DRA 1-02 OT:RR:CTF:ER
H272816 KF
Port of San Francisco
U.S. Customs and Border Protection
555 Battery Street
San Francisco, CA
Attn: Karen Cheung, Drawback Office
RE: Notice of Intent to Export, Destroy, or Return Merchandise for Purposes of Drawback; 191 C.F.R. § 191.35; 19 C.F.R. § 191.36.
Dear Ms. Cheung:
This is in response to your memorandum, dated January 5, 2016, forwarding a request for internal advice pursuant to 19 C.F.R. § 177.11(a) from CITTA Customs Brokerage (“CITTA”) as to the sufficiency of evidence to prove timely submission of United States Customs and Border Protection (“CBP”) Form 7553, Notice of Intent to Export, Destroy, or Return Merchandise for Purposes of Drawback (“NOI”); and regarding completion, amendment, and rejection of a NOI.
Our response follows.
FACTS:
CITTA submitted CBP Form 7553, NOI, for its drawback client in early March of 2015 via FedEx. Within two days, the port contacted CITTA by telephone to explain the submitted form was incomplete because it lacked the signature of a broker or preparer. The port noted that an incomplete NOI is deficient for drawback purposes, and would prevent the port from issuing a decision on whether to examine the merchandise. CITTA responded that it would provide the port with a duly signed NOI by fax.
CITTA exported the merchandise corresponding to its incomplete NOI on March 11, 2015. On March 25, 2015, the port learned of the cargo’s exportation without a completed NOI. The port signed the incomplete NOI submitted by CITTA and marked the form as received on March 30, 2015. The port noted by hand that the NOI was defective and forwarded the NOI to your office for review.
Your office concluded the NOI was not effectively submitted due to the absence of a signature. The port additionally concluded that had the form not been defective, the NOI was not timely submitted prior to the date of exportation because CITTA failed to use the automated machine at the port to submit a “clock-in copy,” which serves to instantaneously deliver the NOI to examining officers who will render a decision on examination. Your office did not issue a written decision requesting or waiving examination of the exported cargo within two days of receiving CITTA’s incomplete NOI.
CITTA argues that a NOI may be submitted to a port via postal service. CITTA explains that documents mailed with tracking services enable an exporter or broker to definitively identify the date on which a NOI is delivered to a port. CITTA concludes that CBP’s obligation to issue an examination decision within two days of receiving an NOI begins to run from the date on which a NOI is delivered by mail. CITTA seeks clarification on whether a postal carrier’s tracking data and delivery confirmation constitutes proof of timely submission.
Your office received a CBP Form 7551, Drawback Entry, from CITTA on April 3, 2015 as part of CITTA’s drawback application. Your office denied drawback on the grounds that CITTA failed to timely submit a completed NOI. Your office seeks clarification on whether a NOI may be deemed submitted without a signature, what is the proper method to submit a NOI, what is the port’s obligation to respond upon receiving an incomplete NOI, and whether a NOI may be amended after the corresponding merchandise has been exported or destroyed.
ISSUES:
Whether submission of an incomplete NOI satisfies an exporter’s 19 C.F.R. § 191.35(a) filing obligation.
What is the appropriate method to submit a NOI?
Whether CBP is required to inform an exporter that it rejected a defective NOI.
Whether an incomplete or inaccurate NOI may be amended after the corresponding merchandise is exported or destroyed.
LAW AND ANALYSIS:
Pursuant to 19 C.F.R. § 191.35(a), an exporter claiming drawback for unused merchandise under 19 C.F.R. § 1313(j) must submit a NOI to:
Give Customs the opportunity to examine the merchandise. The claimant, or the exporter, must file at the port of intended examination a [NOI] at least 2 working days prior to the date of intended exportation unless Customs approves another filing period or the claimant has been granted a waiver of prior notice.
Pursuant to 19 C.F.R. § 191.35(b):
The [NOI] shall certify that the merchandise has not been used in the United States before exportation. In addition, the [NOI] shall provide the bill of lading number, if known, the name and telephone number, mailing address, and, if available, fax number and e-mail address of a contact person, and the location of the merchandise.
Upon receipt of an exporter’s NOI, pursuant to 19 C.F.R. § 191.35(c), within two working days CBP must “notify the party designated on the [NOI] in writing of Customs decision to either examine the merchandise to be exported, or to waive examination.” If CBP waives examination or fails to respond within two working days of receiving a NOI, the corresponding “merchandise may be exported without delay.” Id.
Whether submission of an incomplete NOI satisfies an exporter’s 19 C.F.R. § 191.35(a) filing obligation.
A NOI that is incomplete fails to satisfy an exporter’s filing obligations under 19 C.F.R. § 191.35. See Graham Engineering Corp. v. United States, 510 F.3d 1385, 1389 (Fed. Cir. 2007) (finding that submission of a NOI is a condition of compliance with substantive drawback requirements); Guess? Inc. v. United States, 944 F.2d 855, 858 (C.A.F.C. 1991) (finding that drawback is “a statutory privilege due only when enumerated conditions are met”).
CITTA submitted an unsigned NOI to the port. The port informed CITTA that an unsigned NOI was incomplete, and did not an issue an examination decision regarding the subject merchandise.
An exporter’s signature on a NOI is required by the word “certify” in 19 C.F.R. § 191.35(b), which means “to authenticate or verify in writing.” See Black’s Law Dictionary (9th ed. 2009). In 2012, CBP’s Trade Policy and Programs division issued guidance stating that failure to complete a NOI was a basis for “rejecting the [NOI] back to the filer.” Additionally, the instructions promulgated by CBP on completing a NOI (“NOI Instructions”) explicitly require the “signature, title and date [signed] of the person authorized to bind the company to the veracity of the document.” See Form 7553 (Instructions), January 15, 2014, CBP.gov; see also Graham Engineering Corp., 510 F.3d at 1389 (finding that Congress vested CBP with rulemaking authority “[w]ith regard to all of the drawback benefits of section 1313, [because] Congress anticipated the need for specific rules and regulations to be devised in order to assure proper entitlement to statutory benefits”). We therefore find that a NOI lacking a signature is incomplete, failing to satisfy the certification requirement of 19 C.F.R. § 191.35(b).
CBP may deny drawback to an applicant who exports merchandise without submitting a duly executed NOI because the statutory requirements for a drawback claim under 19 C.F.R. § 1313(j) will not be satisfied. See HQ 230141 (June 9, 2004); and HQ 230122 (February 10, 2004). Receipt of drawback is “expressly conditioned, by statute, upon compliance with [applicable] rules and regulations.” See United States v. Lockheed Petroleum Services, Inc., 709 F.2d 1472, 1476 (Fed. Cir. 1983); Hartog Foods Int’l, Inc. v. United States, 291 F.3d 789, 793 (Fed. Cir. 2002) (“[d]rawbacks are a privilege, not a right”). CBP may also deny drawback to an applicant who submits an incomplete NOI, rendering the submission defective for the purposes of 19 C.F.R. § 191.35. See HQ 230089 (May 26, 2004) (“failure to file the proper notice, deprives the Government of the ability to verify the identity of the merchandise being exported, and the condition of the merchandise…for purposes of the drawback statute”).
What is the appropriate method to submit a NOI.
The NOI Instructions require CBP Form 7553 to be “presented to CBP prior to any action taken by the company.” See Form 7553 (Instructions), January 15, 2014, CBP.gov. A NOI is submitted to a port when presented to an examining officer for signature. See HQ 230141 (June 9, 2004) (discussing “evidence of the dates the NOI’s were presented to CBP”).
CITTA maintains that a NOI may be delivered to a port by postal service, for which the delivery receipt serves as proof of timely submission regardless of when the form is received by an examining officer. Your office informed CITTA that a delivery receipt from a postal carrier cannot serve as proof of timely submission of a NOI. Your office claims that a postal service delivery receipt may not reflect when a NOI is actually presented to an examining officer, and may prevent the port from examining the subject merchandise if a NOI is delivered to the port’s general mailbox. Your office states that it requires a NOI to be “clocked-in” at an automated machine located within the port as proof of timely submission. Previously, your office issued drawback guidance to exporters indicating that a clocked-in copy was necessary to prove timely submission if the subject merchandise was being destroyed. See Guidance for Drawback Claims & Common Errors, Information Notice No. 728-15-03, July 31, 2015. The Los Angeles/Long Beach Seaport also requires a NOI to be clocked-in at the port. See CBP Form 7553, Notice of Intent to Export, Destroy or Return Merchandise for Purposes of Drawback – Change in Seaport Processing Procedures, Public Bulletin No. LA08-003, January 3, 2008. CITTA claims that a clocked-in copy is not required by any applicable regulation.
CBP’s NOI Instructions state the form may be presented to CBP without being provided to an examining officer in person. See Form 7553 (Instructions), January 15, 2014, CBP.gov. Therefore, a NOI may be presented to CBP in person and by alternative methods. To determine which alternative methods are sufficient to prove timely submission under 19 C.F.R. § 191.35(a), we look to the purpose of submission articulated in the regulation: “[g]iv[ing] Customs the opportunity to examine the [subject] merchandise.”
CBP’s opportunity to examine the merchandise identified in a NOI is restricted to two days by 19 C.F.R. § 191.35(c), creating a short operating window for CBP to exercise its right to conduct an examination. In person submission of a NOI affords CBP a full opportunity to examine the subject merchandise because the NOI is directly received by an examining officer, who date stamps the form as proof of timely submission. If CBP fails to issue a decision requesting or waiving an examination within two days of receiving a NOI, the exporter receives a de jure waiver because they are entitled to proceed with exportation “without delay” and without inspection. See 19 C.F.R. § 191.35(c).
In HQ 228645, CBP determined in the context of liquidation notices that by stamping a notice, CBP provided an “importer with a form of documentary proof that liquidation has taken place.” The act of stamping served to conclusively establish the fact of liquidation attested to by the notice. Similarly, the act of stamping a NOI presented in person serves to conclusively establish the date of its submission to and acknowledgement by an examining officer. The clocking-method preferred by the Port of San Francisco equally serves to conclusively establish the date of a NOI’s submission as the form is automatically acknowledged by the machine which provides to the form to an examining officer.
Fax and E-mail may be appropriate methods of submitting a NOI due to the date-stamped acknowledgement of receipt generated. We note that the NOI Instructions require a facsimile number to be included with a NOI if the form is not submitted in person, so that CBP can issue a decision waiving or requesting an examination by fax. See Form 7553 (Instructions), January 15, 2014, CBP.gov. Similarly, a tracking or delivery receipt generated by submitting a NOI via the postal service may serve as proof of timely submission if the receipt is stamped by a CBP examining officer as proof of acknowledgement. In International Trade in Po-Chien, Inc. v. United States, 3 C.I.T. 17, 18 (1982), the Court of International Trade determined that a protest was not properly filed if it was mailed to a CBP office instead of to the appropriate designated official. A tracking or delivery receipt from a NOI delivered to a port via the postal service is therefore not sufficient to prove the NOI’s acknowledgement by a CBP examining officer. We find that a postal service delivery or tracking receipt will not serve as proof of timely submission unless the receipt is stamped by an examining officer, or, the exporter receives a decision within two days. Though delivery via postal service is not prohibited by the applicable regulations, an exporter who mails a NOI risks denial of their drawback claim if the corresponding tracking or delivery receipt was not stamped by a CBP examining officer.
Whether CBP is required to inform an exporter that it rejected a defective NOI.
CBP is not obligated to issue a decision regarding examination within two working days of receiving an incomplete NOI, pursuant to 19 C.F.R. § 191.35(c), because the document required by 19 C.F.R. § 191.35(b) has not been submitted. See HQ 230089 (May 26, 2004) (“CBP is of the position that no compliance short of actual compliance can be regarded as sufficient compliance”). CBP’s deadline to issue an examination decision will begin to run only upon receipt of a duly executed NOI.
Upon receipt of CITTA’s unsigned NOI, the port contacted CITTA by phone to request a duly executed NOI. CITTA assured the port that it would promptly submit a completed NOI, but failed to do so.
Pursuant to 19 C.F.R. § 191.35(c), CBP is only required to inform an exporter in writing regarding its decision to request or waive an examination. The regulations do not address rejecting a NOI in lieu of issuing an examination decision. Given that CBP’s sole obligation to respond to an exporter regarding a submitted NOI is incurred upon the submission of a duly executed NOI, we find that CBP is not obligated to give an exporter notice of defects within a submitted NOI.
Whether an incomplete or inaccurate NOI may be amended after the corresponding merchandise is exported or destroyed.
CITTA filed a drawback application for merchandise exported subject to an unsigned NOI. Your office denied drawback due to CITTA’s failure to submit a completed NOI as required by 19 C.F.R. § 191.35(a)-(b). Though regulations and precedent do not address amendment of a NOI due to incomplete or inaccurate information, we note that 19 C.F.R. § 191.52(a) instructs CBP to reject an incomplete drawback application:
Upon review of a drawback claim, if the claim is determined to be incomplete (see § 191.51(a)(1)), the claim will be rejected and Customs will notify the filer in writing. The filer shall then have the opportunity to complete the claim subject to the requirement for filing a complete claim within 3 years.
19 C.F.R. § 191.51(a)(1) specifies that a claim or application for drawback must:
[C]onsist of the drawback entry on Customs Form 7551, applicable certificate(s) of manufacture and delivery, applicable Notice(s) of Intent to Export, Destroy, or Return Merchandise for Purposes of Drawback, applicable import entry number(s), coding sheet unless the data is filed electronically, and evidence of exportation or destruction. (emphasis added)
CBP will reject a drawback application if any form or information required by 19 C.F.R. § 191.51(a)(1) is missing. See 19 C.F.R. § 191.52(a). Consequently, we find that a drawback application containing an incomplete NOI will be rejected by CBP. A one-time exception to this rule arises under 19 C.F.R. § 191.36(a), which lists the specific conditions that a drawback application must satisfy in order to excuse an exporter’s failure to submit a NOI. We note that even if the conditions listed in 19 C.F.R. § 191.36(a) are satisfied, CBP retains discretion to deny the drawback application. See 19 C.F.R. § 191.36(c).
If a drawback application is submitted with a completed but erroneous NOI, an exporter may submit information and evidence attempting to remedy the errors or resulting discrepancies with other documents. See HQ W231494 (December 14, 2009). We note that in circumstances where a port waived examination of merchandise subject to a completed but erroneous NOI, CBP has determined that an exporter’s drawback application may not be denied on the basis of inaccuracies or inconsistencies arising from the NOI. See HQ 227944 (October 22, 2001).
HOLDING:
Based on the above, we find that: (1) an incomplete NOI does not satisfy an exporter’s 19 C.F.R. § 191.35 filing obligation; (2) that CBP is not obligated to inform an exporter of defects within a submitted NOI; (3) an exporter may prove timely submission of a NOI by: in-person presentation, clocking-in, Fax, E-mail, or a postal service tracking or delivery receipt, so long as the receipt is stamped by a CBP examining officer, or, the exporter receives a written decision within two days; and (4) an exporter may remedy a drawback application submitted with an incomplete or inaccurate NOI subject to the terms of 19 C.F.R. § 191.36 and 19 C.F.R. § 191.52, respectively.
You are to mail this decision to the Internal Advice requester no later than 60 days from the date of the decision. At that time, the Office of International Trade, Regulations and Rulings, will make the decision available to CBP personnel and to the public on CBP’s website, located at www.cbp.gov by means of the Freedom of Information Act and other methods of public distribution.
Sincerely,
Monika R. Brenner, Acting Chief
Entry Process & Duty Refunds Branch