Assistant Port Director
U.S. Customs Service
2350 n. Sam Houston Parkway E.
Houston, TX 77032-3126
ATTN: Dee Barrientez, Drawback Chief
Re: Jet fuel; multiple drawback claimants; splitting of flight; eligible flight; 19 U.S.C. 1309(a); 19 U.S.C. 1309(b); 19 U.S.C. 1313(p); 19 U.S.C. 1313(v); 19 CFR 191.82
We are in receipt of your request for internal advice by memorandum dated July 9, 2002 regarding drawback claims filed by different claimants for aircraft fuel supplied by different suppliers for different legs of the same flight.
Koch Petroleum Group LP (KPG) has filed a manufacturing drawback claim, AA6-xxxx1269 under the provisions of 19 U.S.C. §1313(p). The exports on which the claim is based are airline flights by several airlines. On the basis of the terms of sale of the jet fuel, your office has concluded that the airline is the exporter of the jet fuel. You state that certificates of delivery are on file transferring the jet fuel from KPG to the airlines. Drawback Notices, CF 7514’s, are provided with the claim, which endorse the right to claim drawback from the airlines to KPG.
The drawback claim is for duty paid on 2,320,314 barrels of crude petroleum, received and used from December, 1995 through September, 1996. Drawback is claimed on the basis of 2,320,314 barrels of jet fuel exported by various airlines, from April 30, 1996 through December 31, 1996. On the summary of exports, the destination of all of the exports is listed as “foreign”.
The list of flights on which a portion of the drawback claim is based is for Northwest Airlines, Inc. (Northwest) flights out of Minneapolis/St. Paul, Minnesota in October, 1996. The list includes for each flight, the flight number, aircraft number, “final destination” gallons of fuel laden and the date of lading. There is also a column headed “foreign destination”, but this is left blank with respect to all flights listed.
The following describes a representative flight included in the drawback claim, from the above list. On October 12, 1996, 8,021 gallons of jet fuel were laden aboard flight number 903, aircraft number 6717 in Minneapolis/St. Paul. This amount of fuel was included in the quantity of merchandise on the CF 7514 by which Northwest endorsed its drawback rights to KPG. The “final destination” of flight number 903 was listed as “IAH” which is the symbol for Houston, Texas.
Upon questioning from the Drawback Office, KPG’s broker provided information from Northwest that flight number 903, aircraft number 6717 refueled in Houston, Texas and continued to Los Angeles, California, where it refueled again and continued on to Narita, Japan. In Houston, 11,025 gallons of jet fuel were laden on board and in Los Angeles, 20,851 gallons of jet fuel were laden on board. The drawback rights to the fuel laden in Houston were endorsed to Mobil by Northwest, and the drawback rights to the fuel laden in Los Angeles were endorsed to Citgo by Northwest.
KPG’s broker indicated that the only way which the drawback claims filed by Mobil and Citgo could be located was to manually review every drawback claim filed by Citgo and Mobil, and such a review was not performed.
One issue raised by the drawback office, is how it can determine the eligibility of a flight when a domestic location is identified as the destination. KPG’s broker’s response is that its practice is to wait for Customs to inquire about the flight, in which case the airline will be asked to provide the information. The second issue raised by the drawback office is whether two or more claimants can claim drawback on the basis of the same deemed exportation shipment.
Whether two or more claimants can claim drawback on the basis of the same deemed exportation shipment.
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. Under section 1313(p)(1), notwithstanding any other provision in section 1313, if:
(A) an article (referred to in section 1313(p) as the “exported article”) of the same kind an quality (as specifically defined in section 1313(p)) as a qualified article is exported;
(B) the requirements set forth in section 1313(p)(2) are met; and
(C) a drawback claim is filed regarding the exported article,
the amount of the duties paid on, or attributable to the qualified article shall be refunded as drawback to the drawback claimant. The “notwithstanding” clause was included in order to overcome the requirements in 19 U.S.C. §§1313(a) and (b) that the export article made by the petroleum refiner be the article that is actually exported, and that it be commercially interchangeable for purposes of §1313(j).
The requirements in section 1313(p)(2), compliance with which is a condition precedent to drawback under section 1313(p), are that the exporter must have: (1) manufactured or produced the qualified article; or (2) purchased/exchanged the same from the manufacturer; or (3) imported a qualified article; or (4) purchased/exchanged an imported qualified article from the importer; and the exportation occurs within 180 days after the date of entry of the imported qualified merchandise or during the manufacturing period or within 180 days after the close of such period. We do not address herein whether the requirements of section 1313(p) have been met, as it is beyond the scope of the internal advice requested.
Under 19 U.S.C. §1309(b), imported articles or articles of domestic manufacture or production, laden as supplies upon any vessel or aircraft of the United States or laden as supplies (including equipment) upon, or used in the maintenance or repair of, any such foreign vessel or aircraft shall be considered to be exported within the meaning of the drawback provisions. Such a lading constitutes a deemed exportation if the aircraft is shown to be engaged in an activity set forth in 19 U.S.C. §1309(a).
Customs Regulations 191.2(m)(2) (19 CFR 191.2(m)(2)) defines “exporter” as that “. . . person who, as the principal party in interest in the export transaction, has the power and responsibility for determining and controlling the sending of the items out of the United States.” The regulation further provides that for §1309(b) purposes, “. . . the exporter means that person who, as the principal party in interest in the transaction deemed to be an exportation, has the power and responsibility for determining and controlling the transaction (in the case of aircraft or vessel supplies under 19 U.S.C. §1309(b), the party who has the power and responsibility for lading the vessel supplies on the qualifying aircraft or vessel).” We do not address the issue of the exporter in this decision because it is not an issue raised by the internal advice request and no transaction documents were provided on which such a determination would be based.
It is the act of lading on a qualified vessel or aircraft that constitutes the deemed exportation under 19 U.S.C. §1309. See Asiatic Petroleum Corp. v. United States, 36 CCPA 9 (1948); and United States v. Gulf Oil Corp., 12 Cust. Ct. 108, aff’d 32 CCPA 133 (1945). See also, Mexican Petroleum v. United States, 2 Cust. Ct. 239, rev’d 28 CCPA 90 (1948) ; Standard Oil of Puerto Rico v. United States, 23 Cust. Ct. 70 (1949); and Socony-Vacuum Oil Co. v. United States, 37 Cust. Ct. 129 (1956).
The drawback regulations, 19 CFR 191.82, provide that the exporter shall be entitled to claim drawback unless the exporter assigns such right to “the manufacturer, producer, importer, or intermediate party.” The regulation requires that “[s]uch certification shall also affirm that the exporter…has not and will not assign the right to claim drawback on the particular exportation…to any other party.” (Emphasis added). With respect to multiple drawback claims, the drawback statute provides in 19 U.S.C. §1313(v) as follows:
Merchandise that is exported or destroyed to satisfy any claim for drawback shall not be the basis of any other claim for drawback; except that appropriate credit and deductions for claims covering components or ingredients of such merchandise shall be made in computing drawback payments.
With respect to the addition of paragraph (v) to the statute, the legislative history states that the paragraph “provides that only one drawback claim per exportation or destruction of goods would be allowed.” (H. Report 103 361, 103d Cong., 1st Sess., 130).
In the facts presented, the flight is eligible because the flight number and aircraft is the same from Minneapolis/St. Paul to Narita, Japan. Because the aircraft during the entire flight is considered to have been engaged in foreign trade under the stated facts and the act of lading fuel onto the eligible aircraft constitutes a deemed exportation, each lading is eligible to be the subject of a separate drawback claim.
By filing a drawback claim based upon a deemed exportation under 19 USC §1309, a claimant asserts that the aircraft or vessel is eligible. Consequently, unless there is evidence of eligibility in the claim it is appropriate to request that evidence from the claimant.
Lading fuel on an eligible aircraft is the exportation for purposes of drawback.
Sixty days from the date of this 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.
Myles B. Harmon
Commercial Rulings Division