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HQ 229941





October 14, 2003

DRA-2-02-RR:CR:DR 229941 IOR

CATEGORY: DRAWBACK

Port Director
Customs and Border Protection
1100 Raymond Blvd.
Newark, NJ 07102

Attn: Drawback Office, Barbara Hopard

RE: Internal Advice; 19 CFR 191.72; drawback; evidence of exportation; date of exportation; fact of exportation; Canadian B3; Canadian K84

Dear Madam:

This is in response to a ruling request submitted on behalf of Estee Lauder International Inc. (Lauder), by letter dated April 24, 2003, regarding a current transaction. We are treating this request as an internal advice, as it does not pertain to a prospective transaction. We have received comments from the New York Drawback Office regarding the transaction, by memorandum dated May 14, 2003. We have considered the facts and issues raised and our decision follows.

FACTS:

Lauder filed drawback claim 315-xxxx300-0, on June 21, 2002, based on direct identification under 19 U.S.C. §1313(j)(1). On July 1, 2002, the New York Drawback Office (Drawback Office) issued a request for information for purposes of a full desk review of the claim, including verification of the validity and truthfulness of export documents. For purposes of the review, three exports to Canada were randomly selected for review. The selected exports were referenced as 1229724, 1229894, and 1229895. On the issue of proof of export, the Drawback Office requested proof of export, export sales orders and invoices for the referenced exports. The request noted as follows:

Proof of export must be originally signed or originally certified by the exporting carrier or the exporting carrier’s agent. Copies certified by a party other than the exporting carrier or its agent are not acceptable for this verification. The party certifying the document must be clearly identified by name, title, and affiliation with the exporting carrier. The document(s) must establish the date, place and fact of export. The quantity and description of the exported merchandise as well as the identity of the exporter must support the claim for drawback. The exporting vessel or carrier, the date of export, port of lading, and the ultimate destination of the goods exported must also be shown. Any unidentified third parties appearing on the documents must be clearly explained and clarifying/supporting documentation submitted.

Emphasis supplied.

For export reference 1229724, Lauder provided copies of commercial export invoice no. 1229724, a truck bill of lading (truck b/l) and a Canadian B3. The commercial invoice, dated February 5, 2001, provides the following information regarding the covered merchandise:

PRODUCT CODE
PRODUCT DESCRIPTION
ORDER REFERENCE
QUANTITY SHIPPED
PRICE /UNIT
AMOUNT (USD)
65X9-90-8001
GIFT 1C-SO1
020501 W2
2,880 $Z $Z x 2,880

The invoice indicates the merchandise is being shipped “via truck”. The invoice indicates that the merchandise was sold to and is being delivered to “Estee Lauder Cosm. Ltd.”, in Ontario.

The truck b/l apparently identifies Lauder as the party “from” which the merchandise is shipped, although the name of the company is not entirely legible and no address is given. The truck b/l appears to identify Lauder Canada, in Ontario, as the party to which the merchandise is being shipped, as the name and address are centrally located on the document; however, it does not indicate the role of that party. There is a “sold to” code of 436080. No carrier is identified in the “carrier” box. The document has the date of February 5, 2001; however, nothing indicates what the date represents. The “Ship via” box, indicates “Tri.Par. Invoice 1229724”. The b/l indicates that 80 packages of “Toilet Preparations [illegible] 5 pallets” weighing 2067 lbs. are being shipped. The document contains an illegible signature for the shipper, which is not identified.

The Canadian B3 (Canada Customs Coding Form),submitted has the transaction number 133xxxxxxx389, and identifies the vendor as Estee Lauder Inc., and the importer as “Estee Lauder Cosmetics Limited” in Ontario, Canada, and references 1229724 as “cust. Order”. The “direct shipment date” is February 5, and the “release date” is February 6, 2001. The value is $Zx2,880, and the quantity in one box is stated to be 80 and in item 29 the quantity is stated to be 2880. The merchandise is described as “467 GIFT SETS (MAKEUP PREPA”. The merchandise is said to “arrive by” “TRIPAR – PARS”. There is a “carrier code at importation” of “4892” and a “cargo control” number of “4892 PARS10065140”. The declaration is executed by an individual for the importer’s broker, and is dated February 13, 2001. According to Lauder, this is the date of clearance into Canada.

For export references 1229894 and 1229895, Lauder provided copies of commercial export invoices nos. 1229894 to 1229901, a truck b/l and a Canadian B3. In the response Lauder stated that the B3 covers merchandise which is the subject of the eight invoices. The commercial invoices are all dated February 7, 2001, and provide the following information regarding the covered merchandise:

INVOICE NUMBER
PRODUCT DESCRIPTION
ORDER REFERENCE
QUANTITY SHIPPED
PRICE /UNIT
AMOUNT (USD)
1229894
GIFT 1C-SO1
CA2144409
1,692 $Y $Y x 1,692
1229895
GIFT 1C – SO1
CA2144415
2,664 $Y $Y x 2,664
1229896
GIFT 1C – SO1
CA2144422
648 $Y $Y x 648
1229897
GIFT 1C – SO1
CA2144433
1,368 $Y $Y x 1,368
1229898
GIFT 1C – SO1
CA2144439
684 $Y $Y x 684
1229899
GIFT 1C – SO1
CA2144439
1,944 $Y $Y x 1,944
1229900
GIFT 1C – SO1
CA2144444
3,024 $Y $Y x 3,024
1229901
GIFT 1C – SO1
CA2144450
828 $Y $Y x 828

The product code is 65X9-90-8001 for all of the invoices. The invoices all indicate that the merchandise is being shipped via truck, and that the merchandise was sold to and is being delivered to “Estee lauder Cosm Ltd” in Ontario, Canada.

The truck b/l appears to identify “Clinique” as the party “from” which the merchandise is shipped, and no legible address is given. The truck b/l identifies the “Ship to” party as “Sears Canada Inc.”, in Vaughn, Ontario. There is a “sold to” and “ship to” code of 27845. The carrier is identified as HTAMHIGHLAND/3rd PARTY/TECH TRAFFIC. The document has no legible date. The “Ship via” box, is blank. The b/l indicates that 357 packages of “Toilet Preps NOISN” is the merchandise shipped. The weight appears to be 7497.13. The document does not contain a signature for the shipper.

The Canadian B3 submitted has the transaction number 133xxxxxxx926, and identifies the vendor as “Estee Lauder Inc.”, and the importer as “Estee Lauder Cosmetics Limited” located in Ontario, Canada. The “direct shipment date” is February 7, and the “release date” is February 7, 2001. The value is $Yx12,852 (the total amount shipped according to all eight invoices), and the quantity in one box is stated to be 357 and in item 29 the quantity is stated to be 12,852. The merchandise is described as “467 GIFT SETS (MAKEUP PREPA”. The merchandise is said to “arrive by” “MELBURN TRUCK LINES INC.” There is a “carrier code at importation” of “2395” and a “cargo control” number of “2395 PARS004535”. The declaration is executed by an individual for the importer’s broker, and is dated February 14, 2001. According to Lauder’s example, this declaration is the date of clearance into Canada.

For both of the shipments there was submitted copies of “Product Component Origin Breakdown” for item 65x9-90-8001 described as “GIFT 1C – S01”. According to these breakdowns, the country of origin of all of the components listed is the United States. In Lauder’s February 13, 2003 response to the Drawback Office’s January 8, 2003 request for information, it was stated that the document only shows where the sets are assembled, and does not show the country of origin of the component parts.

Based on the foregoing, the Drawback Office was of the opinion that it could establish the quantity and description of the merchandise asserted to have been shipped by comparison of the quantity and value listed on the B3’s to the export invoices. However, the Drawback Office was of the opinion that it could not establish the fact of the export or the validity of the export documents submitted. Consequently, the Drawback Office issued a second request for information dated November 12, 2002 requesting originally signed or originally certified truck b/l’s and a K84 statement or detailed coding statement issued by Canada to support the submitted B3 forms. Lauder responded by letter dated December 5, 2002 and asserted that sufficient proof of exportation had already been submitted, and that the K84 would not be submitted because it is not used in the normal course of business by Lauder. The Drawback Office followed up by letter dated January 8, 2003, requesting the proof of exportation. By letter dated February 13, 2003, Lauder submitted the K84 statements, issued by Canada, which summarize the broker’s Customs transactions, and show the two B3 transactions. For each of the B3 transactions, the amount indicated as having been paid is equal to the total amount due according to the B3.

Based on the total documents submitted, including the K84, the Drawback Office concluded it was able to verify the validity and accuracy of the drawback claim. The Drawback Office has confirmed that drawback is being claimed under 19 U.S.C. §1313(j)(1), and that the merchandise is in the same condition for purposes of 19 CFR 181.45(b) and 19 U.S.C. §3333(a)(2). Lauder has requested internal advice to confirm whether under these facts it was required to submit the original or certified copies of the bills of lading or the K84. According to Customs Automated Commercial System (ACS), the drawback entry has not been liquidated.

The following is a description of the Canadian entry process, and the significance of the various dates on the B3, using the export reference 1229724 as an example. The “release date” of February 6, 2001 is the date the goods, which are the subject of the B3 with the transaction number 133xxxxxxx389, were physically released by Canadian Customs, into the custody of the Canadian importer. The 14-digit transaction number is assigned at the time of release. At this point the amount of duty owed on the merchandise has not been specifically identified. The “PARS” cargo control number reflects the “pre-arrival review” (PARS) number assigned to the truck delivery. The “release date” also indicates the date the truck’s PARS document was stamped by Canadian Customs. Subsequent to the “release” of the merchandise, the importer has five business days in which to present a “final accounting” to Canadian Customs. The “final accounting” consists of the submission of a completed B3 to Canadian Customs. The total amount of duties or any other fees asserted as owed on the B3 are then placed on the importer’s or its brokers K84. The K84 is a statement issued at the end of each month to the importer or broker, which details each B3 transaction number and the amount owed to Canadian Customs. Although the K84 is not issued until after the submission of the B3, the date the B3 is “certified” is the date as of which the duties and taxes owing are considered to be paid. In this case, the B3 was certified on February 13, 2001. The PARS and the B3, are generally submitted electronically.

ISSUE:

Whether the export invoices, truck bills of lading and B3’s initially submitted were sufficient for verification of the claimed export, on the basis of which drawback is claimed, in accordance with Customs Regulations, 19 CFR 191.72? Whether for all drawback claims made on the basis of exportations to Canada, the drawback claimant may be required to submit a K84 statement?

LAW AND ANALYSIS:

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. 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. The documents submitted in this case, in the form of the B3’s do indicate the date the merchandise was released from Canadian Customs into the commerce of Canada, and thereby do indicate a date of exportation. The dates, if any, on the bills of lading simply indicate that the merchandise was picked up by a carrier in the U.S. Finally, the 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.

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).

The regulations state that the procedures for establishing exportation include, but are not limited to, the procedures listed in (a) through (e). The regulation also requires that the evidence "establish fully the date and fact of exportation." Therefore, any procedure used to establish exportation, whether or not included in (a) through (e), must "establish fully the date and fact of exportation."

For goods subject to NAFTA drawback, there are additional requirements for evidence of exportation set forth under 19 CFR 181.47(G). However, as the instant drawback claim is not subject to NAFTA drawback, the requirements set forth in 19 CFR 181.47 are not applicable in this case. In HQ 228272, dated November 8, 1999, it was stated that “allowance of drawback based on exportations to Canada or Mexico, is also subject to the regulations implementing the [NAFTA] in 19 CFR Part 181.” In HQ 228272, unlike in the instant case, there was no indication that the drawback claim was not subject to NAFTA drawback, therefore, the requirements of Part 181 were addressed.

Invoice No. 1229724

The export sales invoice can be cross-referenced with the Canadian Customs entry (B3) and the truck b/l by use of the invoice number. The only document that mentions a date of exportation is the B3. The date of exportation indicated on the B3 is February 2, 2001; 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 truck b/l insofar as the receipt date on the b/l is the same as the “direct shipment date” on the B3. The broker has also signed the B3, thereby declaring the particulars therein as true and accurate, including the release date. While the exact date of export is not necessarily known, we can ascertain for purposes of drawback that at the latest, the subject merchandise was entered into Canadian commerce, on February 6, 2001. The broker’s signature on the B3, attesting to the release date is sufficient to establish the date of exportation. However, for purposes of accountability, Customs and Border Protection (CBP) requires either an original signed B3 or a certified copy thereof. In this case the B3 is signed by a Canadian broker, and in any event CBP would require certification by a U.S. entity.

We do not have a copy of the drawback entry and therefore do not know the dates of importation of the merchandise for which drawback is being claimed. However, provided that February 6, 2001 is not later than three years after the date of importation, the date of release of the merchandise into the commerce of Canada, is sufficient to establish the date of exportation for purposes of claiming drawback.

With regard to the fact of exportation, while the description of the merchandise on the b/l and the B3 does not fully describe the exported merchandise, the quantity of the merchandise shipped and entered can be matched between the invoice, bill of lading and the B3. The value of the merchandise can also be matched between the invoice and the B3. The product breakdown attached to the invoice also identifies the exported sets as “Gift 1C-S01”, and identifies the individual components of the sets. The information pertaining to the quantity and value of the merchandise exported is sufficient to determine what was exported.

The K84 statement could be used to establish that the merchandise which is the subject of the B3 entered the commerce of Canada, provided it sufficiently described the merchandise, however the only date it provides is the date of the final accounting. For purposes of establishing exportation, CBP would require that it be certified as true and accurate by a U.S. entity. The K84 verifies the amount of duties paid to Canada Customs. Evidence of the actual payment of duties in Canada is required only for merchandise subject to NAFTA drawback for the purpose of application of the NAFTA drawback provisions.

With regard to the Canadian export on which drawback has been claimed, the date and fact of exportation of the merchandise has been sufficiently established in accordance with 19 C.F.R. § 191.72.

Invoice Nos. 1229894 and 1229895

The export sales invoices can be cross-referenced only with the B3. They cannot be cross-referenced with the b/l. The date of exportation indicated on the B3 is February 7, 2001; however, this assertion was made by the Canadian Customs broker and whether the broker had personal knowledge of the date of exportation is questionable. The broker has also signed the B3, thereby declaring the particulars therein as true and accurate, including the release date. While the exact date of export is not necessarily known, we can ascertain for purposes of drawback that at the latest, the subject merchandise was entered into Canadian commerce, on February 7, 2001. The broker’s signature on the B3, attesting to the release date is sufficient to establish the date of exportation. However, for purposes of accountability, CBP requires either an original signed B3 or a certified copy thereof. In this case the B3 is signed by a Canadian broker, and in any event CBP would require certification by a U.S. entity.

We note that in this case, the b/l would be insufficient to establish exportation in any event. The b/l submitted does not indicate any discernible date, and it is not executed – that is, it is not signed and dated by any individual or entity. Therefore, even a certified copy of this document would not serve to establish the date of exportation.

With regard to the fact of exportation, while the description of the merchandise on the b/l and the B3 does not fully describe the exported merchandise, the quantity of the merchandise shipped and entered can be matched between the invoice, bill of lading and the B3. The value of the merchandise can also be matched between the invoice and the B3. The product breakdown attached to the invoices also identifies the exported sets as “Gift 1C-S01”, and identifies the individual components of the sets. The information pertaining to the quantity and value of the merchandise exported is sufficient to determine what was exported.

The K84 statement could be used to establish that the merchandise which is the subject of the B3 entered the commerce of Canada, provided it sufficiently described the merchandise, however the only date it provides is the date of the final accounting. For purposes of establishing exportation, CBP would require that it be certified as true and accurate by a U.S. entity. The K84 verifies the amount of duties paid to Canada Customs. Evidence of the actual payment of duties in Canada is required only for merchandise subject to NAFTA drawback for the purpose of application of the NAFTA drawback provisions.

With regard to the Canadian export on which drawback has been claimed, the date and fact of exportation of the merchandise has been sufficiently established in accordance with 19 C.F.R. § 191.72. However, the party identified on the b/l as the one from which the merchandise was received, is “Clinique”. If Clinique is the exporter, then Lauder cannot claim drawback unless such right is assigned to it. In accordance with 19 U.S.C. §1313(j)(1) and 19 CFR 191.82, the exporter has the right to claim drawback. We note that the B3 and the invoices indicate that the vendor of the merchandise is Lauder. The identity of the exporter should be determined to a certainty before drawback is allowed.

Lauder takes the position that because the Appendix to Customs Regulations Part 163 –(a)(1)(A) List, provides that under the recordkeeping requirements a party who files a drawback claim must keep certain records that are normally kept in the ordinary course of business, CBP cannot require Lauder to provide an original or certified copy of a bill of lading, if Lauder ordinarily does not receive such record. The recordkeeping requirements cannot be read to excuse Lauder from the requirement to produce evidence of the exportation simply on the grounds that it does not ordinarily receive such documentation. CBP cannot require Lauder to maintain records which it does not receive. However, Lauder, without ensuring that it maintains records to support drawback claims, also cannot expect to be able to receive drawback without the requisite substantiation of its drawback claims.

HOLDING:

The export invoices, truck bills of lading and B3’s initially submitted are sufficient for verification of the date and fact of exportation, in accordance with Customs Regulations, 19 CFR 191.72, provided that the B3 is certified by a U.S. entity, to be a true copy of the B-3 form that was filed with Canada. For drawback claims not subject to NAFTA drawback, the K84 statements are not required for purposes of verification of a drawback claim, and under these facts are not necessary to substantiate the date of exportation, provided that the B-3 is certified by a U.S. entity, to be a true copy of the B-3 form that was filed with Canada.

You are to mail this decision to the internal advice applicant no later than 60 days from the date of this letter. On that date, the Office of Regulations and Rulings will make the decision available to Customs and Border Protection personnel, and to the public on the Customs Home Page on the World Wide Web at www.cbp.gov, by means of the Freedom of Information Act, and other methods of public distribution.

Sincerely,


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