

The Court of Appeals for the Federal Circuit (CAFC) reversed Lockheed on appeal and held that the CIT erred in its decision. The CAFC stated that there was neither compliance by Lockheed with the controlling requirements nor acceptable excuse for that failure. CAFC at 65. As stated beforehand, the protestant also did not comply with the controlling requirements (i.e., section 191.61). In addition, there was not acceptable excuse for the protestant's failure to comply. The protestant was notified concerning the amount of drawback applicable to its entry approximately two years before the expiration of the filing deadline. Claiming that it was waiting for the ultimate resolution of the consumption entry protest to file, when it could have filed for drawback, is not acceptable excuse for its failure to comply.

The CAFC also stated that "[d]rawback privileges under the Tariff Act of 1930 are expressly conditioned, by statute, upon 'compliance with such rules and regulations as the Secretary of the Treasury shall prescribe . . .'" CAFC at 65. The CAFC further added that "[n]umerous decisions have held that compliance with drawback regulations is mandatory." CAFC at 65. Therefore, the protestant must comply with section 191.61 in order to receive its drawback privileges. As stated previously, however, the protestant did not comply with the mandatory regulation.

The CAFC additionally stated that Lockheed had several means at its disposal which it could have employed to guarantee compliance with the regulations, yet it neglected to use any of them. CAFC at 67. In this case, the protestant could have preserved its rights by filing for drawback when it received a bill for duties owed. Alternatively, the protestant could have filed a claim based on estimated duties even if it did not possess a bill. Under 19 CFR 191.71(b), for the imported merchandise that Customs determined to be dutiable, and which was eligible for drawback, the protestant had the option to forgo its protest rights and obtain a refund by drawback. The protestant failed to use that regulation. At a minimum, the protestant should have sought advice from Customs as to how to proceed with its drawback claims if unsure. Based on the specific language of section 191.61, the protestant also should have been aware of the consequences (i.e., abandonment) for failure to file claims in a timely manner. Therefore, as in Lockheed, the protestant had means at its disposal to guarantee compliance with the required regulations but neglected to use them.

The CAFC further stated that equitable powers should not be invoked to excuse the performance of a condition by a party that has not acted with reasonable due care and
diligence. CAFC at 67. As stated previously, the protestant neglected to use the means at its disposal to guarantee compliance with the regulations. This neglect by the protestant would not appear to be the exercise of reasonable due care and diligence. Thus, despite the protestant's arguments to the contrary, we find Lockheed instructive for determining that the granting of an exception to the 3-year filing requirement would be improper under the subject circumstances.

HOLDING:

The protest is denied. A Customs officer was not responsible for the untimely filing of the protestant's drawback claims, thus an extension of the 3-year filing requirement of 19 CFR 191.61 is improper. More specifically, awaiting the results of a protest does not establish a Customs officer's responsibility for untimely filing in circumstances where the protestant possessed sufficient information to timely file its drawback claims.

In accordance with Section 3A(11)(b) of Customs Directive 099 3550-065, dated August 4, 1993, Subject: Revised Protest Directive, this decision should be mailed, with the CF 19, by your office to the protestant no later than 60 days from the date of this letter. Any reliquidation of the entry in accordance with the decision must be accomplished prior to mailing of the decision. Sixty days from the date of the decision the Office of Regulations and Rulings will take steps to make the decision available to customs personnel via the Customs Rulings Module in ACS and the public via the Diskette Subscription Service, Lexis, Freedom of Information Act and other public access channels.

Sincerely,

John Durant, Director

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