HQ 225204 - Protest 5301-93-100369; 19 CFR 191.61; C.S.D. 88-14; HQ 224107; expanding scope of drawback claim after three years from date of exportation; incorrect import entry numbers. - United States International Trade Commision Rulings

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HQ 225204

June 4, 1997

DRA-2-01-RR:IT:EC 225204 AJS

CATEGORY: DRAWBACK

Port Director of Customs
U.S. Customs Service
Portway Plaza, Suite 400
1717 East Loop
Houston, TX 77029

RE: Protest 5301-93-100369; 19 CFR 191.61; C.S.D. 88-14; HQ 224107; expanding scope of drawback claim after three years from date of exportation; incorrect import entry numbers.

Dear Sir or Madame:

This is our decision in protest 5301-93-100369, dated July 2, 1993, concerning the liquidation of nine drawback entries.

FACTS:

The importer protests liquidation denying manufacturing drawback respecting certain drawback entries, which decision was based upon the use by the importer of incorrect entry numbers. The importer claims Customs did not advise the importer of this mistake until after the lapse of three years from the date of exportation (i.e., May-December, 1988). Your office states that the importer was advised of the discrepancy on June 12, 1991, in a telephone conversation. A telephone log indicates that the importer was informed that the filer code or a copy of the Customs Form 7501 was needed. In response to a return of bills and correspondences from the protestant on June 9, 1993, Customs issued letters to the protestant on June 17, 1993, indicating that its import entry information for the subject claims was inadequate. On June 25, 1993, Customs notified the protestant that the filer codes for import entry numbers of the subject claims were omitted, and that Customs would accept corrections of these numbers but that new import entry numbers could not be designated. On July 29, 1993, the protestant submitted information attempting to correct these claims.

With respect to the Dallas import entries involved in the subject drawback claims, the protestant asserts that only the prefix (filing code) "153" was omitted and the remaining digits of the assigned entry numbers were properly utilized. Your office initially disputed this assertion.

In a submission of February 26, 1997, your office agreed that all Dallas import entries in which the filing code was missing were merely perfected by the addition of this code. In the future, we note that a drawback claim submitted containing entry numbers without the filing code should not be accepted by Customs because such entry numbers are not valid numbers.

With respect to the Houston entries involved in the subject drawback claims, the protestant asserts that it utilized a tentative entry number assigned to the imported merchandise by its home broker, rather than the actual entry number obtained from Houston Customs by the corresponding broker in Houston. The protestant claims that these tentative entry numbers, however, are directly linked to and correspond with the actual entry numbers obtained from Houston Customs; and each tentative entry number used by the protestant covers the same merchandise as that covered by the actual entry number assigned by Houston Customs. Your office states that the "tentative" entry numbers actually are numbers of consumption entries previously filed by B & D for other clients which have no relationship to the importer. Your submission of February 26, 1997, provided documentation to support this statement for each such entry.

ISSUE:

Whether reliquidation of the subject drawback claims is proper.

LAW AND ANALYSIS:

Initially, we note that this protest was timely filed pursuant to 19 U.S.C. 1514(c)(2)(A). All nine entries were liquidated on May 28, 1993. The protest was filed on July 2, 1993. We also note that the refusal to pay a claim for drawback is protestable pursuant to 19 U.S.C. 1514(a)(6).

It is well settled that drawback regulations are mandatory, have the force and effect of law, and the compliance therewith is a condition precedent to the right of recovery. See C.S.D. 88-14 citing Swift & Co. v. United States, 10 Cust. Ct. 198, 200 (1943). 19 CFR 191.61 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, . . . Claims not completed within the 3 year period shall be considered abandoned. No extension will be granted unless it is established that a Customs officer was responsible for the untimely filing.

This regulation was subsequently codified in 19 U.S.C. 1313(r)(1) by the North American Free Trade Agreement Implementation Act, Title VI, Customs Modernization, Pub. L. No. 103-182, 107 Stat. 2057 (December 8, 1993). The legislative history for section 1313(r)(1) states that this section was intended to be applicable to any drawback entry made before the date of enactment if the liquidation of the entry was not final on the date of enactment. H. Rep. 103-361, 103d Cong. 1st Sess., sect. 632 (November 15, 1993).

The dates of exportation for the subject drawback entries range from May through December of 1988. The protestant did not submit information to correct these mistakes within 3 years after the date of exportation despite the fact that Customs notified the protestant of the mistakes at issue in June of 1991. Consequently, a Customs officer was not responsible for this untimely filing.

In HQ 224107 (August 16, 1993), however, Customs ruled that:

Corrections which only perfect a drawback claim may be permitted after the 3-year period provided for in 19 CFR 191.61. However, a claim may not be amended by expanding the scope of the claim after the expiration of the 3-year period. For example . . . entries or exportations not included in the original claim may not be added after the 3-year period.

In July of 1993, the protestant submitted information attempting to correct the subject drawback claim. Therefore, the essential issue in this protest is whether the additional information submitted by the protestant establishes that the proper imports were designated but merely identified incorrectly on the subject drawback claims.

Drawback claims C53-xxxx725-1, C53-xxxx726-9, and C53-xxxx733-5 deal with Houston import entries. The specific issue in these claims is whether the entered merchandise corresponding with the corrected entry numbers is the same entered merchandise corresponding with the originally submitted (i.e., incorrect) entry numbers. In the first claim, the broker file number (i.e., 1292286) appears on the Customs Form (CF) 7501 generated for billing purposes by the first broker. The incorrect entry number of 031-xxxx610-7 appears on this CF 7501. This same file number (i.e., 1292286) also appears on the second broker's bill to the first broker which sets forth the actual import entry number (i.e., 031-xxxx977-9) obtained by the second broker. The CF 7501 for actual import entry was not included in the protest file. The CF 7501 for the actual import entries for the other two claims were also not included in the protest file. Without the actual import entries we cannot determine if the merchandise is the same, the quantity of merchandise is the same, or the value of the merchandise is the same. As discussed below, the actual import entries should be compared to the incorrect entries to determine if this is in fact the
case. If after such a comparison your office determines that this is in fact the case, you should conclude that the incorrect entry and the correct entry are in fact the same entry. If such a conclusion is reached, amendment of the drawback claims is permissible.

Your office disputes the conclusion that the incorrect and the actual entry number are in fact the same entry. Based on information submitted by your office, the incorrect entry number with the addition of the broker's filing code is actually an entry number previously filed by the second broker for another client who has no relationship to the protestant. Your office has submitted entry documentation to establish this fact for all of the other Houston entries in the subject drawback claims. This information would appear to refute the protestant's assertion that the incorrect entry and corrected entry are in fact the same entry. We would agree with this conclusion if the merchandise is not the same, the quantity is not the same, and the value is not the same. However, as discussed below, we are unable to conclude otherwise when these factors are present.

Claims C53-xxxx719-4, C53-xxxx720-2, C53-xxxx724-4, C53-xxxx727-7, C53-xxxx728-5, and C53-xxxx729-3 contains both entries from Houston and Dallas. Unlike the claims in the above paragraphs, the first three claims contain Houston entries in which the actual import entries were provided. For example in the first claim, the broker file number (i.e., 1289825) appears on the CF 7501 generated for billing purposes by the first broker. The incorrect entry number of 031-xxxx584-4 appears on this CF 7501. The same file number (i.e., 1289825) also appears on the second broker's bill to the first broker which sets forth the actual entry number (i.e., 031-xxxx316-0) obtained by the second broker. Each CF 7501 contains the same merchandise (i.e., "non flex expand rub plast") classified in the same tariff provision (i.e., 770.3000), the same quantity of merchandise (i.e., 4945 and 4321), and the same entered value (13083 and 12041).
There are discrepancies, however. The declared charges differ. On entry 031-xxxx584-4, the charges were $1521, line item 1 and $1329, line item 2. On entry 031-xxxx316-0, the corresponding charges were $1484 and $1366. With respect to entry 031-xxxx589-3 and the asserted corrected entry 031-xxxx656-9, the foreign port of lading, dates of importation and the import numbers differ. Those discrepancies need to be clarified. Similar discrepancies were found in comparing the other samples furnished by the protestant which should be resolved. Nevertheless, based on this information we conclude that the incorrect entry and actual entry cover the same import shipment. Consequently, the amendment of a drawback claim is permissible since it is merely the perfection of the drawback claim. We have also reviewed actual entries 031-xxxx627-0, 031-xxxx656-9, 031-xxxx994-4, 031-xxxx001-7, 031-xxxx008-2, 031-xxxx023-1, 031-xxxx030-6, 031-xxxx073-6 and determined that these entries cover the same shipments as the corresponding incorrect entry. The entry documents for each of the original designated entries should be compared with the complete corresponding corrected entries.

Moreover, we note several discrepancies on the drawback claim itself. The dates of liquidation are not listed (block 19b), the quantity designated from each import entry is not listed

(block 21). The importer name often was not listed (block 22). The relevant T.D. approval was left blank (block 16). Claims filed with those discrepancies do not comply with requirements set forth in 19 CFR 191.72(a) for accelerated payment.

Regarding the Dallas entries, the protestant asserts that the incorrect entry numbers used for the consumption entries are directly linked to the correct entry numbers. Your office no longer disputes this contention. Therefore, corrections concerning the Dallas entries are permissible because these corrections are merely perfecting the subject claims instead of adding entries to the claims.

HOLDING:

The protest is granted in part and denied in part. Amendment of the subject drawback claims beyond 3 years from the date of exportation is permissible for the Dallas entries because these amendments are merely a perfection of the original drawback claims. Amendment of the subject drawback claims beyond 3 years from the date of exportation is permissible for the Houston entries which satisfy the analysis from the example claim because the attempted corrections are merely a perfection of the original drawback claims. However, amendment is not permissible for Houston entries which do not satisfy the analysis from the example claim.

In accordance with Section 3(A)(11)(b) of Customs Directive 099 3550-065, dated August 4, 1993, Subject: Revised Protest Directive, this decision should be mailed, with the Customs Form 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 Ruling Module in ACS and public via the Diskette Subscription Service, Freedom of Information Act and other public access channels.

Sincerely,

Director,

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