DRA-2-02-RR:CR:DR 228272 IOR
Chief, Drawback and Records Branch
U.S. Customs Service
6 World Trade Center, Room 761
New York, NY 10048-0945
RE: Internal advice; drawback; evidence of exportation; alternative documentary evidence; 19 U.S.C. §1313; 19 CFR 191.72; 191.73; 181.47
Dear Madam:
This is in response to a memorandum from your office (DRA-1-AD:NY:N:DR NCS) dated December 7, 1998, requesting internal advice regarding the satisfaction of proof of exportation requirements with alternative documentary evidence. The parties whose transactions are the subject of the memorandum have been notified of the internal advice request and have been provided the opportunity to comment.
FACTS:
You set forth two specific instances of documentation of evidence of exportation, in support of drawback claims, for which you seek our determination of whether the evidence is sufficient to establish exportation under Customs Regulations 191.72 (19 CFR 191.72).
First set of facts
During a drawback verification visit at a claimant’s premises, in support of several export shipments under review, the claimant had unsigned originals or photocopies of bills of lading from a freight forwarder without an original signature or certification. One shipment was allegedly destined for Hong Kong, and a second shipment was allegedly destined for Peru.
The documentation for the Hong Kong shipment consists of a duplicate original bill of lading ("B.L.-Hong Kong"). B.L.- Hong Kong is unsigned, identifies the shipper, consignee (in Hong Kong), port of loading, carrier, port of discharge (Hong Kong), describes the merchandise as 113 cartons of sporting goods weighing 3632 pounds, and indicates that the merchandise was "clean on board: 3/31/95".
The documentation for the Peru shipment consists of a carbon copy of a signed air waybill, which identifies the shipper, consignee (in Miami), date and time of receipt, and the merchandise as 11 pieces of sporting goods weighing 184 pounds. The document provides no information regarding any international destination. A copy (your office believes it is a photocopy as opposed to a carbon copy) of a signed bill of lading ("B.L.- Peru") identifies the same consignee in Miami as the air waybill and identifies the merchandise as "11 tennis racquets (and or access.)" weighing 184 pounds. On the form, under "special instructions", it states "for ultimate export to Peru 2nd day service to forwarder pls". The document is dated and includes a driver signature and number. The claimant also provided an invoice indicating that the merchandise is sold to "Sports International SRL" with an address in Peru but is shipped to "Sports International" in Miami. The invoice identifies the ultimate destination of the merchandise as Peru. The invoice date is the same as that on the air waybill and B.L.- Peru. The invoice indicates the description, quantity and price of merchandise sold. It identifies numerous items and the total quantity as being 11 cartons weighing 184 pounds. There is a wire transfer notice from the claimant’s bank identifying the name of "Sport.s International SRL.", indicating that funds had been transferred. The post date on the notice is two days prior to the date on the bill of lading, air waybill and invoice. A handwritten note on the document identifies the invoice described above and the amount of the transfer that is the same as the amount of the invoice. There is also the claimant’s bank’s deposit record which matches the date on the wire transfer notice and amount of the invoice substantiating that the funds were received.
You ask whether the described documents for the two exports constitute a sufficient proof of export to verify the validity of a drawback program, and whether these documents are all that a claimant is required to maintain to support its claims and drawback program in accordance with 19 CFR 191.73(c)(2).
Second set of facts
A claimant requesting waiver of prior notice of intent to export drawback eligible merchandise under 19 CFR 191.91, did not provide a Mexican pedimento but instead submitted a commercial invoice, confirmation of sale, inland trucking bill of lading to the border, and wire transfer notices. The invoice and confirmation of sale documents are in Spanish, but the terms of the documents have been translated in this office. The commercial invoice is for the claimant’s sale of a blow molding machine "in favor of" a company with an address in Mexico, and the consignee on the invoice is a different party, Banco Nacional de Mexico, in Mexico. The invoice indicates that the party to be notified is a company in Laredo, Texas. The invoice is dated December 10, 1996, and indicates a shipping date of December 10, 1996. The invoice includes the price of the merchandise, in an amount greater than that on the confirmation of sale document. The confirmation of sale document describes the merchandise in more detail and provides what appear to be specifications for the merchandise. The confirmation of sale indicates that the merchandise is sold to the Mexican company identified on the commercial invoice, and instructions are to "send to" a different company in Laredo, Texas. The confirmation is dated April 1, 1996, and the signatures of the seller and buyer are May and June 1996. Both documents have the same purchase order number and machine number. The terms of the confirmation of sale indicate that the delivery time of the merchandise is to be approximately 18 weeks from the date of the purchase order, or July 22, 1996.
The inland trucking bill of lading is dated December 10, 1996. In the space marked "consignee and destination" it identifies the consignee as Banco Nacional de Mexico, and the same U.S. address is given under "Marked Notify", as on the commercial invoice. The merchandise is identified consistently with the invoice. The value of the merchandise is less than that reflected as the total invoice price, on either the commercial invoice or the confirmation of sale. The document is signed and notarized. There is a second inland trucking bill of lading, also dated December 10, 1996 and signed and notarized. In the space marked "consignee and destination" it identifies the consignee as Banco Nacional de Mexico, and the same U.S. address is given under "Marked Notify", as on the commercial invoice. The merchandise is identified consistently with the invoice, and the value of the merchandise is less than that reflected as the total invoice price on either the commercial invoice or the confirmation of sale. The combined value of the two bills of lading is more than that reflected as the total invoice price on either the commercial invoice or the confirmation of sale. Both documents give the truck and trailer number. Neither document indicates any destination in Mexico.
There are three wire transfer notices. They are dated March 19, 1996, July 30, 1996, and January 16, 1997. The total amount of all three notices is equal to the amount reflected as the total invoice price on the commercial invoice. Assuming the documents can be linked together, you ask whether they are sufficient to prove export. If they are sufficient, you ask whether a drawback office should approve a drawback privilege request based solely on these documents for proof of export and with the understanding that the claimant will only maintain these types of documents for submission as proof of export when their drawback program is being reviewed.
ISSUE:
1) Whether unsigned original or uncertified carbon or photocopies copies of signed bills of lading, accompanied by invoices and evidence of payment are sufficient to establish exportation for purposes of drawback under 19 CFR 191.72.
2) Whether for exports to Mexico, notarized and signed inland trucking bills of lading to the border, accompanied by a commercial invoice, confirmation of order, and evidence of payment are sufficient to establish exportation for purposes of drawback under 19 CFR 191.72.
LAW AND ANALYSIS:
A drawback claim, under the drawback statute, 19 U.S.C. §1313, based on an exportation of merchandise, requires an exportation. See, e.g. §1313(a) and (j)((1)(A)(i). Section 1313(l) of the drawback statute grants the Secretary of the Treasury authority to prescribe rules and regulations the compliance with which are to determine the allowance of the drawback privileges set forth in section 1313.
The Customs Regulations implementing the drawback statute provide for evidence of exportation in section 191.72 (19 CFR 191.72) 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) (emphasis added).
The regulations prescribe requirements for establishing exportation which are not set forth in the statute. To adopt such regulations, Customs is required to follow the Administrative Procedure Act (APA) notice and comment procedures. In B.F. Goodrich Co. v. United States, 16 CIT 333, 794 F.Supp. 1148 (1992), the court stated:
Under the APA, 5 U.S.C. §553, et seq., advance publication and an opportunity for public participation are required for all rules except "interpretive rules, general statements of policy, or rules of agency organization, procedure or practice," or "when the agency for good cause finds (and incorporates the finding and a brief statement of reasons therefor in the rules issued) that notice and public procedure thereon are impracticable, unnecessary, or contrary to the public interest.
Id., 16 CIT at 340. With respect to the Drawback Regulations, the proposed revised regulations were published in the Federal Register (62 FR 3082), on January 21, 1997, and Customs received comments in response. The comments and responses thereto were published with the final rule document of the regulations, which included section 191.72, in the Federal Register (63 FR 10970), on March 5, 1998.
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."
After the publication of the cited regulations, on March 5, 1998, Customs Director of Trade Compliance issued a memorandum dated April 4, 1998 to all interested parties, Port Directors and Drawback Chiefs, regarding supporting documents required for exportations made for drawback purposes. In describing acceptable supporting documentary evidence, the memorandum addressed only the requirements of the procedure set forth in paragraph (a), which entails actual evidence of exportation.
The memorandum interprets (a), as follows:
We are interpreting the new regulations to state that if an originally signed bill of lading is not used as the supporting documentation for exportation on a drawback claim, Customs will accept certified copies. Certification must be made by the exporter, claimant or authorized agent and must state that the bill of lading or other documentation establishing export is a true copy of the original document. Certification in this instance requires that the exporter or claimant sign and date the document and include a brief statement that the document is a true copy of the original. This certified export document will then serve as the actual evidence of exportation.
If a photocopy or faxed copy is used, the drawback claimant or authorized agent may certify that it is a true and accurate copy using the above outlined procedures. The signature certifying the copy of the export documentation must be original and cannot be a photocopy. Please be aware, that for those drawback claimants that are not the actual exporter, the certification will obligate them to provide Customs with all necessary backup documentation to that export whenever required for post audit review.
Section 191.73 of the regulations provides for the export summary procedure, and paragraph (c) requires a claimant using that procedure, to maintain evidence to establish fully the fact of exportation, in addition to the Chronological Summary of Exports.
First set of facts
Applying the above regulation, 19 CFR 191.72, and the April 4, 1998 memorandum, to the documentation for the Hong Kong shipment, the unsigned duplicate original bill of lading, with nothing more, is not sufficient to establish exportation under 19 U.S.C. §1313, because it is not signed. The B.L.-Hong Kong does establish the date and fact of exportation by the language "clean on board: 3/31/95." However, because it is not signed it does not fit within the requirements of 19 CFR 191.72(a) (or (b) through (e) for that matter). Without additional documentation, exportation is not established. In Incoterms 2000, a publication of the International Chamber of Commerce, at p. 24, a bill of lading is described as fulfilling three important functions. Those are: "proof of delivery of the goods on board the vessel; evidence of the contract of carriage; and a means of transferring rights to the goods in transit to another party by the transfer of the paper document to him." An unsigned bill of lading would not accomplish any of these functions, and cannot establish exportation either.
Clearly, the regulations set forth certain methods of establishing exportation. Where the requirements of those methods are not met, and an alternative method is proposed, such as an original unsigned bill of lading, that method cannot be acceptable if it provides even less information than the methods set forth. In short, when an originally signed bill of lading would establish exportation under 191.72(a), it goes without saying, that under no circumstances would an original unsigned bill of lading, with nothing more, establish exportation as an alternative method.
Applying the same requirements to the documentation for the Peru shipment, the documents are insufficient to meet the requirements of 19 CFR 191.72(a) through (e). Although the signed air waybill is an original carbon copy, and would be acceptable under (a) without certification, neither it nor the signed copy of the B.L.-Peru establish the date and fact of exportation. Therefore even certification of the documents would not make them sufficient to establish exportation. Without evidence of the date and fact of exportation, the evidence of payment is not conclusive evidence of exportation. In this case in particular, where the payment was apparently deposited with the claimant prior to the dates of the shipment of the merchandise from New Jersey to Miami, the evidence of payment establishes nothing but the fact that the claimant received payment prior to shipping any merchandise at all.
The documentation presented is insufficient to establish fully the date and fact of exportation, under 19 CFR 191.72, and is also insufficient to support a chronological Summary of Exports under 19 CFR 191.73(c).
Second set of facts
In addition to the requirements set forth in 19 CFR 191.72, allowance of drawback based on exportations to Canada or Mexico, is also subject to the regulations implementing the North American Free Trade Act (NAFTA) in 19 CFR Part 181. The completion of drawback claims and evidence of exportation is covered in 19 CFR 181.47, which states in paragraph (a), that unless stated otherwise in Subpart E, the procedural and documentation requirements shall be in accordance with Part 191. In general, section 181.47(a) provides that, in addition to other requirements, a claim for drawback requires "evidence of exportation to Canada or Mexico" and "satisfactory evidence of the payment of duties to Canada or Mexico." Evidence of exportation is provided for in section 181.47(b)(2)(ii)(G) (specifically for claims under section 1313(c) and (j)(1)), and section 181.47(c) (specifically for claims under section 1313(a) and (b) and other drawback provisions.
Section 181.47(b)(2)(ii)(G) provides:
Acceptable documentary evidence of exportation to Canada or Mexico shall include a bill of lading, air waybill, freight waybill, export ocean bill of lading, Canadian customs manifest, cargo manifest, or certified copies thereof, issued by the exporting carrier. Supporting documentary evidence shall establish fully the time and fact of exportation, the identity of the exporter, and the identity and location of the ultimate consignee of the exported goods;...
Section 181.47(c) provides:
Evidence of exportation and of duties paid in Canada or Mexico. For purposes of this subpart, evidence of exportation and satisfactory evidence of payment of duties in Canada or Mexico shall consist of one of the following types of documentation, provided that, for purposes of evidence of duties paid, such documentation includes the import entry number, the date of importation, the tariff classification number, the rate of duty and the amount of duties paid:
(1) In the case of Canada, the Canadian entry document, referred to as the Canada Customs Invoice or B–3, presented with either the K–84 Statement or the Detailed Coding Statement. A Canadian customs document that is not accompanied by a valid receipt is not adequate evidence of exportation and payment of duty in Canada;
(2) In the case of Mexico, the Mexican entry document (the “pedimento”);
(3) The final customs duty determination of Canada or Mexico, or a copy thereof, respecting the relevant entry; or
(4) An affidavit, from the person claiming drawback, which is based on information received from the importer of the good in Canada or Mexico.
Therefore, for exportations to Canada or Mexico, the requirements in section 181.47, need to be applied in conjunction with the requirements in section 191.72. The requirements are broader in section 181.47 as they require evidence of payment of duties in Canada or Mexico. The requirements in section 181.47 are applicable for exportations to Canada on or after January 1, 1996, and for exportations to Mexico on or after January 1, 2001.
The documents submitted do not establish the date and fact of exportation of the merchandise to Mexico, or payment of duties in Mexico. Even if the originally certified bills of lading were provided, at most the documentation establishes shipment of the merchandise to Laredo, Texas, based on the address provided on the inland trucking bills of lading. No address for the consignee is provided, moreover the destination is identified as Laredo, Texas. Neither the inland bills of lading, nor the evidence of payment for the merchandise establish the date and fact of exportation. The identity of the exporter and ultimate consignee is also not clear, as the shipping documentation only evidences shipment to Laredo, Texas, however the requirement of such information is also not in effect until January 1, 2001 for shipments to Mexico.
As set forth in section 181.47(c), evidence of exportation and payment of duties in Mexico would consist of the Mexican entry document (the "pedimento"), the final customs duty determination of Mexico, or an affidavit from the person claiming drawback, based on information received from the importer of the good in Mexico, however, such documentation will only be required for exportations to Mexico on or after January 1, 2001. However, the documents listed are illustrative of the documentation that would currently establish exportation.
In conclusion, although alternative methods of establishing exportation for purposes of drawback are permitted under 19 CFR 191.72, the documentation submitted did not meet any of the specified methods of establishing exportation in 19 CFR 191.72 (a) through (e), and because they did not otherwise establish the date and fact of exportation, the documentation is insufficient to establish exportation for purposes of drawback.
HOLDING:
1) An unsigned original bill of lading, that sets forth the date and fact that merchandise was laden on board, without more, is insufficient to establish exportation under 19 CFR 191.72, for purposes of 19 U.S.C. §1313. Uncertified carbon copies of signed air waybills and photocopies of signed bills of lading are insufficient to establish exportation under 19 CFR 191.72 although accompanied by evidence of payment, when none of the documents establish the date and fact of exportation, and the payment was made prior to any shipment of the merchandise. Documentation that is insufficient to establish exportation under 19 CFR 191.72 is insufficient to support a Chronological Summary of Exports under 19 CFR 191.73(c).
2) For exportations to Mexico, a notarized signed inland trucking bill of lading showing shipment to Laredo, Texas, accompanied by a commercial invoice, confirmation of order, and evidence of payment, is insufficient to establish exportation under 19 CFR 191.72 for purposes of 19 U.S.C. §1313, as it does not establish the date and fact of exportation.
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 personnel, and to the public on the Customs Home Page on the World Wide Web at www.customs.gov, by means of the Freedom of Information Act, and other methods of public distribution.
Sincerely,
John Durant
Director,
Commercial Rulings Division