DRA-2-02
OT: RR:CTF:ER 230788 BAS
Todd A. Hoffman
Port Director
U.S. Customs and Border Protection
Service Port – Los Angeles/Long Beach Seaport
301 E. Ocean Blvd.
Long Beach, CA 90802
Re: Application for Further Review of Protest No. 2704-04-101805; Lee Brands, LLC; 19 U.S.C. § 1313(j); Drawback; 19 C.F.R. § 191.72; evidence of exportation; redacted airway bills
Dear Mr. Hoffman:
This is in response to correspondence that we received on December 2, 2004, requesting further review of Protest No. 2704-04-101805. Stein Shostak Shostak & O’Hara (counsel) filed this protest on behalf of the drawback claimant, Lee Brands, LLC. A subsequent amendment was filed on August 14, 2004.
U.S. Customs and Border Protection (CBP) disallowed drawback on 48 entries. The claimant protests the denial of drawback for numerous reasons, but its application for further review is limited in scope to the sufficiency of the redacted air waybills submitted as proof of exportation. Our decision follows:
FACTS:
The claimant filed 48 drawback entries between June 21, 1995 and March 28, 2002 claiming drawback on different sizes and shapes of exported asparagus under 19 U.S.C. § 1313(j)(1) and (2). Accelerated payments of drawback were made for the first fourteen claims. The remaining thirty four claims were never accelerated. On May 15, 2004, the port liquidated these entries without benefit of drawback. The claimant filed a protest on August 11, 2004, which it subsequently amended on August 17, 2004.
The port submitted a sampling of the subject claims that represent the factual circumstances covered by the Protest. For each claim, the port issued a denial statement that specified a number of deficiencies, including “blackened” bills of lading. It is the claimant’s position that these bills of lading sufficiently show all of the pertinent identifying details to support the export claims. For purposes of brevity, we describe the redacted bills of lading and additional documentation submitted as proof of exportation for one of the subject claims. We note that similar issues recur amongst all of the subject claims submitted by the port for our review.
ISSUE:
Whether exportation of the merchandise on which drawback is claimed has been established in accordance with 19 CFR § 191.72?
LAW AND ANALYSIS:
Timely Protest and AFR Basis
We note initially, at the time of this protest a protest was timely if filed within 90 days of liquidation. See 19 U.S.C. § 1514 (c)(3)(B). Since the time this protest was filed, the Miscellaneous Trade and Technical Corrections Act of 2004, amended section 1514(c) (3) and allows importers to file protests 180 days from notice of liquidation or reliquidation. See Pub. L. 108-429, 118 Stat. 2434 (Dec. 4, 2004). Since the entries in this case were liquidated on May 14, 2004 and the AFR was filed on August 11, 2004, prior to the date of enactment of the foregoing Act, the amendment does not apply to this case. See Miscellaneous Trade and Technical Corrections Act of 2004 ("The amendments made by this subtitle shall apply to merchandise entered, or withdrawn from warehouse consumption, on or after the 15th day after the date of the enactment of this act.").
We also note that the denial of a drawback claim is a protestable matter under 19 U.S.C. § 1514 (a)(6). In this case, as the entries were liquidated on May 14, 2004, and the Application for Further Review (AFR) was filed on August 11, 2004, the protestant filed the AFR within the requisite 90 days of the liquidation and the denial of its drawback claim is protestable. See 19 CFR § 174.23.
We further note that the criteria for further review have been met. The protestant asserts in its application for further review (AFR), that pursuant to 19 C.F.R. § 174.25(b), the “denial decision involves questions of law or fact which have not been ruled upon by the Commissioner or his designee or by the courts including the sufficiency of bills of lading and other supporting documents.”
19 U.S.C 1313 (j)(2)
Under 19 U.S.C. § 1313(j)(2), as amended, substitution unused merchandise drawback may be granted if there is, with respect to imported, duty-paid merchandise, any other merchandise that is commercially interchangeable with the imported merchandise, provided certain requirements are met. The other merchandise must be exported or destroyed within 3 years from the date of importation of the imported merchandise. Before the exportation or destruction, the other merchandise may not have been used in the United States and must have been in the possession of the drawback claimant. The party claiming drawback must be either the importer of the merchandise or have received from the person who imported and paid any duty due on the imported merchandise a certificate of delivery transferring to that party the merchandise, commercially interchangeable merchandise, or any combination thereof. The statute does not define "commercially interchangeable.”
PROOF OF EXPORTATION
The issue of proof of export for satisfying a drawback claim was discussed in HQ 228272, dated November 8, 1999, in response to an internal advice request from the Port of New York. The Customs Regulations implementing the drawback statute provide for evidence of exportation in section 191.72 (19 CFR § 191.72) and read as follows: “Exportation of articles for drawback purposes shall be established by complying with one of the procedures provided for in this section (in addition to providing prior notice of intent to export if applicable (see §§ 191.35, 191.36, 191.42, and 191.91 of this part)). Supporting documentary evidence shall establish fully the date and fact of exportation and the identity of the exporter. The procedures for establishing exportation outlined by this section include, but are not limited to: (a) Actual evidence of exportation consisting of documentary evidence, such as 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; (b) Export summary (§ 191.73); (c) Certified export invoice for mail shipments (§ 191.74); (d) Notice of lading for supplies on certain vessels or aircraft (§ 191.112); or (e) Notice of transfer for articles manufactured or produced in the U.S. which are transferred to a foreign trade zone (§ 191.183).”
The regulation by its terms does not require a specific form. The regulation describes acceptable documentary evidence if that evidence identifies the goods in issue and shows the fact of exportation and the date of exportation. The requirement of providing either a signed original document or a copy certified to be a true copy provides a degree of authenticity to the evidence presented.
In general, the proof of exportation requires evidence of intent for the merchandise at issue to unite with the mass of things belonging to that of another country, and evidence that the merchandise left the U.S. See 19 CFR § 101.1. The documents submitted generally support the intent for the subject merchandise to join the commerce of another country. Such intent is shown by the invoices, packing lists and payment records (provided there are no discrepancies among the documents). Evidence that the merchandise left the U.S. could consist of, for example, a bill of lading indicating that the goods are on an outbound vessel or aircraft, or that the goods were entered into a foreign government’s Customs territory. See HQ 229566, dated September 17, 2002; HQ 228272, dated November 8, 1999. Finally, documentation showing the date of export from the U.S. must carry some certification of authenticity, either in the form of a signature on an original document or certification of a copy of the signed document. See HQ 226929, dated June 4, 1997.
In HQ 228553, dated May 8, 2000, we addressed the issue of whether an uncertified pedimento, by itself, without a certified copy of other supporting documents satisfied the requirements of 19 CFR § 191.72. In that case, the protestant relied on an uncertified copy of a pedimento for proof of export. The pedimento stated the date of entry into Mexico (June 5, 1998), the merchandise, the tariff number, the quantity of merchandise, the number of packages of merchandise, the value of the merchandise, and the stamps stating the duties had been paid. The pedimento stated the quantity received as 1000.00, without a unit of measurement. However, a copy of the Mexican Tariff for subheading 2914.50.01 showed that the reporting quantity was kilograms. Therefore, the measurement was probably kilograms, making the amount 1000.00 kilograms. However, the Protestant did not submit any additional documents such as receipts, bills of lading, or any other documents showing the amount of merchandise sent to Mexico. Also, the pedimento covered 2 packages. Yet, the CF 7501, the withdrawal from warehouse, stated that 120 packages were withdrawn, and the CF 7539, the drawback claim form, was for 40 packages of merchandise which would conflict with the assertion that the 1000 kilograms were contained in 40 25-kilogram bags, rather than 2 packages. This discrepancy in the number of packages and, therefore, the amount of merchandise claimed could have been explained if the Protestant had submitted any supporting documents showing the amount and identity of the merchandise asserted to have been exported to Mexico. In HQ 228553 we held that the lack of documentation results in the inability to determine that the merchandise claimed for drawback is the merchandise that was withdrawn from warehouse in the particular entry. No documents or explanation of the existing documents had been provided to link the merchandise on the pedimento by either specific identification or by accounting method with the imported merchandise on which drawback was asserted. An additional discrepancy regarding the drawback claim in HQ 228553 concerned the dates of removal of the merchandise from the warehouse, and the date of entry into Mexico. The merchandise was removed from the warehouse on April 22, 1998. The date of entry of the merchandise asserted to be that removed from the warehouse, into Mexico, according to the pedimento was June 5, 1998. That is approximately a six week period in which no information was offered regarding where the merchandise was held, or what was being done with the merchandise. Again, this six-week time lag, and the discrepancy regarding the number of packages imported into Mexico, in addition to the lack of certainty regarding the measurement unit for the merchandise imported into Mexico, cast into doubt that the merchandise removed from the warehouse was the same merchandise imported on the pedimento into Mexico.
In HQ 228553, we reasoned that the discrepancies and the lack of information supplied by the Protestant may not be filled in with supposition or conjecture on the part of Customs. The United States Court of Customs Appeals in United States v. Enrique C. Lineiro, 37 C.C.P.A. 5 (1949), stated that where the trial court based its decision not on documented evidence, but on Customs speculation regarding the classification of merchandise, such a decision may not stand. In that case, Customs determined the classification of grain sorghum based on its visual review of the grain, and on the visual evaluation of the grain by an expert of such merchandise. Customs had not had the grain scientifically tested or sampled prior to its classification. Such sampling occurred only when the case went to the appellate court. The Appellate Court stated that determinations of issues in Customs litigation may not be based on supposition. The Court stated that such supposition is merely speculation or guess. Therefore, CBP may only evaluate the evidence presented by the parties in evaluating a case before it and may not speculate so as to fill-in missing information. In view of the discrepancies in HQ 228553, in the documentation discussed above, we held that the uncertified pedimento, by itself, without a certified copy of other supporting documents did not satisfy the requirements of 19 CFR § 191.72.
Similarly, in the instant case the discrepancies and the lack of information supplied may not be filled in with supposition or conjecture on the part of CBP. We selected Summary for Drawback Number 635-0208930-1 as the representative claim. Each export invoice in that drawback summary was reviewed for sufficiency of documentation.
In review of export invoice number 143147, dated April 12, 1999, the invoice indicates that there were 121 cartons of asparagus exported from Ceres International to Giovanelli Fruchtimport AG. Each carton weighed 13.5 pounds for a total of 1633.5 pounds. The Air Waybill submitted with the invoice number had several redactions. Specifically, the following sections had information blackened out: rate/charge, total, prepaid, total prepaid and the nature and quantity of goods section. The weight of the asparagus was not provided although it does state “121-ceres asparagus bunched-Lee.” The export invoice number was a handwritten addition to the Air Waybill. It is unclear who handwrote the invoice number or when it was written. In addition, the reference to Ceres asparagus in the Nature and Quantity of Goods Section of the Air Waybill is of a different type than most of the other information provided. The different typeface calls into question the time at which the information was added to the document and the authenticity of the document. In sum, there is insufficient information on the Air Waybill to conclude that it corresponds to the same shipment referred to by export invoice number 143147.
Another invoice, number 145403, dated March 31, 1999, contains similar redactions on the corresponding airway bill. That is, invoice number 145403 indicates that 577 cartons of asparagus, weighing 13.5 pounds each were exported. The corresponding Air Waybill has numerous redactions including the number of pieces, the gross weight, the commodity item no., the chargeable weight, the rate and charge, the total, and two lines blackened out in the nature and quantity of goods section. The information provided in the Nature and Quantity of Goods section states the quantity of asparagus to be “577 Ceres Asparagus- Bunched – Lee and 408 Lee Bun Asparagus.” The invoice number and number of cartons has been written in by hand and there are three different styles of type on the Air Waybill. There are three different invoice numbers on the Air Waybill. The totals on the Air Waybills that cover more than one invoice such as the one corresponding to export invoice number 145403 can only be reconciled by reference to handwritten annotations whose author is not identified. CBP cannot speculate as to the relationship between the Air Waybill and the invoices submitted. There is too much information missing on the Air Waybill to say with confidence that it is adequate evidence of exportation needed to support a drawback claim. The following invoice numbers have corresponding Airway Bills that are defective in the same or substantially similar manner: 145425,145426, 145427, 145428, 145434, 148526, 148535, 148544, 148555, 157506, 157507,159410 and 159426.
In particular concerning invoice number 145427 there were two corresponding airway bills submitted. On those airway bills there are several different styles of type. The total quantity on the airway bills match the amounts on the invoices only by handwritten notation. Regarding invoice numbers 145428 and 148526 the corresponding airway bills have different styles of type. Again, the total quantity on the invoices can only be reconciled on the airway bill by handwritten notations.
Export Invoice 145444 references two types of asparagus, Lee and Reuben, yet the Airway bills refer only to Lee. Furthermore, the invoice numbers have been handwritten in and there are several redactions on one of the airway bills including the rate/charge, total and amount prepaid.
Regarding export invoice number 145457, two corresponding airway bills were submitted. On both airway bills, the invoice number was handwritten. On one of them the amount of asparagus was omitted and the following areas contained redactions: rate/charge, total, nature and quantity of goods, amount prepaid and total prepaid. The second airway bill had redactions under the nature and quantity of goods section and therefore was not sufficient evidence of export.
Finally, regarding invoice number 156141, the airway bill is not sufficient evidence of export as the there are several different typefaces.
For export invoice number 145706, 145748, 145752, 145756, 145764, 145778, 145781, 145786, 156101 and 156165 the airway bills did not contain any redactions and were consistent with the export invoices and are therefore sufficient evidence of export.
Compliance with the Customs Regulations on drawback is mandatory and a condition of payment of drawback. See Chrysler Motors Corp. v. United States, 14 CIT 807, 816, 755 F. Supp. 388, aff'd, 945 F.2d 1187 (Fed. Cir. 1991) citing Swan & Finch Co. v. United States, 190 U.S. 143, 146 (1903)(holding that "the allowance of drawback is a privilege and compliance with the regulations is a prerequisite to securing it where the regulations are authorized and reasonable."); see also, United States v. Hardesty Co., Inc., 36 CCPA 47, C.A.D. 396 (1949); Lansing Co., Inc. v. United States, 77 Cust. Ct. 92, C.D. 4675 (1976); Guess? Inc. v. United States, 944 F.2d 855, 858 (1991) ("We are dealing [in discussing drawback] instead with an exemption from duty, a statutory privilege due only when the enumerated conditions are met"). See also HQ 229566, dated September 17, 2002. Hence, in order for the protestant to establish exportation of the merchandise, the export on which drawback has been claimed; evidence establishing fully the date and fact of exportation would need to be provided. Airway bills with redactions are not sufficient indications of export when the information redacted precludes establishment of a clear relationship to a particular export invoice. Accordingly, we cannot allow drawback claims to be granted for those aforementioned export invoice numbers which correspond to airway bills with critical information redacted.
HOLDING:
The protest should be GRANTED IN PART and DENIED IN PART, consistent with the analysis set forth above. Please note that we make no decision as to whether the 48 claims have satisfied any of the other requirements for drawback under 19 U.S.C. §§ 1313 (j)(1) or (2).
In accordance with the Protest/Petition Processing Handbook (CIS HB, January 1002, pp. 18 and 21), 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. 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 decisions the Office of 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