Customs Ruling HQ H201710 - FLIR Systems, Inc. Application for Further Review of Protest Number 5309-11-100582

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HQ H201710
Jan 05, 2015

Type : • HTSUS :
Related: 225934; H068279; 228272

DRA 4, PRO 2-05
OT:RR:CTF:ER H201710 GGK

Port Director
U.S. Customs and Border Protection
2350 N. Sam Houston Parkway East, Suite 1000
Houston, TX 77032-3126
Attn: Fletcher Benton, Drawback Chief

RE: FLIR Systems, Inc.: Application for Further Review of Protest Number 5309-11-100582

Dear Port Director:

This is in response to the application for further review (“AFR”) of Protest Number 5309-11-100582, filed by FLIR Systems, Inc. (“FLIR”), on August 27, 2011, concerning the denial of its drawback claim. We apologize for the delay in our response. FACTS: FLIR is a company that designs, manufactures and markets thermal imaging infrared cameras. Between December 18, 2007 and October 21, 2008, FLIR imported several shipments of ThermoVision 3000 Multi-Sensor camera systems. Upon arrival in the United States, FLIR filed sixteen different entries covering the shipments of camera systems. The sixteen entries were assigned the following entry numbers: xxx-xxxx7123, entered on December 18, 2007; xxx-xxxx6744, entered on April 23, 2008; xxx-xxxx6850, entered on April 24, 2008; xxx-xxxx8799, entered on May 20, 2008; xxx-xxxx9367, entered on May 28, 2008; xxx-xxxx0407, entered on June 10, 2008; xxx-xxxx1264, entered on June 17, 2008; xxx-xxxx1413, entered on June 23, 2008; xxx-xxxx1736, entered on June 27, 2008; xxx-xxxx5273, entered on August 22, 2008; xxx-xxxx6727, entered on September 15, 2008; xxx-xxxx7147, entered on September 19, 2008; xxx-xxxx7246, entered on September 23, 2008; xxx-xxxx8293, entered on October 9, 2008; xxx-xxxx8350, entered on October 10, 2008; and xxx-xxxx8913, entered on October 21, 2008.

Based on the documents, FLIR procured the camera systems for the Department of Defense for use in Operation Iraqi Freedom (“OIF”) in direct support of wartime activities. At the time of entry, FLIR classified the camera systems under subheading 9808.00.3000, Harmonized Tariff Schedule of the United States (“HTSUS”), which affords duty-free treatment for articles for military departments: materials certified to the Commissioner of Customs by the authorized procuring agencies to be emergency war material purchased abroad. Although FLIR requested duty-free treatment under subheading 9808.00.3000, the company failed to provide the requisite certifications for the entries from the procuring agency, which in this case was the Defense Contract Management Agency (“DCMA”). Without the proper certifications, U.S. Customs and Border Protection (“CBP”) could not accord duty-free treatment to the camera systems. Instead, CBP reclassified the camera systems under HTSUS subheading 9013.80.9000, rate advanced them, and collected duties accordingly at liquidation. Upon liquidation, FLIR filed a protest challenging CBP’s denial of duty-free treatment for multiple entries on October 8, 2009. FLIR did not file a protest for Entry xxx-xxxx7123.

While the October 8, 2009 protest was pending, FLIR filed Drawback Entry xxx-xxxx4057 on December 20, 2010, which requested a refund of the duties paid on the entries of camera systems. Thereafter, on November 29, 2011, CBP denied the October 8, 2009 protest. As justification, CBP explained that the denial of duty-free treatment under HTSUS subheading 9808.00.3000 was based on a “denial” issued by DCMA. Moreover, CBP also denied FLIR’s request to reclassify the camera systems under a different HTSUS subheading in Headquarters Ruling Letter H068279 (December 30, 2010).

Turing to FLIR’s drawback claim, the company now asserts that the imported camera systems are subject to drawback under 19 U.S.C. § 1313(j)(1), or unused merchandise drawback requiring direct identification. Upon review, the Houston Drawback Center denied the drawback claim on March 4, 2011. In denying the drawback claim, the Drawback Center questioned: 1) whether the documentation submitted by FLIR constitutes sufficient proof of export; 2) whether there was an intent to unite the camera systems to the mass of things belonging to some foreign country in accordance with 19 C.F.R. § 191.2(m); and 3) whether FLIR submitted a valid waiver pursuant to 19 C.F.R. § 191.82. Thereafter, FLIR filed the instant protest and request for further review challenging the Drawback Center’s denial of the drawback claim on August 27, 2011.

To conduct our further review of the protest, we are treating Entry xxx-xxxx6744 as representative of the entries designated on the drawback claim. Entry xxx-xxxx6744 covers several camera systems, which are subject to the drawback claim. At the time of entry summary, FLIR submitted Import Invoice 22508054 (“Import Invoice”), which is issued by FLIR Systems AB (“FLIR Sweden”) and dated April 16, 2008. The Import Invoice identifies the shipment of “THV 3000 Multisensor Package[s].” In addition, FLIR provided Certificates of Conformity issued by FLIR Sweden and dated April 18, 2008. Each Certificate of Conformity is associated with a single camera system covered by the Import Invoice and identifies the camera system by product description, “THV 3Q MS,” and a unique serial number. The relevant Certificates of Conformity submitted with Entry xxx-xxxx6744 lists the following unique serial numbers: 31380048 (“Camera System 48”), 31380049 (“Camera System 49”), and 31380050 (“Camera System 50”).

In addition to the Import Invoice and Certificates of Conformity, FLIR submitted a Receiving Report generated by the Department of Defense’s web-based electronic invoicing tool known as Wide Area Work Flow, or WAWF. The Receiving Report, which is identified by Shipment Number FLR0010, indicates that FLIR shipped multiple units of “THV 3000 Multisensor Package[s]” to the U.S. military on May 5, 2008. The units are identified individually by their unique serial numbers in the comments section of the Receiving Report. Included amongst the serial numbers listed are the unique serial numbers for Camera System 48, Camera System 49 and Camera System 50.

Upon delivery to the U.S. military, Camera System 48, Camera System 49 and Camera System 50 were deployed for use in Operation Iraqi Freedom. The U.S. military submitted several documents, including a properly signed certification that states all documents submitted are true and correct copies of the official U.S. Government’s documentary evidence of the disposition of the camera systems. See November 3, 2014 Memorandum, Subject: Statement of Documentation, issued by the Department of the Army. In particular, three documents are relevant to tracing the movement of the camera systems: the Deployment Tracking Record, the Aircraft Load Plan, and the Mission Detail Report.

In deciphering these documents we first note that International Civil Aviation Organization (“ICAO”) codes are used to identify locations. For example, the Deployment Tracking Record includes two columns labeled as “CONUS Departure Location” and “OCONUS Destination.” For these documents, the acronym “CONUS” refers to “Continental United States” and the acronym “OCONUS” refers to “Outside the Continental United States.” Therefore, the ICAO codes listed in the CONUS Departure Location column identifies a military base located in the continental United States and the ICAO codes listed in the OCONUS Destination column identifies a military based located outside of the Continental United States. In tracing the ICAO codes associated with the camera systems we are examining, we find that Camera System 48, Camera System 49 and Camera System 50 departed from a Continental United States (“CONUS”) Military Base for an OCONUS Destination, specifically, an Undisclosed Airbase in Operation Iraqi Freedom (“OIF”) Area of Operation.

Turning to the individual documents, we note that the Deployment Tracking Record identifies the unique serial number for each camera system. Moreover, the Deployment Tracking Record assigns a Mission ID Number and Transportation Control Number (“TCN”), with correlating Pallet ID number (“Pallet ID”), to each camera system. For Camera System 48 and Camera System 49, the assigned Mission ID Number is AVxxxxxx6242. The assigned TCN for Camera System 48 is xxxxxxxxxxx3140XX and the assigned Pallet ID is PLT-204. The assigned TCN for Camera System 49 is xxxxxxxxxxx3160XX and the assigned Pallet ID is PLT-206. Finally, Camera System 50 is assigned the following: Mission ID Number AMxxxxxx5220, TCN xxxxxxxxxxx3040XX, and Pallet ID PLT-195.

The second document of relevance is the Aircraft Load Plan, which shows the specific placement of cargo loaded onto military aircrafts for transportation. Aircraft Load Plans are identified by a Mission ID Number. Cargo assigned for loading onto the aircraft is identified by TCN and Pallet ID. There are two Aircraft Load Plans submitted for the camera systems we are examining. The first Aircraft Load Plan is identified by Mission ID Number AMxxxxxx6241. Included amongst the TCNs and Pallet IDs found on the first Aircraft Load Plan are the following: xxxxxxxxxxx3140XX and PLT-204; and xxxxxxxxxxx3160XX and PLT 206. Furthermore, the first Aircraft Load Plan indicates that the aircraft was scheduled to depart from a CONUS Military Base on August 28, 2008, for an Undisclosed Airbase in OIF Area of Operation. The second Aircraft Load Plan is identified by Mission ID Number AJxxxxxx522. TCN xxxxxxxxxxx3040XX and Pallet ID PLT 195 appears on the second load plan. Finally, the second Aircraft Load Plan indicates that the aircraft was scheduled to depart from a CONUS Military Base on August 7, 2008, for an Undisclosed Airbase in OIF Area of Operation.

Lastly, we turn to the Mission Detail Reports. The Mission Detail Reports submitted by FLIR document the movement of a military aircraft while carrying out its mission. Information included on the Mission Detail Report includes Mission ID numbers, arrival and departure information for each segment of the flight, and reasons for each stop. Moreover, a series of codes is sometimes used on the Mission Detail Report to indicate the reason for each segment of flight. Relevant codes are as follows:

O: Onload U: Unload R: Refuel C: Crew Rest or Change

In place of codes, a Mission Detail Report may simply state onload and offload locations for cargo. See, e.g., Mission Detail Report identified by Mission ID Number AJxxxxxx5220.

The first Mission Detail Report is primarily identified by Mission ID Number AVxxxxxx6242. In addition, the first Mission Detail Report references Mission ID Number AJxxxxxx6241 and AMxxxxxx6241 in the body of the document. Turning to the flight information, we note that the first Mission Detail Report contains scheduled flight data, estimated flight data and actual flight data. According to actual flight data, the military aircraft carrying out the mission arrived at a CONUS Military Base, on August 28, 2008, and departed the base on the same day. Prior to its departure, cargo was onloaded into the aircraft, as indicated by code “O.” After departing the CONUS Military Base, the aircraft made one stop to refuel and rest or change crew, as indicated by the codes “R” and “C.” Finally, the aircraft arrived at the Undisclosed Airbase in OIF Area of Operation, on August 29, 2008, where the code “U” indicates cargo was unloaded upon arrival. The second Mission Detail Report is primarily identified by Mission ID Number AJxxxxxx5220 and references Mission ID Number AMxxxxxx5220 in the body of the document. In terms of the flight data, the second Mission Detail Report only contains actual flight data. Based on the document, the military aircraft carrying out the mission arrived at a CONUS Military Base, on August 7, 2008, and onloaded cargo. Thereafter, the aircraft departed the CONUS Military Base on the same day and made two stops for refueling and crew change. Finally, the aircraft arrived at the Undisclosed Airbase in OIF Area of Operation, on August 8, 2008, where the mission terminated and cargo was offloaded.

Upon their arrival in OIF, the military integrated the camera systems at issue with other associated equipment. See December 2, 2010 Memorandum, Subject: Clarification of FLIR Systems T3000 Drawback Claim, issued by the Department of the Army. Thereafter, the assembled systems were deployed by the military in combat operations. According to the military, it is not uncommon for these camera systems to be destroyed due to their use during such operations. Any surviving camera systems would have been transferred to Operation Enduring Freedom (“OEF”) once the U.S. military left OIF. The military further confirms that these camera systems will not be returned to the United States due to the likelihood of their destruction as a result of use and due to the high costs of transportation. See July 7, 2014 email from the Department of the Army re: FLIR Sensors Drawback Consideration T3000 Claim W9113M-07-D-004. Finally, the U.S. military issued a letter dated January 13, 2010, which states that the Government has not and will not claim drawback on the camera systems at issue; nor will the Government issue Certificates of Delivery to any person regarding the camera systems. See January 13, 2010 letter, Subject: Contract W9113M-07-D-0004, FLIR Systems intent to claim customs duties drawback/reimbursement, issued by the Department of the Army, Space and Missile Defense Command, and signed by the Contracting Officer.

To close, we note that the Drawback Center identified a question as to whether the camera systems were impermissibly “used” prior to exportation; thereby, disqualifying them for drawback under 19 U.S.C. § 1313(j)(1). Specifically, there was confusion regarding whether the camera systems were integrated with other associated equipment before leaving the United States. The military’s clarification that integration occurred only after the camera systems were exported, however, resolved the Drawback Center’s concern regarding impermissible use prior to exportation. Therefore, the Drawback Center withdrew its denial on that point and we will not address the question of “use” as a part of this further review. ISSUES:

1. Whether the documentation submitted by FLIR constitutes sufficient proof of export.

2. Whether there was an intent to unite the camera systems to the mass of things belonging to some foreign country in accordance with 19 C.F.R. § 191.2(m).

3. Whether FLIR submitted a valid waiver pursuant to 19 C.F.R. § 191.82.

LAW AND ANALYSIS:

As an initial matter, we note that the denial of a drawback claim is a protestable matter under 19 U.S.C. § 1514(a)(6). In this case, the Houston Drawback Center denied the drawback claim in full on March 4, 2011. The protest was timely filed on August 27, 2011, within the 180-day filing deadline set forth under 19 U.S.C. § 1514(c)(3). The Drawback Office subsequently forwarded the protest to this office for further review. The criterion for further review has been satisfied in that this matter involves questions of fact which have not been ruled upon by CBP. See 19 C.F.R. § 174.24 (b), and 19 C.F.R. § 174.26(b)(1)(iv). Specifically, we will determine whether the cumulative evidence submitted by FLIR, including official military documents, sufficiently proves that the merchandise at issue was exported for drawback purposes. Therefore, we will examine the merits of the case.

1. Whether the documentation submitted by FLIR constitutes sufficient proof of export.

Generally, 19 U.S.C. § 1313(j)(1) authorizes drawback if imported merchandise on which was paid any duty, tax, or fee imposed under federal law because of its importation is, within three years of the date of importation, exported or destroyed under CBP’s supervision and was not used in the United States before such exportation or destruction. Pursuant to the statutory requirement, a threshold issue is always whether the imported merchandise was exported before drawback is allowed. Under 19 C.F.R. § 191.2(m), exportation is defined as “the severance of goods from the mass of goods belonging to this country, with the intention of uniting them with the mass of goods belonging to some foreign country.” See also Swan and Finch Co. v. United States, 190 U.S. 143, 145 (1903) (explaining that “‘[a]s the legal notion of emigrating is a going abroad with an intention of not returning, so that of exportation is a severance of goods from the mass of things belonging to this country with an intention of uniting them to the mass of things belonging to some foreign country or other’”) (internal citations omitted). Based on this definition, an exportation is established by a two-pronged analysis: 1) that the goods were severed from the mass of things belonging to this country; and 2) that there was an intent to unite the goods to the mass of things belonging to some foreign country.

The first prong is construed to mean that “the goods in question have been physically carried out of the country of exportation.” National Sugar Refining Co. v. United States, 488 F. Supp. 907, 908 (Cust. Ct. 1980) (citing to United States v. National Sugar Refining Co., 39 C.C.P.A. 96, 101 (1951)), aff’d, 666 F.2d 566 (C.C.P.A. 1981). In order to establish compliance with the first prong, CBP requires evidence that the merchandise exited the United States. Pursuant to 19 C.F.R. § 191.75, when a supplier of merchandise to the Government seeks to claim drawback, exportation shall be established by following the procedures established under 19 C.F.R. § 191.72 and 19 C.F.R. § 191.73. We note that 19 C.F.R. § 191.73 establishes the export summary procedure. Regardless of whether a drawback claimant elects to use the export summary procedure, the regulation specifically requires the claimant to retain supporting evidence of exportation, including actual evidence of exportation as described in 19 C.F.R. § 191.72(a). 19 C.F.R. § 191.73(c)(1). Moreover, actual evidence of exportation must be retained by the claimant and produced for CBP’s review upon demand. See 19 C.F.R. § 191.73(c)(2). Here, FLIR elected to utilize the export summary procedure to support its drawback claim. Upon demand by the Houston Drawback Center, FLIR is required to submit supporting evidence of exportation.

CBP regulations require that “[s]upporting documentary evidence shall establish fully the date and fact of exportation and the identity of the exporter.” 19 C.F.R. § 191.72. Information that may be used to establish evidence of exportation includes, but is not limited to, “an originally signed bill of lading, air waybill, freight waybill, Canadian Customs manifest, and/or cargo manifest, or certified copies thereof, issued by the exporting carrier etc.” 19 C.F.R. § 191.72(a). However, this regulation does not set forth specific requirements to support the date and fact of export. Rather, the regulation gives examples of documentary evidence that are sufficient to establish the date and fact of exportation. In HQ 228272 (November 8, 1999), CBP explained that alternative methods may be used to establish date and fact of export other than those listed at 19 C.F.R. § 191.72(a) through (e), as long as the alternative methods firmly establish date and fact of export.

For the drawback claim at bar, the Houston Drawback Center questioned whether the documentation submitted by FLIR constitutes acceptable proof of export. First, we note that under 19 C.F.R. § 191.72(a), a drawback claimant is required to provide either original documentary evidence issued by the exporting carrier or certified copies thereof. Here, the exporting carrier of the merchandise is the U.S. military. Therefore, commercial documents, such as bills of lading, are not available to evidence exportation. Instead, the military provided a Deployment Tracking Record, Airlift Load Plans, and Mission Detail Reports as evidence. Along with these documents, the U.S. military provided CBP with a signed memorandum certifying that the documents provided are true and correct copies of the official U.S. Government documentary evidence of the disposition of subject assets. See November 3, 2014 Memorandum, Subject: Statement of Documentation, issued by the Department of the Army. We find that the memorandum issued by the U.S. military properly certifies that the Deployment Tracking Record, Airlift Load Plans, and Mission Detail Reports are true and correct copies and satisfies the certification requirements under 19 C.F.R. § 191.72(a). Consequently, we accept these documents as certified copies of original documentation issued by the exporting carrier, the U.S. military.

Next, we examine the documents in their totality to determine whether they sufficiently establish the date and fact of exportation for the camera systems. Again, we are treating Entry xxx-xxxx6744 as representative of the entries designated on the drawback claim. Based on the entry summary documentation provided by FLIR, ThermoVision 3000 Multi-Sensor camera systems are individually identified by unique serial numbers found on the Certificates of Conformity issued by FLIR Sweden. The relevant Certificates of Conformity, dated April 16, 2008, accompanying Entry xxx-xxxx6744 identify the unique serial numbers for Camera System 48, or 31380048; Camera System 49, or 31380049; and Camera System 50, or 31380050. Using these unique serial numbers, we can follow the movement of the camera systems from entry to exportation.

After being released from CBP custody, the documents provided by FLIR evidence that the camera systems were delivered by FLIR to the U.S. military. In particular, the WAWF Receiving Report, identified by Shipment Number FLR0010, indicates that FLIR shipped multiple camera systems to the U.S. military on May 5, 2008. Under the comments section of the Receiving Report, the unique serial numbers for the camera systems are listed, amongst which are the unique serial numbers for Camera System 48, Camera System 49, and Camera System 50. Therefore, we can conclude that FLIR delivered Camera System 48, Camera System 49, and Camera System 50 to the Department of Defense after their importation into the United States.

Once received into inventory, the Department of Defense utilized the unique serial numbers for each camera system to document their movement from the continental United States to OIF. Specifically, the Deployment Tracking Record is a tracking document that lists the camera systems by their unique serial number and assigns three pertinent military identifiers to each: a Mission ID Number; a Transportation Control Number, or TCN; and a correlating Pallet ID Number, or Pallet ID. Generally, Mission ID Numbers are unique identifiers used to distinguish actions, such as an action to transport cargo from the United States to U.S. military bases abroad. Likewise, transportation control numbers and correlating pallet ID numbers are assigned to cargo that is packaged and ready for immediate transportation. For Camera System 48, the Mission ID Number is AVxxxxxx6242, the assigned TCN is xxxxxxxxxxx3140XX, and the correlating Pallet ID is PLT-204. For Camera System 49, the Mission ID Number is also AVxxxxxx6242, the assigned TCN is xxxxxxxxxxx3160XX, and the correlating Pallet ID is PLT-206. Lastly, for Camera System 50, the Mission ID Number is AMxxxxxx5220, the assigned TCN is xxxxxxxxxxx3040XX, and the correlating Pallet ID is PLT-195.

By tracing the TCN and Pallet ID numbers assigned to the camera systems, we can determine when and where the camera systems were loaded onto military transport aircrafts for deployment and their intended destinations. This is done by looking at Aircraft Load Plans, which document the exact placement of cargo loaded onto military aircrafts for transportation. Each Aircraft Load Plan is assigned a mission number, lists the date of departure, and identifies the departure and destination airfields for the cargo. Moreover, the Aircraft Load Plan identifies the cargo being transported by its assigned TCN and Pallet ID. The first Aircraft Load Plan submitted by FLIR is assigned Mission ID Number AMxxxxxx6241 and specifies the departure airfield as a CONUS Military Base and the destination airfield as an Undisclosed Airbase in OIF Area of Operation. The scheduled date of departure for the cargo is August 28, 2008. The list of cargo covered by the first Aircraft Load Plan includes TCN xxxxxxxxxxx3140XX and Pallet ID PLT-204, which is assigned to Camera System 48, and TCN xxxxxxxxxxx3160XX and Pallet ID PLT-206, which is assigned to Camera System 49. Based on this document, we conclude that Camera System 48 and Camera System 49 were loaded onto a military aircraft scheduled to depart from the United States on August 28, 2008, for an Undisclosed Airbase in OIF Area of Operation. Similarly, the second Aircraft Load Plan submitted by FLIR is assigned Mission ID Number AJxxxxxx522 and specifies the departure airfield as a CONUS Military Base, and the destination airfield as an Undisclosed Airbase in OIF Area of Operation. The scheduled date of departure for the cargo is August 7, 2008. The list of cargo covered by the second Aircraft Load Plan includes TCN xxxxxxxxxxx3040XX and Pallet ID PLT-195, which is assigned to Camera System 50. Therefore, based on this document we surmise that Camera System 50 was loaded onto a military aircraft scheduled to depart from the United States on August 7, 2008, for an Undisclosed Airbase in OIF Area of Operation.

Although the Aircraft Load Plans identify the date of exportation and final destination for the camera systems, they are insufficient to evidence actual fact of exportation. This is because the Aircraft Load Plans only establish that the camera systems were loaded onto aircrafts. Whether the aircrafts actually left the United States for their intended foreign destinations is not established. In summary, the Aircraft Load Plans are only sufficient to establish the identity of the exporter, the U.S. military, and an intent to export the camera systems. In order to establish the actual fact of exportation, however, we have to look at the Mission Detail Reports.

The Mission Detail Reports submitted by FLIR document the actual movement of a military aircraft when carrying out a mission. The primary identifier found on the Mission Detail Reports are mission numbers. As previously explained, mission numbers are used by the military to distinguish military actions. Therefore, each mission number correlates to a specific military action. However, a specific military action may have more than one mission number assigned. This is because different components of the military often work together to carry out a military action. Each military component that takes part in carrying out the action may assign a different mission number. For the camera systems at issue, the Deployment Tracking Record provides a Mission ID Number that is assigned to each camera system. Alternatively, the Aircraft Load Plans identify a second Mission ID Number associated with the camera systems. Based on this information, we summarize that the military mission to transport Camera System 48 and Camera System 49 from the United States to an undisclosed OIF airbase was assigned Mission ID Number AVxxxxxx6242, found on the Deployment Tracking Record, and Mission ID Number AMxxxxxx6241, found on the Aircraft Load Plan. In turn, the military mission to transport Camera System 50 from the United States to Iraq was assigned Mission ID Number AMxxxxxx5220, found on the Deployment Tracking Record, and Mission ID Number AJxxxxxx522, found on the Aircraft Load Plan.

Turning to the first Mission Detail Report, the identifying Mission ID Numbers found on the document are AVxxxxxx6242, AJxxxxxx6241, and AMxxxxxx6241. Of these three Mission ID Numbers, two can be traced back to Camera System 48 and Camera System 49 using the documents we have available. Specifically, AVxxxxxx6242 is the Mission ID Number assigned to both systems on the Deployment Tracking Record and AMxxxxxx6241 is the Mission ID Number found on the Aircraft Load Plan covering both systems. Therefore, we can conclude that the first Mission Detail Report documents a military action involving Camera System 48 and Camera System 49. According to the actual flight details found on the first Mission Detail Report, a military aircraft picked up cargo at a CONUS Military Base on August 28, 2008. The aircraft then traveled to an Undisclosed Airbase in OIF Area of Operation, where cargo was offloaded on August 29, 2008. Although the aircraft made several stops between leaving the United States and arriving at the U.S. military base abroad, no cargo was onloaded or offloaded during those stops. Based on all of the above, we can surmise that the cargo onloaded at the CONUS Military Base included Camera System 48 and Camera System 49. Moreover, the cargo offloaded at the Undisclosed Airbase in OIF Area of Operation also included the aforementioned camera systems.

Similarly, the second Mission Detail Report includes two identifying Mission ID Numbers: AJxxxxxx5220 and AMxxxxxx5220. Here, we note that AMxxxxxx5220 is the Mission ID Number assigned to Camera System 50 on the Deployment Tracking Record. Therefore, we can conclude that the second Mission Detail Report documents a military action involving Camera System 50. According to the actual flight details found on the second Mission Detail Report, a military aircraft picked up cargo at a CONUS Military Base on August 7, 2008. The aircraft then traveled to an Undisclosed Airbase in OIF Area of Operation, where cargo was offloaded on August 8, 2008. Although the aircraft also made several stops between leaving the United States and arriving at the U.S. military base abroad, no cargo was onloaded or offloaded during those stops. Consequently, we conclude that the cargo onloaded at the CONUS Military Base and subsequently offloaded at the Undisclosed Airbase in OIF Area of Operation included Camera System 50.

To summarize, it is possible to determine from the Mission Detail Reports that the camera systems were delivered to an Undisclosed Airbase in OIF Area of Operation. Therefore, the Mission Detail Reports establish the fact of exportation. Moreover, the reports also reinforce the date of exportation by confirming the date that the camera systems left the continental United States and arrived at the U.S. military base abroad. For Camera System 48 and Camera System 49, the date of exportation occurred on August 28, 2008, while Camera System 50 was exported on August 7, 2008. Finally, the Mission Detail Reports confirm the identity of the export for the camera systems as the U.S. military. Consequently, when examined together, the Deployment Tracking Record, the Aircraft Load Plans, and the Mission Detail Reports constitute sufficient proof of exportation demonstrating that the camera systems were severed from the mass of things belonging to this country.

2. Whether there was an intent to unite the camera systems to the mass of things belonging to some foreign country in accordance with 19 C.F.R. § 191.2(m). In addition to proving that the merchandise was severed from the mass of things belonging to this country, exportation for drawback purposes also requires a showing that there was an intent to unite the goods to the mass of things belonging to some foreign country. See 19 C.F.R. § 191.2(m); Swan and Finch Co. v. United States, 190 U.S. 143, 145 (1903). Generally, the controlling factor in this analysis is the intention of the parties at the time of shipment. Nassau Distributing Co., Inc. v. United States, 29 Cust. Ct. 151, 153 (1952) (internal citations omitted). Thus, “so long as an immediate bona fide purpose to seek a foreign market coincides with a bona fide act of shipment later changes in either the intent or destination have no effect upon the original character of the act as an exportation.” Id. at 154 (quoting United States v. National Sugar Refining Co., 39 C.C.P.A. 96, 100 (1951)). Alternatively, a situation may arise where the intent to unite the goods with the mass of things belonging to a foreign country does not exist at the time of shipment but nevertheless results in an exportation due to subsequent events. Specifically, merchandise which, after its initial shipment, is intended to be or in fact is diverted into the commerce of an intermediate country, becomes an export of that intermediate country. Bethlehem Steel Corp. v. United States, 551 F. Supp. 1148, 1149 (Ct. Int’l Trade 1982) (citations omitted) (finding that imported, duty-paid merchandise moving between two U.S. ports by means of transshipment through Canada was exported because the merchandise was offered for sale in Canada). The contingency of diversion sufficient to negate the original intent at the time of shipment, however, must have a realistic basis in fact and not be mere conjecture. Id. (internal quotations omitted) (citing Hugo Stinnis Steel & Metals Co. v. United States, 80 Cust. Ct. 175, 192 (1978), aff’d, 599 F.2d 1037 (1979)). To summarize, in order to unite goods to the mass of things belonging to another country for purposes of exportation, there must be an intended bona fide purpose to seek a foreign market or an actual diversion of the merchandise into the commerce of an intermediate country.

In denying the drawback claim, the Houston Drawback Center noted that FLIR provided no information regarding the eventual disposition of the camera systems. Specifically, even if the camera systems were shipped to OIF and OEF, it is unclear whether the military will ultimately bring these camera systems back to the United States once their overseas mission is complete. Therefore, there is a question as to whether there is an intent to unite these camera systems with the mass of things belonging to some foreign country. See HQ 225934 (June 12, 1995) (finding that there is no intent to unite luggage, which temporarily leaves the United States and is destined for return, with the mass of things belonging to a foreign country). Thus, we sought clarification with the military. For the camera systems at issue in the instant drawback claim, the military has confirmed that due to the nature of their use while in OIF and OEF, most will be destroyed or deemed unusable. See July 7, 2014 email from the Department of the Army re: FLIR Sensors Drawback Consideration T3000 Claim W9113M-07-D-004. Moreover, the military has asserted that any camera system not destroyed will remain in OIF and OEF and will not be brought back to the United States. Id. Consequently, the exportation requirement that there is an intent to unite the goods to the mass of things belonging to another country is satisfied. C.f. T.D. 78-422 (August 1, 1978) (holding that railway cars manufactured in the United States are united with the mass of goods of a foreign country if it can be demonstrated that the cars are intended for domestic use in the foreign country, which is not incidental to use in international traffic).

3. Whether FLIR submitted a valid waiver pursuant to 19 C.F.R. § 191.82.

The final issue raised by the Houston Drawback Center when denying the drawback claim was whether the January 13, 2010 letter issued by the military sufficiently satisfied the waiver requirement pursuant to 19 C.F.R. § 191.82. Under 19 C.F.R. § 191.82, the exporter is entitled to claim drawback. However, the regulation allows the exporter to waive its right to claim drawback and assign such right to the importer by way of certification. Id. The certification required must affirm that the exporter has not and will not assign the right to claim drawback on the particular exportation to any other party. Id. With regards to the drawback claim at issue, the U.S. military is the exporter of the camera systems. Therefore, the military retains the right to claim drawback but has the ability to waive its right in favor of FLIR.

To satisfy the waiver requirement under 19 C.F.R. § 191.82, FLIR produced a letter dated January 13, 2010, which is signed the Contracting Officer for the camera systems. The letter contains the relevant language that waives the government’s right to claim drawback on the camera systems. Moreover, the letter confirms that the government has not and will not issue a certificate of delivery for the camera systems to any parties. In examining this letter, the Drawback Center did not question the sufficiency of the waiver language. Rather, the Drawback Center questions whether the individual issuing the letter had the authority to waive the right to claim drawback on behalf of the government. Due to the Drawback Center’s concern, we reached out to the U.S. military for confirmation.

In response to our inquiry, the U.S. military explained that procurement matters are generally handled by contracting officers. The authority of a contracting officer to contract on behalf of the military is set forth in a warrant, which includes any limitations of authority. Therefore, so long as a contracting officer operates within the limitations of his warrant, he or she may contract on behalf of the military. Here, the procurement contract at issue was executed by the Contracting Officer on behalf of the U.S. military. According to his warrant, the Contracting Officer had sufficient authority to not only enter into the procurement contract with FLIR but also to waive any drawback rights resulting from the contract. In light of this clarification, we are satisfied that the Contracting Officer had the authority to waive drawback rights on behalf of the U.S. military and that the January 13, 2010 letter satisfies the waiver requirement under 19 C.F.R. § 191.82.

HOLDING:

Accordingly, the protest shall be GRANTED for any portion of the drawback claim where a designated camera system can be traced from importation to exportation using the documents discussed above.

In accordance with Sections IV and VI of the CBP Protest/Petition Processing Handbook (HB 3500-08A, December 2007, pp. 24 and 26), you are to mail this decision, together with the CBP Form 19, to the Protestant no later than 60 days from the date of this letter. Sixty days from the date of the decision, the Office International Trade, 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 and Trade Facilitation Division