• HQ H046997
• Nov 17, 2011

• Type : • HTSUS :
•  Related:   07102; 100182; 70294; 79499; 81778; 77712; 79730; 79733; 79736; 06115; 06531; 79873; 70130; 71961; 55546; 104034; 228272; 130110; 130113; 229073; 108334   

DRA-2-01
DRA-2-02

RR:CR:DR H046997 CSO

Port Director – New York/Newark
U.S. Customs and Border Protection
Protest and Control
1100 Raymond Boulevard, Suite 402
Newark, New Jersey 07102

Attn: Ms. Maryanne Carney

Re: Application for Further Review of Protest Number 4601-08-100182; 19 U.S.C. 1313(b); substitution manufacturing drawback; titanium; proof of export; manufacture and production documentation

Dear Port Director:

This is in response to your correspondence dated December 2, 2008, forwarding an Application for Further Review (AFR) of Protest 4601-08-100182. The protestant, RMI Titanium Company (RMI), filed the protest on January 22, 2007, to challenge the denial of certain drawback claims. In its protest, RMI argues that because of the corrections and modifications made to the claims, drawback should be granted.

FACTS:

RMI is a manufacturer of titanium products made from imported titanium sponge. RMI uses titanium sponge, scrap, and alloying components to form titanium alloy blocks. The blocks are then welded together with large scrap pieces to form a cast electrode that is charged in a vacuum until melted. The molten material is cast into ingot form. Once the ingot is cast, it is shaped into various forms according to the specifications of RMI’s clients. RMI works with third party processors to perform some of the manufacturing. RMI has filed numerous drawback claims on the exported titanium products under the manufacturing substitution drawback statute, 19 U.S.C. § 1313(b).

Hogan & Hartson, LLP filed this protest on behalf of RMI. Protest 4601-08-100182 covers the following drawback entries: xxx-xxxx 986-6; xxx-xxxx 123-5; xxx-xxxx 241-5 (241-5); xxx-xxxx 365-2; and xxx-xxxx 398-3 (398-3). On July 27, 2007, U.S. Customs and Border Protection (CBP) New York/Newark Drawback Office (Drawback Office) liquidated these drawback entries without a refund of the import duties. Claim numbers 398-3 and 241-5 were designated by the Drawback Office as the representative claims for purposes of further review by this office. Therefore, this letter reviews claim number 398-3 and 241-5 as representative of the four remaining drawback claims at issue in this AFR. Claim 398-3 was identified for purposes of determining whether RMI provided sufficient proof of export documentation and claim 241-5 and claim 398-3 were identified to determine whether RMI provided sufficient production records. We also note that RMI dropped claim number 986-6 in its entirety on September 29, 2010, because it discovered that the exports used in claim number 986-6 were imported under a Temporary Importation under Bond (TIB) and were ineligible for drawback.

RMI filed drawback claim 241-5 on June 19, 2006, and drawback claim 398-3 on January 31, 2007. On March 22, 2007, the Drawback Office sent RMI a desk review notification requesting supporting documentation relating to drawback claim number 398-3. The Drawback Office requested similar documentation for drawback claim 241-5 on April 25, 2007. In both desk reviews, the Drawback Office requested import documentation related to certain entries. For claim 398-3, Newark requested supporting documentation for entry number xxx-xxxx411-6 and for claim 241-5, it requested supporting documentation for entry number xxx-xxxx849-4.

The Drawback Office also requested proof of export including export sales orders and invoices for specific exports within each drawback claim. For drawback claim number 398-3, the Drawback Office requested proof of export for exports 70294 and 79499, and proof of export for export 81778 that was selected by RMI for verification. For claim 398-3, International Drawback Services (IDS), RMI’s broker that filed the claim, replied to the Drawback Office’s May 8, 2007, desk review notice. In its response, IDS submitted some of the requested documents related to Entry xxx-xxxx411-6. IDS also provided the requested export sales orders and invoices for exports 70294 and 79499; descriptive literature and specifications for titanium sponge. For claim 241-5, IDS replied to the Drawback Office’s desk review notice on June 21, 2007, and provided the requested information that related to import entry number xxx-xxxx849-4. It also submitted a bill of material, sales orders and imports for exports 77712, 79730, 79733 and 79736; descriptive literature and documentation; and, specifications and certificates of analysis for the imported and substituted merchandise.

On July 27, 2007, the Drawback Office liquidated the three subject claims and denied the drawback claims in full because of insufficient documentation. On January 22, 2008, RMI submitted its protest to the Drawback Office. The letter accompanying the protest stated that the broker, IDS, was no longer in business and that RMI was using Comstock and Theakston

(Comstock) as its new drawback broker. Further, RMI stated it had “carefully reviewed each claim” and the Drawback Office’s corresponding desk review, and prepared responses to the original desk reviews in support of the claims. At that point RMI determined that the original claims contained certain information that was either erroneous or for which RMI could not verify its accuracy.

RMI did not alter its claims to correct for the deficiencies it identified in its January 18, 2008, protest but indicated that the documents were forthcoming. Additional documents were subsequently provided on February 20, 2008. On November 26, 2008, the Drawback Office recommended denying the protest and forwarded the protest to this office for further review. The Drawback Office stated that the protest should be denied for the following reasons:

1. Valid proof of export was not submitted to substantiate the exports designated for drawback.

2. RMI was unable to substantiate the actual dates of exportation for the designated merchandise.

3. RMI was claiming drawback on the same export more than once and RMI is unable to substantiate that all duplicate exports have been removed from these claims.

4. RMI stated that exports designated in the original drawback claim were domestic shipments and not true exportations. RMI did not demonstrate to CBP that it has the required recording-keeping systems to substantiate export designations.

5. The required certificates of manufacture and delivery were not submitted.

6. Manufacturing documents were not submitted to substantiate the inventory spreadsheets and computer screen printouts that were submitted with the amendments following the filing of this protest.

7. Drawback claims did not adhere to manufacturing ruling 44-06115-001. Additionally, manufacturing ruling 44-06531-001 has not been modified to reflect appropriate ASTM or AMS grades of titanium used in the manufacture process.

8. CBP is unable to validate the accuracy of the drawback claim because RMI continues to submit waste calculation amendments.

9. Some exports used to substantiate the import designations are exports that contained merchandise that was imported under a TIB entry and were not eligible for drawback.

10. No documentation was submitted from third party manufacturers that were involved in the manufacturing process of the designated merchandise.

11. It remains unclear whether all of the designated merchandise from third party manufacturers were removed from the drawback claims.

12. The third party manufacturers did not properly obtain an agent or individual manufacturing ruling.

13. RMI has not demonstrated to CBP that it maintains the required records to substantiate the drawback claims.

After the initial claim was filed, RMI modified or supplemented the representative claims seven times. In total, corrections were made on January 22, 2008; February 20, 2008; October 1, 2008. While the request for further review was pending before Headquarters, on October 26, 2009, RMI filed a submission that provided, inter alia, additional proof of export documentation, manufacturing records and descriptions of the manufacturing process for the five subject claims. On March 16, 2011, this office and representatives of RTI International Metals, Inc., RMI’s parent company, as well as representatives of Comstock and legal counsel for RMI met to discuss whether RMI had provided sufficient documentation to demonstrate its claim. As a result of this meeting RMI provided additional documentation on March 30, 2011. Below is a summary of how each representative claim was modified and/or supplemented.

Proof of Export -- Claim 398-3

The Drawback Office identified Claim 398-3 as a representative claim for purposes of proof of export. In order to respond to the Drawback Office’s requests regarding export documentation, in its February 20, 2008, submission, RMI reduced the amount claimed for drawback by dropping import xxx-xxxx413-2 from the claim. The Certificate of Manufacture and Delivery (CMD) for number 398-3 stated that a specific drawback ruling was pending with Headquarters. The CMD also identified RMI as the transferor of the exported merchandise and RTI Tradco as the transferee. In the Chronological Export Summary provided on February 20, 2008, RMI dropped export 70294 from the claim. Because export 70294 was previously the representative export for the claim, Comstock identified export 79873 as the new representative export and provided proof of export documentation for exports 70130, 79499, 79873 and 81778.

RMI states that the export documentation, which is discussed in further detail in the “Analysis” section below, demonstrates that export 70130 is a shipment by air from John F. Kennedy (JFK) International Airport to the United Kingdom. It argues that the delivery note shows the receipt date of Export 70130 into the United Kingdom on December 11, 2006. RMI asserts that export documentation for export 71961 shows that the export is a shipment via a vessel, Eilbek, from Montreal to the United Kingdom. RMI also states that the exported articles were delivered to Montreal from Cleveland, Ohio via DHL Global Forwarding. Further, RMI maintains that the documents also show that export 79499 was shipped from Cleveland Ohio via DHL Global Forwarding to Montreal and from Montreal it was delivered to France via air. RMI claims that the documentation indicates that export 79873 was shipped to the United Kingdom via vessel, Reinbek, and arrived on February 5, 2007. Finally, for export 81778, RMI states that the documentation reveals that it was a shipment to the United Kingdom via air and shows receipt by RMI UK Service Center into the United Kingdom on January 15, 2007.

In addition to the documentation provided to support proof of exportation, RMI further revised the claim on October 2, 2008, explaining that it:

uncovered additional exports that it believes must be deleted from the claims. These exports consist of goods that were made from electrodes produced by a subsidiary [of RMI], Galt Alloys, Inc. (Galt). The electrodes were produced using sponge imported by RMI and sold to Galt. However, RMI now realizes that its previous broker did not prepare the necessary rulings and documentation sufficient to claim drawback on the products produced under this scenario.

RMI also removed designated imported titanium sponge that was sold to Galt and reduced claim 398-3.

Date of Production – Claim 398-3

In an email message dated August 26, 2010, CBP asked RMI for additional records to show the production order numbers for the titanium weldable material that moved from RMI to Tradco. CBP asked for production records that demonstrate how the imported merchandise was produced through the third party manufacturer, Tradco. On September 2, 2010, RMI explained that the each SAP screen printout provided a heat number. The heat number is a number assigned to products produced from the same melt process (i.e., one melt process is assigned one heat number) and is assigned to a specific ingot when the ingot is created. The heat number that was provided corresponds to the order number 30099323. There are multiple production order numbers for any one heat number. The production order numbers represent a series of manufacturing steps. The Production Order – Documented Goods Movements (PODGM) screen shots follow the merchandise through the various manufacturing steps to complete the production order that result in the product being made to the customer’s specification. For heat number 8714416, there are two production order numbers 30096847 and 30099323. Production order number 30096847 represents production at RMI and production order number 30099323 represents production at Tradco. RMI provided packing list 80145274 and RMI alleges that it shows the shipment from RMI (aka RTI, Niles) to Tradco and through the heat number 8714416 and production order 30096847.

Date of Production -- Claim 241-5

Claim 241-5 was identified as a representative claim for purposes of determining whether RMI provided sufficient documentation to show production of the exported articles. On February 20, 2008, RMI reduced this claim by removing import XXX-XXXX571-8 from the claim. The CBP Form 7551 indicated that the specific manufacturing drawback ruling was pending. In the October 2, 2008, modification for claim 241-5, RMI made the same changes that were made to claim 398-3. As a result of removing exports produced by Galt, claim 241-5 was further reduced.

In the October 26, 2009, submission RMI provided commercial invoices for the import/entry number XXX-XXXX849-4. RMI also submitted production documentation including a diagram of the Production Process; a Narrative to Explain Supportive Production Documentation; PODGM screen printouts that includes four sets of inventory management software (SAP) reports dated 9-28-2009. These four sets of reports include screen printouts for Sales Order/Export Number 55546. RMI argues that it shows the titanium sponge and alloying component material being manufactured into the pressed block; cast electrodes; ingot from the cast electrodes and the production in Niles of the exported product from the ingot. The PODGM indicates a posting date from February 14, 2005 through December 12, 2005. In a March 25, 2010, memorandum, Comstock explained that the posting date listed on the PODGM report indicates “the date the goods movement entry is made into SAP.”

On April 15, 2011, RMI provided additional documentation records for claim 241-5 to show the final date of production. RMI provided traveler documents that follow the titanium through the production process to the final inspection and stenciling operation. A traveler document records the movement of titanium through the production process via the heat number as well as specific production orders. RMI provided a definition of a traveler document via an email dated August 10, 2011. The definition is as follows: a “traveler” or “travel card” is essentially a router or control document that accompanies the material as it goes, or “travels” to each production step. The “traveler” is currently more commonly known as a “production order,” and exists in both hard copy and as an electronic version in SAP. The traveler lists all of the required production steps, including testing, thus giving the operators detail as to what has to be done to the material. As each step is completed, the traveler is signed and passed on with the material to the next production step. The material is identified on the traveler through its heat number and production order number, and contains additional information, such as the batch number, pieces and weight.

RMI explained that when the production of a titanium article is complete and has had its final inspection and stencil, as documented on the traveler document, the article will be issued into finished goods inventory, which requires closure of the production order. This is accomplished through the entry of a “101” transaction in SAP. The date on which this “101” movement is input into the system will be captured by the system as the “101” movement date, i.e., it is a systems generated date automatically recorded for the transaction. The traveler may have a manually recorded completion date/stamp slightly different than the 101 date primarily because the SAP transaction may be entered into the system the day after the traveler is delivered for recordation into the system.

For claim 241-5, RMI indicated that the traveler document lists production order 30080030 that is also listed on the PODGM. RMI further stated that the traveler document also lists the material number 104034, that is the same number as on the PODGM for claim 241-5. The final inspection date on the traveler document is December 28, 2005. RMI clarified that the traveler indicates that the mill stencil was placed on the product on December 29, 2005, and the posting date listed on the PODGM is December 30, 2005, the day after the mill stencil was completed.

Additionally, on March 4, 2008, RMI submitted a request to amend its specific manufacturing drawback ruling to update its ruling 44-06115-001 including inter alia, claiming drawback for titanium scrap, where the claims would be filed and who would be authorized to sign the drawback documents. The amended specific manufacturing drawback ruling was approved on December 1, 2008.

ISSUES:

1) Whether RMI provided sufficient proof of export.

2) Whether RMI provided sufficient documentation that demonstrates the date of production of the exported article.

LAW AND ANALYSIS:

Initially, we note that the refusal to pay a claim for drawback is protestable pursuant to 19 U.S.C. § 1514(a)(6). The Drawback Office denied drawback in full when it liquidated the subject entries on July 27, 2007, without drawback. The protest was timely filed on January 22, 2008, within the 180–day filing deadline set forth under 19 U.S.C. § 1514(c)(3) (2004). The Drawback Office determined that it would deny the protest and on November 26, 2008, forwarded the protest to this office for further review. Because the protest involves questions of law, fact, or both, which have not been ruled upon by the Commissioner of CBP, a CBP headquarters official, or by the customs courts further review is granted. See 19 C.F.R. § 174.24(b).

One of the reasons for the Drawback Office’s denial of the claims was the fact that there were duplicate exports on the claims and some of the listed exports were actually domestic shipments rather than international shipments. However, we conclude that RMI removed all of the duplicate exports and the domestic shipments from the claims. The Drawback Office also recommended denial because RMI did not submit required certificates of manufacture and delivery and did not amend applicable rulings or obtain required agent rulings. RMI subsequently modified the specific rulings in March 2008, and dropped the unauthorized third party manufacturer from the claim on October 1, 2008.  RMI also submitted third party manufacturer agent rulings for the remaining agents in 2009. Another basis for objection by the Drawback Office was that RMI did not have a final waste calculation. However, RMI submitted its finalized waste calculation on October 8, 2010.  The Drawback Office also recommended denial because some exports used to substantiate import designations were exports that contained merchandise that was imported under a TIB entry and hence not eligible for drawback.  However, RMI also remedied this problem and dropped the TIB imports from the claims on October 8, 2010.

The remaining reasons for denying the claims include maintaining the required records to substantiate the claims including valid export documentation, proof of actual dates of exportation, sufficient manufacturing documents to support inventory spreadsheets and computer screen printouts. These are addressed in our discussion below as to whether RMI provided sufficient proof of export and whether RMI maintained and provided sufficient documentation that demonstrates the production dates of the exported article.

Whether RMI Provided Sufficient Proof of Export

The Drawback Office indicated that one of the reasons for denial of the claims was that RMI did not provide sufficient documentation to show that the titanium merchandise was exported from the United States. Subsequent to the Drawback Office’s recommendation for denial, RMI provided additional proof of export documentation for the representative claims. Upon review of the additional documentation, we determine that RMI provided sufficient proof of export for the requested exports in representative claim 398-3.

RMI has specific obligations when it makes drawback claims pursuant to the substitution manufacturing drawback statute and regulations. Substitution manufacturing drawback per 19 U.S.C. § 1313(b) provides that when imported duty-paid merchandise and any other merchandise (whether imported or domestic) of the same kind and quality are used in the manufacture or production of articles and the articles that are exported or destroyed under CBP supervision, then 99 percent of the duties on the imported duty-paid merchandise shall be refunded as drawback. Such drawback is allowable provided that none of the articles were used prior to the exportation or destruction, and even if none of the imported merchandise was actually used in the manufacture or production of the exported or destroyed articles. Drawback claimants have an obligation to export the exported article “within five years after importation of the imported merchandise.” 19 U.S.C. § 1313(i). For substitution drawback claims, as with all drawback claims, the CBP regulations require claimants to retain supporting evidence and documentation. See 19 C.F.R. § 191.26(b).

In general, there are two primary requirements for proof of export. The first requirement is evidence of an intent for the merchandise at issue to unite with the mass of things belonging to some foreign country. See 19 C.F.R. § 101.1 (defining “exportation” as “a severance of goods from the mass of things belonging to this country with the intention of uniting them to the mass of things belonging to some foreign country”). The second requirement is evidence that the merchandise exited the United States. See 19 C.F.R. § 191.72. For drawback claims, the methods of establishing compliance with the exportation requirement are set forth in 19 C.F.R. § 191.72. Specifically, the CBP regulations require that “[s]upporting documentary evidence shall establish fully the date and fact of exportation and the identity of the exporter.” 19 C.F.R. § 191.72. However, this regulation does not set forth specific requirements to support the date and fact of export rather, the regulation gives examples of documentary evidence that are sufficient to establish the date and fact of export. In HQ 228272 (November 8, 1999), CBP explained that

alternative methods may be used to establish date and fact of export other than those listed at 19 C.F.R. § 191.72(a) through (e) as long as the alternative methods firmly establish date and fact of export. Information that may be used to establish evidence of exportation includes, but is not limited to, “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 etc.” 19 C.F.R. § 191.72(a).

Further, CBP issued Directive 3740-009 that provides more clarity on the requirements of 19 C.F.R. § 191.72(a). Directive 3740-009 was released to the public approximately in May 2002 and states that all proofs of export (including bills of lading) must contain the following four necessary data elements: 1) fact/date of export; 2) intent to join the commerce of another country; 3) identity of the exporter; and, 4) quantity and description of merchandise exported. All of the documentation sufficiently set forth the identity of the exporter and the quantity and description of the merchandise. We thus analyze whether the documents provided for the five exports 70130, 71961, 79499, 79873, and 81778 sufficiently show the fact and date of export as well as the intent to join the commerce of another country. Finally, we note that RMI provided sufficient certification or original signatures on its export documents pursuant to 19 C.F.R. § 191.72.

Export 70130

This article was produced in part and exported by Tradco, a third party manufacturing agent of RMI. The documentation to support proof of export for export 70130 includes an invoice, packing list, house air waybill number CLE 2TE9778, master air waybill 932-95331806, cargo manifest, Import Entry Acceptance Advice (IEAA) and a delivery note. The titanium article produced from the merchandise is identified on the packing list with the sales order number 70130, the heat number 85131448-02-00 and the production order number 30097354. The invoice 90148816 shows a sale from RTI Tradco, Washington, Missouri to RMI UK Service Center, United Kingdom. Invoice 90148816 and packing list 80148821 both show a shipment of titanium products from Tradco facilities in Washington, Missouri to Brookpark, Ohio.  The titanium was then shipped to JFK International Airport as evidenced by the house air waybill CLE 2TE9778 and the master air waybill 932-95331806, with the accompanying cargo manifest that each show a laden on board date of December 8, 2006. The house air waybill CLE 2TE9778 references packing list 80148821. The cargo manifest accompanying the master air waybill 932-95331806 references the house air waybill number CLE 2TE9778. The master airway bill shows a flight number 130110 transporting the titanium JFK to the United Kingdom.  These documents collectively show an intent to unite the merchandise with the mass of things belonging to another country and the date of export which is December 8, 2006. 

Additional documentation to support the actual fact of export was the IEAA, also known as the C88, and is a U.K. customs declaration form completed by importers or their agents to declare goods entering into the United Kingdom.  The IEAA shows the house airway bill number CLE 2TE9778 and the master air waybill number 932-95331806 as being received on December 11, 2006.  Additionally, a delivery note issued by DHL Global Forwarding shows the delivery of the articles listed on the noted air waybills and packing list 80148821 on December 11, 2006.  The IEAA and the delivery note demonstrate that the merchandise was received into the United Kingdom on December 11, 2006.  Based on the above documentation in total, RMI sufficiently established both the intent to unite the merchandise with the mass of things belonging to another country and evidence that export 70130 exited the United States on December 8, 2006.

Export 71961

Export 71961 is an export transported by vessel that was produced in part and exported by Tradco, a third-party manufacturer agent of RMI. For export 71961, the documentation provided by RMI consists of invoice 9014901, packing list 80148969, DHL Global Forwarding warehouse receipt, DHL Global invoice, Customs Entry Advice/ C88 submission, an Electronic Export Information (EEI) transmittal and an express bill of lading CLE012842. The titanium article produced from the merchandise is identified on the packing list with the sales order number 71961, the heat number 8714416-02-00 and the production order number 30099323. RMI provided a DHL warehouse receipt showing that packing list number 80148969 was picked up on December 8, 2006, and indicated that the shipper was Tradco. Invoice 9014901 and packing list 80148969 demonstrate the titanium merchandise being moved from Tradco in Washington, Missouri, to Ohio. The invoice 9014901 lists packing list number 80148969 and sales order number 71961. The invoice 9014901 also shows a sale from RTI Tradco in Washington, Missouri to RMI U.K. Service Center, United Kingdom. The express bill of lading CLE012842 references packing list number 80148969 and shows that from Ohio it was transported to Montreal where it was then shipped by boat to Liverpool, England. The express bill of lading, CLE012842, also includes a laden on board date of January 12, 2007. The invoice, packing list and the express bill of lading are sufficient to show an intent to unite the merchandise with the mass of things belonging to another country.

The EEI (formerly known as Shipper’s Export Declaration (SED)) is required from persons exporting goods from the United States. The EEI provided by RMI is dated January 12, 2007, and by itself, shows an intent to export but is not sufficient for actual date and fact of export because it merely shows that the exporter is planning the shipment but nothing in the document shows movement of the exported articles. However, the EEI combined with the express bill of lading CLE012842 that shows a laden on board date January 12, 2007 sufficiently show the date of export as January 12, 2007. The Customs Entry Advice issued by DHL Global Forwarding shows entry into the United Kingdom on January 24, 2007. RMI also provided a DHL Global invoice that listed the port of lading as Montreal and the port of discharge as Liverpool, which references the express bill of lading CLE012842. The express bill of lading CLE012842, EEI, U.K. Customs Entry Advice/ C88 submission that references the express bill of lading CLE012842 together with the DHL Global invoice and warehouse receipt that references packing list number 80148969, collectively, provides adequate evidence for the date and fact of export as required by 19 C.F.R. § 191.72. All documents allow CBP to trace the movement of titanium from Washington, Missouri to entry into the United Kingdom.

Export 79499

Export 79499 is an export that was flown from the United States to Paris, France. The documentation provided for export 79499 included invoice 90149531, packing list 80149398, EEI transmittal, master airway bill with cargo manifest, house airway bill CLE2TE9810, a letter from DHL explaining an error on the cargo manifest and a DHL Global Forwarding Bon de Livraison (good of delivery) document. The titanium article produced from the merchandise is identified on the packing list with the sales order number 79499, the heat number 8814789-03-00 and the production order number 30099507. The invoice 90149531 and packing list 80149398 show the titanium articles’ movement from Tradco in Washington, Missouri, to Ohio. The invoice 90149531 also shows a sale from RTI Tradco in Washington, Missouri to TRI Reamet S.A., France. The house airway bill CLE2TE9810 references invoice number 90149531 and together with the cargo manifest shows a laden on board date of December 27, 2006, on flight 012027 from JFK to Paris, France. According to the letter from DHL Global, the house air waybill listed on the cargo manifest was CLE2TE9809 but reference to CLE2TE9809 was in error and the house airway bill should have listed CLE2TE9810. RMI also provided the EEI transmission, which references the house air waybill CLE2TE9810 and shows that the merchandise was laden on board December 27, 2009. The invoice 90149531, packing list 80149398, EEI transmittal collectively show an intent to unite the titanium with the mass of things belonging to some foreign country. The house airway bill CLE2TE9810 and the cargo manifest show the date of export as being December 27, 2009.

Documentation that demonstrates fact of export includes a document that shows receipt of the merchandise in France. A Bon de Livraison (Good of Delivery) issued by DHL Global Forwarding was provided and shows delivery of the house air waybill number CLE2TE9810 and the master air waybill number 001-99689365 on December 29, 2009, to France. Hence, based on all of the foregoing documentation for export 79499, RMI has satisfied the requirements of 19 C.F.R. § 191.72 because it demonstrates the shipment of titanium from Tradco to entry into France. Export 79873

Export 79873 was shipped to Montreal where the exported articles were then moved by vessel to the United Kingdom. The documentation provided for export 79873 consists of invoice 90149537, packing list 80149555, EEI submission, express bill of lading CLE013000, DHL Global Forwarding warehouse receipt, U.K. Customs Entry Advice/C88 submission and the Trader Input Plain Paper that shows the United Kingdom’s acceptance of the C88 form, and DHL forwarding collection and delivery order. The titanium article produced from the merchandise is identified on the packing list with the sales order number 79499, heat number 8814789-03-00 and the production order number 30099507. Invoice 90149537 and packing list 80149555 show the titanium traveled from Tradco in Washington, Missouri, to Ohio. The express bill of lading CLE013000 references the packing list 8014955 and shows that the merchandise was planned to be shipped from Ohio to Montreal and then shipped by vessel, Reinbek, to Liverpool, England. The express bill of lading and the EEI transmittal that references the express bill of lading number CLE013000 indicate that the laden on board date was January 26, 2007. The invoice, packing list and express bill of lading demonstrate an intent to export the titanium out of the United States as well as the date of export as January 26, 2007.

RMI also provided a U.K. Customs Entry Advice/C88 submission that lists the express bill number “01300000” and shows the date of arrival into the United Kingdom as February 19, 2007. The Trader Input Plain Paper is a document that shows acceptance of the Customs Entry Advice/C88 submission by the United Kingdom and is also dated February 19, 2007. The Customs Entry Advice/C88 submission and the Trader Input Plain Paper are sufficient to demonstrate the fact of export because it shows entry of export 79873 into the United Kingdom. Taken as a whole, all of the documents provided are sufficient to prove export from the United States.

Export 81778

Export 81778 is a shipment that was transported via air from the United States to the United Kingdom. The documentation provided to show proof of export for export 81778 consists of an invoice 90149280, packing list 80149217, warehouse receipt, EEI transmittal, master air waybill 93295359040 and cargo manifest, house air waybill CLE2TE9834, import entry acceptance advice (IEAA) and a DHL Global Forwarding Delivery Note. The titanium article produced from the merchandise is identified on the packing list with the sales order number 81778, heat number 8513448-03-00 and the production order 30101114. Both the invoice 90149280 and packing list 80149217 indicate that the titanium was shipped from Tradco in Washington, Missouri to Ohio. Invoice 90149280 shows a sale of titanium from RTI Tradco in Washington, Missouri to RMI U.K. Service Center, United Kingdom. RMI also provided a warehouse receipt that lists the packing list 80149217 and shows the merchandise was received into warehouse in Ohio on December 12, 2006. The house air waybill references packing list 80149217 and demonstrates that the titanium was moved to JFK International airport. The master air waybill 93295359040 references house air waybill 2TE9834 and shows that the articles were flown to the United Kingdom on Flight 130113 on January 11, 2007. The invoice, packing list, warehouse receipt and the house air waybill are traceable to each other and all demonstrate an intent to export the titanium to the United Kingdom. Further the master air waybill 93295359040 and house air waybill 2TE9834 show the date of export as January 11, 2007.

Additionally, RMI provided the IEAA that shows the house airway bill CLE2TE9834 and master air waybill 93295359040 and shows receipt into the United Kingdom on January 15, 2007, and a DHL Delivery Note, that lists both the house air waybill and the master air waybill numbers, as arriving into the United Kingdom on January 12, 2007. Both the IEAA and the DHL Delivery Note sufficiently support the date and fact of export. The proof of export documentation is sufficient for export 81778 because it allows CBP to trace the flow of merchandise from Tradco into the United Kingdom.

In sum, for all five representative exports, RMI sufficiently showed date and fact of export because the exported articles were traceable with export numbers, through packing list numbers to various types of airway bills and bills of lading including the cargo manifests, and EEI transmittals. The U.K. Customs Entry Advice/C88 forms and the Bon de Livraison issued by DHL Global Forwarding also demonstrate that the titanium merchandise was entered into another country. All of the documentation that was provided for each export, taken as a whole, allows CBP to trace the shipment of exported merchandise from the Tradco facility to the foreign country, sufficiently establishing proof of export.

Whether RMI maintained and provided sufficient documentation that demonstrates the production dates of the exported article

The Drawback Office stated that one of the reasons for denying the claim was because RMI did not submit requested manufacturing documentation to show the date of production. This was because the document provided by RMI only showed the anticipated date of production and not the actual date of production. Upon request by CBP, RMI subsequently provided additional production documentation that included additional Production Order – Documented Goods Movements (PODGM) screen prints and “traveler” documents that track the movement of the titanium through the production process. Upon review of the additional documentation and as explained below, we determine that the additional documentation demonstrates the date of production of the exported article.

As previously discussed, substitution manufacturing drawback per 19 U.S.C. § 1313(b) provides that the imported duty-paid merchandise and any other merchandise (whether imported or domestic) of the same kind and quality must be used within three years of the receipt of the imported merchandise in the manufacture or production of exported articles. Hence, in order for CBP to determine whether the exported article was manufactured within three years after receipt of the imported merchandise, the date or inclusive dates of production must be established by the records of the company. See 19 C.F.R. §§ 191.26(a)(1)(i) and 191.26(b). For substitution drawback claims, as with all drawback claims, the CBP regulations require claimants to retain supporting evidence and documentation. CBP regulation 19 C.F.R. § 191.26(b) states that “[t]he records of the manufacturer or producer of articles manufactured or produced in accordance with 19 U.S.C. § 1313(b) shall establish the facts in paragraph (a)(1)(i). ..” CBP regulation, 19 C.F.R. § 191.26(a)(1)(i), requires that the records must establish the “date or inclusive dates of manufacture or production.” See also, HQ 229073 (August 29, 2001) (stating that “a substitution manufacturing drawback claimant must keep records that establish among other things, the date or inclusive dates of manufacture or production.”).

In its production process, RMI uses titanium sponge, scrap, and alloying components to form titanium alloy blocks. The blocks are then welded together with large scrap pieces to form a cast electrode that is charged in a vacuum until melted. The molten material is then cast into ingot form. Once the ingot is cast, it is shaped into various forms according to the specifications of RMI’s clients. RMI provided PODGM screenprints and “traveler documents” that follow the titanium through the production process to the final inspection and stenciling operation. The PODGM is a computer screen shot that follows the merchandise through the various manufacturing steps to complete the production order. The titanium is processed by taking pieces of titanium and shaping them into specific molds and shapes as required by the clients. A traveler document records the movement of titanium through the production process via the heat number as well as specific production orders. When the production of a titanium article is complete and has had its final inspection and stencil, as documented on the traveler, the article will be issued into finished goods inventory, which requires closure of the production order.

This is accomplished through the entry of a “101” transaction in PODGM. The date on which this “101” movement is input into the system will be captured by the system as the “101” movement date, i.e., it is a systems generated date automatically recorded for the transaction. The traveler document may have a manually recorded completion date/stamp slightly different than the 101 date primarily because the PODGM input may be entered into the system the day after the traveler is delivered for administration.

For claim 241-5 the PODGM shows the merchandise entering production and also indicates production order 30080030. The traveler document references production order 30080030 that is listed on the PODGM and also corresponds to the material item number 104034, that is also listed on the PODGM. The final inspection date on the traveler is December 28, 2005. The mill stencil was placed on the product on December 29, 2005, as demonstrated on the traveler document. The mill stencil is the final step in production, indicating that it has been inspected. Further, the traveler document references sales order number 55546, which is the unique identification number for the exported article. Because the traveler documents show the final date of production of the exported article on December 29, 2005, we find that the additional documentation to support the date of production is sufficient as required by 19 C.F.R. § 191.26(b).

Regarding claim 398-3, which was selected to show production through RMI’s third party agent, Tradco, on September 2, 2010, RMI provided documentation showing the movement of the titanium weldables from RMI to Tradco. The document that was provided was a SAP screen printout that provided a heat number. RMI indicated that the heat number should be used to track the titanium through the production process. The heat number is a number assigned to products produced from the same melt process (i.e., one melt process is assigned one heat number) and is assigned to a specific ingot when the ingot is created. The heat number 8714416 that was provided corresponds to the production order number 30099323. The documentation also shows that there are multiple production order numbers for any one heat number because the production order numbers represent a series of manufacturing steps that are applied to one heat number. For heat number 8714416, there are two production order numbers, 30096847 and 30099323. These production orders represent two different phases of the production process. Production order 30096847 represents part of the production that occurs at RMI and production order 30099323 represents the final production at Tradco. RMI provided packing list 80148969 that shows shipment from RMI (aka RTI, Niles) to Tradco and the packing list shows heat number 8714416 and production order 30099323.

The traveler document provided by RMI references production order 30099323 that is listed on the PODGM and also corresponds to the material item number 108334, that is also listed on the PODGM. The final inspection date on the traveler is December 4, 2006. The mill stencil was placed on the product on December 4, 2006, as demonstrated on the traveler document. The mill stencil is the final step in production, indicating that it has been inspected.

Because the heat number is traceable through the shipment of the titanium weldables from RTI Niles to Tradco, we are satisfied that the weldables were shipped from RMI (aka RTI, Niles) to Tradco, and finished production on December 4, 2006. Hence, RMI has satisfied the requirements of 19 C.F.R. § 191.26 because it provided sufficient records to demonstrate the date of production.

HOLDING: Because both the date of production and proof of export were established for the representative claims, in accordance with CBP regulations, the protest should be granted consistent with our findings above which are limited to the remaining allowable drawback on each of the four claims. Under the facts described, and in response to the application for further review, you are directed to grant the protest as stated above. In accordance with Sections IV and VI of the CBP Protest/Petition Processing Handbook (HB 3500-08A, December 2007, pp. 24 and 26), you are to mail this decision, together with the CBP Form 19, to the protestant no later than 60 days from the date of this letter. Any recalculation of the drawback claims in accordance with the decision must be accomplished prior to mailing the decision.

Within sixty days from the date of the decision, the Office International Trade, Regulations and Rulings, will make the decision available to CBP personnel, and to the public 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 B. Harmon, Director
Commercial and Trade Facilitation Division