HQ 228291 - Protest and Application for Further Review No. 2809-98-100737; Over-quota rate for importation of orange juice from Mexico; drawback on over-quota merchandise; 19 U.S.C. §1313(w); Section 404(e)(5) of the URAA; Pub. L. 103465, 108 Stat. 4961; NAFTA drawback; Pub. L. 103-182, 107 Stat. 2057 (1993) - United States International Trade Commision Rulings

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HQ 228291

November 1, 1999

DRA-2-02 RR:CR:DR 228291 CB

CATEGORY: DRAWBACK

Port Director
U.S. Customs Service
555 Battery Street
San Francisco, CA 94105
ATTN: Liquidation Branch

RE: Protest and Application for Further Review No. 2809-98-100737; Over-quota rate for importation of orange juice from Mexico; drawback on over-quota merchandise; 19 U.S.C. §1313(w); Section 404(e)(5) of the URAA; Pub. L. 103465, 108 Stat. 4961; NAFTA drawback; Pub. L. 103-182, 107 Stat. 2057 (1993)

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 seven drawback entries of frozen concentrated orange juice for manufacturing (“FCOJM”) imported from Mexico by protestant, Valley Foods, Inc. d.b.a. CCPI (“Protestant”). According to protestant, because the merchandise was a product of Mexico, protestant entered the FCOJM under the North American Free Trade Agreement (“NAFTA”) preferential tariff rates applicable to imports of orange juice from Mexico. The import entries were made between October, 1996 and February, 1997.

Under NAFTA., the tariff rates applicable to FCOJM from Mexico include tariff-rate quotas, where both the “in-quota” and “over-quota” rates are preferential compared to nonNAFTA rates. Protestant claimed drawback under 19 U.S.C. §1313(b) and 19 U.S.C. §1313(j)(2). Protestant states that it expected its claims to be eligible for drawback because the NAFTA Implementation Act did not impose any drawback limitation for over-quota merchandise. Consequently, protestant claimed drawback and received accelerated payment in the amount of $243,034.13.

The entries were liquidated drawback denied on August 14, 1998, for those portions of each entry that were duty paid at the NAFTA over-quota rate of duty (8.094 cents/liter). In denying said portions of the entries, Customs relied on 19 U.S.C. §1313(w) and 19 C.F.R. §191.3(c). Consequently, the amount of drawback allowed totaled $90,026.26 representing that portion of the claim pertaining to the “in-quota” merchandise.

ISSUE:

Were the subject drawback entries properly liquidated?

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 CFR Part 174). The claims were liquidated on August 14, 1998, without drawback and the subject protest was filed on October 6, 1998. We also note that the refusal to pay a claim for drawback is a protestable issue (see 19 U S C § 1514(a)(6)).

Pursuant to 19 U.S.C. §1313(w)(1), no drawback is available for agricultural products subject to the over-quota rate of duty established under a tariff-rate quota, except for claims under 19 U.S.C. §1313(j)(1). This amendment to the drawback statute implements Section 404(e)(5) of the Uruguay Round Agreements Act (“URAA”), Pub. L. 103-465, 108 Stat. 4961 (1994). In an unpublished ruling, HQ 114349 issued May 8, 1998, we stated that merchandise entered under an over-quota duty rate would not be eligible for drawback pursuant to 19 U.S.C. §1313(w)(1).

Protestant contends that both the text and legislative history to the NAFTA and URAA make it clear that Customs interpretation of section 404(e)(5) as applicable to tariff-rate quotas under NAFTA, nullifies the benefits Congress intended the NAFTA to confer. Furthermore, that section 404 pertains only to URAA tariff-rate quotas set Out in Schedule XX and, that frozen concentrated orange juice was not one of the agricultural products subject to tariffication under the URAA. Protestant points to the text of the URAA itself and the legislative history to the same in support of its interpretation. Specifically, protestant relies on the first clause of section 404 which states: “In implementing the tariff-rate quotas set out in Schedule XX.. . .“ Pub. L.103-465, 108 Stat. 4809 (Title IV) §404(a). The legislative history explains that the reason for the change in the law is to “. . . provide specific authority for administering tariff-rate quotas being established for agricultural products under comprehensive tariffication and pursuant to Schedule XX.” H. Rep. 826(I), 103d Cong., 2d Sess., p. 156 (1994).

Additionally, protestant points to the different purposes behind the URAA tariffication process and NAFTA’s tariff-rate design. Protestant contends that the purpose behind tariffication was to convert restrictive border measures, such as import quotas, to tariff equivalents. Consequently, according to protestant, the over-quota duties established by the URAA were designed to be exclusionary. Protestant contrasts this with the purpose behind the NAFTA tariff-rate quotas which, according to protestant, were established to limit the volume of imported “in quota” merchandise qualifying for the most preferential rate of duty vis-a-vis the most favored nation (“MEN”) rate.

The Supreme Court has consistently found that “in all cases involving statutory construction, ‘our starting point must be the language employed by Congress’... and we assume ‘that the legislative purpose is expressed by the ordinary meaning of the words used.”’ American Tobacco Co. v. Patterson, 456 U.S. 63, 68 (1982), quoting Reiter v. Sonotone Corp., 442 U.S. 330, 337 (1979). In Griffin v. Oceanic Contractors. Inc., 458 U.S. 564, 73 L. Ed. 973, 102 5. Ct. 3245 (1982), the Supreme Court held that when Congress’ “will has been expressed in reasonably plain terms, ‘that language must ordinarily be regarded as conclusive.”’ Id.at 570 (quoting Consumer Prod. Safety Comm’n v. GTE Sylvania. Inc., 447 U.S. 102, 108, 64 L. Ed. 2d 766, 100 5. Ct. 2051(1980)). In the instant case, protestant is requesting that we ignore the plain language of the applicable statute, i.e., 19 U.S.C. §1313(w)(l), and look to the history of and purposes behind the NAFTA and URAA. It is a well settled rule of statutory construction that “[t]he history leading up to a statute is to be used only for the purpose of resolving doubts as to the meaning of the words used in the statute in case of ambiguity.” Fairport, Painesville & E. R.R. Co. v. Meredith, 292 U.S. 589, 594, 54 5. Ct. 826 (1934). In issuing HQ 114349 Customs followed the literal words of the statute. There is no need to resort to the legislative history of 19 U.S.C. §13 13(w)(1) because there is no ambiguity in the statutory language.

HOLDING:

The protest should be DENIED. Drawback is not available, pursuant to 19 U.S.C. §1313(w)(1), on FCOJ entered under an over-quota duty rate.

In accordance with Section 3A(11)(b) of Customs Directive 099 3550-065, dated August 4, 1993, Subject: Revised Protest Directive, you are to mail this decision, together with the Customs Form 19, to the protestant no later than 60 days from the date of this letter. Any reliquidation of the entry or entries in accordance with the decision must be accomplished prior to mailing the decision.

Sixty days from the date of the decision, the Office of Regulations and Rulings will make the decision available to Customs personnel, and to the public on the Customs Home Page on the World Wide Web at www.customs.gov, by means of the Freedom of Information Act, and other methods of public distribution.

Sincerely,

John A. Durant, Director
Commercial Rulings Division

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