United States International Trade Commision Rulings And Harmonized Tariff Schedule
faqs.org  Rulings By Number  Rulings By Category  Tariff Numbers
faqs.org > Rulings and Tariffs Home > Rulings By Number > 1994 HQ Rulings > HQ 0224837 - HQ 0544644 > HQ 0224890

Previous Ruling Next Ruling

HQ 224890

February 18, 1994

DRA-2/DRA-4-CO:R:C:E 224890 PH


Regional Director
Commercial Operations
New Orleans, Louisiana 70130

RE: Protest 2002 93 100299; Substitution Finished Petroleum Derivatives Drawback; Jet Fuel; 19 U.S.C. 1313(p); Public Law 103-182, Section 632

Dear Sir:

The above-referenced protest was forwarded to this office for further review. Our decision follows.


The protest is of the liquidation of a drawback entry (or claim) filed on November 15, 1990. According to the file, the imported merchandise designated as the basis of drawback for the claim was imported on July 25, 1990, and entered on July 31, 1990 (219,052 barrels of merchandise designated), and the exportation upon which the claim is based was on September 19, 1990.

According to documents in the file and Customs records, the protestant was the importer of the designated imported merchandise (the entry summary for the July 25, 1990, importation is for 219,052 barrels of jet fuel with an A.P.I. gravity of 45.0, classifiable under subheading 2710.00.15304, Harmonized Tariff Schedule of the United States Annotated (HTSUSA), valued at $4,833,426, with $115,002.55 in duty). The protestant in a "substitution affidavit" dated November 14, 1990, stated, among other things, that "[the protestant has] not issued a certificate of delivery covering the designated merchandise nor a certificate of manufacture and delivery covering articles manufactured or produced therefrom." The affiant stated that records were maintained to verify this and other statements in the affidavit.

According to the Customs Form 7511 (Notice of Exportation of Articles with Benefit of Drawback) for this claim, the exported merchandise upon which drawback was claimed was 228,853 barrels of "jet fuel - kerosene type", classifiable under subheading 2710.00.15304, HTSUSA, with a value of $8,771,03_ (the last digit does not appear on the copy of the document in the file), exported from Lake Charles, Louisiana, on the ULAN, ultimately destined for Canada.

For the importation, there is a "Vessel Gauging Report" and a "Shore Tank Gauging Report" (both reports dated July 26, 1990) showing that 219,052.48 barrels of jet fuel were unloaded from the FAR SAGA at the protestant's terminal at Linden, New Jersey. There is a copy of a July 19, 1990, "Certificate of Quantity" showing 219,402 barrels (9,214,884 U.S. gallons) of "jet fuel DERD 2494[,] min[.] flash 105[,] 'without ASA-3 additive'" loaded into the FAR SAGA at the Maraven S.A. Terminal in Punta Cardon, Venezuela (the copy of this document shows only part of the identification of the shore tanks from which this fuel was loaded, but that part indicates that they are the same tanks referred to in the "Certificate of Quality", described below). There is a copy of a July 19, 1990, "Certificate of Quality" reporting on the specifications for samples from shore tanks D5- 06, D5-08, and D7-01 at the Maraven S.A. Terminal in Punta Cardon, Venezuela.

For the exportation, there is a copy of a "Tanker Bill of Lading No. 1" issued on September 20, 1990, which states that 228,852.95 barrels of "jet fuel meeting Colonial Pipeline 54 grade specifications - in bulk" were shipped on board the ULAN by the protestant. The merchandise was stated to be licensed by the United States for ultimate destination to Canada. There is a Certificate of Origin reflecting the same information for a like quantity of jet fuel (described as in the bill of lading), loaded at Lake Charles. There are reports of inspection in the file, including a "Trade Inspection Certificate" for 228,852.95 barrels of cargo described as jet fuel loaded into the ULAN from tanks 19, 20, and 62 at [the protestant's] refinery, Lake Charles, September 17 - 20, 1990. There are "Shore Quantity Summary" and "Vessel Quantity Summary" reports reflecting the same information. There are "Analytical Reports" for each of the tanks from which the ULAN was loaded (i.e., tanks 19, 20, and 62) reporting on the specifications of the samples taken from those tanks.

As stated above, on November 15, 1990, the protestant filed a claim for drawback on the 219,052 barrels of jet fuel. Customs Regional Laboratory was requested to review the merchandise in the claim for fungibility (the drawback claim was under 19 U.S.C. 1313(j)(2) which, at the time the claim was filed, required the imported merchandise and the exported merchandise to be fungible) and gave its opinion that the merchandise was not fungible because the exported merchandise did not meet the specification for aromatics content in the ASTM D 1655 standard for jet fuel (two opinions were given, both to the same effect, the second after the protestant had submitted additional information on the effect of the aromatics content). Our ruling 223769, October 20, 1992, concurred with this opinion, after reviewing evidence the protestant had provided regarding the aromatics content.

In a letter dated October 28, 1992, Customs advised the protestant that drawback was being denied because the imported merchandise and the exported merchandise were not fungible, citing ruling 223769 (see above). The protested drawback claim was liquidated, without drawback allowed, on November 20, 1992. The protestant filed the protest under consideration on February 16, 1993.


Is there authority to grant the protest of denial of drawback in this case?


Initially, we note that the protest was timely filed under the statutory and regulatory provisions for protests (see 19 U.S.C. 1514 and 19 CFR Part 174). We note that the refusal to pay a claim for drawback is a protestable issue (see 19 U.S.C.

Under 19 U.S.C. 1313(p) (the following describes the provision as it is pertinent to this case and not as it is applicable in all instances), if an article of the same kind and quality as a qualified article is exported, certain requirements are met, and a drawback claim is filed regarding the exported article, drawback may be granted. "Qualified article", for purposes of this subsection, means an article described in heading 2710, HTSUSA (among other headings), which is imported duty-paid. An exported article is of the "same kind and quality" as the qualified article for which it is substituted under this subsection if it is a product that is commercially interchangeable with or referred to under the same eight-digit classification of the HTSUS as the qualified article. The "requirements" required to be met for purposes of this subsection are that the exporter of the exported article imported the qualified article in a quantity equal to or greater than the quantity of the exported article; that the exported article is exported within 180 days after the date of entry of the imported qualified article; that the drawback claimant complies with all requirements of section 1313, including providing certificates which establish the drawback eligibility of articles for which drawback is claimed; and that the manufacturer, producer, importer, exporter, and drawback claimant of the qualified article and the exported article maintain all records required by regulation.

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. The foregoing summary of section 1313(p) is based on the law as amended by Public Law 103- 182. Title VI of Public Law 103-182 took effect on the date of enactment of the Act (section 692 of the Act). The amendments to section 1313(p) apply to claims filed or liquidated on or after January 1, 1988, and claims that are unliquidated, under protest, or in litigation on the date of enactment of Public Law 103-182. (According to the applicable legislative history, the amendments to the drawback law (19 U.S.C. 1313, other than subsection (p)) are applicable to any drawback entry made on or after the date of enactment as well as to any drawback entry made before the date of enactment if the liquidation of the entry is not final on the date of enactment (H. Report 103-361, 103d Cong., 1st Sess., 132 (1993); see also provisions in the predecessors to title VI of the Act; H.R. 700, 103d Cong., 1st Sess., section 202(b); S. 106, 103d Cong., 1st Sess., section 202(b); and H.R. 5100, 102d Cong., 2d Sess., section 232(b)).)

Compliance with the Customs Regulations on drawback is mandatory and a condition of payment of drawback (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; see also, Guess? Inc. v. United States, 944 F.2d 855, 858 (1991) "We are dealing [in discussing drawback] with an exemption from duty, a statutory privilege due only when the enumerated conditions are met" (emphasis added)).

In the protested claim, the imported merchandise is a "qualified article" for purposes of 19 U.S.C. 1313(p) (i.e., it is classified under heading 2710, HTSUSA, and it was imported duty-paid). The exported merchandise is of the same kind and quality as the imported qualified article (i.e., both are classified under subheading 2710.00.15, HTSUSA). The exporter of the exported article imported the qualified article in a quantity equal to the exported article (i.e., 219,052 barrels). The exported article was exported within 180 days after the date of entry of the imported qualified article (i.e., date of entry of imported article: July 31, 1990; date of export of exported article: September 19, 1990). Based on the information available to us, there are no requirements under the drawback law which would be applicable to a claim for drawback under section 1313(p) for this importation which have not been complied with.

We note that under 19 U.S.C. 1313(r)(2), a drawback entry filed pursuant to any subsection of section 1313 shall be deemed filed pursuant to any other subsection of section 1313 if it is determined that drawback is not allowable under the entry as originally filed but is allowable under such other subsection. (House Report 103-361, supra, at page 131, makes it clear that this provision is not intended to require Customs "to investigate all alternatives in addition to the claimed basis before liquidating [a] drawback claim as presented.") Accordingly, the protest is GRANTED. Because of our decision in this regard, we are not addressing the issue of whether the imported merchandise and the exported merchandise are commercially interchangeable (the current standard for substitution under 19 U.S.C. 1313(j)(2), as that provision was amended by Public Law 103- 182).


There is authority (under the amended 19 U.S.C. 1313(p)) to grant the protest of the denial of drawback.

The protest is GRANTED. 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, with the Customs Form 19, 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, Lexis, Freedom of Information Act, and other public access channels.


John Durant, Director

Previous Ruling Next Ruling

See also: