OT:RR:CTF:VS H287731 YAG

Director, Petroleum Natural Gas and Minerals CEE
2350 N. Sam Houston Pkwy, Ste. 1000
Houston, TX 77032

RE: NAFTA Certificate of Origin

Dear Center Director:

This is in response to your correspondence, dated June 27, 2017, forwarding to our office a request for internal advice, filed by Neville Peterson LLP, on behalf of their client, [***] ([***] or "the Importer"). At issue is the validity of a North American Free Trade Agreement ("NAFTA") Certificate of Origin provided by the Importer to U.S. Customs and Border Protection ("CBP") with respect to the importation of certain [***] (hereinafter "the imported goods").

Counsel for the Importer has asked that certain information submitted in connection with this internal advice request be treated as confidential. This request for confidentiality is approved. The information contained within brackets and all attachments to this internal advice request, forwarded to our office, will not be released to the public and will be withheld from published versions of this decision.

FACTS:

This internal advice concerns a shipment of the imported goods by the Importer through the Port of Pembina, ND claimed to be eligible for preferential tariff treatment under the NAFTA. The imported goods were produced by [***] at the location of its subsidiary [***] (collectively referred to as "the Producer/Exporter").

On October 31, 2014, CBP issued a CBP Form 28 (Request for Information) to the Importer requesting the NAFTA Certificate of Origin for their imported goods in connection with Entry No. [***], dated January 4, 2014.[1] On November 25, 2014, the Importer supplied a blanket NAFTA Certificate of Origin, dated December 31, 2013, covering the entries from January 1, 2014 to December 31, 2014. However, this Certificate of Origin was signed by the transport company [***] ("the Contractor"), rather than the exporter.[2]

On December 11, 2014, CBP issued a CBP Form 29 (Proposed Notice of Action) denying preferential tariff treatment under the NAFTA and declaring that the Certificate of Origin was not valid because it was signed by a third party Contractor and not [***], the Producer/Exporter. The Importer was given 30 days to provide the correct Certificate of Origin. On January 8, 2015, the Importer submitted its timely response to CBP's Proposed Notice of Action and argued that as an authorized agent of the exporter, with a knowledge of relevant facts, the Contractor had the authority to sign the NAFTA Certificate of Origin already submitted to CBP. The Importer objected to the Proposed Notice of Action and requested CBP not to deny the Importer's claim on the basis of the legal arguments raised. However, on February 25, 2015, CBP issued its Notice of Action. In response, on March 18, 2015, the Importer disputed the action, requested internal advice, and prior disclosure. Within this response, the Importer also provided a corrected NAFTA Certificate of Origin, executed by the Producer/Exporter on March 5, 2015, for the blanket period from January 1, 2014 to December 31, 2014.[3] On November 2, 2015, the Importer repeated its request for internal advice, which was forwarded to our office on June 27, 2017.

It is the position of your office that the Contractor lacked the requisite indicia of authority to act on the Producer/Exporter's behalf because the Producer/Exporter has not provided a formal power of attorney to the Contractor. Further, you state that the valid NAFTA Certificate of Origin must be in the possession of the importer and signed and dated prior to importation. Thus, in your view, the corrected NAFTA Certificate of Origin, issued by the Producer/Exporter and signed/dated at the time of issuance (well after the importation of goods) is not acceptable. You state that the Importer's submission of a new NAFTA Certificate of Origin, with the current date, did not qualify as correctable action permitted under 19 C.F.R. 181.22(c).

On the other hand, the Importer argues that the Contractor was an authorized agent of the Producer/Exporter with knowledge of the relevant facts (based on the existing contract with the Producer/Exporter), and as such the Contractor was an appropriate signatory for the Producer/Exporter's NAFTA Certificate of Origin. To substantiate this argument, the Importer provided a letter, dated January 7, 2015, from the Producer/Exporter indicating that it entered into a contract with the Contractor to provide bulk rail transportation of the imported goods from Canada to the United States. The Producer/Exporter also indicated that the Contractor had knowledge of the imported goods' NAFTA-qualifying status, and in this role, the Contractor executed the initial NAFTA Certificate of Origin provided to CBP.

Moreover, in its response to CBP's supplemental questions, dated February 5, 2015, the Importer described a range of services provided by the Contractor in connection with [***] used in processing at the Producer/Exporter's facility, including: transferring [***] to the Producer's facility [***], transferring [***] from the Producer/Exporter's place of production [***] to the Importer in specifically designed rail cars, completing and distributing shipping manifests and bills of lading required for export, obtaining permits and licensing required to perform contracts for the Producer/Exporter, appointing the Contractor's [***] operators to operate the Producer/Exporter equipment, loading from the Producer/Exporter's [***] to the Contractor's railcars, and preparing paperwork for export which was reviewed and approved by the Producer/Exporter. These operations and the Contractor's involvement in the Producer/Exporter's operations were further confirmed by the Importer's submission to our office, dated May 11, 2018, which also included a letter from the Contractor, dated April 18, 2018, confirming the scope of its responsibilities under the contract with the Producer/Exporter. Nonetheless, a copy of the actual contract was not provided to our office upon request.

Finally, the Importer argues that if CBP maintains its position as to whether the Contractor was an appropriate signatory, then the Contractor-signed NAFTA Certificate of Origin was a defective certificate that may be remedied in accordance with 19 C.F.R. 181.22(c).

ISSUES:

1. Whether an otherwise valid NAFTA Certificate of Origin is invalid because it was not signed by the exporter or the exporter's authorized agent.

2. Does the corrected NAFTA Certificate of Origin satisfy the requirements of Subpart C of Part 181 of the Customs Regulations (19 C.F.R. Part 181, Subpart C)?

LAW AND ANALYSIS:

Under NAFTA, goods produced in Canada, Mexico, or the United States are eligible for preferential tariff treatment upon importation into one of the three countries if they satisfy certain rules. These rules are laid out in the various articles of the NAFTA, and the corresponding regulations are set out in Part 181 of the Customs Regulations (19 C.F.R. Part 181).

With respect to the NAFTA Certificate of Origin, Section 181.21(a) of the Customs Regulations (19 C.F.R. 181.21(a)) states, in pertinent part, that:

In connection with a claim for preferential tariff treatment, or for the exemption from the merchandise processing fee, for a good under the NAFTA, the U.S. importer must make a formal declaration that the good qualifies for such treatment . . . the declaration must be based on a complete and properly executed original Certificate of Origin, or copy thereof, which is in the possession of the importer and which covers the good being imported.

In the instant case, whether the Importer possessed a NAFTA Certificate Origin at the time of the claim is not at issue. The issue is whether the Certificate was complete and properly executed.

1. Whether an otherwise valid NAFTA Certificate of Origin is invalid because it was not signed by the exporter or the exporter's authorized agent.

A Certificate of Origin shall be accepted by the Center Director as valid, provided that the Certificate is completed, signed, and dated in accordance with the requirements of 19 C.F.R. 181.22(b). See 19 C.F.R. 181.22(c). In turn, Section 181.22(b) requires that the Certificate of Origin be on CBP Form 434, another approved form, or in another format approved by CBP; be signed by the exporter or by the exporter's authorized agent having knowledge of relevant facts; and, be in English or the language of the country from which the good is exported.

In this case, the exporter did not execute the NAFTA Certificate of Origin. The Importer argues that a person executing a CBP Form 434 on behalf of an exporter is not required to be in possession of a power of attorney for the Certificate to be valid. The Importer cites Headquarters Ruling Letter ("HQ") 562040, dated July 17, 2002, in support of its argument that the an exporter is not required to be in possession of a power of attorney. In HQ 562040, a blanket NAFTA Certificate of Origin executed by an official of the exporter was found to be valid, despite not being executed pursuant to a power of attorney. CBP stated that the Regulations do not specifically require an authorized agent to hold a formal power of attorney in order to execute the NAFTA Certificate of Origin. Therefore, if the agency relationship and knowledge of the relevant facts were present, the agent of the exporter could validly sign the Certificate of Origin. We note, however, that HQ 562040 dealt with the situation in which the Certificate of Origin was executed by officials of the exporter.

In HQ 562134, dated June 13, 2002, CBP also found that an officer of an importing corporation who had knowledge of the relevant facts may sign a Certificate of Origin because he or she was acting as the authorized agent of the exporter, pursuant to an affidavit submitted for CBP's review, claiming the agency relationship. In HQ 561968, dated August 20, 2002, a corrected NAFTA Certificate of Origin was signed by the employee of the exporter's parent company. CBP accepted a memorandum submitted by the parent company stating that the officer of the parent company, through an interaffiliate agreement, had authority and knowledge to execute the NAFTA Certificate of Origin.

Even though we agree that the Contractor does not need a formal power of attorney from the Producer/Exporter to execute the NAFTA Certificate of Origin, we note that in all of the rulings and decisions cited above, the entities and employees/officials of such entities executing the certificates on behalf of the exporter were related, affiliated, or associated with the exporters. The facts of this case are different. In this case, the NAFTA Certificate of Origin was executed by a third party, not related or affiliated with the Producer/Exporter. There are no affidavits or interaffiliate agreements or memorandums submitted by the Producer/Exporter indicating the agency relationship with the Contractor. Instead, the Importer provided a letter from the Producer/Exporter indicating that it entered into a contract with the Contractor to provide bulk rail transportation of the imported goods from Canada to the United States. The Producer/Exporter simply indicated that the Contractor had knowledge of the imported goods' NAFTA-qualifying status, and in this role, the Contractor executed the initial NAFTA Certificate of Origin provided to CBP. We note that nowhere in this letter is it stated that the Producer/Exporter authorized the Contractor to execute the NAFTA Certificate of Origin. Moreover, to substantiate its assertion that the Contractor had knowledge that the imported goods were originating, the Importer provided a letter from the Contractor and its own summary of the Contractor's responsibilities under the contract with the Producer/Exporter. However, there is no indication how the Contractor acquired knowledge that the imported goods were originating when it was only specifically hired to provide transportation services by the Producer/Exporter. Therefore, we find the Importer failed to show that the Contractor was an authorized agent with knowledge of the relevant facts for purposes of executing the NAFTA Certificate of Origin.

2. Does the corrected NAFTA Certificate of Origin satisfy the requirements of Subpart C of Part 181 of the Customs Regulations (19 C.F.R. Part 181, Subpart C)?

19 C.F.R. 181.22(c) states "if the Center Director determines that a Certificate is ... defective or has not been completed in accordance with paragraph (b) of this section, the importer shall be given a period of not less than five (5) working days to submit a corrected Certificate." See also HQ H239669, dated April 23, 2013. Additionally, pursuant to 19 C.F.R. 181.22(c), the Center Director must accept the corrected Certificate as valid, unless he or she determines that the imported good does not qualify as originating for reasons provided elsewhere in Part 181 of the Regulations.

In this case, the submitted NAFTA Certificate of Origin was not executed by the exporter or a person authorized by the exporter; therefore, it made the Certificate "defective or ... not completed in accordance with paragraph (b) of 19 C.F.R. 181.22." 19 C.F.R. 181.22(c). Section 181.22(c) does not specify what type of "defect" may be corrected. It merely states that, if a Certificate is defective or otherwise fails because it has not been completed in accordance with paragraph (b) of that section, the importer shall have a chance to correct it.

On November 17, 2014, CBP issued guidance clarifying the term "valid NAFTA Certificate of Origin." See CSMS #14-000598, entitled "Valid v. Invalid v. Defective NAFTA Certificate of Origin." In this guidance, CBP stated that a NAFTA Certificate of Origin is valid if it: lists the good in question; covers the period in question; includes the exporter's or his agent's signature; and was in the importer's possession at the time of the claim, as demonstrated by 1) the authorized signature date prior to the date of the preference claim, and 2) submission upon request of a CBP official. A NAFTA Certificate of Origin is invalid if it does not meet the aforementioned requirements. CBP further stated as follows:

The NAFTA Certificate of Origin is defective-and thus may be remedied in accordance with 19 C.F.R. 181.22(c)-if, while meeting the conditions of a "Valid NAFTA Certificate of Origin," above, contains other errors or omissions. These include, but are not limited to the following: illegibility, misclassification, incorrect or missing preference criteria, signature by an individual who cannot legally bind the company, typed or stamped signature, 3rd-country goods (in addition to NAFTA goods), Net Cost field error, single entry Certificate without an invoice or other unique reference numbers, or other similar errors or omissions.

Your office claims that the corrected NAFTA Certificate of Origin, issued by the Producer/Exporter and signed/dated at the time of issuance (well after the importation of goods) is not acceptable because (1) such a correction does not contemplate the creation of a new Certificate of Origin, and (2) a valid NAFTA Certificate of Origin must be in possession of the importer at the time of importation.

Your office relied on HQ 562097, dated July 17, 2002. In HQ 562097, the "certificate" initially submitted to CBP was not a NAFTA Certificate of Origin within the meaning of Article 501 of the NAFTA or 19 C.F.R. 181.22-23. In denying the importer's attempt to correct the "certificate," CBP stated that such document was not a NAFTA Certificate of Origin amenable to correction or cure of defects as provided in 19 C.F.R. 181.22(c). In declaring that 19 C.F.R. 181.22(c) does not endorse creation of entirely new documents, CBP pointed out that the omissions were so numerous by failing to follow the applicable instructions, that the document was not equivalent in substance to a NAFTA Certificate of Origin. In other words, the importer could not create an entirely new document to substitute a non-existent NAFTA Certificate of Origin. We do not find that to be the case here.

In this case, the Importer sought to correct the defect in the NAFTA Certificate of Origin to include the exporter's signature, as was required by CBP. We find this to be a correctable action in accordance with 19 C.F.R. 181.22(c). Therefore, the Importer rightfully submitted the corrected NAFTA Certificate of Origin, executed by the Producer/Exporter on March 5, 2015. We note that in order to correct an exporter's signature in a Certificate it would require that a new Certificate be prepared. A new Certificate however, would have to be signed, and the date of the signature would necessarily be, in this case, subsequent to the date of the entry on which the NAFTA claim was originally made. Such a corrected document should reflect the actual date on which the corrected document is signed because the new date should provide an accurate record of the fact that this is a "corrective action." See HQ 561820, dated June 19, 2002. In this case, the fact that the NAFTA Certificate of Origin is dated after the date of importation and the claim for NAFTA preferential tariff treatment is appropriate. As we have stated previously in this decision, whether the Importer possessed an otherwise valid NAFTA Certificate Origin (with the exception of the exporter's signature) at the time of the claim is not at issue.

HOLDING:

Based upon the information provided, the NAFTA Certificate of Origin submitted for the imported goods is defective, since it was not executed by the exporter or by the exporter's authorized agent having knowledge of the relevant facts. However, upon the submission of the corrected Certificate, the NAFTA claim should have been allowed, provided the goods qualify for NAFTA preferential tariff treatment.

This decision should be mailed by your office to the party requesting Internal Advice no later than 60 days from the date of this letter. On that date, Regulations and Rulings, Office of Trade, will make the decision available to CBP personnel and the public at www.cbp.gov, by means of the Freedom of Information Act and other methods of public distribution.

Sincerely,

Monika R. Brenner, Chief
Valuation & Special Programs Branch
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[1] On February 25, 2015, CBP issued another CBP Form 28 (Request for Information) with respect to Entry No. [***], also expanding the scope to additional 138 entries. This request for information raises the same issues as CBP's request, dated October 31, 2014.
[2] The Contractor took physical possession and control over the imported goods from the Producer (and seller) at the location of its subsidiary, loaded the goods into specially designed, Contractor-owned railcars at that location and shipped the imported goods into the United States. Therefore, the Importer considered the Contractor to be the exporter. CBP determined that the Contractor was a transport company and gave the Importer the opportunity to explain why the Contractor may possess the authorization and knowledge to execute the NAFTA Certificate of Origin on behalf of the Producer/Exporter.
[3] Additional NAFTA Certificates of Origin covering shipments during 2012 and 2013 were also provided.