DRA-4 RR:CR:DR 230409RDC
Port Director, Customs and Border Protection
Houston Service Port
2350 N Sam Houston Parkway East
Suite 1000
Houston, Texas 77032-3126
Att: Lynne Sakaki-Lee
RE: Protest number 5301-03-100151; Chevron U.S.A., Inc.; Denial of drawback claim; 19 U.S.C. § 1313(p); 19 U.S.C. § 1514; 19 U.S.C. § 1313(r); P.L. 106-36; § 2420 of the Miscellaneous Trade and Technical Corrections Act of 1999; CSD 82-37; “Instruction for Filing 1313(p) Claims”; § 632(b) of the North American Free Trade Agreement Implementation Act; Administrative Procedure Act.
Dear Sir or Madam:
Protest number 5301-03-100151 was forwarded to this office for further review on 4/7/2004. We have considered the evidence provided and the points raised by your office and the Protestant. Our decision follows.
FACTS:
The Protestant, Chevron U.S.A., Inc., (Chevron), protests the denial of drawback claim BI6-xxxx009-1. The protested drawback entry was filed on a CF 331, “Manufacturing Drawback Entry and / or Certificate.” There are two CF 331s included in the file: one date-stamped as received 2/7/1997 and the other date-stamped as received on 3/11/1997, at the Houston Drawback Center (Houston). Both 331s have written on them that the “CM [certificate of manufacture and delivery] was issued on C53-[xxxx]350-1.” The CF 331 received 3/11/1997 also states that the CM C53-[xxxx]350-1 was liquidated on 10/4/1996. With one other minor, immaterial exception, the CF 331s appear to be identical.
There is also in the file a copy of a letter from Houston to Chevron dated 2/28/96, advising that the “diskette returned error message copied to disk.” There is no drawback entry number referenced, but the letter states “see attached” where the drawback entry number would be noted. However, there is no attachment to this letter. Apparently, the protested drawback entry was originally filed on 2/7/1997 with a diskette error. The error letter was then sent to Chevron on 2/28/97 (dated with the wrong year, i.e., 1996 instead of 1997) and subsequently, the entry was re-filed on 3/11/1997. We note that Chevron does not dispute the filing date of the protested entry.
This drawback entry claims drawback per 19 U.S.C. § 1313(p) on exported jet fuel laden aboard commercial aircraft during the period between 10/1/1992 and 10/31/1992. The “entry type code” given is “44,” which denotes a claim per § 1313(b), substitution manufacturing drawback, and the claim states “C[ertificate of] M[anufacture] was issued on C53-0027350-1.” According to Houston, this certificate of manufacture and delivery was for the production of fuel from crude oil. The claim is based on exportation of the jet fuel, which was produced from crude oil.
Amendments to 19 U.S.C. § 1313(p) made by the Miscellaneous Trade and Technical Corrections Act of 1999 (1999 Trade Act), which was enacted on June 25, 1999, were to “take effect as if included in the amendment made by section 632(a)(6) of the North American Free Trade Agreement Implementation Act” (NAFTA Act). The NAFTA Act was enacted on December 8, 1993. Consequently, the amendments to § 1313(p) made by the 1999 Trade Act were to have retroactive effect, including effect on drawback entries already filed.
On 11/2/1999, CBP promulgated “Instruction for Filing 1313(p) Claims” (Instructions), which were made public on www.customs.treas.gov after the 1999 Trade Act was enacted. In pertinent part the instructions stated, “these instructions should be used to file and properly identify 1313(p) claims that specifically pertain to” drawback claimed under the amendments made by the 1999 Trade Act. Each numbered direction described the actions required by the drawback claimant in order to claim drawback under § 1313(p) as amended by the 1999 Trade Act. Numbers 1 through 4 applied to “Existing Manufacturing Claims,” i.e., drawback entries already filed, and instructed the claimant to “file a new CF 7551.” According to Chevron, during October of 1999 it was instructed by a Houston representative that it need not “re-file” the protested drawback claim on a new CF 7551 as described in the Instructions. This representative is no longer employed at Houston.
The protested drawback entry was liquidated on 1/24/2003, with zero drawback allowed because, according to Houston, “this claim was not re-filed during the window period of opportunity under Public Law 106-36 that opened June 25, 1999 and closed December 27, 1999. As a result, the claim was liquidated with no drawback allowance since it did not meet the statutory filing requirements of 19 U.S.C. § 1313(r).” The instant Protest was received in Houston on 4/23/2003, and a document labeled “Further Legal Arguments submitted under 174.28 C.R.” was received on 6/24/2003. The sole issue upon which the instant Protest is based is whether the drawback entry was timely filed as required by § 1313(r).
ISSUE:
Does the requirement in 19 U.S.C. § 1313(r)(1), that “a drawback entry and all documents necessary to complete a drawback claim, . . . shall be filed . . . within 3 years after the date of exportation . . . of the articles on which drawback is claimed” apply to the instant protested drawback entry filed on 3/13/1997?
LAW AND ANALYSIS:
We note initially that the instant Protest was timely filed, i.e., within 90 days of the refusal to pay the drawback claim (19 U.S.C. § 1514(c)(3)(B)). Under 19 U.S.C. § 1514 “decisions of the Customs Service, including the legality of all orders and findings entering into the same, as to . . . the refusal to pay a claim for drawback . . .” (§ 1514(a)(6)) are final unless a protest of that decision is filed within 90 days of the decision to deny drawback (§ 1514(c)(3)(B)). This Protest was filed on 4/23/2003 and the drawback claim was liquidated on 1/24/2003, with zero drawback paid because it did not comply with the requirement in 19 U.S.C. § 1313(r).
Section 1313(r) of 19 U.S.C. provides that:
A drawback entry and all documents necessary to complete a drawback claim, including those issued by the Customs Service, shall be filed or applied for, as applicable, within 3 years after the date of exportation or destruction of the articles on which drawback is claimed, except that any landing certificate required by regulation shall be filed within the time limit prescribed in such regulation. Claims not completed within the 3-year period shall be considered abandoned. No extension will be granted unless it is established that the Customs Service was responsible for the untimely filing.
19 U.S.C. § 1313(r)(1)). The three year time limit during which drawback entry and certificate of manufacture must be filed begins with first day after the date the articles are exported (C.S.D. 82-37, Cust. Serv. (1982)). The date of exportation of the jet fuel on which the drawback is claimed is “10/01-31/92.” Thus, the protested drawback entry must have been filed within 3 years after 10/31/1992 or 11/1/1995. The protested drawback claim was filed 3/13/1997. Consequently, the protested drawback claim does not meet the “within 3 year” filing requirement of § 1313(r).
Chevron maintains however, that this drawback entry should be paid in full and advances two arguments in support of its Protest. The Protestant first argues that CBP’s denial of its claim “contravenes the express statutory provisions of the 1999 amendments [to § 1313(p)], which have retroactive effect back to the 1993 implementation of the NAFTA implementation Act.” Chevron thus contends that the language of the 1999 Trade Act permits its claim as filed. The first rule of statutory interpretation is to look to the text of the statute (see Connecticut Nat. Bank v. Germain, 503 U.S. 249, 253-254, (1992), “When interpreting a statute, we look first and foremost to its text." “Absent a clearly expressed legislative intention to the contrary, that language must ordinarily be regarded as conclusive.” (Consumer Product Safety Commission v. GTE Sylvania, Inc., 447 U.S. 102 (1980)).
Sections 2420(a) through (d) of the 1999 Trade Act amended 19 U.S.C. § 1313(p) to “clarify the application of drawback for petroleum products where a party other than the exporter is the importer.” (S. Rept. 106-2., 1999 S. 262; 106 S. 262 , 106th Congress, 1st Sess.) Section 2420(e) of that Act provided that:
The amendments made by this section shall take effect as if included in the amendment made by section 632(a)(6) [which amended 1313(p)] of the North American Free Trade Agreement Implementation Act.
(Miscellaneous Trade and Technical Corrections Act of 1999, Pub. Law No. 106-36, 113 Stat. 127). Thus, the language of §2420(e) clearly states that the amendments to § 1313(p) made by the 1999 Trade Act were to be treated as if they were enacted with § 632(a)(6) of the North American Free Trade Agreement Implementation Act (NAFTA Act).
Section 632(a)(6) of the NAFTA Act, enacted on December 8, 1993, also amended 19 U.S.C. § 1313(p). Section 632(b) of the NAFTA Act provided when the amendments made by § 632(a)(6) were effective:
Notwithstanding section 514 of the Tariff Act of 1930 (19 U.S.C. 1514) or any other provision of law, the amendment made by paragraph (6) of subsection (a) shall apply to-
(1) claims filed or liquidated on or after January 1, 1988, and (2) claims that are unliquidated, under protest, or in litigation on the date of the enactment of this Act
Accordingly, the plain language of § 632(b) of the NAFTA Act dictates that the amendments made by § 632(a)(6), and therefore also those amendments made by the 1999 Trade Act, applied to (1) drawback entries filed or liquidated on or after January 1, 1988, and (2) drawback entries that were unliquidated (or under protest, or in litigation) on December 8, 1993. However, § 2420(e) of the 1999 Trade Act contains a “sunset’ provision” which provides that:
For purposes of section 632(b) of that Act [the NAFTA Act], the 3-year requirement set forth in section 313(r) of the Tariff Act of 1930 shall not apply to any drawback claim filed within 6 months after the date of the enactment of this Act [Jun. 25, 1999] for which that 3-year period would have expired.
As stated above, § 1313(r) of 19 U.S.C. requires that a drawback claim must be filed within 3 years after the date of exportation of the articles on which drawback is claimed. Thus, per § 2420(e) of the 1999 Trade Act, this 3-year rule did not apply to any drawback claim filed within 6 months after 6/25/1999, i.e., between 6/25/1999 and 12/27/1999.
Further, were the plain language of the Acts insufficient to discern Congress’ intent as to the effective dates of the amendments, this intent is further evidenced by that section of the Senate Report on the 1999 Trade Act which discussed the changes to § 1313(p):
In an effort to resolve, finally and completely, issues relating to the interpretation of this drawback, the provision would apply retroactively, as provided in the North American Free Trade Agreement Implementation Act of 1933 and Section 484A of the Trade Act of 1990 (Pub. L. 101-382. However, a “sunset” provision would end the retroactive period for claims not made within six months of enactment of this provision.
(S. Rpt. 106-2 on S. 262 (106th Cong. 1st Sess. Feb. 3, 1999, at page 71).
The protested drawback entry was filed 3/13/1997. Therefore, since it was not filed between 6/25/1999 and 12/27/1999 the 3-year rule per § 1313(r) applies to the protested drawback entry. Consequently, the protested drawback entry must have been filed and complete “within 3 years after the date of exportation . . . of the articles on which drawback is claimed.” The protested drawback entry claims drawback on exported jet fuel laden aboard commercial aircraft during the period between 10/1/1992 and 10/31/1992. Within 3 years after 10/1/1992 is 10/1/1995. Accordingly, whether the protested drawback claim was filed on 3/11/1997 or 3/13/1997, it was not filed within 3 years after the exports and was untimely.
Chevron also argues that the “Instructions for Filing 1313(p) Drawback Claims,” should not have been relied upon by CBP to deny its claim because these instructions were invalid as they were promulgated in violation of the Administrative Procedure Act. Chevron argues that the Instructions for Filing 1313(p) Drawback Claims “were improperly promulgated by [CBP] ignoring the requirement that substantive rules be made following notice to and comment by the affected members of the public.” Because Chevron submitted a revised drawback entry June 1, 2000 for the protested claim on a CF 7551, “Drawback Entry” and marked this entry “Revised as per P.L. 106-36, Already filed – No Changes,” it seems that Chevron believed that the first of these instructions would have been applicable to the protested drawback claim. Instruction Number 1, under “How to File,” describes the relevant claims to which this instruction applied as,
“Existing Manufacturing Claims (liquidation was not final) – These claims are already filed and require no changes.
a. File new CF 7551 with Revised as per P.L. 106-36, already filed – No Changes printed at the top of the form.
b. Use original drawback entry number.
c. Indicate new claim date.
d. Use existing data – no resubmission necessary.
e. Use existing attachments (exhibits) – no resubmission necessary.”
First, we disagree with Chevron’s contention that Houston relied on the “Instructions for Filing 1313(p) Drawback Claims” to deny its claim. Clearly, the “within 3 years” requirement is contained in the drawback statute in § 1313(r) – not in the instructions cited – and it was not necessary for Houston to rely on any authority other than the drawback statute to deny this drawback entry.
Moreover, § 2420(e) of the 1999 Trade Act suspended the application of 1313(r) for drawback entries filed between 6/25/1999 and 12/27/1999, so that drawback claimants could take advantage of the substantive changes to drawback requirements per § 1313(p). The Instructions merely provided guidance on how to obtain a “new claim date” so that a previously filed drawback claim could be considered under the new terms of § 1313(p). Further, since the Instructions are “interpretative rules, general statements of policy, or rules of agency organization, procedure, or practice” the APA does not apply.
Chevron does not provide the legal framework which supports its contention; thus we have supplied the legal underpinnings of the Protestant’s conclusions as necessary. It appears that Chevron is relying on § 4(a) of the Administrative Procedure Act (5 U.S.C. § 553(b)) which requires agencies to follow notice and comment procedures for substantive rules. Section 553(b) exempts from these procedures "interpretative rules, general statements of policy, or rules of agency organization, procedure, or practice . . . ." (5 U.S.C. § 553(b)). Since the “Instruction for Filing 1313(p) Claims” do not constitute a substantive rule the notice and comment procedures do not apply.
The Instructions cited do not “establishes a standard of conduct which has the force of law” as a substantive rule was characterized in Pacific Gas & Elec. Co. v. FPC, 506 F.2d 33 (U.S. App. DC 1974). In Pacific Gas & Elec. during a natural gas shortage the Federal Power Commission issued, without notice and comment, a statement of policy regarding how natural gas deliveries should be prioritized. This statement was challenged as violative of 5 U.S.C. § 553. Regarding the difference between a substantive rule and a policy statement the D.C. Circuit stated:
The critical distinction between a substantive rule and a general statement of policy is the different practical effect that these two types of pronouncements have in subsequent administrative proceedings. . . . . A properly adopted substantive rule establishes a standard of conduct which has the force of law.
(Id. at 38). The Court then said that, in contrast to a substantive rule, a general statement of policy “is not finally determinative of the issues or rights to which it is addressed.” (Id). As stated above, the “within 3 years” requirement, that Chevron does not meet, is contained in the drawback statute in § 1313(r) not in the Instructions. Accordingly, it is the language of the statute which establishes the standard of conduct. Moreover, it is the provision in the drawback statute which is finally determinative of the drawback claimant’s rights – not the Instructions. Nothing in the Instructions leads us to believe that drawback claims were denied based on non-compliance with the Instructions.
The Instructions were issued by CBP to advise drawback claimants how to take advantage of the amendments to § 1313(p). In Davis Walker Corp. v. Blumenthal 460 F. Supp. 283 (U.S. Dist. DC 1978) the Department of Commerce used a "trigger price mechanism" (TPM) which, once a “trigger price” was used to monitor the price of imported goods could be measured and initiate antidumping investigations, if warranted. The TPM was challenged as a substantive rule to which the APA rulemaking requirements, 5 U.S.C. § 553, apply. The government argued that the TPM was “an internal agency procedure.” The court in Davis Walker said that the TPM
itself does not establish any restrictions upon the affected industry; rather it serves to aid the Treasury in its administration of the Antidumping Act. The implementation of the TPM does not By its terms set trigger prices as minimum import prices or preclude the importation of goods at less than trigger prices.
(Id. at 292.) The D.C. District Court found that the TPM was a policy statement not a substantive rule:
the TPM does not impose rules or restrictions on the regulated industry or the public, and the Treasury consistently characterized it as a guide to aid the Secretary in the administration and enforcement of the Antidumping Act, . . . .”
(Id. at 294.) Like the TPM in Davis Walker the Instructions do not establish any restrictions nor impose any rules on drawback claimants; rather they served to aid CBP in its administration of the amendments to § 1313(p). The requirements to claim drawback are found only in § 1313, the drawback statute. Consequently, since the requirement that, in order to take advantage of the suspension of § 1313(r), drawback entries must have been filed “within 6 months after the date of the enactment of this Act [6/25/1999]” is in the 1999 Trade Act and not in the Instructions for filing drawback claims, it is not subject to the notice and comment procedures.
HOLDING: The requirement in 19 U.S.C. § 1313(r)(1), that “a drawback entry and all documents necessary to complete a drawback claim, . . . shall be filed . . . within 3 years after the date of exportation . . . of the articles on which drawback is claimed” applies to the instant protested drawback entry filed on 3/13/1997.
Therefore, this Protest should be DENIED in full. In accordance with the Protest/Petition Processing Handbook (CIS HB, January 2002, pp. 18 and 21), you are to mail this decision, together with the Customs Form 19, 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 of the decision. Sixty days from the date of the decision the Office of Regulations and Rulings will make the decision available to CBP personnel, and to the public on the CBP Home Page 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 Rulings Division