DRA-1-06-RR:CR:DR 228093 IOR
Port Director
U.S. Customs Service
2350 N. Sam Houston Parkway East
Houston, TX 77032
ATTN: Robert Keller
Passenger processing/Outbound
RE: Internal Advice; drawback; rejection of claim; 19 CFR 191.24;19 CFR 191.51; 19 CFR 191.52
Dear Sir:
This is in response to an internal advice request submitted by memorandum dated June 26, 1998, pertaining to the rejection of drawback claims.
FACTS:
Manual drawback entry no. BI6-xxxx5325, was submitted to the Houston drawback unit on May 29, 1998. The claimant is Chevron U.S.A. Inc., and the claim was based on 19 U.S.C. §1313(p). The copy of the document submitted with the internal advice request is stamped as "received May 29, 1998", but that stamp is crossed out and there is a second stamp that indicates "received Jun 19, 1998". On May 29, 1998, the entry was received with the related /designated Certificate of Manufacture (CM). The entry was submitted for the purpose of ensuring eligibility for drawback for exports that occurred in early June, 1995.
According to the drawback claimant’s broker, on or about June 11, 1998, the broker received back from Customs the drawback entry no. BI6-xxxx5325 and CM, along with an "Incomplete Drawback Claim Rejection" notice ("rejection notice"), dated June 5, 1998. The rejection notice indicated that the claim was lacking "Certificate of Manufacture and Delivery" and "Applicable Import Entry Number(s)". According to your memorandum, the entry and CM were returned to the Houston Drawback Unit on June 19, 1998, without corrections. The Customs Automated Commercial System (ACS) records indicate that the subject entry was filed on June 19, 1998.
The drawback entry form, CF 331, provides space for the description of the imported duty paid merchandise or drawback products; the quantity/description of merchandise used; the quantity/description of article(s) produced; and the vessel or aircraft upon which the exported merchandise is to be used or consumed. For these items, the drawback claimant has indicated "see attached". In the space for the description and quantity of the articles exported, the drawback claimant has indicated "section V: Refer to attached Summary of Exports."
Attached to the entry form is a certification under 19 U.S.C. §1313(p); a list of quantity of barrels of fuel and other petrochemicals exported, the drawback factor and crude allowed; a summary of exports (which includes the date of export, exporting carrier, unique export identifiers, description of exported merchandise, net quantity of export, schedule B no. and destination); CM no. 7xxx95; and Exhibits A through F. On the summary of exports, for three of the twelve exports, the unique export identifiers show "various" as opposed to a specific number, however for those the airline carrier is identified.
The CM form, also CF 331, provides space for the description of the imported duty paid merchandise or drawback products; the quantity/description of merchandise used; and the quantity/description of article(s) produced. For these items, the drawback claimant has indicated "see attached". The document is blank with respect to information pertaining to the import entry numbers, dates of import and liquidation, port where filed, quantity designated, imported by, and dates of receipt at factory and use in manufacture. In the part of the form specifically pertaining to Certificates of Manufacture and delivery, section VII, the space for "articles delivered to and date delivered" indicates "see attached".
According to your internal advice request, the entry and CM were rejected because when the CM was being input into ACS, an error message was received indicating that one of the seven designated imports exceeded the amount of duty paid. As a result, the CM record was deleted from ACS and both the entry and CM were rejected and returned to the Customs broker.
According to the broker, before submitting the entry, it was checked in a mock ABI claim, and received an "Accepted Error Free" message. It is the broker’s understanding that one of the designated import entries had liquidated at a lower amount than the claimant was aware of, and caused the error when the CM was being entered into ACS. The broker takes the position that the entire claim should not have been rejected, but that the overstated amount should have been disallowed, in which case the exports occurring in early June, 1995, would not have expired without drawback.
In the internal advice request you state that the broker received the acceptance message because only 99% of the overdesignated claim ($48,739.35) was input against the mock claim, whereas 100% ($49,231.67) was actually designated against the CM by the broker. Since the import liquidated with a reduction from the amount originally paid (($49,231.67 reduced to $49,083.93), the claimed amount was accepted for the mock claim, but not the actual CM, which was overdesignated by $147.74.
You ask 1) whether the drawback unit was correct in rejecting the claim; 2) if the rejection was proper, would the entire claim be denied because some exports fall beyond the three year filing requirement and should the broker have filed a corrected claim removing the now untimely exports and making the adjustments to the import entry designations, as necessary so that the rejected claim was made complete; and 3) is it proper to reject claims and Certificates of Manufacture when import entries are over designated?
ISSUE:
Whether the drawback claim was rejected in accordance with Customs Regulations?
LAW AND ANALYSIS:
Generally, section 1313(p) of the United States Code (19 U.S.C. §1313(p)) provides for drawback for certain petroleum derivatives. The drawback statute was substantively amended by section 632, title VI Customs Modernization, Pub. L. No. 103 182, the North American Free Trade Agreement Implementation ("NAFTA") Act (107 Stat. 2057), enacted December 8, 1993. Title VI of Public Law 103 182 took effect on the date of enactment of the Act (section 692 of the Act). According to the applicable legislative history the amendments to the drawback law (19 U.S.C. §1313) are applicable to any drawback entry made on or after the date of enactment as well as to any drawback entry made before the date of enactment if the liquidation of the entry is not final on the date of enactment (H. Report 103 361, 103d Cong., 1st Sess., 132 (1993); see also provisions in the predecessors to title VI of the Act; H.R. 700, 103d Cong., 1st Sess., section 202(b); S. 106, 103d Cong., 1st Sess., section 202(b); and H.R. 5100, 102d Cong., 2d Sess., section 232(b)). The Customs Regulations were revised on March 5, 1998 to implement the amended statutes.
Under 19 U.S.C. §1313(r)(1), as added by section 232 of Public Law 103-182 (and effective as to this protest):
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.... 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.
House Report 103-361 (supra, at p. 130) explains this provision as "set[ting] a period of 3 years from the date of exportation or destruction in which to file a complete claim." This provision is implemented by Customs Regulations 191.51 (19 CFR 191.51).
With respect to a complete claim, 19 CFR 191.51(a) provides:
(1) Complete claim. Unless otherwise specified, a complete drawback claim under this part shall consist 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 under subpart G of this part.
In addition, 19 CFR 191.24(b) sets forth what information is required to be on the Certificate of Manufacture and Delivery:
(1) The person to whom the article or drawback product is delivered;
(2) If the article or drawback product was manufactured or produced under a general manufacturing drawback ruling, the unique computer generated number assigned to the letter of acknowledgment for that ruling, and if the article or drawback product was manufactured or produced under a specific manufacturing drawback ruling, either the unique computer number or the T.D. number for that ruling;
(3) The quantity, kind and quality of imported, duty paid merchandise or drawback product designated;
(4) Import entry numbers, HTSUS number for the imported merchandise to at least the 6th digit (such HTSUS number shall be from the entry summary and other entry documentation for the imported, duty paid merchandise unless the issuer of the certificate of manufacture and delivery received the merchandise under another certificate (either of delivery or of manufacture and delivery), in which case such HTSUS number shall be from the other certificate), and applicable duty amounts;
(5) Date received at factory;
(6) Date used in manufacture;
(7) Value at factory, if applicable;
(8) Quantity of waste, if any, if applicable;
(9) Market value of any waste, if applicable;
(10) Total quantity and description of merchandise appearing in or used;
(11) Total quantity and description of articles produced;
(12) Date of manufacture or production of the articles;
(13) The quantity of articles transferred; and
(14) The person from whom the article or drawback product is delivered.
With respect to the correct calculation of the amount of drawback due, 19 CFR 191.51(b), provides:
Drawback claimants are required to correctly calculate the amount of drawback due. The amount of drawback requested on the drawback entry is generally to be 99 percent of the import duties eligible for drawback. (For example, if $1,000 in import duties are eligible for drawback less 1 percent ($10), the amount claimed on the drawback entry should be for $990. Claims exceeding 99 percent (or 100% when 100% of the duty is available for drawback) will not be paid until the calculations have been corrected by the claimant.) Claims for less than 99 percent (or 100% when 100% of the duty is available for drawback) will be paid as filed, unless the claimant amends the claim in accordance with § 191.52(c).
Based on the regulations, sections 191.51(a), 191.24, and 191.52(a), the subject claim was incomplete as described in 191.51(a). Section 191.52(a) refers to 191.51(a) for the basis of rejection. Although all of the information required by the regulations in 191.51(a) and 191.24(b), that is the information on the entry form and on the CM, may be contained in Exhibits A through F, there is no way to identify which attachment goes with which block of information, and it cannot be determined by a simple review of the forms. As the exhibits are labeled, the claimant could have indicated which exhibit is referred to, in addition to the words "see attached", but chose not to do so. Further, the exhibits contain numeric descriptions of the information shown in the columns, but no numbers correspond to those on the columns of the CF 331. In our review of the entry and attachments, it does not appear that the HTSUS number for the imported merchandise is provided anywhere, and it is required information on the CM under 19 CFR 191.24. Therefore, if the information is provided, but in such a way that the relationship of the information to the forms is incomprehensible, the information may as well not have been provided at all. Therefore, the drawback entry was appropriately rejected under 19 CFR 191.52(a). Please note that section 191.2 (j), defines a "claim" as the drawback entry and related documents required by regulation. Thus, by definition, the rejection of a claim under section 191.52(a) would include rejection of the CM as well, unless the CM was previously filed with Customs.
With respect to rejection based on incorrect calculation of drawback due, section 191.51(b) specifically provides that claims which exceed 99% of duty paid, "will not be paid until the calculations have been corrected by the claimant." Therefore, for calculation, a claimant should be allowed to correct the amount claimed.
Section 191.51(e) of the regulations provides that no extension will be allowed for the untimely filing of a claim unless it is established that Customs was responsible for the untimely filing. In this case, the claim was properly rejected, therefore Customs did not cause the claim to be untimely filed. The untimely filing was due to the claimant’s failure to file a complete claim.
With respect to the denial of a claim when only some of the exports are untimely, it is our position that the claim should not be denied in entirety; however drawback should only be allowed for the portion of the claim that is timely. This decision does not address whether all of the requirements for drawback have otherwise been met, and the merits of the drawback claim should be reviewed prior to the allowance of any drawback.
HOLDING:
A drawback entry filed with incomprehensible attachments constitutes an incompletely filed claim and is grounds for rejection of a claim under 19 CFR 191.52(a). An overstated claim for drawback should not be rejected, however pursuant to 19 CFR 191.51(b), drawback should not be paid until the calculations have been corrected by the claimant.
You are to mail this decision to the internal advice applicant no later than 60 days from the date of this letter. On that date, 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.gov, by means of the Freedom of Information Act, and other methods of public distribution.
Sincerely,
John Durant, Director
Commercial Rulings Division