HQ 227441 - Application for further review of protest No. 5301-95-100489; Proof of exportation; drawback; 19 U.S.C. ?1313(j); 19 CFR 191.141; 19 CFR 191.52; 19 CFR 191.73 - United States International Trade Commision Rulings

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HQ 227441

June 4, 1997

DRA-2-02-DRA-4-RR:IT:EC 227441 IOR

CATEGORY: DRAWBACK

Port Director
U.S. Customs Service
Drawback Liquidation Section
2350 North Sam Houston Pkwy E, Ste. 900
Houston TX 77032
Attn: Deidra Golden

RE: Application for further review of protest No. 5301-95-100489; Proof of exportation; drawback; 19 U.S.C. ?1313(j); 19 CFR 191.141; 19 CFR 191.52; 19 CFR 191.73

Dear Sir:

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

FACTS:

By entries 601-xxxx356-7 and 601-xxxx516-6, dated May 5, 1994 and June 29, 1994, respectively, the protestant imported a total of 168 reels of "ropes, cbls, crdg, oth:oth, galvan." Drawback entries 027-xxxx6999 and 027-xxxx7005, for unused merchandise drawback under 19 U.S.C. ?1313(j)(1) (CF 7539), dated November 9, 1994, were presented at port 2301 on behalf of the drawback claimant Capro, Inc., on November 9, 1994. The CF 7539 indicates that the merchandise would be exported on or about November 9, 1994. The merchandise on each drawback entry consists of 8 reels of ropes, cables, other : other, galvanized steel. The exporter is identified as Capro, Inc. c/o Corrigan Dispatch Company, and the party identified as authorized to collect drawback is Capro, Inc.

The Customs inspector checked block 44 of the CF 7539 indicating that "Customs has decided not to examine the merchandise and it may now be exported." The Customs inspector also filled out the "Lading Report," on the CF 7539, which consists of boxes 54-60, on November 9, 1994. The drawback entries were routed to the Drawback Center in Houston for final disposition, and were received on November 17, 1994. According to the Customs Protest and Summons Information Report (CF 6445), two requests were made to the claimant for proof of export, and a Mexican Pedimento was submitted. The file contains, for each drawback entry, a second request to Corrigan Dispatch Co., dated December 8, 1994, for "[o]riginal proof of export; i.e., signed or certified bill of lading; or proof that the company is approved for ESP."

The pedimento indicates that the merchandise was imported on November 8, 1994, which is the date filled in the blank next to "Fecha Entrada," which translates into "date of importation." The dates November 7-13, 1994 is filled in under the heading "Facturas/Fechas/Forma De Facturacion/Proveedor/Domicilio," which translates into "invoices/dates/form of invoice/supplier/address." The other information under this heading identifies La Ventaja Inc., located in Brownsville, Texas, and provides the terms "F.O.B." The pedimento identifies the "importador" (importer) as L.V.I. de Mexico, S.A. de C.V. Item no. 6 on the pedimento, which appears to have been highlighted, identifies the merchandise as "CABLE GALVANIZADO CORTADO A MEDIDA 1.5mm.x1x19+8x7," which translates into "galvanized cable cut-to-size." The quantity is not apparent.

The drawback entries were liquidated on June 30, 1995, and drawback was denied. The file contains a letter, referencing both drawback entries, dated June 12, 1995, to Corrigan Dispatch Co., stating that the drawback claims were liquidated at "0", for "failure to provide export documentation, after second request." The Port Director takes the position that drawback should be denied due to the protestant's failure to comply with 19 CFR 191.141. The Port Director also states that blocks 54-60, on the CF 7539 are completed by the inspectors merely upon witnessing the particular trailer exit the United States, and as the merchandise was not to be examined by Customs, the lading report does not indicate that the subject merchandise was exported.

The protestant takes the position that the CF 7539 was properly and timely filed and received by Customs, that the signature in block 60 of the CF 7539 constitutes sufficient legal proof of export, and in the alternative, if the CF 7539 signature is not sufficient, the pedimento shows that the merchandise did enter Mexico during the week of November 7-13, 1994. The protestant claims that LVI de Mexico, the importer identified on the pedimento, is a shelter operation housing Capro Inc., and that similar pedimentos have been routinely accepted by the Houston Drawback office as proof of export.

ISSUE:

Whether the protest was properly denied for protestant's failure to comply with the requirements of 19 U.S.C. ?1313(j).

LAW AND ANALYSIS:

Initially, we note that the protest was timely filed under the statutory and regulatory provisions for protests (see 19 U.S.C. ?1514 and 19 C.F.R. Part 174). We note that the refusal to pay a claim for drawback is a protestable issue under 19 U.S.C. ?1514(a)(6). This protest involves the denial of drawback under 19 U.S.C. ?1313(j)(1).

Section 313(j) of the Tariff Act of 1930, as amended (19 U.S.C. ?1313(j)(1)), provides for a refund of duties on imported merchandise, exported or destroyed under Customs' supervision, within three years from the date of importation, and not used within the U.S. before such exportation or destruction. Prior to the amendment of the drawback statute by section 632, title VI - Customs Modernization, Pub. L. No. 103-182, the North American Free Trade Agreement Implementation ("NAFTA") Act (107 Stat. 2057), enacted December 8, 1993, an additional requirement under section 1313(j) was that the merchandise be in the same condition as when it was imported. The requirements for filing and documentation prior to exportation are set forth in 19 C.F.R.

(b) Filing and documentation prior to exportation -- (1) Filing. An exporter-claimant who desires to export merchandise with drawback under 19 U.S.C. 1313(j) shall file with the drawback office a completed Customs Form 7539. The exporter-claimant also shall furnish a copy of the import entry or identify the import entry, date of entry, and port of entry under which the merchandise was imported into the United States. It shall certify that the merchandise is in the same condition as when imported and not used within the United States before such exportation. Transfers shall be documented by certificates of delivery (see ?191.65).

(2)(i) Time of filing. The completed Customs Form 7539 shall be filed with the drawback office at least 5 working days prior to the date of intended exportation of the merchandise, unless the Customs officer approves a shorter filing period.

(ii) Waiver of prior notice of intent to export. A request for a waiver of prior notice by an exporter-claimant shall be in writing to the drawback office. The appropriate Customs officer may waive prior notice at any time for any exporter-claimant. An exporter-claimant shall be granted this waiver after filing with the appropriate Customs official six consecutive claims free of substantial error, provided that such exporter-claimant has operated under the same condition program for a minimum of six months. An exporter-claimant who repeatedly files inaccurate claims may have the privilege (of filing without prior notice) revoked. Customs will so notify the exporter-claimant in writing of the revocation as soon as possible.

(3) Examination -- (i) Decision to examine. Within 3 working days after Customs Form 7539 is filed, the exporter-claimant shall be notified whether Customs will examine the merchandise. If the exporter-claimant is not notified within the 3-day period, the exporter-claimant shall export the merchandise without delay.

It is well established that drawback laws confer a privilege, not a right. Swan & Finch Company v. United States, 190 U.S. 143, 23 Sup. Ct. 702 (1903). When merchandise is imported and a drawback statute may potentially be applicable, an accruing or inchoate right may be said to arise. However, the right to recover drawback ripens only when all provisions of the statute and applicable regulations prescribed under its authority have been met. Romar Trading Co., Inc. v. United States, 27 Cust. Ct. 34 (1951); General Motors Corporation v. United States, 32 Cust. Ct. 94 (1954). Drawback claimants must strictly adhere to the requirements set forth in the statutes and applicable regulations. United States v. W. C. Hardesty Co, Inc., 36 CCPA 47, C.A.D. 396 (1949); Spencer, Kellogg & Sons (Inc.) v. United States, 13 CCPA 612 (1926).

Clearly, the CF 7539 was not filed within the time required by 19 CFR 191.141(b). It was presented to the port on November 9, and according to the pedimento the merchandise entered Mexico on November 8. In addition, the protestant does not state the date of actual exportation, or the date of intended exportation, the CF 7539 states that the merchandise is to be exported "on or about" November 9, and the protestant states that according to the pedimento, the merchandise entered Mexico during the week of November 7-13. Even if the merchandise entered Mexico on November 13 and that was the date of intended exportation, November 9 is four days prior to November 13, not five working days as required by the regulation. In addition, November 11 was Veteran's Day, a national holiday, and the 12th and 13th fell on Saturday and Sunday. Thus, November 9 is only two working days prior to November 13, and November 17, Thursday, was the fifth working day after November 9. However, section 191.141(b)(2)(i) allows the Customs officer to approve a shorter filing period than the five days. In this case, the Customs inspector, by checking the block on the CF 7539 that the merchandise will not be examined and may be exported could be said to have implicitly approved a shorter filing period.

Assuming that a shorter filing period was approved, and the CF 7539 was timely filed, the protestant is still required to provide evidence of exportation, in accordance with 19 CFR of documents that are evidence of exportation "such as the bill of lading, air waybill, freight waybill, Canadian Customs manifest, cargo manifest, or certified copies thereof, issued by the exporting carrier." Section 191.52 states "[s]upporting documentary evidence shall establish fully the time and fact of exportation and the identity of the exporter." Section 181.47(c) which provides for completion of claims for drawback, under NAFTA, provides that the Mexican entry document, the "pedimento" is evidence of exportation to Mexico. In this case, the pedimento may be sufficient evidence of exportation, however it is inconsistent with the lading report on the CF 7539, and the protestant's statements that the CF 7539 was timely filed. Without more, the documents provided do not establish that the CF 7539 was timely submitted, or that the protestant is entitled to drawback.

The date of the CF 7539 is November 9, 1994, however, according to the pedimento, the merchandise entered Mexico on November 8, 1994. It is not apparent from the pedimento, the quantity of merchandise that was exported. There is no apparent link between the pedimento and the merchandise claimed to have been exported. It is the burden of the drawback claimant to establish the exportation of the merchandise. The lading report on the CF 7539 provides that the date laden is November 9, 1994, and is signed on November 9, 1994. While 19 CFR 191.141(b)(2)(i) may provide for the allowance of a shorter filing period for the CF 7539, nothing in the regulation indicates that the merchandise may be exported prior to the submission of the CF 7539 to Customs. We can conclude that either the CF 7539 was not timely filed, or that the pedimento does not pertain to the subject drawback entries. Drawback must be denied on either of these grounds.

The lading report on the CF 7539, alone, is not sufficient evidence of exportation, as it is not one of the types of documents listed in 191.52(c)(2). Furthermore, the Lading Report simply has the inspector's certification that a particular vehicle left the United States. Especially in light of the fact that the merchandise was not required to be examined by Customs, the certification does not indicate that the subject merchandise itself was exported. In HQ 205989, dated July 1, 1976, a similar issue was addressed with respect to the exportation of merchandise entered under a T.I.B. We stated:

With regard to your contention that Customs Form 7512 should be sufficient proof that the item placed in bond is the same item being exported, the Customs From 7512 merely certifies that the merchandise arrived at the port of exportation, while the Customs Form 3495 received from the exporting carrier and properly signed off by Customs, enables Customs to certify that the merchandise has actually been exported as the law requires.

As in HQ 205989, evidence of the exportation, from a party other than Customs, must be provided in order to establish exportation of the merchandise.

Finally, the evidence indicates that the protestant, the party identified as the exporter and the person authorized to collect drawback, is not a person entitled to receive drawback. Section 191.73(a) of the Customs Regulations provides for the person entitled to receive drawback:

(a) Exporter; reservation by manufacturer or producer. The person named as exporter on the notice of exportation or in bill of lading, air waybill, freight waybill, Canadian Customs manifest, cargo manifest, or certified copies of these documents, shall be deemed to be the exporter and entitled to drawback, unless the manufacturer or producer shall reserve the right to claim drawback. The manufacturer or producer who reserves this right may claim drawback, and he shall receive payment upon production of satisfactory evidence that the reservation was made with the knowledge and consent of the exporter.

The protestant is not named on the pedimento. The only parties named on the pedimento are the importer, L.V.I. de Mexico, and the supplier, La Ventaja, Inc., of Brownsville. As there is no indication that the right to claim drawback has been reserved by the protestant, or for any other reason is not the right of La Ventaja, the protestant is not entitled to receive drawback. In the protest, the protestant states that L.V.I. de Mexico is a shelter operation housing the protestant as a client. We find this irrelevant on the question of whether the protestant is the proper drawback claimant.

HOLDING:

The protestant has not established that it has met the requirements for drawback under 19 U.S.C. ?1313(j).

Consistent with the decision set forth above, you are hereby directed to deny the subject protest. 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 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 Trade
Compliance Division

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