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HQ 228694

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September 3, 2002

PRO 2-02 RR:CR:DR 228694 EAB

CATEGORY: DRAWBACK

Port Director
U.S. Customs Service
2350 Sam Houston Parkway East
Houston, Texas 77032

RE: Protest No. 5301-99-100020; actuators

Dear Port Director:

This is our decision on protest 5301-99-100020, timely filed Quality Customs Brokers, Inc. on behalf of Bettis Corp., against your decision to liquidate certain entries of merchandise without benefit of drawback under 19 U.S.C. § 1313(j)(1).

FACTS:

"Actuators" were imported over a period of time through 1994 into 1996. It is claimed that, on or about October 29, 1996, 725 of those actuators that were imported were exported, unused, for which drawback was claimed. The consignee or purchaser of the exported actuators was Prime Actuator and Control Systems UK Ltd., a wholly owned subsidiary of Bettis UK Ltd., which itself is a wholly owned subsidiary of Bettis Corporation, the claimant and protestant.

Upon due notice of intent to export having been given, Customs (Houston) commenced to physically inspect the merchandise bound for exportation. For reasons not attempted to be explained, Customs commenced said inspection, but never officially completed it, in that the inspector, according to your memorandum forwarding the protest to this office for further review, "failed to make the appropriate marks [on the CF7539] with regard to the exam results. The extent of the exam is not known since the Inspector made no remarks. Furthermore, due to the amount of containers involved it cannot be assumed that the Inspector examined all the merchandise."

The central issue is presented as one of quantity, not condition. Hence, the European consignee, at the request of Customs (Houston Drawback Office) wrote among other things on November 22, 1999, that "on or about 11 December, 1996, Bettis UK Ltd received . . . seven containers which included 725 valve actuators."

Deciding that insufficient proof of export was submitted, the open entries were liquidated without benefit of drawback.

As part of the protest application, Quality Customs Brokers, on behalf of Bettis, wrote on January 13, 1999, in part, that " . . . we were shipping in 7 containers a 328 package lot with the 725 pcs claimed on drawback being packed into 244 of the 328 packages."

The file before us contains a copy of a bill of lading referencing invoice 960916 and describing seven 40' containers containing, en toto 328 "pcs". Invoice 960916 describes seven containers, each with a distinct number, and attached to said invoice is a seven-part set of documents that purport to identify the contents of each container, especially by serial number for each item. Also submitted by Quality Customs Brokers is a six-page list of entries, 52 in all, each of which is followed by a list of serial numbers.

ISSUE:

Whether sufficient proof of export has been submitted to grant drawback.

LAW AND ANALYSIS:

Before we reach the heart of the matter, we need to dispose of an issue that you perceive arising out of the fact that the domestic claimant/protestant is a party related to the foreign consignee/ purchaser. Generally speaking, where parties are related, care must be exercised in the appraisement of the goods, in order that duties may be correctly assessed against the true value of the imported goods. In this case, there is no indication, other than your alarum, that the imported goods were the subject of a transaction between related parties. From the documents in the file, clearly the exported goods were the subject of a transaction between related parties, but there is nothing in the file indicating such a circumstance with respect to the imported goods. In any event, we do not take this protest as one proper for consideration of that "related parties" issue, inasmuch as the documentation in the file, without regard to the relationship between the parties, is adequate to decide whether there is sufficient proof of export to support the claim for drawback.

Section 313(j)(1) 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 US before such exportation or supervised destruction. Thus, drawback of duties is a matter of statutory privilege rather than a legal right. Swan & Finch Company v. United States, 190 U.S. 143 (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. Chrysler Motors Corp. v. United States, 755 F. Supp. 388, aff'd, 945 F.2d 1187 (Fed. Cir. 1991); Guess? Inc. v. United States, 944 F.2d 855 (Fed. Cir. 1991).

Customs regulations pertaining to the completion of drawback claims state in part as follows:

Unless otherwise specified, a complete drawback claim under this part shall consist of the drawback entry on Customs Form 7551, applicable certificate(s) of manufacture and delivery, applicable Notice(s) of Intent to Export, Destroy, or Return Merchandise for Purposes of Drawback, applicable import entry number(s), coding sheet unless the data is filed electronically, and evidence of exportation or destruction under subpart G of this part.

19 CFR 191.51(a)(1). Furthermore,

A completed drawback claim, with all required documents, shall be filed within 3 years after the date of exportations or destruction of the merchandise or articles which are the subject of the claim [and] claims not completed within the 3-year period shall be considered abandoned. . . .

19 CFR 191.51(e)(1).

If Customs determines upon review of the drawback claim that the claim is incomplete (19 CFR 191.51(a)(1) noted), then the claimant will be notified in writing and given the opportunity to complete the claim subject to the three-year filing requirement of 19 U.S.C. 1313(r), 19 CFR 191.51.

Notwithstanding that a claim may be complete when filed or completed upon notice, subject to the three-year filing requirement, Customs may determine that additional evidence or information is required in order to find that drawback should be allowed. In such event, Customs will notify the filer in writing of the additional evidence or information required to perfect the claim for drawback. At that time, the claimant shall furnish or have the appropriate party furnish the additional evidence or information within 30 days of the date of notification by Customs. Customs may extend this period if requested, in writing and for good cause shown. In any event,

. . . The evidence or information required under this paragraph may be filed more than 3 years after the date of exportation or destruction of the articles which are the subject of the claim. Such additional evidence or information may include, but is not limited to:

(1) The export bill of lading or other actual evidence of exportation . . . .; (2) A copy of the import entry and invoice annotated for the merchandise . . . .; (3) A copy of the export invoice annotated . . . .;

(4) Certificates of delivery . . . .

19 CFR 191.52(b).

It is clear from the record before us that a completed claim for drawback has been filed. The problem is, it has not been verified. After painstaking "data mining" of the documents in the file before us, we find the following:

1. Of the 52 entries identified as covering the imported goods for drawback, rather than the no less than 725 actuators that are claimed to have been imported, no more than 721 actuators were identified by distinct serial number - S/N 8254 is a double item on entry 531-NNNN223-7, entry 531-NNNN868-9 lists 8 units rather than the 9 claimed and entry 531-NNNN036-0 lists S/Ns 11204 and 11205 twice;

2. Of the 725 actuators claimed to have been exported, there is no record of importation of 28 serial numbers/actuators out bound per the bill of lading and the contents list attached thereto.

3. The written averment that 725 actuators were received overseas thus must have been shipped, is directly contradicted by the contents sheets attached to the export bill of lading, which set out only 697 discrete serial numbers, therefore, separate actuators. Also, such a document is hearsay and not within the business record exemption to the hearsay rule. The invoice attached to the export bill of lading is admissible as a business record, of course, and links the remaining actuators exported to the listed imported actuators.

The evidence in the file supports the claim for the 697 actuators listed as being imported under the identified import entries and listed as being exported based on the export bill of lading and referenced. For your convenience, we have enclosed a copy of the spreadsheet that we compiled to make this determination.

HOLDING:

The protest is to be denied as to the 28 actuators that were exported but not listed as being imported under the identified import entries. The protest is granted as to the remaining (697) actuators. 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,

William G. Rosoff, for

Myles B. Harmon,
Acting Director

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