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HQ 227025





March 17, 1998

DRA 1-06-RR:CR:DR 227025 IOR

CATEGORY: DRAWBACK

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

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