DRA 1-06-RR:CR:DR 227025 IOR
Port Director
ATTN: Protest Section
U.S. Customs Service
33 New Montgomery Street
15th Floor
San Francisco CA 94105
RE: Application for further review of protest No. 2904-96-100027; Voluntary tender of duties; drawback; 19 CFR
191.3(a)(iii); 19 CFR 191.81(c)
Dear Madam:
The above-referenced protest was forwarded by Chief,
Liquidation Branch, by memorandum dated May 31, 1996, to this
office for further review. We have considered the points raised
and our decision follows.
FACTS:
Six separate entries were made by the protestant from July
24, 1990 through August 26, 1991 at Portland. These entries were
liquidated and duty-paid from November 9, 1990 through August 16,
1991. A subsequent entry of the same merchandise, made on July
29, 1991, was rate advanced at Portland on March 23, 1992,
because the entered value of the merchandise increased through
proper classification. As a result of the rate advance, the
protestant made additional payments on each of the first six
entries for various amounts, by letter dated May 7, 1992. The
May 7, 1992 letter specifically identified each entry for which
an additional payment is made, and the amount of additional
duties paid for each entry. According to Customs records, the
collection date of the tender is recorded as May 12, 1992.
Subsequently, the protestant made a drawback entry at Portland on
July 6, 1993. The drawback entry included the six original
entries and included a claim for drawback on the amounts
voluntarily tendered after the original entries had been
liquidated. On November 17, 1995, Customs liquidated the
drawback entry at less than the claimed amount. The difference
between the amount claimed and the amount at which the entry was
liquidated represents the additional duties tendered on the
original entries. The protest on the liquidation of the drawback
entry was filed on February 2, 1996.
The protestant contends that the additional payments are a
part of the duties to which drawback is applicable, as they were
paid after the date of liquidation of the original entries, but
prior to the claim for drawback. Customs disagreed, finding that
additional duties paid after the time allowed for reliquidation
(90 days from the date of liquidation) are not eligible for
drawback and are determined to be "withheld duties."
ISSUE:
Whether the additional payments made as "voluntary tenders"
more than 90 days after liquidation are eligible for drawback as
ordinary duties.
LAW AND ANALYSIS:
Initially, we note that the protest was timely filed
pursuant to 19 U.S.C. 1514(c)(2). The subject drawback entry was
liquidated on November 17, 1995, and this protest was filed on
February 2, 1996.
In support of the denial of drawback, the Drawback office
refers to HQ 222984, dated May 26, 1992, which cites HQ 215896,
dated September 26, 1983, which defined "withheld duties" as
amounts which are voluntarily tendered after the time allowed for
reliquidation has expired, and found that withheld duties do not
constitute "ordinary Customs duties" under 19 CFR 22.41 (the
predecessor to 19 CFR 191.3) and are not eligible for drawback
under 19 U.S.C. 1313. In HQ 222984, based on facts
substantially identical to those in the instant case, Customs
held that the additional payments made more than 90 days after
liquidation of the consumption entries are voluntary tenders and
consequently are not eligible for drawback. As in HQ 222984, the
additional payments made in the instant case were voluntarily
tendered more than 90 days after liquidation of the consumption
entries, and as such they meet the definition of withheld duties
as stated in HQ 215896.
However, the drawback law was substantively amended by
section 632, title VI- Customs Modernization, Public Law 103-182,
the North American Free Trade Agreement Implementation Act (107
Stat. 2057), enacted December 8, 1993. Section 692 of the Act
provides that titleVI provisions take effect on the date of
enactment. Customs has published revised Customs Regulations
regarding drawback, to implement the amended drawback law; to
change some administrative procedures involving manufacturing and
unused merchandise drawback; and for general simplification and
improvement of the editorial clarity of the regulations. The
revised regulations were published in the Federal Register on
March 5, 1998 (63 FR 10970).
With respect to duties and fees subject or not subject to
drawback, the revised Customs Regulations 191.3 (19 CFR 191.3)
provide in pertinent part as follows:
(a) Duties subject to drawback include:
(1) All ordinary Customs duties, including:
...
(iii) Tenders of duties after liquidation of the entry,
or withdrawal from warehouse, for consumption for which
the duties are paid, subject to the conditions and
requirements of 191.81(c) of this part, including:
(A) Voluntary tenders (for purposes of this section, a
"voluntary tender" is a payment of duties on imported
merchandise in excess of duties included in the
liquidation of the entry, or withdrawal from warehouse,
for consumption, provided that the liquidation has
become final and that the other conditions of this
section and 191.81 of this part are met);....
Customs Regulations 191.81, referred to in 19 CFR 191.3, provides
in pertinent part as follows:
(a) Time of liquidation. Drawback entries may be
liquidated after:
(1) Liquidation of the import entry becomes final;
....
(c) Claims based on voluntary tenders or other payments
of duties. (1) General. Subject to the requirements
in paragraph (c)(2) of this section, drawback may be
paid on voluntary tenders of the unpaid amount of
lawful ordinary Customs duties for an entry, or
withdrawal from warehouse, for consumption (see
191.3(a)(1)(iii) of this part), provided that:
(i) The tender or payment is specifically identified as
duty on a specifically identified entry, or withdrawal
from warehouse, for consumption;
(ii) Liquidation of the specifically identified entry,
or withdrawal from warehouse, for consumption became
final prior to such tender or payment; and
(iii) Liquidation of the drawback entry in which that
specifically identified import entry, or withdrawal
from warehouse, for consumption is designated has not
become final.
(2) Written request and waiver. Drawback may be paid
on claims based on voluntary tenders or other payments
of duties under this subsection only if the drawback
claimant and any other party responsible for the
payment of the voluntary tenders or other payments of
duties each file a written request for payment of each
drawback claim based on such voluntary tenders or other
payments of duties, waiving any claim to payment or
refund under other provisions of law, to the extent
that the voluntary tenders or other payments of duties
under this paragraph are included in the drawback claim
for which drawback on the voluntary tenders or other
payment of duties is requested under this paragraph.
In this case, the protestant has met all of the requirements
of the revised drawback regulations, with respect to refund of
the voluntary tenders, with the exception of the written request
and waiver provided for in 19 CFR 191.81(c)(2). In this case, as
provided in: (1) 19 CFR 191.3(a)(1)(iii), the subject duties were
tendered after liquidation of the subject entries became final,
(2) 19 CFR 191.81(a), the liquidation of the import entries has
become final (tenders were made more than 90 days after the
liquidation of the entries); and (3) 19 CFR 191.81(c), each
tender of payment was specifically identified as duty on a
specifically identified entry in the May 7, 1992 letter to
Customs, liquidation of each specifically identified import entry
became final prior to the tenders, and liquidation of the
drawback entry in which the specifically identified import
entries were designated has not become final. To meet all of the
requirements for drawback on the voluntary tenders, the
protestant, as the drawback claimant and the party responsible
for the payment of voluntary tenders, must file a written request
for payment of the drawback claim based on the subject voluntary
tenders, in which the protestant waives any claim to payment or
refund under other provisions of law, to the extent that the
voluntary tenders are included in the drawback claim for which
drawback on the voluntary tenders is requested.
The foregoing application of the revised drawback
regulations is applicable to any pending and future drawback
claims which have not been finally liquidated, on and after the
April 6, 1998 effective date of the revised regulations.
HOLDING:
The additional payments made more than 90 days after
liquidation of the consumption entries are "voluntary tenders" as
provided for in 19 CFR 191.3 and, provided that a written request
and waiver under 191.81 is made, drawback of the tenders may be
made.
Consistent with the decision set forth above, you are hereby
directed to grant the subject protest. In accordance with
Section 3A(11)(b) of Customs Directive 099 3550-065, dated August
4, 1993, Subject: Revised Protest Directive, this decision should
be mailed by your office to the protestant no later than 60 days
from the date of this letter. Any reliquidation of the entry in
accordance with the decision must be accomplished prior to
mailing of the decision. Sixty days from the date of the
decision the Office of Regulations and Rulings will take steps to
make the decision available to customs personnel via the Customs
Rulings Module in ACS and the public via the Diskette
Subscription Service, Freedom of Information Act and other public
access channels.
Sincerely,
Director,
Commercial Rulings Division