HQ 229384 - AFR 2704-99-103071; 19 CFR 191.72; drawback; evidence of exportation; certified bill of lading - United States International Trade Commision Rulings

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HQ 229384

February 1, 2002

DRA-2-02-RR:CR:DR 229384 IOR

CATEGORY: DRAWBACK

Port Director
U.S. Customs Service
301 E. Ocean Blvd.
Long Beach, CA 90802

Attn: Drawback Office, Suite 900

Richard Andrejko

RE: AFR 2704-99-103071; 19 CFR 191.72; drawback; evidence of exportation; certified bill of lading

Dear Madam:

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:

The protest is against the denial of drawback for drawback entry no. C27-xxxx390-5, which was filed on June 19, 1998. The drawback entry was based on 20 exportations of merchandise. It appears that the drawback claim was based on direct identification under 19 U.S.C. §1313(j)(1). The drawback entry was liquidated on September 10, 1999.

The subject protest was filed on November 9, 1999, and the Application for Further Review was filed on November 22, 1999. The protest is against the denial of drawback for 2 of the exports on the basis of which drawback was claimed. It is the protestants position that the totality of the documents submitted are sufficient to establish the date and fact of exportation. It is the Drawback Office’s position that the date and fact of exportation cannot be established for the exported merchandise at issue.

A Chronological summary of exports was submitted with the drawback entry. The summary contained the invoice number, export date, export carrier name, export manifest number, destination country, import entry number, import date, manufacturer, item number, exported quantity, import price per unit, total import value, duty rate, and total duty paid on the exported merchandise upon entry.

For one of the invoices at issue, 199415, on the chronological summary, in the “export manifest” column, the information is a “foreign ck” number.

The following is the documentation submitted for each of the two asserted exportations:

Invoice no. 200377—

1) letter dated May 4, 1995, from the Brazilian purchaser to the protestant explaining that all bills of lading should identify the shipper as a Miami third party, which is said to be the purchaser’s Miami office for purposes of the purchaser’s import license; in the letter, the purchaser waives drawback rights to the benefit of the protestant;

2) invoice for electronic toys and games, dated August 1, 1995, sold to an entity in Brazil, for shipment to Brazil, for the total amount of $33,997.92, indicating a container no. TPHU696083-2, and seal no. 0016094, and a ship date of August 1, 1995;

3) packing list dated July 27, 1995, for 441 cartons of the items on the invoice, weighing 7613 units, with an invoice total of $33,997.92, with a ship date of July 31, 1995, for shipment to the purchaser indicated on the invoice, referencing the same container and seal nos.;

4) trucking receipt dated July 31, 1995, referencing the same container and seal nos., and booking no. PLA269180, indicating shipment by protestant, and Brazil as the final destination;

5) ocean freight booking document dated July 25, 1995, booking no. PLA-269180, for the shipment of electronic games to Brazil, in a 20 foot container, estimated to depart on August 8, 1995, on the ATLANTA, voyage 18, and identifying the shipper as the protestant;

6) shipping line document, dated July 25, 1995, identifying the protestant as the shipper, itemizing the shipping charges;

7) equipment release form, dated July 25, 1995, identifying a container by the container no., and booking no., for pick up of the container in Los Angeles, California and delivery to the Santa Fe Railroad;

8) bill of lading instructions on the protestant’s letterhead, dated August 1, 1995, identifying a Miami third party as the shipper, specifying the vessel name, container and seal nos., number of cartons, contents, and requesting a copy of the bill of lading;

9) copy of unsigned bill of lading, dated August 10, 1995, for shipment from the Miami third party to purchaser in Brazil, of 441 cartons of “LCD games”, laden on board on August 10, 1995, in one 20 foot container, referencing the booking and container nos., weighing 3453 kgs. (the port of initial receipt is shown as Los Angeles), on the ATLANTA, voyage 18;

10) certificate of marine insurance, dated August 1, 1995, issued to the Miami third party, insuring the specified 441 cartons in the specified container and seal nos., shipped on the ATLANTA voyage 18; and

11) facsimile communication dated August 28, 1995,between the protestant and the Brazilian purchaser regarding shipping fees, for the merchandise expected to arrive on August 31.

With respect to export invoice no. 200377, on the chronological summary of exports, the export date is asserted to be August 1, 1995.

Invoice no. 199415—

1) facsimile letter on a Costa Rican company letterhead, dated July 6, 1995, to protestant, attaching a copy of a check for merchandise purchased by a Panamanian purchaser which check has been sent by courier, and providing an address for a certain freight forwarder in Miami, for the Panamanian purchaser;

2) a copy of a check dated June 7, 1995, payable to the protestant, in the amount of $23,384.50, drawn on a Miami bank, indicating the account holder as the Costa Rican company named on the July 6, 1995 facsimile letterhead;

3) invoice dated July 18, 1995, for electronic toys and games, for a total invoice value of $19,989.60, for sale to a customer in Panama, for shipment to Panama, with a ship date of July 18, 1995;

4) a copy of a signed bill of lading dated July 18, 1995, for the shipment of 94 packages of electronic goods, valued at $19,989.60, from the protestant to California, in care of the Panamanian purchaser, referencing the sales invoice no., and referencing a booking no. L76387 to Panama;

5) cash receipts batch posting journal reprint, dated August 9, 1995, indicating a July 10, 1995 receipt by the protestant of $23,384.50, from the Panamanian purchaser, referencing no invoice number;

6) credit memo no. 203438 from the protestant to the Panamanian purchaser, dated September 30, 1995, in the amount of $19,989.60, for the same items as listed in invoice no. 199415;

7) invoice no. 203439, dated September 30, 1995, indicating a credit and rebill of invoice no. 199415, in the amount of $19,787.70, including a 1% cash discount, itemizing the same merchandise as on invoice 199415 and credit memo 203438;

8) copy of a check from the protestant to a party in Miami, dated September 30, 1995, in the amount of $3,596.74, also showing endorsement on the back for deposit in the account of the named payee;

9) facsimile letter dated August 27, 1999, from the protestant to a freight company attaching invoice no. 199415, and thanking for assistance in locating a bill of lading relating to that invoice.

With respect to export invoice no. 199415, on the chronological summary of exports, the export date is asserted to be July 18, 1995.

The protestant takes the position that the totality of the documents should all be considered in determining the time and fact of exportation. With respect to the date of exportation, the protestant asserts that the fact that the purchaser paid for the goods in advance, establishes the urgency of the purchaser’s desire to receive the goods as soon as possible, thus implying that the goods were exported immediately. According to the protestant, the refund from the protestant was for the difference in merchandise ordered, and that which was in stock and actually shipped.

ISSUE:

Whether exportation of the merchandise on which drawback is claimed has been established in accordance with Customs Regulations, 19 CFR 191.72?

LAW AND ANALYSIS:

We note initially that the refusal to pay a claim for drawback is a protestable issue pursuant to 19 U.S.C. §1514(a)(6). Drawback for the subject entry was denied on September 10, 1999, when it was liquidated with partial drawback. This protest was timely filed on November 9, 1999, which is within the 90-day filing deadline set forth in 19 U.S.C. §1514(c). This protest involves the denial of drawback under 19 U.S.C. §1313(j).

The Customs Regulations 191.72 (19 CFR 191.72) require evidence of exportation as follows:

Exportation of articles for drawback purposes shall be established by complying with one of the procedures provided for in this section (in addition to providing prior notice of intent to export if applicable (see §§ 191.35, 191.36, 191.42, and 191.91 of this part)). Supporting documentary evidence shall establish fully the date and fact of exportation and the identity of the exporter. The procedures for establishing exportation outlined by this section include, but are not limited to:

(a) Actual evidence of exportation consisting of documentary evidence, such as an originally signed bill of lading, air waybill, freight waybill, Canadian Customs manifest, and/or cargo manifest, or certified copies thereof, issued by the exporting carrier; (b) Export summary (§ 191.73);
(c) Certified export invoice for mail shipments (§ 191.74); (d) Notice of lading for supplies on certain vessels or aircraft (§ 191.112); or (e) Notice of transfer for articles manufactured or produced in the U.S. which are transferred to a foreign trade zone (§ 191.183).

We have applied the foregoing regulations to each set of documents provided to Customs for the merchandise on which drawback was denied, and have responded with respect to each invoiced shipment separately.

In general, the proof of exportation requires evidence of an intent for the merchandise at issue to unite with the mass of things belonging to that of another country, and evidence that the merchandise left the U.S. See 19 CFR 101.1. The documents submitted generally support the intent for the subject merchandise to join the commerce of another country. Such intent is shown by the invoices, packing lists and payment records (provided there are no discrepancies among the documents). Evidence that the merchandise left the U.S. could consist of, for example, a bill of lading indicating that the goods are on an outbound vessel or aircraft, or that the goods were entered into a foreign government’s Customs. See HQ 228272, dated November 8, 1999. Finally, documentation showing the date of export from the U.S. must carry some certification of authenticity, either in the form of a signature on an original document or certification of a copy of the signed document. See HQ 226929, dated June 4, 1997.

Under evidentiary rules, hearsay testimony is not admissible. The Federal Rules of Evidence (FRE) define hearsay as “a statement, other than one made by the declarant while testifying at the trial or hearing, offered in evidence to prove the truth of the matter asserted.” FRE 801(c). Under FRE 801(a), a statement includes a written assertion. An exception to the hearsay rule is in 801(6) which provides that:

A memorandum, report, record, or data compilation, in any form, of acts, events, conditions, opinions, or diagnoses, made at or near the time by, or from information transmitted by, a person with knowledge, if kept in the course of a regularly conducted business activity, and if it was the regular practice of that business activity to make the memorandum, report, record, or data compilation, all as shown by the testimony of the custodian or other qualified witness.

The submitted documents, consisting of the invoices, packing list, bills of lading, delivery receipts, cash receipts batch journal reprint, and checks, appear to all be records made at the time of the transactions at issue, and kept in the course or regularly conducted business.

With respect to invoice no. 200377, the totality of the documents provided indicates that the electronic toys and games which are the subject of invoice no. 200377 were laden on board for shipment to Brazil on August 10, 1995, however the bill of lading copy is neither certified nor a copy of a signed document. Although according to the bill of lading, the shipper of the exported merchandise is not the drawback claimant, the right to claim drawback was waived by the exporter and assigned to the protestant. We note that with respect to this export invoice, on the chronological summary of exports the export date is asserted to be August 1, 1995, although the date of the bill of lading is August 10, 1995. Therefore, the chronological summary of exports cannot be correct. It is recommended that the protest be allowed with respect to this invoice item, provided that a certified copy of a signed bill of lading is submitted, and you choose not to verify the validity of the bill of lading itself with the carrier.

With respect to invoice no. 199415, there is no evidence of export to Panama. The only bill of lading is for shipment within the U.S. We note that with respect to this export invoice, although on the chronological summary of exports, the export date is asserted to be July 18, 1995, at most, the evidence indicates that the merchandise was picked up at the protestant’s place of business, in California on that date. The date the merchandise left the U.S. is wholly missing from the documentation submitted. The evidence of payment does not establish exportation, as the payment was made prior to the invoice and shipment dates. While payment prior to shipment may indicate an imminent shipment, it does not establish the date and fact of exportation. Moreover, none of the payments are between the purchaser and the protestant, and they do not reference the invoice number. Denial recommended.

Compliance with the Customs Regulations on drawback is mandatory and a condition of payment of drawback (United States v. Hardesty Co., Inc., 36 CCPA 47, C.A.D. 396 (1949); Lansing Co., Inc. v. United States, 77 Cust. Ct. 92, C.D. 4675; see also, Guess? Inc. v. United States, 944 F.2d 855, 858 (1991) "We are dealing [in discussing drawback] instead with an exemption from duty, a statutory privilege due only when the enumerated conditions are met" (emphasis added)). Therefore, because both the date and fact of the exportations has not been established as explained above, in accordance with the regulations, the protest should be denied as outlined above, unless a certified documents is provided.

In general, as noted above, even where some evidence of the fact and date of exportation has been provided, the chronological summary of exports generally asserts the invoice, or invoice ship date as the date of exportation, and because the bills of lading are dated later, the chronological summary of exports cannot be correct. The date of exportation on the chronological summary of exports should be the date of exportation as opposed to the invoice date, invoice ship date, or any other date.

HOLDING:

Exportation of the merchandise on which drawback is claimed has not been established in accordance with Customs Regulations, 19 CFR 191.72 with respect to the two invoiced shipments. Exportation may be established with respect to one of the invoiced shipments if a certified copy of a signed or executed bill of lading is provided.

The protest should be DENIED UNLESS certain documentation is provided, in accordance with the instructions above. 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 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 Durant
Director, Commercial

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