HQ 229892 - - United States International Trade Commision Rulings

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HQ 229892

July 3, 2003

DRA-2-02
229892 AL

Assistant Port Director
Trade Operations
Customs Border Protection
2350 N. Sam Houston Parkway E.
Houston, Texas 77032-3126

Dear Sir/Madam:

This is in response to your internal advice request dated January 17, 2003 which is in accordance with Customs Regulations Part 177 (19 CFR 177). This regulation allows requests for “advice or guidance to the interpretation or proper application of the Customs and related laws with respect to a specific Customs transactionfrom the Headquarters Office at any time, whether the transaction is prospective, current, or completed.” 19 CFR §177.11(a).

According to the request, the Port is seeking internal advice on the allowance of a single export document to support the exportation on multiple drawback claims. Copies of four drawback claims were provided. The first example covers the following drawback claims: AA6-XXXXX29-6 (“296”) and AA6-XXXXX31-5 (“315”). The second example covers the following drawback claims: AA6-XXXXX70-9 (“709”) and AA6-XXXXX98-2 (“982”).

FACTS:

The first example covers two drawback claims: 296 and 315. The following facts are supported by the documents provided by the Port.

The first drawback claim (“296”) asserts a manufacture using a product classified under subheading 2713.11.00, Harmonized Tariff Schedule of the U.S. (HTSUS, 1998). This claim is based on 19 USC 1313(p)(2)(A)(i). The claim further stated that the product was manufactured into 168,456 barrels of motor gasoline during the period from January 2000 to December 2000. The duty rate was listed at 2.6 cents per barrel. A table of conversion was included in the claim which listed a drawback factor of 1.08846. It also listed 168,456 crude barrels allowed and 154,765 barrels exported. The claim’s Chronological Summary of Exports identified the exported article as 154,765 barrels of motor gasoline which was exported to Mexico on February 12, 2000 by the vessel “Port Arthur” and classified under subheading 2710.00.15, HTSUS (2000).

According to the claim’s Certificate of Manufacture and Delivery (certificate), the import merchandise was described as being Class II or Class III Crude Oil. The certificate also had a drawback factor of 0.0260491. The manufacturing period covers the year 2000 but the relevant manufacturing abstract records were not provided.

On the Shipper’s Export Declaration (SED), the unleaded motor gasoline was referenced by its Schedule B number: 2710.00.1518 which is the equivalent of subheading 2710.00.15, HTSUS (2000). This export information is also evidenced by a Tanker Bill of Lading. The bill of lading stated that 250,079.62 barrels of regular unleaded gasoline was clean on board the Port Arthur on February 12, 2000. Therefore, the entire amount of 250,079.62 barrels of regular unleaded gasoline, evidenced by the SED, was exported to Mexico. However, on claim 296, only 154,765.28 barrels, which are subject to the statutory requirements of 19 USC 1313(p)(2)(A)(i), were claimed for drawback, leaving a remainder of 95,314.34 barrels exported but not claimed.

The second drawback claim (“315”), which is based on 1313(p)(2)(A)(iii), involves the designation of 286,901.57 barrels of motor fuel imported on February 2, 2000 and classified in subheading 2710.00.15, HTSUS (2000). Two exports are listed. The first export involves 191,587.23 barrels of gasoline sent to Mexico on February 3, 2000 aboard the vessel “Trogir.” The second export involves the 95,314.34 barrels of gasoline sent to Mexico on February 12, 2000 aboard the vessel “Port Arthur.” This second export is at issue here. The second export is supported by the same bill of lading that supports the 154,765.28 barrels on claim 296 of the 250,079.62 barrels sent to Mexico.

The second example consists of drawback claims, 709 and 982. The following facts are supported by documents provided by the Port.

Claim 709 involved the importation of Epoxide Resin that is referenced by various names such as Epon Resin 164LS, Epikote 5112, Epikote 5205, etc. and is classified under subheading 3907.30.00, HTSUS (1997). Like claim 315, claim 709 is based on 1313(p)(2)(A)(iii).

There are 52 import entries covering the importation of epoxide resin during the period of July 4, 1997 to December 16, 1997 at a duty rate of 6.1% ad valorem. The first 37 import entries are said to cover an importation period from July 4, 1997 to November 4, 1997. The remaining 15 import entries are said to cover an importation period from November 6, 1997 to December 16, 1997. Import entries 1 through 22 covered 402,294 kilograms of the designated merchandise which are said to cover an importation period from July 4, 1997 to October 2, 1997. The total amount of this product imported into the United States was 979,934 kilograms.

Claim 709 involved two separate exportations. The first exportation, as evidenced by a Tanker Bill of Lading, took place on November 5, 1997 on the vessel “Stolt Vinland” to Durban, South Africa. The bill of lading described the commodity as Epon Resin 828 and that a total amount of 512,673 kilograms was exported. However, the first export of claim 709 only involved 401,233 kilograms of the 512,673 kilograms exported, leaving a remainder of 111,440 kilogram exported but not claimed. The second exportation claimed on 709 took place on March 16, 1998 on the vessel “Stolt Spray” to Durban, South Africa which was evidenced by its Tanker Bill of Lading. This bill of lading accounted for the exportation of 594,524 kilograms of Epon Resin 828. However, only 578,701 kilograms of the 594,524 kilograms were claimed on 709, leaving a remainder of 15,823 kilograms exported but not claimed. Thus, 401,233 kilograms from the first exportation and 578,701 kilograms from the second exportation were claimed together under claim 709. The remaining 111,440 from the first exportation that was exported on November 5, 1997 by the Stolt Vinland, was claimed under a subsequent claim (982). The 15,823 kilograms covered by the Stolt Spray exportation on March 16, 1998 still remains unclaimed.

Claim 982, which is also based on 1313(p)(2)(A)(iii), involved 29 import entries of 458,587 kilograms of epoxide resin and said to be classified in subheading 3907.30.00, HTSUS (1997). The designated imported merchandise, identified as Epikote 5203, Epikote 5050, etc. was imported during the period from March 18, 1997 to October 9, 1997. The first 23 import entries covered 347,147 kilograms and covered the importation period from March 18, 1997 to May 19, 1997. The remaining 6 import entries covered 111,440 kilograms imported during the period from June 28, 1997 to October 9, 1997.

There are 14 export shipments identified on claim 982. The first 13 export shipments are said to have occurred from May 8, 1997 to June 17, 1997 and cover 347,147 kilograms of epoxide resin. The last export shipment of 111,440 kilograms was exported on November 5, 1997 on the Stolt Vinland; the same voyage that was identified as an export shipment on claim 709.

In the two examples, the Port is concerned with the use of a single export document for multiple claims which may have claimed the same shipment more than once which would be a violation of 19 USC 1313(v). The Port believes that such a violation may have occurred. However, in addition to the Port’s request, we must first address the validity of the four drawback claims based on the evidence that has been provided.

ISSUES:

Whether the four drawback claims comply with the requirements of 19 USC Section 1313(p).

Whether the use of a single export document that supports multiple drawback claims is in violation of 19 USC Section 1313(v).

LAW and ANALYSIS:

Before discussing the issues, we discovered three discrepancies on claim 296. First, the tariff classification for the imported merchandise was listed as subheading 2713.11.00, HTSUS (1998), which covers “petroleum coke, not calcined” and not “Class III Crude Oil/Class II Crude Oil” as described on the claim’s certificate of manufacture and delivery (certificate) as the designated imported merchandise. Class II or III Crude Oil is classified under subheading 2709.10.00 of the HTSUS (1998), at a duty rate of 2.6 cents per barrel from Mexico. Therefore, the duty rate used to calculate drawback was that of Class II or III Crude Oil but the tariff classification stated to cover the designated imported merchandise did not match the designated merchandise.

A second discrepancy was discovered. The table of conversion that was described earlier states a drawback factor of 1.08846. However, the certificate provides a different drawback factor of 0.0260491. Not only are the drawback factors not consistent, but the 168,456 crude barrels allowed for 154,765 barrels of motor gasoline might not be accurate. In 1966, the industry standards of potential production for petroleum were approved and published in T.D. 66-16 (January 19, 1966). The standards are given for each product made from each class of crude petroleum or petroleum derivatives. According to T.D. 66-16, Class II/Class III Crude oil would manufacture respectively, 86% and 91% of motor gasoline. There is insufficient information to determine if the computation is consistent with T.D. 66-16.

Lastly, while the import entries listed on the certificate were made during the period from February 25, 1998 to December 23, 1998, the receipt dates and the relevant manufacturing periods were not provided. Consequently, those abstract records should be checked to ensure that sufficient gasoline was produced to have been the subject of the February 12, 2000 export.

First Issue:

In this case, we have four drawback claims based on 19 USC Section 1313(p). According to 19 USC 1313(p),

Notwithstanding any other provision of this section, if- an article. . .of the same kind and quality as a qualified article is exported; the requirements set forth in paragraph (2) are met; and a drawback claim is filed regarding the exported article; drawback shall be allowed as described in paragraph (4).

As mentioned above, the article must comply with “. . . the requirements set forth in paragraph (2).” The first drawback claim (296) is based on 19 USC 1313(p)(2)(A)(i). According to section 1313(p)(2)(A)(i), “[t]he exporter of the exported article manufactured or produced a qualified article in a quantity equal to or greater than the quantity of the exported article.”

The manufacturing period for the export was from January 1, 2000 to December 31, 2000. 19 USC 1313(p)(2)(C) states that “[i]n the case of the requirement of subparagraph . . . (A)(i), the exported article is exported during the period that the qualified article described in subparagraph . . . (A)(i) . . . is manufactured or produced, or within 180 days after the close of such period.” We are not certain as to whether the exportation date of February 12, 2000 complies with the statutory time requirement of exportation because the relevant abstract records were not available to determine whether sufficient amounts of gasoline was produced and exported timely. However, the manufactured exported article, motor gasoline, meets the statutory definition of a “qualified article” under section 1313(p)(3)(A)(i)(I) and (ii)(I) with regard to the exportation of motor gasoline.

With respect to section 1313(p)(2)(A)(iii), claim 315 also designated 286,901.57 barrels of gasoline imported on February 2, 2000 as the basis for drawback. The relevant exports occurred on February 3, 2000 (191,587.23 barrels on the Trogir) and February 12, 2000 (95,314.34 barrels on the Port Arthur). Those exportations met the 180-day statutory time period. Moreover, the gasoline met the statutory definition of a qualified article under section 1313(p)(3)(A)(i)(I) and (ii)(II).

The last two claims (709 and 982) for the Epoxide Resins, which are also based on 19 USC 1313(p)(2)(A)(iii), have met the statutory definition of a qualified article under 1313(p)(3)(A)(i)(II) and (ii)(II). The qualified article was correctly classified under subheading 3907.30.00 of the HTSUS (1997).

The remaining concern for these two claims is whether they have met the time requirement of section 1313(p)(2)(E). As it was stated earlier, the exported article must be “. . . exported within 180 days after the date of entry of an imported qualified article. . . .” On claim 709, the exported qualified article was imported during the period of July 4, 1997 to December 16, 1997. According to the Exporter’s Chronological Summary Report, the first exportation which consisted of 401,233 kilograms, occurred on November 5, 1997 on the Stolt Vinland. The second exportation of 578,701 kilograms took place on March 16, 1998 on the Stolt Spray. The first exportation covered entries that were imported during the period of July 4, 1997 to October 2, 1997. This first exportation accounted for import entries 1 to 21 and 18,939 kilograms of the 22nd entry. The claimant chose to claim only 401,233 kilograms when in essence it could have claimed all entries that were imported prior to the first exportation date of November 5, 1997 but only up to the amount exported on November 5, 1997. Nonetheless, the first exportation of November 5, 1997 falls within the 180-day time requirement for the first 21 import entries plus 18,939 kilograms of the 22nd entry, covering the importation period of July 4, 1997 to October 2, 1997. The second exportation of March 16, 1998 covers the importation period from October 2, 1997 to December 16, 1997 which is the remaining 1,061 kilograms of the 22nd import entry plus the remaining import entries, totaling in the amount of 578,701 kilograms. Again, the second exportation was made timely within 180 days from the period of importation.

The remaining 111,440 kilograms from the first exportation of 512, 673 kilograms, exported by the Stolt Vinland, were claimed on claim 982. A list of 29 recorded entries covered imports during the period of March 18, 1997 to October 9, 1997. The last 6 import entries which were imported between the period of June 28, 1997 to October 9, 1997, were designated against the 111,440 kilograms of epoxide resin exported on November 5, 1997. Thus, the exportation that occurred on November 5, 1997, met the “within 180 days” requirement.

The last three claims (315, 709 and 982) comply with the provisions of section 1313(p). However, Claim 296 has the noted discrepancies which need to be resolved.

Second Issue:

Under 19 U.S.C. § 1313(v):

Merchandise that is exported or destroyed to satisfy any claim for drawback shall not be the basis of any other claim for drawback; except that appropriate credit and deductions for claims covering components or ingredients of such merchandise shall be made in computer drawback payments. (emphasis added).

The statutory purpose of section 1313(v) is to prevent multiple claims on the same exported or destroyed merchandise. Here, the issue does not concern the multiple use of merchandise which is the subject of § 1313(v), but the use of an export document which is being used to identify the relevant export articles. Section 1313(v) does not preclude the use of an export document to support an exportation on multiple drawback claims. The section prevents the identification of the same merchandise on more than one drawback claim. Here, the drawback claims did not identify the same merchandise.

The issue in HQ 229590 (October 24, 2002), which addressed the application of 19 U.S.C. § 1313(v), concerned “[w]hether two or more claimants can claim drawback on the basis of the same deemed exportation shipment.” In HQ 229590, lading fuel on an eligible aircraft was held to be the act of severance of goods for purposes of drawback and that by filing a drawback claim based upon a deemed exportation under 19 U.S.C. § 1309, a claimant asserts that the aircraft or vessel is eligible. Here, if the identified export articles were not claimed more than once, the provisions of 19 USC 1313(v) would not preclude drawback.

HOLDING:

Claims 315, 709, 982 comply with the requirements of 19 USC § 1313(p), however, due to discrepancies found on claim 296, the Port should ensure that the information provided, complies with the requirements of 19 USC 1313(p)(2)(A)(ii).

The use of a single document to identify different export articles on multiple drawback claims does not violate the provisions of 19 USC 1313(v).

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,

Myles Harmon, Director
Commercial Rulings Division

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