PRO-1-CO:C:R:E 222097
Regional Director
Commercial Operations
Northeast Region
10 Causeway Street
Boston, Massachusetts 02222-1056
RE: Request For Further Review of Protest No. 1303-000295, Dated
August 25, 1989; Drawback right to receive payment; Clerical
error; Agent has no greater rights than his principal in
protest procedures.
Dear Madame:
The following is in reply to your request of December 27,
1989, for further review of the above-referenced protest.
FACTS:
There are two separate sets of facts in this complex matter:
the first dealing with the circumstances leading up to the
liquidation and payment of the claim for drawback and the second
dealing with the claimed clerical error under 19 U.S.C.
1520(c)(1).
Facts Leading Up To The Liquidation And Payment Of The
Claim For Drawback:
"A" was the importer of a shipment of steel.
"B", as a Customhouse broker and clothed with the power of
attorney for "A", filed as the agent of "A", Customs Form
7539, a Drawback Entry Covering Same Condition Drawback for
the steel in question.
A bill of lading submitted with the entry listed "A" as the
shipper (exporter).
"A" was listed in item number 30 of the entry as the
exporter and claimant identification number for "A" was
inserted in item number 34.
"B" was inserted in item number 26 as the "Name of Person
Authorized to Collect Drawback (If other than the
exporter)."
However, the entry was liquidated on June 17, 1988, and
payment was issued to "A", the exporter-claimant who
subsequently cashed the check.
Facts Dealing With Claimed Clerical Error Under 19 U.S.C.
1520(c)(1):
"B" (Customhouse broker) in a letter dated and received by
Customs on June 16, 1989, requested reliquidation of the
drawback entry on the basis of clerical error, mistake of
fact and/or inadvertence causing the payment to be made to
the wrong party (the exporter-claimant).
Documentation submitted with the letter to support the claim
for clerical error indicated, prior to the exportation for
drawback, the following;
1. "A" sold the steel in question to "C", a foreign
entity.
2. "A" agreed to relinquish all drawback rights to "C"
and to execute all necessary documents to enable "C" to
exercise drawback rights.
3. "D", legal counsel for "C", authorized "B"
(Customhouse broker) to act on behalf of "C" with
instructions that the duty refund should be paid to
"C" and under no circumstances to "A" and noted that
"by statute and regulation the drawback belongs to the
exporter and in this case the exporter is ["C"].
Customs denied the request for reliquidation under 19 U.S.C.
1520(c)(1) and "B", the Customhouse broker, filed a protest
under 19 U.S.C. 1514(a)(7).
ISSUES:
Issue 1. Did the Customs service make a proper drawback
payment based on the first set of facts?
Issue 2. Is there a basis to reliquidate for clerical error,
mistake of fact, or other inadvertence not amounting to error in
the construction of a law based on the two set of facts?
Issue 3. May a Customhouse broker with power of attorney to
act as the agent for his principal, the drawback claimant, file a
protest in his own right?
LAW AND ANALYSIS:
Section 191.73(a) of the Customs Regulations entitled
Person Entitled To Receive Drawback states as follows:
(a) Exporter; reservation by manufacturer or producer.
The person named on the notice of exportation or in bill of
lading...shall be deemed to be the exporter and entitled to
drawback unless the manufacturer or producer shall reserve
the right to claim drawback. The manufacturer or producer
who reserves this right may claim drawback, and he shall
receive payment upon satisfactory evidence that the
reservation was made with the knowledge and consent of the
exporter.
(b) Agent or person designated to receive drawback.
Drawback may be paid to the agent of the manufacturer,
producer, or exporter, or to the person the manufacturer,
producer, exporter, or agent directs in writing to receive
drawback payment.
This regulation is applicable for manufacturing drawback
under 19 U.S.C. 1313(a) and (b). However, section 191.141(e),
concerning same condition drawback, provides, in part, "the
provisions relating to direct identification drawback shall apply
to claims for drawback under this subpart insofar as applicable
to and not inconsistent with the provisions of this subpart".
Accordingly, section 191.73 is controlling in determining who
has the right to claim same condition drawback and who may be
authorized to receive the payment on behalf of the claimant.
Manufacture or production is not a requirement for same
condition drawback under 19 U.S.C. 1313(j). Therefore, the only
claimant under section 191.73(a) for same condition drawback is
the exporter. (See Customs Decision 87-6.) In the first set of
facts, "A" was inserted in item number 30 of the drawback entry
as the exporter, a bill of lading was submitted with the entry to
substantiate that "A" was the exporter of record and the
identification number for "A" was inserted in item number 34 of
the entry. Under section 191.73(a), "A" was the only party
entitled to claim drawback and was the proper claimant.
Under section 191.73(b), the Customs Service may pay the
drawback to the authorized agent of the exporter. The agent
receives the payment on behalf of his principal, the exporter-
claimant. Payment to the authorized agent or directly to his
principal is satisfaction of the payment of the claim for
drawback. The Customs Service may elect to pay the principal
directly to satisfy the claim. Accordingly, we conclude that
the payment of the claim directly to the exporter-claimant was a
proper drawback payment under the first set of facts.
The second set of facts reveals that the real exporter was
the foreign buyer "C" and that the shipper, "A' was, in fact,
merely acting as an agent for the foreign buyer. The question as
to who is the proper claimant is a question of law. (See
Treasury Decision 10186, which holds, in part, that the owner of
the goods who entrusted them to a carrier, under contract for
delivery to a foreign port was the exporter, and as such
entitled to drawback.) Reliquidation is not applicable under 19
U.S.C. 1520(c)(1) to correct a misinterpretation in the
construction of a law or applicable regulations. Moreover, under
19 U.S.C. 1520(c)(1), Customs has authority to correct errors
adverse to an importer and the facts fail to show any error
adverse to the importer.
Section 174.12(4) and (5) of the Customs Regulations
provides that a protest may be filed by "any person filing a
claim for drawback", or "any authorized agent" subject to the
provisions of section 171.3. A Customhouse broker who files a
protest with power of attorney as the agent of the claimant-
principal has no greater rights than those of the principal. The
claimant-principal is the protestant, not the agent. The
protest does not purport to be a protest filed by the Customhouse
broker as the agent of the claimant but appears to be an attempt
by the agent to file a protest in his own right. Assuming that
the Customhouse broker continued to have authority to act as the
agent and intended to file the protest as the agent of the
claimant-principal, than we have to conclude that the protestant
is requesting that the Customs Service pay a drawback claim which
the protestant has already received.
HOLDINGS:
Issue 1. Payment of a drawback claim to either the exporter-
claimant or to his authorized agent is satisfaction of the claim
for drawback. Customs may, elect to pay the exporter-claimant
rather than the authorized agent of the exporter-claimant.
Issue 2. The determination as to which party is entitled to
file a drawback entry (claim) is a legal question.
Issue 3. A Customhouse broker acting as the agent of the
drawback claimant in filing a protest has no greater rights than
his principal, the drawback claimant.
You are directed to inform the Customhouse broker who is not
the drawback claimant that he has no standing to file a protest
in his own behalf. Further, on the assumption that the
Customhouse broker filed the protest as the authorized agent of
the drawback claimant, you are directed to deny in full the
protest of your refusal to reliquidate under 19 U.S.C.
1520(c)(1).
Please provide the parties with a copy of this decision with
your denial of the protest.
Sincerely,
John Durant
Director
Commercial Rulings Division