DRA-4-CO:R:C:E 225463 SR
Ms. Claire Jamal
Shell Oil Company
One Shell Plaza
P.O. Box 2463
Houston, Texas 77252
RE: Drawback under 19 U.S.C. 1313(p)(2)(A)(iii) when the export
is to a NAFTA country; Article 303, NAFTA; Sections 102 and 203,
Public Law 103-182 (NAFTA Implementation Act); 19 U.S.C.
1313(j)(4)
Dear Ms. Jamal:
This is in response to your letters dated April 6, 1994, and
June 1, 1994, concerning drawback for petroleum products exported
to Mexico.
FACTS:
Shell Oil Company requests a ruling on whether drawback may
be obtained under 19 U.S.C. 1313(p), as amended by the North
American Free Trade Agreement (NAFTA) Implementation Act (Public
Law 103-182; 107 Stat. 2057, 2194-2196), on the basis of certain
exportations to Mexico. The company states that it will import
gasoline and jet fuel at various ports in the United States and
pay duty at the rate of $.52.5 per barrel. The company states
that it intends to export other molecules of gasoline to Mexico.
The company states that it will be both the importer and exporter
of record. The company states that it will comply with all
requirements of 19 U.S.C. 1313(p), including the requirement that
exportation must occur within 180 days of importation. The
company states that it plans to claim drawback in the amount of
$.52.5 per barrel on the exportations, on the basis of 19 U.S.C.
1313(p).
ISSUE:
Whether drawback for petroleum products under 19 U.S.C.
1313(p)(2)(A)(iii) may be granted for exportations, in the
situation described in the FACTS portion of this ruling, to
Mexico?
LAW AND ANALYSIS:
Under 19 U.S.C. 1313(p)(2)(A)(iii), if an article of the
same kind and quality as a qualified article is exported, certain
requirements are met, and a drawback claim is filed regarding the
exported article, drawback may be granted. "Qualified article",
for purposes of this subsection, means an article described in
heading 2710, HTSUSA (among other headings), which is imported
duty-paid. An exported article is of the "same kind and quality"
as the qualified article for which it is substituted under this
subsection if it is a product that is commercially
interchangeable with or referred to under the same eight-digit
classification of the HTSUSA as the qualified article (we note
that motor fuel, including gasoline and jet fuel (naphtha-type
and kerosene-type) is referred to in subheading 2710.00.15,
HTSUSA). The "requirements" required to be met for purposes of
this subsection are that the exporter of the exported article
imported the qualified article in a quantity equal to or greater
than the quantity of the exported article; that the exported
article is exported within 180 days after the date of entry of
the imported qualified article; that the drawback claimant
complies with all requirements of section 1313, including
providing certificates which establish the drawback eligibility
of articles for which drawback is claimed; and that the
manufacturer, producer, importer, exporter, and drawback claimant
of the qualified article and the exported article maintain all
records required by regulation.
Article 303 of the NAFTA provides, in pertinent part, that
"No Party may, on condition of export, refund, waive or reduce
... customs duties paid or owed on a good imported into its
territory and substituted by an identical or similar good that is
subsequently exported to the territory of another party" (Article
303 2.(d)). Article 303 was implemented in United States law by
section 203 of the NAFTA Implementation Act (107 Stat. 2057,
2086-2092; 19 U.S.C. 3333) (i.e., "[s]ection 203 ... makes
significant changes to U.S. drawback law in order to implement
NAFTA Article 303 obligations restricting drawback and duty
deferral programs between the Parties" and "[s]ection 203
implements the limitations on drawback established under NAFTA
Article 303 ..." (House Report 103-361, 103d Cong., 1st Sess.,
Part I, pp. 38-40 (1993)). In specific regard to Article 303
2.(d), quoted above, this provision was implemented by section
203(c) of Public Law 103-182 which added a new paragraph to 19
U.S.C. 1313(j) providing that:
Effective upon the entry into force of the [NAFTA], the
exportation to a NAFTA country, as defined in section 2(4)
of the [NAFTA] Implementation Act, of merchandise that is
fungible with and substituted for imported merchandise,
other than merchandise described in paragraphs (1) through
(8) of section 203(a) of that Act [paragraphs (1) through
(8) are not applicable to the situation under
consideration], shall not constitute an exportation for
purposes of [19 U.S.C. 1313(j)(2)].
According to the legislative history for Public Law 103-182,
this provision "eliminates, effective upon entry into force of
the Agreement, 'same condition substitution drawback' by amending
[19 U.S.C. 1313(j)(2)], thereby eliminating the right to a refund
on the duties paid on a dutiable good upon shipment to Canada or
Mexico of a substitute good, except for goods described in
paragraphs one through eight of section 203(a)" (House Report
103-361, 103d Cong., 1st Sess., Part I, pp. 39-40 (1993)).
The "same condition" drawback referred to above is that
which was provided for in 19 U.S.C. 1313(j). Under amendments to
the provision effected by Public Law 103-182 (see section 632;
107 Stat. 2192, 2193-2194), this provision now provides for
"unused merchandise" drawback. Paragraph (2) of section 1313(j)
provides, and provided (before the amendments effected by Public
law 103-182) for the substitution of such merchandise. In either
case (i.e., whether for same condition or unused merchandise),
the substituted merchandise was prohibited from being used in the
United States prior to the exportation (i.e., the substitution
was between imported merchandise and merchandise substituted for
it which was commercially interchangeable and was not used,
whether for manufacture or otherwise (except for certain
"incidental" uses), after the substitution).
Thus, it is clear that the NAFTA, and the implementing
legislation in Public Law 103-182, intended to, and did, amend
the drawback law to preclude same condition substitution drawback
(now unused merchandise substitution drawback) for merchandise
exported to a NAFTA country. Article 303 2.(d) of the NAFTA
basically provides that drawback may not be granted by a NAFTA
country "on a good imported into its territory and substituted by
an identical or similar good that is subsequently exported to the
territory of another party." This would appear to preclude
drawback under 19 U.S.C. 1313(p)(2)(A)(iii), under which, upon
compliance with certain other requirements, drawback may be
granted on certain petroleum products when a petroleum product is
imported into the United States and an article of the same kind
and quality as the imported merchandise (i.e., a substitute
article) is exported within 180 days of the importation.
Although, as stated above, Article 303 2.(d) of the NAFTA
may appear to preclude drawback under 19 U.S.C.
1313(p)(2)(A)(iii), the statutory provision (i.e., Public Law
103-182) which implemented NAFTA did not specifically so provide,
in contrast to the specific provision in this regard for 19
U.S.C. 1313(j)(2) (i.e., section 203(c), NAFTA Implementation
Act, quoted above). Under section 102, NAFTA Implementation Act
(107 Stat. 2062-2063), "[n]o provision of the Agreement [i.e.
NAFTA], nor the application of any such provision to any person
or circumstance, which is inconsistent with any law of the United
States shall have effect [and] [n]othing in [the NAFTA
Implementation Act] shall be construed to amend or modify any law
of the United States ... unless specifically provided for in [the
NAFTA Implementation Act]." In explaining this provision, the
legislative history to the NAFTA Implementation Act stated it
means "U.S. laws shall prevail if inconsistent with any provision
of the NAFTA [and] nothing in the NAFTA Implementation Act,
unless specifically provided for in the Act, shall be construed
to amend or modify any U.S. law, ... or to limit any authority
conferred under any U.S. law" (House Report 103-361, 103d Cong.,
1st Sess. Part 1, p. 16 (1993)). In explaining the reasons for
this provision, the legislative history stated:
The NAFTA Implementation Act incorporates all amendments to
existing Federal statutes or provision of new authorities
... known to be necessary or appropriate to enable full
implementation of, and compliance with, U.S. obligations
under the NAFTA. Those provisions of U.S. law that are not
addressed by the implementing bill are left unchanged ... .
In the unlikely event that any future changes in Federal
statutes should be necessary to remedy an unforeseen
conflict between requirements of a Federal law and the
Agreement, such changes can be enacted in subsequent
legislation. [House Report 103-361, 103d Cong., 1st Sess.
Part 1, pp. 17-18 (1993))
The basic rule of statutory interpretation is that the first
step is to examine the text of the statute (United States v.
Alvarez-Sanchez, 114 S. Ct. 1599, 1603 (1994) (i.e., "[w]hen
interpreting a statute, we look first and foremost to its text").
"Where the content of the statute is clear and unambiguous, 'that
language must ordinarily be regarded as conclusive'" (Norfolk and
Western Railway Co. v. United States, CIT Slip Op. 94-173
(printed in the November 30, 1994, edition of the Customs
Bulletin and Decisions, vol. 28, No. 48, p. 25, p. 30), quoting
from Negonsott v. Samuels, 113 S. Ct. 1119, 1122-1123 (1993)).
In the statutory provisions applicable in this case, the
text of 19 U.S.C. 1313(p)(2)(A)(iii) provides for drawback when a
covered petroleum product is imported into the United States and
an article of the same kind and quality as the imported
merchandise is exported within 180 days of the importation,
assuming compliance with all other applicable requirements.
Although Article 303 2.(d) of the NAFTA provides that drawback
may not be granted on a good imported into a NAFTA country when a
substituted article is exported to another NAFTA country, this
provision was specifically implemented only in regard to 19
U.S.C. 1313(j)(2), and not in regard to 19 U.S.C.
1313(p)(2)(A)(iii). Section 102 of the NAFTA Implementation Act
specifically provides that no provision of NAFTA which is
inconsistent with any United States law shall have effect and
that nothing in the NAFTA shall be construed to amend or modify
any law of the United States unless specifically provided for in
the NAFTA Implementation Act.
Based on these provisions, we have no choice but to conclude
that the limitation in Article 303 2.(d), implemented in United
States law by the addition of paragraph (4) to 19 U.S.C. 1313(j),
does not apply to drawback claimed under 19 U.S.C.
1313(p)(2)(A)(iii). This conclusion is consistent with the
"clear and unambiguous" text of the applicable statutory
provisions (see above). Furthermore, it is consistent with the
stated intent of Congress (i.e., see above quotation from House
Report 103-361, pp. 17-18, stating that "provisions of U.S. law
that are not addressed by the implementing bill are left
unchanged [and if] any future changes [are] necessary to remedy
an unforeseen conflict ... such changes can be enacted in
subsequent legislation").
The above conclusion is also consistent with the maxim of
statutory construction that expressio unius est exclusio alterius
(the expression of one thing is the exclusion of another). Under
this maxim if a statute "... assumes to specify the effects of a
certain provision, other ... effects are excluded" (Black's Law
Dictionary, 6th ed. (1990), p. 581; see also, e.g., United States
v. Azeem, 946 F. 2d 13, 17 (2nd Cir. 1991), "In general,
congressional consideration of an issue in one context, but not
another, in the same or similar statutes implies that Congress
intends to include that issue only where it has so indicated").
That is, in Pubic Law 103-182 Congress specifically stated that
the restriction on substitution under NAFTA was to apply to same
condition substitution drawback (or unused merchandise
substitution drawback) under 19 U.S.C. 1313(j)(2). Congress did
not so provide in regard to the substitution allowed under 19
U.S.C. 1313(p)(2)(A)(iii), even though that provision was added
by the same enactment. Therefore, under this maxim we must
conclude that the restriction on substitution under NAFTA was to
apply only to 19 U.S.C. 1313(j)(2), and not 19 U.S.C.
1313(p)(2)(A)(iii).
For the information of the inquirer, we note that drawback
under 19 U.S.C 1313(p)(2)(A)(iii), unless exempt under section
203(a)(1) through (8) of the NAFTA Implementation Act (and we
note that the merchandise under consideration does not appear to
be so exempt), will be subject to NAFTA drawback, as provided for
in section 203(b) of the NAFTA Implementation Act, when that
provision takes effect (see section 213(c) of the NAFTA
Implementation Act). In this regard, the attention of the
inquirer is directed to 19 CFR Part 181, subpart E.
HOLDING:
Based on current statutory provisions, stated legislative
intent, and the rules of statutory construction, upon compliance
with all applicable requirements, drawback for petroleum products
under 19 U.S.C. 1313(p)(2)(A)(iii) may be granted for
exportations, in the situation described in the FACTS portion of
this ruling, to Mexico.
Sincerely,
John Durant, Director
Commercial Rulings Division