HQ 562188 - Protest Nos. 1101-00-100217 and 1101-00-100223; Validity of NAFTA Certificate of Origin; Opportunity for Correction of Illegible, Incomplete or Defective Certificates of Origin; Authorized Signature - United States International Trade Commision Rulings

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HQ 562188

July 30, 2002

MAR-05 RR:CR:SM 562188 NL

CATEGORY: CLASSIFICATION

Port Director
U.S. Customs Service
2ND AND CHESTNUT STREETS
PHILADELPHIA, PA 19106

RE: Protest Nos. 1101-00-100217 and 1101-00-100223; Validity of NAFTA Certificate of Origin; Opportunity for Correction of Illegible, Incomplete or Defective Certificates of Origin; Authorized Signature

Dear Port Director:

This office has considered the application for further review of Tosco Refining L.P. (Tosco) of the above-referenced protests. The decisions of this office follow.

FACTS:

These protests concern the importation by Tosco of crude oil at the Port of Philadelphia under claims of eligibility for duty-free treatment under the North American Free Trade Agreement (NAFTA). Eligibility for NAFTA treatment was denied by Customs officials who concluded that the Certificates of Origin for the two protested entries were not in conformity with Customs requirements.

The ‘223 Protest

With respect to Protest No. 1101-00-100223 (the ‘223 Protest), entry was made on April 25, 2000, at which time Tosco declared on the CF 7501 that the crude oil was a product of Canada eligible for duty-free treatment under NAFTA. The invoice identified the good as “Hibernia Crude Oil” and the exporter as Mobil Canada Midstream.

The protest record indicates that subsequent to importation Tosco submitted in support of its NAFTA claim a document styled “North American Free Trade Agreement Certificate of Origin”, issued on the letterhead of Hibernia Management and Development Co. It is understood that this entity has an interest in the Hibernia crude transportation and sale operations offshore Newfoundland, Canada. The document indicates that loading was completed on April 24, 2000.

The document was not prepared on CF 434, nor was it any other form approved by Customs. The data elements provided did not conform with Customs requirements. Among other omissions, there was no representation of the basis under which the crude qualified for NAFTA preference., i.e., by reason of being wholly obtained or entirely produced in Canadian territory. The document identifies the exporter as Mobil Canada Midstream Services, but there is no designation of the producer of the crude oil. The document does not, as required for proper execution of the CF 434, indicate whether the exporter’s certification is based on his knowledge, the producer’s written representation or a certificate executed by the producer. Finally, the document as included in the protest record was signed but not dated.

There is evidence from the facsimile traffic markings that Tosco was in possession of this document at the time of importation.

By a CF 29 Notice of Proposed Action dated May 22, 2000, Customs advised that it had no information that the document was approved for use as a NAFTA Certificate of Origin. The importer was requested to provide such information within five days. It is apparent from the protest file documents that no such information was available or submitted; the document prepared on the letterhead of Hibernia Management and Development Co. had not been approved by U.S. Customs for use as a NAFTA Certificate of Origin for merchandise imported into the U.S.

The protest file also contains a blanket CF 434 covering the period April 1, 2000 through March 31, 2001, with a May 11, 2000 date of execution. The certificate was executed by an official of Chevron Products International L&T, and identifies various Chevron and Mobil entities, all partners in the Hibernia consortium, as exporters. The CF 434 indicates Tosco as the importer. It appears that the Protestant Tosco did not possess this CF 434 until at least its May 11, 2000 date of execution. The Protestant advises that it supplied this CF 434 to Customs on May 25, 2000.

In response, on May 26, 2000, Customs issued a CF 29 Notice of Action denying NAFTA preferential treatment for the imported crude oil. The explanation indicated that the NAFTA certificate (the subsequent CF 434 dated May 11, 2000) was not valid for the importation made on April 25, because it was not signed by the exporter or a person holding a power of attorney from the exporter. The Action taken pursuant to this Notice of Action also was based on the fact that the CF 434 was dated May 11, 2000, subsequent to the date of importation. Customs treated this as evidence that the importer was not in possession of a CF 434 at the time of claiming NAFTA eligibility. See 19 CFR 181.22(b), which provides that a claim of preferential tariff treatment is to be made on the basis of a Certificate of Origin which is in the possession of the importer at the time of making the claim.

The Protestant Tosco, while conceding deficiencies in the initial “certificate” prepared by Hibernia Management and Development Co., submits that it should have been afforded an opportunity to submit a corrected certificate. Tosco points to 19 CFR 181.22, which provides in part:

If the port director determines that a Certificate is illegible or defective or has not been completed in accordance with paragraph (b) of this section, the importer shall be given a period of not less than five working days to submit a corrected Certificate.

Tosco submits that denial of its claim for preferential treatment on the grounds stated in the CF 29 Notice of Action is inconsistent with the obligation of Customs to permit correction of a defective certificate. Necessarily, argues TOSCO, a correction may bear a date of execution that is after the date of importation; to do otherwise would be an improper backdating of the Certificate of Origin.

The ‘217 Protest

With respect to Protest No. 1101-00-100217 (the ‘217 Protest), entry was made on May 3, 2000, at which time Tosco declared on the CF 7501 that the crude oil was a product of Canada. The invoice identified the good as “Hibernia Crude Oil” and the exporter as Petro-Canada.

Subsequent to importation Tosco submitted in support of its NAFTA claim several certifications on CF 434. All named Petro-Canada as the exporter and were executed by various officers of that company. The importers indicated were Coastal Eagle Point Co. and Sun International Ltd. The Protestant explained that Coastal Eagle Point Co., also an importer from the Hibernia Field, in this case sold the oil to TOSCO before importation by TOSCO.

By a CF 29 Notice of Action dated June 30, 2000, Customs advised that none of the CF 434 Certifications submitted by TOSCO were valid. In particular, a certificate that otherwise would have been valid was defective because, said Customs, it was executed by a Mr. Chow-Wah, an officer of Petro-Canada, before submission to Customs of a letter from upper management stating that Mr. Chow-Wah had “signing authority” for Petro-Canada. Mr. Chow-Wah executed the CF 434 on April 26, 2000; the above-referenced letter was dated May 16, 2000. Customs denied the Protestant’s claim of NAFTA eligibility on the basis that there was no valid Certificate of Origin in the importer’s possession at the time the importer made its claim of eligibility.

This particular CF 434 indicated Coastal Eagle Point as the importer; Customs did not indicate that this was a defect requiring correction or a finding of invalidity.

ISSUE:

Whether the importer-Protestant was in possession of valid or correctable Certificates of Origin at the time of importation, when it claimed NAFTA preferential tariff treatment for the subject crude oil.

LAW & ANALYSIS:

The ‘223 Protest

The NAFTA Certificate of Origin is established by the Parties to the Agreement pursuant to Article 501 of the NAFTA. Section 205(b)(1)(B) of the NAFTA Implementation Act (19 USC §1508(b)(1)(B)) provides that:

The term "NAFTA Certificate of Origin" means the certification, established under article 501 of the North American Free Trade Agreement, that a good qualifies as an originating good under such Agreement.

The corresponding regulation, at 19 CFR 181.22(b)(1), requires that the Certificate shall be on CF 434, or on another form approved by the Canadian or Mexican Customs administrations, or on another form or in a medium approved by U.S. Customs.

The Certificate of Origin (Customs Form 434) is used by the exporter to certify that a good qualifies as an originating good for purposes of preferential tariff treatment under the NAFTA. The form includes fields for, among other things: the name and address of the producer, importer and exporter; the shipment or blanket period for which preferential treatment is claimed; a description of goods; the preference criterion; the Harmonized System tariff classification number; the country of origin; the authorized signature; and the date of signature. The instructions for the CF 434 also call for the exporter, if he is not the producer, to provide in Field 8 the basis for his knowledge or reliance that the good qualifies as originating.

In this protest, the “certificate” initially submitted was not on CF 434, nor was it on any other approved form or medium. The instant protests require a determination of whether this document could qualify as a Certificate of Origin for purposes of the NAFTA.

Leaving aside nonconformity as to form or medium, we consider the key consideration to be whether the data provided on the nonconforming form is equivalent in substance to the data normally provided on the CF 434 Certificate of Origin. If not, the unapproved “certificate” prepared by Newfoundland Transshipment Limited may not be treated as a NAFTA Certificate of Origin within the meaning of Article 501 of the NAFTA and the applicable Customs Regulations.

There are numerous differences between the Newfoundland Transshipment Limited “certificate” and a properly executed CF 434. The following items are missing from the former:

Exporter’s address and tax ID number (Block 1) Producer’s name, address and tax ID number (Block 3) Importer’s address and tax ID number (Block 4) HS tariff classification (Block 6)
Preference criterion (Block 7)
Whether the exporter is the producer (Block 8) The country of origin

The document also omits the basis for the exporter’s knowledge that the good is originating, and the actual form of the certification is not in conformity with CF 434.

In view of these differences, it must be concluded that this “certificate”, although apparently in the possession of the importer at the time of its claim of preferential tariff treatment, was not valid as a NAFTA Certificate of Origin. It was not approved by either the Mexican or Canadian Customs administrations. It was not approved by U.S. Customs. As set forth above, it was not equivalent in substance, or even nearly so, to a properly executed CF 434. This office therefore finds that Customs officials properly considered the this “certificate” to be invalid for the purposes of supporting the claim of NAFTA originating status in this protest.

In sum, the Newfoundland Transshipment document is not considered a valid NAFTA certificate of origin.

In consequence, none of the later-submitted CF 434s may be treated as a correction of the initial Newfoundland “certificate”. Only documents prepared in accordance with §181.22(b) of the Customs Regulations, may be corrected. Pursuant to §181.22(c), a NAFTA Certificate of Origin may be corrected if Customs determines that it is illegible, defective or incomplete. This possibility is not available for documents that differ substantially from the format and content of the CF 434, and which therefore are invalid and not merely illegible or bear some defect of execution in the nature of clerical error or inadvertent omission.

The remaining point for decision is therefore whether any of the certifications submitted on CF 434 with respect to either of the entries were valid.

With respect to this Protest, there was no CF 434 presented that bears a date of execution prior to the date of importation, which is the date of the claim for NAFTA eligibility. Entry was made on April 26, 2000, while a CF 434 was not executed until May 11, 2000. Thus the importer was not, as required under 19 CFR §181.22(b), at that time in possession of a properly executed Certificate of Origin. Moreover, although §181.22(c) affords the importer an opportunity to correct an illegible, defective or improperly completed CF 434, in this protest the CF 434 dated May 11, 2000 was not a correction pursuant to 19 CFR §181.22. Given that its date of first execution was weeks after the importer made entry and claim for NAFTA eligibility, Customs correctly concluded that the importer was not in possession of a valid or correctable at the time of claiming NAFTA eligibility as required under 19 CFR §181.22(b).

The ‘217 Protest

With respect to Protest ‘217 we find no basis for rejecting the certificate bearing a date of execution of April 26, 2000. The document, on CF 434, was executed by an officer of the exporter. The file documents show that the importer-Protestant received a copy of this CF 434 on May 1, 2000. NAFTA eligibility was claimed on May 3, 2000. Customs did not provide a reason to conclude that this officer was without the knowledge requisite to execute the certificate. Presentation of a letter attesting to this officer’s “signing authority”, in the nature of a power of attorney, was not necessary to make the CF 434 valid, prospectively or otherwise. We therefore find that this particular CF 434 was executed prior to the date of importation, was in the possession of the importer on the date entry was made, May 3, 2000, and was otherwise valid in support of the importer’s claim of NAFTA eligibility. This Protest should be allowed.

HOLDING:

Protest No. 1101-00-100223 should be DENIED.

Protest No. 1101-00-100217 should be ALLOWED.

In accordance with Section 3A(11)(b) of Customs Directive 099 3550065, dated August 4, 1993, this decision and the Customs Form 19 are to be mailed to the protestant no later than sixty 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,

Myles B. Harmon
Acting Director

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