HQ 229566 - Protest No./AFR 5301-02-100114; 19 C.F.R. §§ 191.72,191.28, 191.33; evidence of exportation; HQ 228272 (November 8, 1999); hearsay evidence; Fed. R. Evid. §§ 801(a) & 803(6); Andy Mohan, Inc. v. United States, 63 CCPA 104, 107 (1976); See United States v. Baar & Beards, Inc., 46 CCPA 92, C.A.D. 705 (1959); See Chrysler Motors Corp. v. United States, 14 CIT 807, 816, 755 F. Supp. 388, aff'd, 945 F.2d 1187 (Fed. Cir. 1991) - United States International Trade Commision Rulings

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HQ 229566

September 17, 2002

DRA-2-02 RR:CR:DR 229566 LLB

Category: DRAWBACK

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

Attn: Drawback Office, Vivian Yuan

RE: Protest No./AFR 5301-02-100114; 19 C.F.R. §§ 191.72,191.28, 191.33; evidence of exportation; HQ 228272 (November 8, 1999); hearsay evidence; Fed. R. Evid. §§ 801(a) & 803(6); Andy Mohan, Inc. v. United States, 63 CCPA 104, 107 (1976); See United States v. Baar & Beards, Inc., 46 CCPA 92, C.A.D. 705 (1959); See Chrysler Motors Corp. v. United States, 14 CIT 807, 816, 755 F. Supp. 388, aff'd, 945 F.2d 1187 (Fed. Cir. 1991)

Dear Sir:

The above-referenced protest was forwarded to this office for further review. We have considered the arguments raised by the protestant, Hilti, Inc., and your office. Our decision follows.

FACTS

The protest is against the denial of drawback of drawback entry no. AA6-xxxx853-6, which was filed, March 29, 1999, pursuant to 19 U.S.C. § 1313(j)(1), and was liquidated on December 21, 2001. The protest was filed on March 12, 2002, against the denial of drawback claim, which consisted of 23 exports, the basis of which drawback was claimed. In liquidating the drawback claim, the port requested export documentation for three of the designated exports, two of which were exports to Mexico and one of which was an export to Canada. It is the protestant’s 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 evidence provided by the protestant to support that the exporters for the Mexican exports waived their right to drawback is insufficient. Further, the date and fact of
exportation cannot be established for the exported merchandise at issue.

The protestant also raises that the port had no authority to require that the documents submitted by the protestant be certified by a “disinterested third party”. Insofar as the port based its denial on the insufficiency of the evidence rather than the certification of the documents submitted, we do not reach the issue of whether certification of export documents by a disinterested third party is required. See 3V, Inc. v. United States, 83 F. Supp. 2d 1351 (Ct. Int’l Trade 1999)(granting defendant’s motion to dismiss for failure to state a claim upon which relief may be granted)(holding that there was no case or controversy where both the classification assessed and the classification protested are duty-free).

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, item number, exported quantity, and export price per unit.

The protestant has provided the following documentation, in pertinent part:

- two undated assignment letters from Hilti Latin America, Ltd. to Hilti, Inc.
a document dated May 8, 2002, from Hilti Canada, Ltd. titled “Exports to Canada”. The document states that a Canadian Customs from B-3 is attached; however, such document is not attached.
an invoice from a Canadian Customs broker to Hilti Canada, Ltd. dated June 5, 1996 for cargo control number 2ITN15052473. Invoice indicates the shipper as Hilti, Inc. The customer order number 83NT0502096/84NT05209

Canadian Customs Entry dated May 31, 2002, indicating Hilti, Inc. as the vendor, and the date of shipment as May 22nd-- no year indicated. Referencing Customer P.O. No. 83NT0502096/84NT005209
sales invoice dated May 22, 1996, referencing P.O. No. 83NT0502096. Shipped on BAMA trailer 873
sales invoice dated May 22, 1996, referencing P.O. No. 84NT005209. Shipped on BAMA trailer 873
two Mexican pedimentos, one dated May 22, 1996, and the other dated May 29, 1996, with attached packing lists indicating the exporter as Hilti Latin America, Ltd.

ISSUES

1. With regard to the subject exportations to Mexico, whether the evidence is sufficient to establish that the exporter assigned its right to drawback to the protestant pursuant to 19 C.F.R. § 191.33

2. Whether exportation of the merchandise on which drawback is claimed has been established in accordance with 19 C.F.R. § 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 December 21, 2001, when it was liquidated with no drawback. This protest was timely filed on March 12, 2002, which is within the 90-day filing deadline set forth in 19 U.S.C. §1514(c)(3). This protest involves the denial of drawback under 19 U.S.C. §1313(j)(1).

ISSUE 1

Pursuant to 19 C.F.R. § 191.33(a)(1), under 19 U.S.C. § 1313(j)(1), the exporter is entitled to drawback; however, pursuant to § 191.33(a)(2), in pertinent part,

The exporter or destroyer may waive the right to drawback and assign such right to the importer or intermediate party. A drawback claimant under 19 U.S.C. § 1313(j)(1) other than the exporter or destroyer shall secure and retain certification signed by the exporter or destroyer that such party waived the right to claim drawback, and will not authorize any other party to claim exportation or destruction . . . The certification provided for under this section may be a blanket certification for a stated period. The claimant shall file such certification at the time of, or prior to the filing of the claim(s) covered by the certification.

(emphasis added). With regard to the two exportations to Mexico, the Mexican pedimentos and the attached packing lists indicate that the exporter is Hilti Latin America, Inc. (HLA). Insofar as the drawback claimant here, Hilti, Inc., is not the exporter, assuming that Hilti, Inc. is either the importer or intermediate party, Hilti, Inc. was required to provide certification that HLA waived its right drawback and assigned its right to Hilti, Inc.

Both assignment letters provided by the protestant are substantially similar in language and state that HLA The other acknowledgment letter refers to Hilti Latin America, Inc. as “Proveedor” Hilti Latin America, Inc. It is apparent that whomever prepared the letter mistakenly copied the name from the Mexican pedimento believing that Proveedor was actually party of HLA’s name when in fact it is a title equivalent to an exporter on a pedimento. “hereby acknowledges that, respect to all articles supplied to HLA by Hilti, Inc., Hilti, Inc. reserves the right to drawback thereon with the knowledge and consent of HLA. This assignment shall remain in effect until either party provides written notice that it is no longer valid.” These letters do not meet the requirements of § 191.33(a)(2). First, the letters are undated and further, do not give a stated period of time; therefore, it cannot be determined if these letters apply to the exportations in question. Second, the letters do not certify that HLA would not authorize any other party to claim the exportation for drawback. Therefore, with regard to the two exportations to Mexico, the protestant cannot claim drawback thereon. As such, we do not reach the issue of whether exportation of the merchandise on which drawback is claimed has been established in accordance with 19 C.F.R. § 191.72 as to the subject importations to Mexico.

ISSUE 2

Pursuant to the Customs Regulations evidence of exportation is required 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);
In pertinent part, “[a]ctual evidence of exportation, as described in § 191.72 of this subpart, is the primary evidence of export for drawback purposes.” 19 C.F.R. § 191.73(c). (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).

19 C.F.R. § 191.72 (footnote added).

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 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.” Fed. R. Evid. 801(c). Under Fed. R. Evid. 801(a), a statement includes a written assertion. An exception to the hearsay rule is in 803(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 a Canadian Customs broker invoice, a packing list, and Canadian Customs entry, appear to all be records made at the time of the transaction at issue, and kept in course of regularly conducted business. However, the document titled “Exports to Canada Affidavit,” We note that the document containing the vice president’s statement is not an affidavit as it is labeled. An affidavit is “a statement or declaration reduced to writing and sworn or affirmed to before some officer who has authority to administer an oath or affirmation.” United States v. Paragon Bead Corp., 3 Cust. Ct. 644, 646 (1939). Review of the foregoing document does not indicate that the vice president’s statement was sworn to before a notary public or any other officer having such authority, therefore, the document is not an affidavit, but merely an unsworn statement. dated May 8, 2002, signed by David Sires, Vice President, Tax/Audit, and Assistant Secretary, was not made at the time of the transaction at issue insofar as it was executed 6 years after the alleged May 22, 1996, exportation occurred.

Further, affidavits provided as evidence are only "... entitled to little weight, being incomplete and based on unproduced records, and having been executed years after the transaction to which they attest." Andy Mohan, Inc. v. United States, 63 CCPA 104, 107 (1976). Mr. Sires’ unsworn statement, dated and signed May 8, 2002, provides the following:

This affidavit is submitted under Section 191.72(a) of the U.S. Customs Code of Federal Regulations. We hereby submit satisfactory evidence in the form of this certification that duties were paid to Canada on the following imports of our claimed exports. Accordingly, the attached B3 includes the following information:

1. The Canadian entry number
2. The date of import into Canada.
3. The Canadian HTS number
4. The Canadian rate of duty.
5. The amount of duties paid to Canada in Canadian dollars. 6. The amount of duties paid to Canada in U.S. dollars.

First, the B3 to which Mr. Sires refers was not attached to his statement. Second, Mr. Regan’s statement was "executed years after the transaction to which it attests" insofar as it has been six years since the exportations on which the protestant claims drawback was filed. See United States v. Baar & Beards, Inc., 46 CCPA 92, C.A.D. 705 (1959) (holding that an affidavit more than two years after the event to which it related, not supported by any records, is insufficient to support the basis for the claim at issue). Hence, Mr. Sires unsworn statement is entitled to little weight, if any at all.

Notwithstanding the foregoing, review of the remaining documents do not establish exportation. Although the purchase order number on the sales invoice can be cross-referenced with the Canadian Customs entry, and the cargo control number/bill of lading number thereon can be cross-referenced with the chronological summary of exports, the only document that mentions a date of exportation is the Canadian Customs entry. The date of exportation indicated on the Canadian Customs entry is May 22, 1996; however, this assertion was made by the Canadian Customs broker and whether the broker had personal knowledge of the date of exportation is questionable. Based on our review of the documents, it is likely that the broker obtained the date of exportation from the export bill of lading insofar as the Customs Broker’s invoice indicates the bill of lading number, the company used for shipment, and the number of the truck on which the merchandise arrived. Hence, in order for the Canadian Customs broker’s assertion, as to the date of exportation, to fall within the hearsay exception, the protestant will need to provide a copy of the bill of lading certified by the export carrier—the entity which would have personal knowledge of the date of exportation and is the custodian of the bill of lading.

Compliance with the Customs Regulations on drawback is mandatory and a condition of payment of drawback. See Chrysler Motors Corp. v. United States, 14 CIT 807, 816, 755 F. Supp. 388, aff'd, 945 F.2d 1187 (Fed. Cir. 1991) citing Swan & Finch Co. v. United States, 190 U.S. 143, 146 (1903)(holding that “the allowance of drawback is a privilege and compliance with the regulations is a prerequisite to securing it where the regulations are authorized and reasonable.”); see also, 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 (1976); 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"). Hence, in order for the protestant to establish exportation of the merchandise to Canada, the exports on which drawback has been claimed, the protestant will need to provide a certified bill of lading.

HOLDING

1. With regard to the subject Mexican exports, the evidence is insufficient to establish that the exporter assigned its right to drawback to the protestant pursuant to 19 C.F.R. § 191.33, insofar as the assignment letters are undated and the letters do not certify that the exporter would not authorize any other party to claim the exportation for drawback. The protest should be DENIED as to these exports.

2. With regard to the Canadian export on which drawback has been claimed, exportation of the merchandise in accordance with 19 C.F.R. § 191.72 has not been established. Exportation may be established with respect to this export if a certified copy or executed bill of lading is provided. The protest should be DENIED UNLESS certain documentation is provided, in accordance with the foregoing instructions.

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

Sincerely,

John Durant, Director
Commercial Rulings Division

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