DRA-1-06-RR:CR:DR 227421 SAJ
Port Director of Customs
U.S. Customs Service
Houston Drawback Center
2350 Sam Houston Pkwy, Ste. 900
Houston, TX 77032
RE: Application for further review of Protest No. 5301-96-100471; 19 C.F.R. 191.141; 19 C.F.R. 191.52; 19 U.S.C. 1514;
19 U.S.C. 1313(j)(1); Unused merchandise drawback; C.S.D.
82-38; HQ 222431
Dear Sir:
The above-referenced protest was forwarded to this office
for further review. We have considered the facts and issues
raised, and our decision follows.
FACTS:
According to the documentation in the file, Capro, Inc.
(protestant) filed a claim for unused merchandise drawback under
19 U.S.C. 1313(j) for cable. The subject protest was timely
filed against the denial of drawback for drawback entry number
2503293-8, on the grounds that the original pedimento number
1200-5006483, dated May 4, 1995, submitted as proof of export for
the claim, did not contain cable with specifications to match the
entry documents. The asserted export shipment reflected on
Customs Form (CF) 7539 is 8 REELS of JP PART # 10-3062 galvanized
cable with the dimensions of 1.5mm 1x19+8x7, weighing 1016
kilograms. The subject export shipment was stated to have
occurred on April 17, 1995.
The pedimento originally submitted with protestant's
drawback claim, pedimento number 1200-5006483, has an entry
summary date of May 4, 1995. This pedimento contains 5 lines of
merchandise. Line number 3 describes the merchandise as
"CARRETES DE CABLE GALVANIZADO, MEDIDAS: 1.5mm.1x9+8x9", which
are "Reels of Galvanized Cable" measuring 1.5mm.1x9+8x9. We note
that there are no matching part numbers to the CF 7539 on this
pedimento for this merchandise.
Protestant's drawback claim on drawback entry number 027-2503293-8 was denied on September 7, 1996, due to the discrepancy
reflected on pedimento number 1200-5006483, which showed that the
imported merchandise was not the same as the exported
merchandise, as required under the regulations. Specifically,
the import invoice shows cable with dimensions "1.5 mm 1x19+8x7",
and the pedimento number 1200-5006483 shows cable with dimensions
"1.5 mm 1x9+8x9".
Customs Form (CF) 7501, which has an export date of December
15, 1994 and an import date of December 31, 1994, reveals that
under entry number 601-0xxxx93-7 (93-7), protestant entered
10,160 kg of "ROPES, CBLS, CRDG, OTH:OTH, GALVAN" under
7312.10.9030/4% of the Harmonized Tariff System of the United
States.
Invoice Number AC94-1212, dated December 12, 1994, reflects
that 500,000 m of "GT Cable Capro" Parts No. 10-3064,
1.5mm1x19+8x7 "GT" (10 Pallets, 40 Reels), and 500,000 m of "GO
Cable Capro" Parts No. 10-3062,, 1.5mm1x19+8x7 "GO" (10 Pallets,
40 Reels), were imported from Japan.
Protestant filed the subject drawback entry with Customs on
Customs Form (CF) 7539. Block 44 of the CF 7539 contains a check
mark and the inspector's initials indicating that "Customs has
decided not to examine the merchandise and it may now be
exported." Drawback entry number 2503293-8 has a drawback entry
date of April 17, 1995, and describes the merchandise as "CABLE".
Blocks 15 and 16 list the imported part numbers as "JP PART #10-3064" "40 REELS 5080 KG" and "JP PART #10-3062" "40 REELS 5080
KG". The merchandise described on the exported portion is listed
as "JP PART #10-3062" "8 REELS 1016 KG".
The broker submitted a new pedimento number 1200-5005659,
dated April 18, 1995, with this protest on October 17, 1996. We
note that there is no explanation from the broker as to why the
original pedimento was submitted with the drawback claim.
This second pedimento, which was submitted in conjunction
with the subject protest, pedimento number 1200-5005659, has an
entry summary date of April 18, 1995. This pedimento has 14 line
items of merchandise. Line item number 6 describes the
merchandise as "CARRETES DE CABLE GALVANIZADO C/CA PA E/ESTANO,
1.5mm.1x19+8x7", which are "Reels of Galvanized Cable" measuring
1.5mm.1x19+8x7. The value for line item number 6 is $237,617
Dollars. Line item number 7 describes the merchandise as
"CARRETES DE CABLE GALVANIZADO, MEDIDAS: 1.5mm.1x9+8x9, which are
"Reels of Galvanized Cable" measuring 1.5mm.1x9+8x9. The value
for line item number 7 is $19,637 Dollars. Only line item number
6 matches the measurements claimed on the drawback claim. The
value of protestant's claim is $26,971.12.
However, line item number 6 on pedimento number 1200-5005659
describes the cable, but not the amount (i.e, it does not state
the number of reels nor weight). In other words, item number 6
on pedimento Number 1200-5005659 does not show that there were 8
reels weighing 1,016 kg as asserted on protestant's drawback
claim. Moreover, a comparison of the dollar amount on line item
number 6 on pedimento number 1200-5005659 fails to provide a link
to the asserted export.
Drawback entry number 027-25032938 was liquidated on October
4, 1996. The subject protest, with application for further
review was filed on October 17, 1996.
As a side issue, you state that there may be negligent
inaction in this case on the part of the broker. You state that
despite the fact that the broker has acknowledged the problem
regarding pedimentos with cable descriptions that do not match
the entry documents, the broker has not taken any steps to
correct the pedimentos in many instances. In the case at hand,
the broker timely submitted a pedimento that matched the import
invoice with the subject protest.
ISSUE:
Whether unused merchandise drawback may be denied for
failing to match the identity, quantity, and value of the
merchandise imported and exported.
LAW AND ANALYSIS:
We note initially that the refusal to pay a claim for
drawback is a protestable issue pursuant to 19 U.S.C. 1514(a)(6).
Drawback for entry 93-7 was denied on September 7, 1996. This
protest was timely filed against the denial of drawback for the
subject entries on October 17, 1996, since the 90-day statutory
and regulatory filing deadline was met under 19 U.S.C. 1514 and
19 C.F.R. Part 174.
The applicable law is found in section 632, title VI -
Customs Modernization, Public Law 103-182, the North American
Free Trade Implementation Act (107 Stat. 2057), enacted December
8, 1993. Title VI of that Act amended 19 U.S.C. 1313(j).
Section 692 of the Act provides that Title VI provisions take
effect on the date of enactment.
Section 632 of the new Act changes same condition direct
identification drawback by providing that imported merchandise
for which duty was paid and is, before the close of the 3-year
period beginning on the date of importation, exported or
destroyed under Customs supervision and is not used within the
United States before such exportation or destruction is eligible
for "unused merchandise drawback." The law no longer requires
that the merchandise be in the same condition as when imported.
In the instant case, the protestant asserts that the
merchandise was exported. The Customs Regulations issued under
the authority of this provision are found in 19 C.F.R. 191.141.
Under paragraph (b) of 19 C.F.R. 191.141, an exporter who desires
to export merchandise with drawback under 19 U.S.C. 1313(j) is
required to file a completed CF 7439 at least 5 working days
prior to the date of intended exportation unless a shorter filing
period is approved.
The exporter-claimant may request, in writing, waiver of
this advance notice. Customs may grant such a waiver or, in
certain circumstances, is required to grant it. Within 3 working
days after the CF 7539 is filed, Customs is required to notify
the exporter-claimant whether the merchandise will be examined.
If the exporter-claimant is not so notified, he or she is
required to export the merchandise without delay. Under
paragraph (c) of 19 C.F.R. 191.141, within 3 years after
exportation of merchandise under 19 C.F.R. 191.141(b), an
exporter-claimant is required to complete his or her drawback
claim by filing with the same Customs official who received the
CF 7539 evidence of exportation under the procedures described in
19 C.F.R. 191.52 or 191.54. Under paragraph (e) of 19 C.F.R.
191.141, the provisions relating to direct identification
drawback apply to claims for drawback, insofar as applicable and
not inconsistent with 19 C.F.R. 191.141-191.142.
One of the provisions relating to drawback claims is that
drawback claim "shall be subject to verification by the director
at whose port the claim is filed. 19 C.F.R. 191.10(a). Such
verification means "the examination of any and all records ...
maintained by the claimant ... which are required by the
regulatory auditor to render a meaningful recommendation
concerning the drawback claimant's conformity to the law and
regulations and the determination of supportability, correctness,
and validity of the specific claim or groups of claims being
verified." 19 C.F.R. 191.2(o). It is specifically provided that
verification includes "an examination of ... all the accounting
and financial records relating to the transaction(s)." 19 C.F.R.
191.10(c)).
Under 191.51, exportation of articles for drawback purposes
shall be established by one of the procedures listed in that
section, one of which is 19 C.F.R. 191.52. Under section 191.52,
a drawback claimant may support the drawback claim with a notice
of exportation on CF 7511 which is required to show the
information listed in paragraph (b) of section 191.52. Under
paragraph (c) of section 191.52, the notice of exportation may be
certified or uncertified. If uncertified, it must be supported
by documentary evidence of exportation, such as "the bill of
lading, air waybill, freight waybill, ... cargo manifest, or
certified copies thereof, issued by the exporting carrier."
In Customs Service Decision (C.S.D.) 82-38, we held that a
claimant must make available records which prima facie evidence
show importation, manufacture, and exportation for purposes of
the drawback law. Headquarters ruling (HQ) 222431 (January 30,
1991), provided that although C.S.D. 82-38 concerned
manufacturing drawback, there is no reason why C.S.D. 82-38
should not be applicable to "same condition drawback" (currently
referred to as unused merchandise drawback).
C.S.D. 82-38 was modified to hold that the claimant must
make available records which prima facie show, with regard to the
merchandise for which drawback is sought, importation,
exportation or destruction of the imported merchandise within 3
years from importation, and non-use in the United States. Thus,
the provisions relating to direct identification drawback apply
to claims for unused merchandise drawback insofar as applicable
and not inconsistent with 19 C.F.R. 191.141 - 191.142.
Protestant filed the subject drawback entry with Customs on
CF 7539, which contains a drawback entry date of April 17, 1995.
Block 44 of the CF 7539 contains a check mark and the Customs
inspector's initials indicating that "Customs has decided not to
examine the merchandise and it may now be exported."
In this case, there is prima facie evidence of importation
(i.e., entry summaries and detailed invoices). Although there
are no matching part numbers to the CF 7539 on pedimento number
1200-5006483, which was originally submitted to claim drawback
for the subject merchandise, another pedimento number 1200-5005659 was submitted by protestant's broker in conjunction with
the subject protest.
With respect to the submission of new evidence to support an
existing claim, a claimant may submit evidence to show
entitlement to drawback so long as the liquidation of the
drawback claim has not become final. If a claimant abandons its
original claim and makes a new claim, through the use of a new
import shipment or new export shipment, the filing for such a new
claim must meet the time limit set by 19 U.S.C. 1313(r). Section
1313(r) provides that a complete drawback claim shall be filed
within 3 years after the date of exportation or destruction of
the articles on which drawback is claimed.
In the instant case, the protestant appears to be trying to
submit evidence to prove the eligibility of the asserted export
shipment reflected on CF 7539, which consists of 8 reels of JP
PART # 10-3062 galvanized cable with the dimensions of 1.5mm
1x19+8x7, weighing 1,016 kilograms. The subject export shipment
was stated to have occurred on April 17, 1995.
If the imported merchandise matches pedimento number 1200-5005659, drawback would be authorized. However, the evidence on
pedimento number 1200-5005659 is also inadequate to support the
asserted export of the subject merchandise. Pedimento number
1200-5005659 fails to list the quantity of the reels and the
weight. Therefore, there is no link with the imported part
number JP PART # 10-3062 to the merchandise covered. Moreover,
the entrance date of pedimento number 1200-5005659 of April 18,
1995, does not match the date on the drawback claim of April 17,
1995. Also, there is no attempt on protestant's behalf, nor is
there any evidence offered to explain that discrepancy.
The Customs Court has held that right to recover drawback
arises only when all of the provisions of the statute and the
applicable and lawful regulations prescribed under its authority
have been completed. Romar Trading Co. v. United States, 27
Cust. Ct. 34, C.D. 1344 (1951), followed in 718 Fifth Avenue
Corp. v. United States, 741 F. Supp. 1579, CIT slip op. 90-59
(1990). Thus, the regulations must be adhered to before the
exporter is eligible for drawback. Customs reserves the right to
examine merchandise before exportation to verify that the
exported goods were the imported goods and that those goods bear
no evidence of a change in condition or of use. In the case at
hand, Customs waived the opportunity to examine the exported
merchandise. It is important to emphasize that substitution of
merchandise is not allowed under NAFTA. It is therefore crucial
that protestant show, through documentation, that the same cable
imported was exported.
As stated in the FACTS portion of this ruling, you express
concern that there may be negligent inaction in this case on the
part of the broker. You state that despite the fact that the
broker has acknowledged the problem regarding pedimentos with
cable descriptions that do not match the entry documents, the
broker, in many instances, has not taken any steps to correct the
pedimentos. However, negligent prior attempts are irrelevant for
purposes of this protest. The subject protest has been evaluated
on its own merits and although it is timely, it is not supported
by evidence. As for other drawback claims, negligent preparation
on the part of the broker may be the subject of action under 19
U.S.C. 1641, which pertains to Customs brokers, or 19 U.S.C.
1593a, which covers penalties for false drawback claims.
Although there are no matching part numbers to the CF 7539
on pedimento number 1200-5006483, which was originally submitted
to claim drawback for the subject merchandise, another pedimento
number 1200-5005659 was timely submitted by protestant's broker
with the subject protest. However, pedimento number 1200-5005659
also fails to match the identity and the quantity of the cable
imported and exported. In the instant case, drawback is denied.
HOLDING:
In view of the fact that protestant has failed to provide a
pedimento matching the imported merchandise with the exported
merchandise, this protest is DENIED.
Consistent with the decision set forth above, you are hereby
directed to deny the subject protest. In accordance with Section
3A(11)(b) of Customs Directive 099 3550-065, dated August 4,
1993, Subject: Revised Protest Directive, this decision should be
mailed by your office 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 the decision. Sixty days from the date of the decision
of the Office of Regulations and Rulings will take steps to make
the decision available to customs personnel via the Customs
Rulings Module in ACS and the public via the Diskette
Subscription Service, Freedom of Information Act and other public
access channels.
Sincerely,
Director,
Commercial Rulings Division