DRA-2-02
RR:CR:DR 229018 IDL
Port Director of Customs
Attn: Joyce Stark
P.O. Box 52-3215
Miami, Florida 33152-3215
Re: Evidence of Export; 19 U.S.C. 1313(j)(1); 19 CFR 101.1; 19 CFR 191.33; 19 CFR 191.36
Dear Ms. Stark:
This is in reply to your Request for Internal Advice, dated November 21, 2000, concerning the evidentiary adequacy of exportation documents pertaining to drawback claimant, The Serpentine Group (“Serpentine”), of Fort Lauderdale, Florida.
FACTS:
On November 10, 1996, Serpentine entered one 52-foot pleasure yacht (“yacht”), hull #52003I697, country of origin, Taiwan, Entry No. 100-xxxx389-1, HTSUS 8903.92. Serpentine claims it exported the yacht on January 7, 1997, from Key West, Florida to Grand Cayman Island. Serpentine failed to file a CF 7553 Notice of Intent to Export, Destroy, or Return Merchandise for Purposes of Drawback prior to said export. On November 1, 1999, Serpentine filed a 1313(j)(1) Drawback Entry, No. 820-xxxx844-5, along with an application for waiver of Failure to File Notice of Intent to Export, Destroy, or Return Merchandise for Purposes of Drawback pursuant to 19 CFR 191.36.
Serpentine provided the port with the following documents, as evidence of exportation:
(1) Commercial invoice dated September 10, 1996, indicating that the yacht set sail from Kaohsiung, Taiwan to the United States on or about September 19, 1996;
(2) Attestation by the Bureau Veritas International Register, Marine Division declaring that the yacht was admeasured in Dania, FL on December 20, 1996, and that the Bureau Veritas issued two Cayman Islands certificates-Certificate of Survey and Tonnage Certificate- also on December 20, 1996;
(3) Clearance of Vessel to a Foreign Port to “Gary Grant Master or Commander of the Lady Hunter…burden 19 tons…FBGL Taiwan…bound for George Town Grand Cayman”; issued by port of Key West on January 7, 1999;
(4) Certificate of British Registry, stating the Particulars of Ship; issued by Registrar of Ships Cayman Islands on December 24, 1996.
In addition, the port requested our legal analysis of documentation frequently submitted by drawback claimants. Although these documents do not pertain specifically to Serpentine, we will address some of those issues as general information.
ISSUES:
Whether Serpentine has demonstrated that an exportation of the yacht occurred?
Whether the documents identify drawback claimant Serpentine as
owner and exporter of the yacht for purposes of drawback
eligibility under 1313(j)(1) and 19 CFR 191.33(a)(1)?
Whether Serpentine has demonstrated that the yacht has not been used within the United States before such exportation?
General Issue:
Whether any of the documentation presented for general legal advice is adequate to:
identify an exporter;
show physical separation from the U.S.; or
intent to join the vessel to another country?
LAW AND ANALYSIS:
Drawback is granted upon the exportation of imported merchandise upon which was paid any duty, tax, or fee imposed under Federal law because of its importation, if the merchandise has not been used within the United States before such exportation. 19 U.S.C. 1313(j)(1).
Under 19 CFR 101.1, exportation is defined 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 shipment of merchandise abroad with the intention of returning it to the United States with a design to circumvent provisions of restriction or limitation in the tariff laws or to secure a benefit accruing to imported merchandise is not an exportation. Merchandise of foreign origin returned from abroad under these circumstances is dutiable according to its nature, weight, and value at the time of its original arrival in this country. (emphasis added)
191.33 Person entitled to claim drawback
Direct identification. (1) Under 19 U.S.C. 1313(j)(1),
the exporter…shall be entitled to claim drawback. 19 CFR 191.33
Issue (1)
Whether Serpentine has demonstrated that an exportation of the yacht
occurred?
In determining adequacy of export evidence, one must consider whether drawback claimant presented evidence reliably demonstrating that an exportation of the yacht occurred. 19 CFR 101.1 requires physical separation of the yacht from the U.S., coupled with the requisite intent. Intent is to be determined from the facts and circumstances surrounding a given case. Intent at the time of shipment abroad is the controlling factor in determining whether or not the shipment was exported. See HQ 114301; F.W. Meyers & Co., Inc., v. United States, 29 Cust. Ct. 202, C.D. 1468 (1952). Intent is shown by acts or contracts. American Customs Brokerage Co. v. United States, 72 Cust. Ct. 245, 375 F.Supp. 1360 (1974); Rentner v. United States, 15 Ct. Cust. 147 (1927). Contract language of commerce shows commercial intent. Premier Graining Co. v. United States, 57 Cust. Ct. 32 (1966).
In this instance, a Purchase and Sale Contract for the yacht signed by Serpentine and a buyer in Grand Cayman prior to the date of exportation might be sufficient to demonstrate intent to join the yacht to the commerce of a foreign country, one of the two criteria for demonstrating an export.
With respect to an imported, duty-paid, U.S.-flagged yacht, Customs has held that “[m]erely removing a yacht from U.S. territorial waters on a temporary foreign pleasure cruise with the intent to return the yacht to the United States would not constitute an exportation. (see Customs ruling letter 103386, dated September 27, 1978, published as C.S.D. 79-85).
In the instant case, the CF 1378 Clearance of Vessel to a Foreign Port was issued by port of Key West on January 7, 1999. This document merely states that “Gary Grant Master or Commander of the Lady Hunter…burden 19 tons…FBGL Taiwan…bound for George Town Grand Cayman.” It does not demonstrate intent to join the yacht with the mass of things belonging to a foreign country. However, it does appear to demonstrate physical severance of the yacht from the Unites States.
The Commercial Invoice is not helpful in determining whether Serpentine severed the yacht from the mass of things belonging to this country with intent to join the mass of things belonging to a foreign country. The invoice of Camargue Yacht Co., dated September 10, 1996, appears to be the invoice associated with the import entry of November 10, 1996. Since it predates the import into the U.S. and it was used to make the import entry, it cannot show an intent to join the yacht with the commerce of any other country but the U.S.
However, the Attestation of the Bureau Veritas that the boat was measured for tonnage and surveyed for registration by the Cayman Islands government, together with the Certificate of British Registry, dated December 20, 1996, seems to show an intent to join the boat to the commerce of the Cayman Islands, particularly since the place of business of the owner, Lady Hunter, Ltd., is in the Cayman Islands.
Nevertheless, the relationship between the importer, Serpentine Group, and Lady Hunter, Ltd, a Cayman Islands entity that is identified as the owner on the vessel registration, is neither explained nor demonstrated by any of the documents. The registration suggests that Serpentine sold the yacht to Lady Hunter, Ltd. If that transfer of ownership is shown by adequate evidence, such as a contract of sale between Serpentine and Lady Hunter, Ltd., that contract plus the registration and Customs clearance would be adequate to show exportation of the yacht on the date of clearance.
Issue (2)
Whether the documents identify drawback claimant Serpentine as owner and exporter of the yacht for purposes of drawback eligibility under 1313(j)(1) and 19 CFR 191.33(a)(1)?
One must consider whether the drawback claimant’s identity matches that of the owner and exporter. See 19 CFR 191.33(a)(1), 19 U.S.C. 1313(j)(1), above. Serpentine presented a CF 1378 Clearance of Vessel form as evidence of export of the “Lady Hunter.” However, the Clearance of Vessel form does not demonstrate that Serpentine is the owner or the exporter of the yacht. Likewise, according to the Certificate of British Registry, it appears that the owner of the yacht is Lady Hunter, Ltd. The connection between Lady Hunter, Ltd. and Serpentine Group is unclear. If the yacht was sold to Lady Hunter, Ltd. and that company exported it, then under 1313(j)(1), Lady Hunter, Ltd. would be eligible to claim drawback, but not Serpentine, unless Lady Hunter, Ltd., the apparent owner of the yacht on the date of clearance, endorsed its right to the importer, Serpentine Group.
Serpentine failed to submit any other documentation proving it was the owner and exporter of the yacht for purposes of drawback eligibility under 1313(j)(1) and 19 CFR 191.33(a)(1).
Issue (3)
Whether Serpentine has demonstrated that the yacht has not been used within the United States before such exportation?
Serpentine must also demonstrate that the yacht has not been used within the U.S. prior to exportation. See 19 U.S.C. 1313(j)(1), above.
However, Serpentine presented no evidence addressing “non-use” of the yacht. Nevertheless, the port made a general inquiry as to the validity of an affidavit declaring non-usage.
In Andy Mohan, Inc. v. United States, 63 C.C.P.A. 104; 537 F.2d 516 (1976), the court held that affidavits presented as evidence were to be “scrutinized… with care, because, being ex-parte, they were not subject to cross-examination.” Under 28 U.S.C. 2635, there is “discretion to refuse to admit the affidavits as an exception to the hearsay rule.” Evidence should be assessed in practical terms, considering such factors as completeness, adequacy of bases, and possible motives to deceive." In addition, the court cited as a factor the timeliness of the execution of affidavit following the occurrence of the transaction in question. See Mohan.
Further, where an affidavit is not a record kept by the supplier in the regular course of regularly conducted business, such affidavit is excludable hearsay evidence not falling within the purview of Federal Rules of Evidence, Rule 803(6). See Thom S. Zani v. United States, 86 F. Supp. 2d 1334 (Ct. Int’l Trade 2000).
General Issue:
Whether any of the documentation presented for general legal advice is adequate to:
demonstrate physical separation from the U.S.;
demonstrate intent to join the vessel to another country; or
identify an exporter?
The CF 1300 Vessel Entrance or Clearance Statement offers potentially useful information (that was not available on the former CF 1378 Clearance of Vessel to a Foreign Port form) in determining the merit of a drawback claim:
(1) Date and time of arrival
(2) Name address and phone no. of ship’s agent
Name and country of owner
Port arrived/departed for
Particulars of voyage
Although the issuance of a CF 1300 clearance certificate does not absolutely show that the boat left the U.S., the certificate is analogous to the sufficiency of a bill of lading as evidence of time of export. The CF 1300 does serve as prima facie evidence of a severance from the U.S.
The port also questioned the adequacy of a bill of sale as evidence. It appears that the bill of sale may be useful in demonstrating one aspect of exportation-specifically, intention to join a vessel with the mass of things belonging to some foreign country. The port should carefully scrutinize a bill of sale, ensuring its reconciliation with the applicable drawback claim.
The material sent with the memorandum ENT-5:PD:A:TC:D MR of September 10, 2001, is returned. In that memo, it is alleged that the documentary evidence may be false or misleading in that yachts cleared foreign and registered foreign may be returned to the U.S. shortly after clearance. However, the material contained no evidence in support of that allegation, consequently, there is no basis for a ruling.
HOLDING:
If adequate evidence of the apparent sale and delivery of the yacht from Serpentine to Lady Hunter, Ltd. is presented and Lady Hunter, Ltd., the apparent owner of the yacht at the time of clearance, endorses, as the apparent exporter, its right to claim drawback to Serpentine, there would be evidence to approve the claim for drawback. Otherwise, the claim should be denied.
A copy of this letter should be provided to Serpentine and a reasonable opportunity to supply the missing evidence, as discussed above, should be permitted.
Sixty days from the date of the decision, 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.ustreas.gov, by means of the Freedom of Information Act, and other methods of public distribution.
Sincerely,
John Durant
Director,
Commercial Rulings Division
enclosure