HQ 226750 - Protest 5301-95-100004; Manufacturing Drawback; Time for Completion of Drawback Claims; Time for Amendment of Drawback Claims; "Deemed" Liquidation of Drawback Claims; 19 U.S.C. 1313(b); 19 U.S.C. 1313(r)(1); 19 U.S.C. 1504 - United States International Trade Commision Rulings

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HQ 226750

January 27, 1997

DRA-2-01/LIQ-9-01-RR:IT:EC 226750 PH

CATEGORY: DRAWBACK

Area Director
U.S. Customs Service
1717 East Loop
Houston, Texas 77029

RE: Protest 5301-95-100004; Manufacturing Drawback; Time for Completion of Drawback Claims; Time for Amendment of Drawback Claims; "Deemed" Liquidation of Drawback Claims; 19 U.S.C. 1313(b); 19 U.S.C. 1313(r)(1); 19 U.S.C. 1504

Dear Sir:

The above-referenced protest was forwarded to this office for further review. Our decision on the protest follows. Our ruling on this matter addresses only the issue raised; no other issues are considered.

FACTS:

The protest is of the demand on surety for five drawback entries (or claims). Three of the drawback entries (65...3634, 65...3683, and 65...3774) were the subject of protest 5301-94-100443 and our ruling HQ 226749, copy enclosed. The other two drawback entries (65...3691 and 65...3782), according to Customs records, were reliquidated with full drawback and are no longer in controversy (see protests 5301-94-100427 and 5301-94-100428, respectively). The drawback entries remaining in controversy (65...3634, 65...3683, and 65...3774) were described in the FACTS portion of ruling HQ 226749. The FACTS portion of ruling HQ 226749 is incorporated by reference into this ruling.

On October 3, 1994, demand was made on the surety for payment of the difference between accelerated drawback and the liquidated drawback for the drawback entries under consideration. The surety filed the protest under consideration on January 3, 1995. In the protest, the protestant makes arguments similar to those described in ruling HQ 226749 (copy enclosed, and incorporated by reference into this ruling), regarding the alleged error in preparation of the Certificate of Delivery [CD] for that portion of drawback which was denied in the drawback entries in controversy. The protestant also contends that the drawback entries under consideration were "deemed" liquidated by operation of law, pursuant to 19 U.S.C. 1504(a).

ISSUE:

Is there authority to grant the protest against the demand on the surety in this case?

LAW AND ANALYSIS:

Initially, we note that the protest was timely filed under the statutory and regulatory provisions for protests and that the decisions protested are protestable (see 19 U.S.C. 1514 and 19 CFR Part 174). The certification that the protest is not being filed collusively to extend another authorized person's time to protest, as required for a protest by a surety (see 19 U.S.C. 1514(c)(3)), was provided.

The LAW AND ANALYSIS portion of ruling HQ 226749 describes the applicable drawback laws and regulations, and Customs interpretation thereof. Based on that analysis, protest 5301-94-100443 (involving the same drawback entries and the arguments regarding the allegedly incorrectly filed CD) was denied in that ruling. The LAW AND ANALYSIS portion of that ruling is incorporated by reference into this ruling. This protest must also be denied, insofar as that issue is concerned, for the same reasons stated in ruling HQ 226749.

The protestant contends that, under 19 U.S.C. 1504, the liquidations of the drawback entries were "deemed" liquidated as asserted by the claimant, because they occurred more than one year after they were filed. Under section 1504, in pertinent part, unless extended as provided therein, "an entry of merchandise not liquidated within one year from ... the date of entry of such merchandise ... shall be deemed liquidated at the rate of duty, value, quantity, and amount of duties asserted at the time of entry by the importer of record."

The so-called "deemed" liquidation provision, in 19 U.S.C. 1504, was added by section 209 of Public Law 95-410 (92 Stat. 902). The legislative history for this provision (see Senate Report (Finance Committee) 95-778, 95th Cong., 2d Sess. (1978), and House Conf. Report 95-1517, 95th Cong., 2d Sess. (1978), reprinted at 1978 U.S.C.C.A.N. 2211) describes this provision as applying to "entr[ies]", "importation[s]", and "importer[s]" (1978 U.S.C.C.A.N. at 2215, 2242-2243, and 2258). There is no reference in the statute or in the legislative history to drawback.

The Customs Regulations issued under this provision are found in 19 CFR part 159. Section 159.11 of the Customs Regulations provides generally for such "deemed" liquidations by operation of law and then, in paragraph (b), specifically provides that:

The provisions of this section and [section] 159.12 shall apply to entries of merchandise for consumption or withdrawals of merchandise for consumption made on or after April 1, 1979, but shall not apply to vessel repair entries or drawback entries. [Emphasis added.]

Sections 159.11 and 159.12 were added to the Customs Regulations by T.D. 79-221, the preamble of which specifically stated "[t]hese amendments [i.e., providing for 'deemed' liquidations by operation of law] are limited to entries or withdrawals of merchandise for consumption made on or after April 1, 1979, 180 days after enactment, and do not include vessel repair entries or drawback." (1979 bound Customs Bulletin, p. 650, see also pp. 685-686; emphasis added.)

Thus, by its terms, 19 U.S.C. 1504 makes it clear that it applies to importations (i.e., the provision applies to "an entry of merchandise" and provides for the deemed liquidation of the merchandise "at the rate of duty, value, quantity, and amount of duties asserted at the time of entry by the importer of record"). The legislative history makes it clear that this was the intent of the legislation. The Customs Regulations issued under the provision explicitly provide for the application of the provision to entries of merchandise for consumption or withdrawals of merchandise for consumption, but not to drawback entries. This position of the Customs Service was explicitly recognized and confirmed in the legislative history to the recently enacted Customs Modernization Act (Public Law 103-182, Title VI; 107 Stat. 2057), which substantially amended both the drawback law and the "deemed" liquidation statute (19 U.S.C. 1313 and 1504; see sections 632 (107 Stat. 2192) and 641 (107 Stat. 2204)). That is, in House Report 103-361, 103d Cong., 1st Sess., part I, page 132 (1993), it is reported that "... the Committee is concerned that under current Customs Regulations, and recognizing that there is no statutory time limitation for the liquidation of drawback claims ..." (emphasis added)). The protest is denied in regard to this issue.

HOLDING:

There is no authority to grant the protest against the demand on the surety in this case (see ruling HQ 226749, copy enclosed; and because the "deemed" liquidation provisions in 19 U.S.C. 1504 do not apply to drawback entries (see above)).

The protest is DENIED. 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 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 Rulings Module in ACS and the public via the Diskette Subscription Service, Freedom of Information Act, and other public access channels.

Sincerely,

Director, International

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