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HQ 227679





March 23, 1998
DRA-4 RR:CR:DR 227679 CB

CATEGORY: LIQUIDATION

Port Director
U.S. Customs Service
423 Canal Street
Room 303
New Orleans, LA 70130

RE: Protest and Application for Further Review No. 2002-96-102300

Dear Sir/Madam:

The above-referenced protest was forwarded to this office for a determination. We have considered the points raised and a decision follows.

FACTS:

The subject protest covers the denial of 35 drawback claims, all of which involve exportations to Canada after January 1, 1994. The claims were filed under 19 U.S.C. ?1313(j)(1), direct identification/unused merchandise drawback. A portion of the claims involve exportations to Canada prior to January 1, 1996; another portion is for exportations after January 1, 1996.

Protestant imports gloves which are placed in inventory in its Memphis, Tennessee warehouse. Protestant also purchases or manufactures domestic gloves. According to protestant's letter of October 28, 1996, it issues a blanket purchase order to its suppliers who subsequently ship many times against said purchase order. Thus, it is common to have more than one entry per purchase order. By way of a letter dated March 25, 1997, Protestant states that under its current practice it may be impossible to confirm that a given carton was duty paid on one entry or another for that purchase order. The same carton number/purchase order combination may be used more than once. Per protestant, the only alteration performed on the exported gloves is to replace the original label with a Canadian (French language) label.

According to protestant, for shipments to Canada, the Inventory Control Department issues an interfactory transfer order. The stock is pulled and the purchase order number is communicated to the traffic manager. Once the export file is complete, it is held until the drawback claim is filed.

Based on correspondence received from protestant, as well as telephonic conversations with the traffic manager, Customs determined that the physical inventory method used by protestant was not sufficient to identify the merchandise from importation to exportation. protestant could not identify the specific import entry on which the goods were entered. protestant could only narrow it down to one of several entries. Additionally, as an alternative to physical direct identification, Customs requested that protestant provide information regarding its accounting method. Customs determined that the information provided did not show that protestant utilized an accounting method previously approved by Customs (e.g., allowable under Schedule X of the Appendix to 19 CFR Part 181). The accounting procedures employed by protestant is used to determine profits and tax liability.

At protestant's request, a meeting was held with protestant's representatives on October 21, 1997. During this meeting, this office advised the protestant that it had an opportunity to cure the deficiencies which existed in its documentary evidence to substantiate its drawback claims. By way of a letter dated December 23, 1997, protestant's representative indicated that it was still in the process of obtaining the necessary evidence. On February 23, 1998, we sent a follow-up letter advising protestant it had thirty days to make any additional submission. On March 20, 1998, this office received a letter from protestant indicating that further efforts to reconstruct the required records would not be productive. Thus, it was withdrawing its claims.

ISSUE:

Should the subject protest be granted?

LAW AND ANALYSIS:

Initially, we note that the protest, with application for further review, was timely filed under the statutory and regulatory provisions for protests (see 19 U.S.C. ?1514 and 19 CFR Part 174) and that the decision protested, the denial of drawback, is a protestable decision (see 19 U.S.C. ?1514(a)(6)).

In view of the fact that, after having been afforded an opportunity by this office, protestant is unable to provide the necessary documentation to substantiate its direct identification drawback claims, the subject protest must be denied.

HOLDING:

The subject protest is hereby DENIED in full.

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, with the Customs Form 19, 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,

John A. Durant, Director
Commercial Rulings Division

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