HQ 228781 - Internal Advice; Protest No. 1001-98-104326; Application for Further Review; Merck & Co.; 19 U.S.C. § 1313(j)(2); NAFTA drawback; HQ 228209 (April 12, 2002) - United States International Trade Commision Rulings

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HQ 228781

June 20, 2002

DRA-4 RR:CR:DR 228781 LLB

Category: DRAWBACK

Port Director of Customs
1210 Corbin Street
Elizabeth, New Jersey 07201

RE: Internal Advice; Protest No. 1001-98-104326; Application for Further Review; Merck & Co.; 19 U.S.C. § 1313(j)(2); NAFTA drawback; HQ 228209 (April 12, 2002)

Dear Sir or Madam:

The above-referenced protest has been forwarded to our office for further review. As explained below, because the requirements for further review have not been met, we are treating the application as a request for internal advice per 19 C.F.R. § 177.11. We have considered the points raised by the protestant and your office. Our decision follows.

FACTS

The subject protest concerns a claim for unused merchandise drawback pursuant to 19 U.S.C. § 1313(j)(2). According to the import invoice and the CF 7501 in the record, the imported merchandise consisted of 1,100 kilograms of Famotidine manufactured in Ireland. The import date was March 25, 1993. The exporter’s summary indicates that the protestant exported 15 kilograms of Famotidine to Canada on August 4, 1995 and that the protestant exported 20 kilograms of Famotidine to Mexico on July 16, 1995 under substitution unused merchandise drawback (19 U.S.C. § 1313(j)(2)). The protestant alleges in its protest that the exported Famotidine was manufactured in Europe and that it was exported in the same condition as when it was imported into the United States; however, has not provided any inventory records to support its allegation.

The protestant has also provided a copy of a non-binding pre-determination of commercial interchangeability of the imported and exported Famotidine issued by the Port of New York; however, the protestant has not provided any further evidence of commercial interchangeability.

On July 10, 1998, the protestant filed a drawback claim against the foregoing 35 kilograms of Famotidine, which the port denied reasoning that pursuant to 19 C.F.R. § 181.43, drawback could only be paid on drawback claims filed pursuant to 19 U.S.C. § 1313(j)(1), not (j)(2) for exports to Mexico and Canada after January 1, 1994. The protestant filed a protest and application for further review thereto.

ISSUE

Whether the merchandise is eligible for drawback under 19 U.S.C. § 1313(j)(2)

LAW and ANALYSIS

Initially, we note that the protestant’s October 21, 1998, protest, is timely inasmuch as it was filed within 90 days from the July 31, 1998, denial of drawback. 19 U.S.C. § 1514(c)(3). The matter is protestable under § 1514(a)(6).

We also note that the protestant’s application for further review (AFR) does not meet the requirements set forth in 19 C.F.R. § 174.24, which provides:

Further review of a protest which would otherwise by denied by the port director shall be accorded a party filing an application for further review which meets the requirements of § 174.25 when the decision against which the protest was filed: (a) Is alleged to be inconsistent with a ruling of the Commissioner of Customs or his designee, or with a decision made at any port with respect to the same or substantially similar merchandise; (b) Is alleged to involve questions of law or fact which have not been ruled upon by the Commissioner of Customs or his designee or by the Customs courts; (c) Involves matters previously ruled upon by the Commissioner of Customs or his designee or by the Customs courts but facts are alleged or legal arguments presented which were not considered at the time of the original ruling; or (d) is alleged to involve questions which the Headquarters Office, United States Customs Service, refused to consider in the form of a request for internal advice pursuant to § 177.11(b)(5) of this chapter.

Therefore, further review will be accorded to the party filing an application for further review which meets the requirements of § 174.25 and at least one of the criterion in § 174.24. In the subject protest, the port approved the AFR notwithstanding the fact the protestant has not alleged any of the conditions required in § 174.24 of the decision protested. Consequently, the criteria for further review have not been met and therefore, we are treating protestant’s application as a request for internal advice.

The protestant argues that the exported Famotodine is eligible for drawback pursuant to 19 U.S.C. § 1313(j)(2) inasmuch as under § 3333(a)(2), it is a non-NAFTA article which was exported to Canada or Mexico in the same condition as when imported into the United States and thus, not a “good subject to NAFTA drawback and therefore, not subject to the proscriptions against § 1313(j)(2) drawback in 19 U.S.C. § 1313(j)(4). The foregoing issue and the facts raised in this protest are substantially similar to those addressed recently in HQ 228209 (April 12, 2001). As explained in the LAW and ANALYSIS section of that ruling, the goods exported to Canada and Mexico are not the imported goods upon which the drawback claim is based, but are the substitute goods. The designated imported merchandise, which is not exported, is the basis for the drawback claim. As it is not exported, it is not merchandise described in paragraph (2) of section 3333(a), which describes an exported good, and cannot be the basis for a claim under § 1313(j)(2). We have attached a copy for your reference.

HOLDING

Under the facts described, the law does not provide for drawback under 19 U.S.C. § 1313(j)(2), on exports of substituted goods to Canada and Mexico, unless the imported goods on which the drawback claim is based are described in paragraphs (1) through (8) of 19 U.S.C. § 3333(a). Insofar as the subject goods are not described in paragraphs in paragraphs (1) through (8) of 19 U.S.C. § 3333(a), the protestant’s drawback claim, as well as its protest should be denied.

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.ustreas.gov, by means of the Freedom of Information Act, and other methods of public distribution.

Sincerely,

John Durant, Director

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