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HQ 230776

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August 10, 2005

DRA-4 RR:CR:DR 230776 RDC

CATEGORY: INTERNAL ADVICE

Port Director, Customs and Border Protection Houston Service Port
2350 N. Sam Houston Parkway East
Suite 1000
Houston, Texas 77032-3126

RE: Commercial interchangeability; 19 C.F.R. § 191.51(e)(1); internal advice; 19 C.F.R. § 177.11; abandoned drawback claim; 19 U.S.C. § 1313(r)(1); completed drawback claim; 19 C.F.R. § 191.51(a)(1); perfected drawback claim; evidence of commercial interchangeability; Merchandise Processing Fee; Harbor Maintenance Tax; Texport Oil Co. v. United States, 185 F.3d 1291 (Fed. Cir. 1999); Miscellaneous Trade and Technical Corrections Act of 2004.

Dear Sir or Madam:

In the “AFR Protest Transmittal” dated 11/22/2004, sent to this office from the Houston Drawback Center (Houston), it is acknowledged that the protestant’s application for further review does not meet the criteria for further review. We agree that the protestant’s AFR does not warrant further review (see 19 U.S.C. § 1515 and 19 C.F.R. §§ 174.24-25). However, Houston requests assistance regarding the application of 19 C.F.R. § 191.51(e)(1). Accordingly, since further review cannot be granted but Houston nonetheless requests guidance on the application of the CBP regulation to the factual situation presented and as to whether the merchandise is commercially interchangeable, we are issuing this internal advice per 19 C.F.R. § 177.11.

The factors to consider in making a determination of commercial interchangeability are established by regulation (see 19 C.F.R. § 191.32(c)) and guidance is set forth in a significant number of Headquarters rulings. (See e.g., HRL 230119 (8/4/2004) determining commercial interchangeability of cottonseed oil; HRL 230172 (2/26/2004) determining commercial interchangeability of polyol; HRL 230098 (1/15/2004) determining commercial interchangeability of class III crude oil; HRL 230207 (3/23/2004) determining commercial interchangeability of polyethylene terephthalate resin; HRL 229826 (7/21/2003) and HRL 229838 (5/30/2003) determining commercial interchangeability of methyl tertiary-butyl ether; HRL 229305 (8/27/2002) determining commercial interchangeability of No. 2 Fuel Oil; HRL 228261 (2/8/2002) determining commercial interchangeability of methyl methacrylate monomer; HRL (2/8/2002) determining commercial interchangeability of cyclohexane).

FACTS:

Dow Chemical Company filed a claim for $91,592.47 in drawback of duties paid per 19 U.S.C. § 1313(j)(2), substitution unused merchandise drawback, on exported methylene chloride. The drawback claim consisted of the 7551, an import designation spreadsheet containing entry numbers, dates of import from 6/3/1999 though 9/24/1999, an export designation spreadsheet containing the export dates and amounts; the drawback coding sheet and a cover letter from the broker. The drawback entry was received by CBP on 10/27/2000 and designated twenty-two exportations that occurred between 6/23/1999 and 12/26/1999.

By letter dated 10/31/2000, Houston requested Dow to “submit supporting documents for commercial interchangeability” of the imported and exported methylene chloride. By letter dated 2/27/2002, Dow advised Houston that it received HRL 228898 which held that imported and domestic Dowper [chemical ingredient Perchloroethylene] were commercially interchangeable for purposes of drawback per § 1313(j)(2). By electronic mail dated 3/7/2002, Houston advised Dow that HRL 228898 did not address the commercial interchangeability of methylene chloride and that without the documents required to substantiate commercial interchangeability of the imported and exported methylene chloride, the drawback claim could not be paid. No evidence of commercial interchangeability was supplied prior to liquidation of the drawback claim.

On 8/22/2003 the drawback claim was liquidated with zero drawback allowed. According to an undated letter from Houston, the drawback claim was denied because “commercial interchangeability was not established.” On 11/18/2003, Dow filed Protest number 5301-03-100803 against the denial of the drawback claim, which protest included unspecified documents that are said to permit a determination of commercial interchangeability. With the protest was included a CF 7551 labeled by the claimant as “Amended.” This amended drawback entry includes a claim for drawback of the Merchandise Processing Fee (MPF) and Harbor Maintenance Tax (HMT), in addition to the claim for drawback of the duties paid. In the protest transmittal the drawback claim was characterized as abandoned per 19 C.F.R. § 191.51(e)(1) because of the claimant’s failure to substantiate commercial interchangeability within three years of the dates that the methylene chloride was exported.

ISSUES:

1. Was the drawback claim abandoned within the meaning of 19 C.F.R. § 191.51(e)(1) because of the claimant’s failure to substantiate commercial interchangeability within three years of the dates that the methylene chloride was exported?

2. Whether the claims for drawback of the MPF and HMT appearing on the “amended” drawback entry received 11/18/2003 constitute an impermissible amendment to or permissible perfection of, the drawback entry?

3. Whether the CAFC decision in Texport Oil Co. v. United States, permitting drawback of MPF per § 1313(j), establishes the right to drawback of MPF notwithstanding § 1313(r)?

4. Whether the Miscellaneous Trade and Technical Corrections Act of 2004 (2004 Trade Act), which authorized drawback of HMT per § 1313(j) establishes the right to drawback of HMT notwithstanding § 1313(r)?

LAW AND ANALYSIS:

1. Was the drawback claim abandoned within the meaning of 19 C.F.R. § 191.51(e)(1) because of the claimant’s failure to substantiate commercial interchangeability within three years of the dates that the methylene chloride was exported?

Section 1313(r) of 19 U.S.C., filing drawback claims, provides:

A drawback entry and all documents necessary to complete a drawback claim, . . . shall be filed or applied for, as applicable, within 3 years after the date of exportation . . . of the articles on which drawback is claimed, . . . . Claims not completed within the 3-year period shall be considered abandoned. . . .

(19 U.S.C. § 1313(r)(1)). Per 19 C.F.R. § 191.51:

A completed drawback claim, with all required documents, shall be filed within 3 years after the date of exportation . . . of the merchandise or articles which are the subject of the claim. . . . unless this time is extended as provided in paragraph (e)(2) of this section, claims not completed within the 3-year period shall be considered abandoned. Except as provided in paragraph (e)(2) of this section, no extension will be granted unless it is established that Customs was responsible for the untimely filing.

(19 C.F.R. § 191.51(e)(1)). Section 191.51 also states which documents are required to constitute a complete drawback claim:

Unless otherwise specified, a complete drawback claim under this part shall consist of the drawback entry on Customs Form 7551, applicable certificate(s) of manufacture and delivery, applicable Notice(s) of Intent to Export, Destroy, or Return Merchandise for Purposes of Drawback, applicable import entry number(s), coding sheet unless the data is filed electronically, and evidence of exportation or destruction under subpart G of this part.

(19 C.F.R. § 191.51(a)(1)). Therefore, the documents listed in § 191.51(a)(1) which are required for the type of drawback claim made, must be filed within “3 years after the date of exportation or destruction” of the goods upon which the claim is based in order
for a drawback claim to be complete. Dow’s drawback claim as filed consisted of the 7551, an import designation spreadsheet containing entry numbers, an export designation spreadsheet containing the export dates and amounts; the drawback coding sheet and a cover letter from the broker. Thus, Dow’s drawback claim consisted of the documents required by § 191.51(a)(1)) and was complete as filed on 10/27/2000.

If a drawback claim is complete, i.e., the documents listed in § 191.51(a)(1) have been received - as was the case here - but additional evidence is required, the completed claim must be perfected per 19 C.F.R. § 191.52, which states:

If Customs determines that the claim is complete according to the requirements of § 191.51(a)(1), but that additional evidence or information is required, Customs will notify the filer in writing. The claimant shall furnish, or have the appropriate party furnish, the evidence or information requested within 30 days of the date of notification by Customs. Customs may extend this 30-day period for good cause if the claimant files a written request for such extension within the 30-day period. The evidence or information required under this paragraph may be filed more than 3 years after the date of exportation or destruction of the articles which are the subject of the claim.

(19 C.F.R. § 191.52(b)). Section 191.52(b) gives as examples of additional evidence, though not an exhaustive list, documents that may be characterized as necessary to perfect a claim: evidence of exportation, the import entry and invoice, export invoice, or certificate of delivery (19 C.F.R. § 191.52(b)(1) through (4)).

In HRL 227627 (7/20/1999) we stated: “A drawback claim may however be perfected after the three years have passed. The examples of perfections, provided in section 191.52(b), consist of the submission of documents supporting elements of the drawback claim that have already been set forth, not changes to the existing claim.” Evidence of commercial interchangeability can be characterized as necessary to support an element of a drawback claim filed per § 1313(j) and necessary to perfect a drawback claim per § 191.52(b) and thus may be submitted more than three years after the exportations involved. However, notwithstanding the 30-day response time limit in § 191.52(b), to support a claim or assertion made to CBP new evidence may be presented subsequent to the administrative process, i.e., at trial.

In Texport Oil Co. v. United States, CBP denied drawback claimed per § 1313(j)(2) because the substituted petroleum was not “commercially interchangeable” with the imports. The plaintiff provided evidence at trial not supplied to CBP “that the petroleum products were commercially interchangeable based on acceptance of the buyer, thereby proving that commercial parties accepted the import merchandise as commercially interchangeable with the export merchandise” (1 F. Supp. 2d 1393, 1396 (1998) (vacated in part, rev’d in part, aff’d in part, by 185 F.3d 1291 (Fed. Cir. 1999)). In ITT Corp. v United States, 24 F.3d 1384, 1389 (Fed. Cir. 1994) the Federal Circuit held that “evidence that can be considered at the trial de novo to prove the truth of assertions made . . . to Customs is not limited to merely that which is contained in the administrative record before Customs. Accordingly, the 30-day response time limit in § 191.52(b), would not prevent additional evidence of commercial interchangeability from being provided at trial.

Dow’s drawback claim was complete per § 191.51(a)(1) as filed but additional evidence was required per § 191.52(b), i.e., evidence of commercial interchangeability, to perfect the claim. If a drawback claim is complete but additional evidence is required to perfect the claim, as in Dow’s case, CBP is to advise the drawback claimant in writing that its claim requires additional evidence in order to be perfected. By letter dated 10/31/2000, and electronic mail dated 3/7/2002, Houston requested Dow to provide evidence of the commercial interchangeability of the methylene chloride. The documents said to evidence commercial interchangeability were supplied with the protest on 11/18/2003. Per Texport, 185 F.3d 1291 and ITT Corp., 24 F.3d 1384, this evidence, though submitted outside the 30-day period, would be permitted at trial and therefore should be reviewed to determine if it supports the claim of commercial interchangeability.

2. Whether the claims for drawback of the MPF and HMT appearing on the “amended” drawback entry received 11/18/2003 constitute an impermissible amendment to or permissible perfection of, the drawback entry?

Dow’s original drawback entry as filed on 10/27/2000, claimed $91,592.47 in drawback, which was 99 per cent of duties paid on the exports. With its protest, on 11/18/2003, Dow filed a new CF 7551 labeled “Amended,” which claimed drawback of $96,607.40. This new amount represents 99 percent of duties paid plus the MPF and HMT paid on the designated entries. As discussed above, § 1313(r) requires that drawback claims be complete within three years after the date of exportation of the articles on which drawback is claimed. The legislative history to this section explains this provision as “set[ting] a period of 3 years from the date of exportation or destruction in which to file a complete claim.” (H. Report 103-361, 103d Cong., 1st Sess., 130).

The CBP regulations provide that:

Amendments to claims for which the drawback entries have not been liquidated must be made within three (3) years after the date of exportation or destruction of the articles which are the subject of the original drawback claim. Liquidated drawback entries may not be amended; however, they may be protested as provided for in § 191.84 of this part and part 174 of this chapter.

(19 C.F.R. § 191.52(c)). In HRL 227627, 7/20/1999 we held, in part, that changing the amount of drawback claimed is a change in the scope of the claim and not simply the submission of supporting evidence. Therefore, under HRL 227627, a change to the amount of drawback claimed is an amendment to the claim, not a perfection and per § 191.52(c) will be considered an untimely amendment of the claim if such change occurs more than three years after the date of exportation.

The last exportation of the articles which are the subject of Dow’s drawback claim took place on 12/26/1999. Consequently, per § 191.52(c) once three years from that date elapsed, i.e., 12/26/2002, that drawback claim could not be amended. Nor could the claim be amended after liquidation of the drawback entry. Dow filed the drawback entry labeled “Amended” and claiming drawback of HMF and MPF on 11/18/2003. Since the amended drawback claim changed the amount of drawback claimed, i.e., increased the amount to include HMF and MPF, under HRL 227627 that change was a change in the scope of the claim, and not simply the submission of supporting evidence. Therefore, the amended drawback entry including claims for drawback of HMF and MPF filed on 11/18/2003 was an untimely amendment of the claim, because it was filed more than three years after the date of the last exportation, i.e., after 12/26/2002. Further, the amended drawback entry filed on 11/18/2003 was an untimely amendment of the claim per § 191.52(c), because it was filed subsequent to liquidation of the drawback claim, i.e., after 8/22/2003.

3. Whether the CAFC decision in Texport Oil Co. v. United States, permitting drawback of MPF per § 1313(j), establishes the right to drawback of MPF notwithstanding § 1313(r)?

The Federal Circuit Court (CAFC) in Texport Oil Co. v. United States, affirmed the Court of International Trade’s (CIT) decision that drawback of MPF is payable on a claim per § 1313(j)(2) (185 F.3d 1291 (Fed. Cir. 1999) (vacating in part, rev’g in part, aff’g in part the CIT decision in Texport Oil Co. v. United States, 1 F. Supp. 2d 1393 (1998)). In Texport, CBP denied drawback claimed per § 1313(j)(2) because the substituted petroleum was not “commercially interchangeable” with the imports. CBP also denied drawback of MPF and HMT because, as explained by the CAFC, “those charges were not assessed ‘because of [the merchandise’s importation’ and thus did not fall within the ambit of section 1313(j)(2)” (185 F.3d 1291, 1293).

The CIT held and, the CAFC affirmed, that MPF is a fee assessed because of importation, and is subject to drawback per § 1313(j)(2) because that section specifically permits drawback of a tax or a “fee imposed under Federal law because of its importation” (1 F. Supp. 2d 1393, 1401; 85 F.3d 1291, 1296). Section 1313(j)(1) also contains the language relied on in the Texport case: “If imported merchandise, on which was paid any duty, tax, or fee imposed under Federal law upon entry or importation . . . . Thus, the effect of the CAFC’s decision in Texport was to change the application of the drawback law, specifically, § 1313(j)(1) and (2), to make the MPF subject to drawback claimed per under that section.

Moreover, because the Texport Court held that certain language in § 1313(j) made drawback of MPF payable on claims under these sections, the Texport decision meant that drawback of MPF was payable on claims per § 1313(j) since the assessment of MPF was enacted into law. At the time the MPF was enacted, the words relied on in Texport were already in §§1313(j)(1) and (2).

The words relied on by the Federal Circuit Court in Texport were added to § 1313 as § 1313(j)(1) and (2) by Public Law 96-609, enacted on 12/28/1980 (Title II, § 201(a), 94 Stat. 3560, 12/28/1980) and applied to articles entered for consumption on or after 12/28/1980 (Public Law 96-609, § 201(b), Title II). The Merchandise Processing Fee (MPF) is assessed pursuant to 19 U.S.C. § 58c(a)(9). Paragraph 9 was added to § 58c(a) by the Omnibus Budget Reconciliation Act of 1986 (§ 8101(a), Title VIII, Subtitle B, P.L. 99-509, 10/21/1986, 100 Stat. 1965, 1967). The Omnibus Trade and Competitiveness Act of 1988 (§ 1214(g), Title I, Subtitle B, P.L. 100-418, H.R. 4848, 8/23/1988, 102 Stat. 1107, 1156) amended § 58c(a)(9) to change the references in that subsection from the Tariff Schedules of the United States (TSUS) to the Harmonized Tariff Schedule of the United States (HTSUS):

For the processing of any merchandise (other than an article that is--

"(A) provided for under any item in chapter 98 of the Harmonized Tariff Schedule of the United States, except subheading 9802.00.60 or 9802.00.80,

"(B) a product of an insular possession of the United States, or

"(C) a product of any county listed in general note 3(c)(v) of such Schedule) that is formally entered, or withdrawn from warehouse for consumption--

"(i) after November 30, 1986, and

"(ii) before October 1, 1987;
a fee in an amount equal to 0.22 percent ad valorem.

(§ 58c(a)(9), 8/23/1988.) The Customs and Trade Act of 1990 (§ 111(a), Subtitle B, Title I, P.L. 101-382, H.R. 1594, 8/20/1990, 104 Stat. 629, 654) amended § 58c(a)(9) to provide:

For the processing of merchandise that is formally entered or released during any fiscal year, a fee, subject to the limitations in subsection (b)(8)(A), in an amount equal to 0.17 percent ad valorem.

The Uruguay Round Agreements Act (§ 612(a) Subtitle B Title VI, P.L. 103-465, H.R. 5110, 12/8/1994, 108 Stat. 4809) applicable to articles entered, or withdrawn from warehouse for consumption, on or after 1/1/95, changed the MPF to 0.21. Section § 58c(a)(9) currently provides:

(9) (A) For the processing of merchandise that is formally entered or released during any fiscal year, a fee in an amount equal to 0.21 percent ad valorem, unless adjusted under subparagraph (B). Therefore, at the time the assessment of MPF was made law, the language the Federal Circuit in Texport held entitled claimants to drawback of MPF per § 1313(j) was already part of (j)(2) and (j)(1).

The CBP regulations were changed as a result of the decision in Texport to conform the regulations with this change in the drawback law. (See T.D. 02-39, 67 Fed. Reg. 48,547, 7/25/2002, and CBP Dec. 04-33, 69 Fed. Reg. 60,082, 10/7/2004, amending regulations at 19 C.F.R. § 191.3 and § 191.51). The amendments to the CBP regulations merely reflected the change in interpretation of § 1313(j) to permit drawback of MPF per § 1313(j), but the amended regulations did not, themselves, authorize the change.

The CAFC decision in Texport changed the interpretation of § 1313(j) but, there is no basis in the Texport decisions to conclude that all other drawback requirements do not apply to such claims. In fact, neither the CIT nor the Federal Appeals Court ever addressed the issue of whether Texport’s claim for MPF was timely per § 1313(r) because the issue was never raised by either court or any parties to the case. The facts of that case, as articulated by the CIT and the CAFC, are insufficient to discern, on a post hoc basis, whether § 1313(r) was ignored because Texport’s claim for MPF was within the 3-year limit and thus, it was not necessary to discuss or whether § 1313(r) was ignored due to oversight. Nevertheless, with respect to Dow’s protested drawback claim, § 1313(r) cannot be ignored without legal basis to do so. Thus, Dow’s protested drawback claim must meet all other requirements for drawback per §1313(j)(2), including the § 1313(r) 3-year limit. Per § 1313(r), Dow’s amended drawback entry claiming MPF was untimely because it was filed more than three years after the date of exportation. Consequently, CBP is without authority to pay drawback of the MPF claimed.

4. Whether the Miscellaneous Trade and Technical Corrections Act of 2004 (2004 Trade Act), which authorized drawback of HMT per § 1313(j) establishes the right to drawback of HMT notwithstanding § 1313(r)?

Section 1557 of the Miscellaneous Trade and Technical Corrections Act of 2004 (2004 Trade Act), (108 P.L. 429, 118 Stat. 2434, enacted 12/03/2004) amended the language of § 1313(j) to make the HMT subject to drawback claimed under § 1313(j). Sections 1313(j)(1) and (2) were amended by deleting the language “because of its” and replacing it with “upon entry or.” In subparagraph (C)(ii)(II) “then upon” was deleted and replaced with “then, notwithstanding any other provision of law, upon” and “shall be refunded as drawback” was replaced with “shall be refunded as drawback under this subsection.” (§ 1557(a)). Subsection (b) of 1557 provides the effective date for these amendments:

The amendments made by this section shall take effect on the date of the enactment of this Act, and shall apply to any drawback claim filed on or after that date and to any drawback entry filed before that date if the liquidation of the entry is not final on that date.

(§ 1557(b),108 P.L. 429, 118 Stat. 2434) (emphasis ours). The 2004 Trade Act was enacted 12/03/2004. Therefore these amendments apply to two categories of drawback claims: 1) any drawback claim filed on or after 12/03/2004 and 2) any drawback entry filed before 12/03/2004, if the liquidation was not final on 12/03/2004. Accordingly, § 1557(b) gives the amendments limited retroactive effect. However, there is no evidence that Congress intended that the other statutory drawback requirements, including § 1313(r), did not apply to the 2004 Trade Act amendments to § 1313(j). Subsection 1313(r) requires a drawback entry to be complete within 3 years of exportation.

The first rule of statutory interpretation is to look to the text of the statute (see Connecticut Nat. Bank v. Germain, 503 U.S. 249, 253-254, (1992), “When interpreting a statute, we look first and foremost to its text.” “Absent a clearly expressed legislative intention to the contrary, that language must ordinarily be regarded as conclusive.” (Consumer Product Safety Commission v. GTE Sylvania, Inc., 447 U.S. 102 (1980)). We find no such “clearly expressed legislative intent” to suspend application of § 1313(r) in the amendments to § 1313(j) made by § 1557(a) of the 2004 Trade Act. In contrast, when the Miscellaneous Trade and Technical Corrections Act of 1999 (1999 Trade Act) (Pub. Law No. 106-36, 113 Stat. 127) was enacted to amend 19 U.S.C. § 1313(p), those amendments were given retroactive effect and Congress included a “sunset provision” which made § 1313(r) inapplicable to claims filed within 6 months of enactment.

The 1999 Trade Act, enacted on 6/25/1999, provided that the amendments to 1313(p) were to be treated as if they were enacted with § 632(a)(6) of the North American Free Trade Agreement Implementation Act, (NAFTA Act) enacted on12/8/1993. Section 632(b) of the NAFTA Act provided that the amendments made by § 632(a)(6) applied to (1) drawback entries filed or liquidated on or after 1/1/1988, and (2) drawback entries that were unliquidated (or under protest, or in litigation) on 12/8/1993. Thus, the amendments to 1313(p) made by the 1999 Trade Act, enacted on 6/25/1999, were give retroactive effect back to entries that remained not finalized on 12/8/1993. Section 2420(e) of the 1999 Trade Act also contained a “sunset’ provision” which provided that:

For purposes of section 632(b) of that Act [the NAFTA Act], the 3-year requirement set forth in section 313(r) of the Tariff Act of 1930 shall not apply to any drawback claim filed within 6 months after the date of the enactment of this Act [Jun. 25, 1999] for which that 3-year period would have expired.

Thus, the language of the 1999 Trade Act clearly indicated that the 1313(r) 3-year rule did not apply to any drawback claim filed within 6 months after 6/25/1999, i.e., between 6/25/1999 and 12/27/1999. The obvious intent of this exception was to give claimants an opportunity to claim drawback under § 1313(p) as amended on exports more than 3 years old.

Further, were the plain language of the Act insufficient to discern Congress’ intent as to the non-application of § 1313(r), this intent is further evidenced by that section of the Senate Report on the 1999 Trade Act which discussed the changes to § 1313(p):

In an effort to resolve, finally and completely, issues relating to the interpretation of this drawback, the provision would apply retroactively, as provided in the North American Free Trade Agreement Implementation Act of 1933 and Section 484A of the Trade Act of 1990 (Pub. L. 101-382. However, a “sunset” provision would end the retroactive period for claims not made within six months of enactment of this provision.

(S. Rpt. 106-2 on S. 262 (106th Cong. 1st Sess. Feb. 3, 1999, at page 71). We find nothing in the legislative history to the 2004 Trade Act which evidences Congress’ intent to suspend application of § 1313(r).

Since there is nothing in the text of the 2004 Trade Act, nor in the legislative history to indicate that Congress intended to exempt claims for drawback of HMT made per the 2004 Trade Act amendments from the requirements of § 1313(r), § 1313(r) must apply to these drawback claims. Thus, § 1557(b) of the 2004 Trade Act gives the amendments to § 1313(j) limited retroactive effect with respect to two groups of claims, without ignoring the other statutory requirements for drawback, including the 3-year requirement in § 1313(r): 1) a drawback entry that included a claim for HMT, timely filed before 12/03/2004 for which liquidation was not final; and 2) a drawback entry timely filed before 12/03/2004, unliquidated, that did not claim HMT could be amended within 3 years from export, i.e., going back to December 2001, to claim HMT. We are aware that the argument could be made that the Texport decision in 1999 denying drawback of HMT on claims under § 1313(j), would have prevented the filing of claims intended to be encompassed within the limited retroactive effect the 2004 Trade Act gives the amendments to § 1313(j). However, It is evident, from the continuing litigation regarding drawback of HMT in George E. Warren Corp. v United States (201 F. Supp. 2d 1366 (Ct. Intl. Trade 2002) aff’d 341 F.3d 1348 (Fed. Cir. 2003,) reh’g denied, reh’g en banc, denied LEXIS 24143 (Fed. Cir. 11/6/2003) cert. denied LEXIS 5516 (U.S. 10/4/2004)) and the introduction in congress of four bills authorizing drawback of HMT on claims per § 1313(j), that the CAFC’s decision in Texport was not considered by all potential drawback claimants as conclusively foreclosing the payment of drawback on the HMT and did not prevent the filing of drawback entries claiming HMT before 12/03/2004.

In Warren the plaintiff challenged CBP’s denial of drawback of HMT claimed per § 1313(p) (201 F. Supp. 2d 1366 (Ct. Intl. Trade 2002); aff’d 341 F.3d 1348 (Fed. Cir. 2003)). At both at the CIT and the CAFC it was argued that Texport had been wrongly decided and that, as a matter of law, HMT was subject to drawback (201 F. Supp. 2d 1366,1368; 341 F.3d 1348, 51). When the CIT decision in 2002 found for the Government, Warren appealed to Federal Circuit Appeals Court. When that decision denying relief to Warren was issued in 2003, Warren filed for a rehearing en banc. When a rehearing en banc was denied, Warren filed for certiorari to the Supreme Court. When the Supreme Court denied certiorari on 10/4/2004, the 2004 Trade Act was two months away from enactment. We note that BP Oil Supply Company, Inc. filed an amicus curiae brief with the CAFC during Warren, evidencing that the domestic petroleum industry was aware of the case and its implications.

In addition, from 2000 to 2002 four bills were introduced in Congress, two in the House of Representatives and two in the Senate, which were intended to overturn Texport by amending §§ 1313(j) and (p) to make HMT subject to drawback (see H.R. 4662, 106th Cong. (2000); S. 2694, 106th Cong. (2000); H.R. 1756, 107th Cong.) (2001); S. 2121, 107th Cong. (2002)). The purposes of these bills were all described as “to simplify and clarify certain drawback provisions.” Each of these bills was made effective to drawback entries filed before the enactment date if the liquidation of the entry was not final on that date. That the introduction of these bills and the proceedings in Warren encouraged drawback claimants filing claims subsequent to the Texport decision to include HMT in their claims, is evidenced by actual claims received by CBP.

Dow’s drawback claim was filed before 12/03/2004, i.e., 10/27/2000 and liquidated 8/22/2003. The finalization of that liquidation was prevented by 19 U.S.C. § 1514 Section 1514 (2004) provides that CBP decisions with respect to the denial of a drawback claims (among others) are final and binding “unless a protest is filed in accordance with” that section (or unless an action is filed in the CIT) (19 U.S.C. § 1514(a) (2004)); see also A. N. Deringer, Inc. v. United States, 447 F. Supp 453 (Cust. Ct. 1978), vacated on other grounds (1979) 593 F.2d 1015, on remand, summary judgment granted (Cust Ct. 1980)). when the instant protest was filed on 11/18/2003. As of 12/03/2004, this protest was still pending which continued to prevent the finalization of the drawback entry. Accordingly, the drawback claim at issue was not final on 12/03/2004 and ostensibly comes within the ambit of the second category of drawback entries to which 2004 Trade Act applies: a drawback entry filed before 12/03/2004, if the liquidation of the entry is not final on 12/03/2004. However, Dow’s claim for drawback of HMT was not filed timely per § 1313(r). Without evidence that Congress intended the amendments to § 1313(j) made by the 2004 Trade Act to create an exception to § 1313(r), CBP is without authority to pay the untimely claim for drawback of the HMT.

HOLDINGS:

1. The drawback claim was not abandoned within the meaning of 19 C.F.R. § 191.51(e)(1) because per 19 C.F.R. § 191.51(a)(1) the drawback claim was complete as filed on 10/27/00. Therefore, to the extent that commercial interchangeability of the imported and exported methylene chloride is proven by the documents submitted 11/18/03
with the protest, the drawback claim on duties paid as filed on 10/27/2000 should be allowed and this protest should be GRANTED in part.

2. The amended drawback entry filed on 11/18/2003 was an untimely amendment of the claim because it was filed more than three years after the date of exportation, i.e., after 12/26/2002, and subsequent to liquidation, after 8/22/2003. Therefore, the claims for HMT and MPF first appearing on the amended drawback entry filed on 11/18/2003, were untimely. Therefore, in this respect the protest should be DENIED in part.

3. The CAFC decision in Texport Oil Co. v. United States notwithstanding, drawback of MPF claimed per § 1313(j) is not payable because the amendment to the drawback claim for MPF was untimely. Therefore, to the extent the amended drawback entry at issue claims drawback of the MPF paid, this protest should be DENIED in part.

4. The Miscellaneous Trade and Technical Corrections Act of 2004 notwithstanding, Dow’s claim for drawback of the HMT per § 1313(j) is not payable because the amendment to claim HMT was untimely. Therefore, to the extent the amended drawback entry at issue claims drawback of the HMT paid, this protest should be DENIED in part.

In accordance with the Protest/Petition Processing Handbook (CIS HB, January 2002, pp. 18 and 21), 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 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 CBP personnel, and to the public on the CBP 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,

Myles Harmon, Director

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See also:

• Tariff No.: 9802.00.60 - U.S. articles of specific metals exported for further processing and returned for further processing
• Tariff No.: 9802.00.80 - U.S. articles assembled abroad, which have not lost their physical identity or have not advanced in value or improved in condition abroad