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HQ 228780





January 15, 2002

DRA-1-06
RR:CR:DR 228780 IDL

CATEGORY: DRAWBACK

Port Director of Customs

Attn: Drawback Branch

Room 602
610 S. Canal Street
Chicago, IL 60607

RE: 19 U.S.C. 1313(r)(1); 19 CFR 191.51, 191.61; Rejection of Drawback Claim

Dear Sir or Madam:

This is in response to your internal advice request dated March 21, 2000, regarding appropriate filing date of a drawback entry.

FACTS:

According to information furnished in your internal advice request, Fritz Companies, Inc. (“Fritz”), Romulus, MI, submitted a drawback claim, which was erroneously submitted using an import entry number, 110-xxxx928-9, rather than a drawback entry number. The claim included a Customs Form 7539, a listing of import entry designations, and an incomplete application for Exporter Summary Procedure. The dates of export were from March 30, 1994 through December 11, 1996.

The drawback entry was received on March 25, 1997. The following day, Customs rejected the drawback entry for failure to supply proof of export (bills of lading) or a completed Exporter Summary Procedure format. The port had not yet noticed the erroneous drawback entry number at that time. The port attached the rejection letter to the drawback entry. The Chicago port did not retain a copy of this rejection notice. However, a rejection log maintained at the port indicates that the entry was rejected and returned to the broker on March 26, 1997.

On July 7, 1999, Fritz phoned Customs regarding the status of the drawback claim. In attempting to track down its claim, Fritz cited the import entry number it had erroneously filed on March 25, 1997. (Customs assigns importers and brokers (collectively, “filer”) a three-digit filer code, used as a prefix in filing of entry numbers. The filer supplies the next seven digits of the entry number, and the check digit). Since Fritz used its import entry number in its drawback claim, that number could not be used again for filing of a drawback claim. Therefore, Customs orally advised Fritz to resubmit drawback entry, and to renumber the drawback entry with a new number.

On September 1, 1999, Fritz filed a new drawback entry number, 110-xxxx351-8, along with the documents originally submitted and rejected in March 1997. On September 3, 1999, the port again rejected the drawback entry, because, once again, no exporter summary or export bills of lading were included.

On September 8, 1999, Fritz filed drawback entry number 110-xxxx351-8, with Exporter Summary attached. The port accepted and filed the number into the computer system for the first time, since the drawback claim had twice been submitted incomplete, without Export Summary or bill of lading.

On September 13, 1999, the port sent Fritz a CF 28, advising that Fritz was not eligible to receive a drawback refund on exports made prior to September 8, 1996, and that application for One-Time Waiver was required with bills of lading and supporting records. On November 2, 1999, the port received an application for a One-Time Waiver. The port then advised Fritz that the time frame listed in the application, March 30, 1994 through December 11, 1996, exceeded the three years allowed to file drawback entries after the date of export.

Fritz disputes the port’s assertion that it sent notice of rejection to Fritz, claiming that “there is no rejection notice in either the Customs file or in the Fritz file; nor is there any record in Customs file that a rejection had been sent or in Fritz’s file that a rejection had been received”. Therefore, Fritz claims that Customs was responsible for the untimely filing of the drawback entry, due to its “failureto properly notify the drawback claimant of any deficiency in the drawback claim”, and as a result, any “purported rejection of the drawback entry was ineffective and the original stamped-in received drawback entry’remains alive.’” Fritz concludes that since “there was no lawful procedure for the rejection of a drawback entry, the drawback entry could not lawfully be rejected.”

ISSUES:

(1) Whether the regulations provided for rejection of drawback claims in 1997?

(2) Whether the evidence demonstrates that Customs failed to notify the drawback claimant of a deficiency in the drawback claim?

LAW AND ANALYSIS:

Issue (1)
A complete drawback claim must include evidence of exportation. 19 CFR 191.51 (1997) (1998). Since Fritz failed to include evidence of exportation and a correct drawback entry number, the claim it filed on March 25, 1997 was an incomplete claim. Customs does not consider the claim to have been accepted. We disagree with Fritz’ argument that the drawback claim could not lawfully be rejected, pursuant to the following regulations and Customs Decisions:

191.51 Alternative Procedures (1997)
Exportation of articles for drawback purposes shall be established by complying with one of the following procedures: Notice of exportation
Exporter’s Summary
Certified notice of exportation for mail shipments Notice of lading for supplies on certain vessels or aircraft Notice of transfer for articles manufactured or produced in United States which are transferred to a foreign trade zone

191.51 Completion of drawback claims (1998) General. (1) Complete claim. Unless otherwise specified, a complete drawback claim under this part shall consist of the drawback entry on Customs Form 7551, applicable certificate(s) of manufacture and delivery, applicable Notice(s) of Intent to Export, Destroy, or Return Merchandise for Purposes of Drawback, applicable import entry number(s), coding sheet unless the data is filed electronically, and evidence of exportation or destruction under subpart G of this part.

191.61 Time for filing (1997)
A drawback entry and all documents necessary to complete a drawback claim, including those issued by one Customs officer to another, shall be filed or applied for, as applicable, within 3 years after the date of exportation of the articles on which drawback is claimed, except that any landing certificate required under section 191.67(d) of this part shall be filed within the time limit prescribed therein. Claims not completed within the 3-year time period shall be considered abandoned. No extension will be granted unless it is established that a Customs officer was responsible for the untimely filing.

Under 19 U.S.C. 1313(r)(1), a complete drawback claim must be filed within 3 years after the date of exportation. Claims not completed within that time are considered abandoned, with the only provision for extension being if it is established that Customs is responsible for the untimely filing. See also 19 CFR 191.61 (1997). Filing an incomplete claim does not suspend the running of the time period. See Customs Bulletin and Decisions, Vol. 32, No. 51, page 123, December 23, 1998.

If, upon review of a drawback claim, Customs determines that it is incomplete, Customs rejects the claim. The claim may be completed and refiled, but the claim must be completed and filed within the 3-year period for filing a complete claim (19 CFR 191.52(a)). See Customs Bulletin and Decisions, Vol. 32, No. 51, page 129, December 23, 1998.

If documentation is missing, or the claim contains major inaccuracies and inconsistencies, the claim will be rejected and returned to the claimant for correction. The claim will not be considered to have been accepted by Customs and the 3-year time period will not be considered to have been met by the filing of such an incomplete claim. See Customs Bulletin and Decisions, Vol. 31, No. 5, page 35, January 29, 1997. (emphasis added)

The decision of January 29, 1997, supra, specifically provided for rejection of incomplete drawback claims. Although the regulations in 1997 did not expressly refer to “rejection” of a drawback claim, 19 CFR 191.51 (1997) and 19 CFR 191.61 (1997) provided that a drawback claimant was required to satisfy specific filing requirements, implying that failure to meet those requirements precluded Customs from accepting a claim.

Issue (2)
The drawback specialist in Chicago explained the operating procedures in handling drawback entries as follows: drawback entries are recorded in a “Received” log, specifying the date received, drawback entry number, company name, and the type of entry. Similarly, drawback entries that are rejected are recorded in a “Rejection” log, specifying the date returned, drawback entry number, and company name.

The logs maintained at the Chicago port clearly indicate that drawback entry 110-xxxx928-9 was received on March 25, 1997, and was rejected and returned to the broker on March 26, 1997. Furthermore, the CF 7539 includes three different date stamps-March 25, 1997, September 1, 1999, and September 8, 1999, all marked “Received Chicago Drawback”. The fact that Customs received the same CF 7539 on three separate occasions suggests that the drawback entry must have been rejected and returned.

In addition, Fritz argues that Customs “fail[ed] to notify claimant of a deficiency”, implying that claimant was either not aware of the fact of rejection, or not aware of the reason for rejection. We reject both of these arguments. Although, no specific procedural rules governing rejection of a drawback entry existed at the time of original rejection, it is clear that Customs did provide claimant notice of rejection (discussed above). Further, the port has indicated that a letter of rejection was included in the original rejection and return of the drawback claim. The rejection letter may or may not have included a statement of deficiencies to the claim. In any event, in light of the rejection of the claim, the claimant would have been prudent to consult with the regulations cited above or with the port for proper filing of a drawback claim. Instead, the claimant neglected to follow up on the rejection of the claim for well over two years, before, finally, calling Customs to inquire regarding the rejection and return. Had the claimant acted judiciously and promptly following notice of rejection, claimant might have been able to salvage its drawback claim on exports made prior to September 8, 1996. Without rebuttal evidence, we presume that Customs’ employees exercised their duties properly. We cannot accept Fritz’ assertion that Customs failed to notify claimant of a deficiency. (See Enron Oil Trading and Transportation Co. v. United States, 988 F.2d 130 (Fed. Cir. 1993); 1993 U.S. App. Lexis 38199); see also A.N. Deringer, Inc. v. United States, 20 C.I.T. 978 (1996); 1996 Ct. Intl. Trade Lexis 148.)

Fritz also argues that the “Received” date stamp of March 25, 1997 is “in and of itself sufficient evidence that a drawback claim was filed and is active.” We disagree. The date stamp merely proves the undisputed claim that a drawback entry was received for processing on March 25, 1997. It does not prove that the claim was “active” at any time. Actually, the prompt rejection of the claim on the following day demonstrates that the claim was not “viable” at any time; the claim was merely stamped for processing, and immediately rejected upon the port’s review.

Finally, Fritz argues that “in the CF 28 Customs acknowledges that the original drawback entry ‘has now been renumbered’”, suggesting an admission by Customs that the original claim was active at some point. However, upon a careful reading of the statement and examination of the evidence, it appears that the Customs officer was referring to renumbering by Fritz, not by Customs.

Thus, we agree with the port that the time of filing of Drawback Claim No. 110-xxxx351-8 is September 8, 1999.

HOLDING:

Accordingly, the claim for drawback on exports made prior to September 8, 1996 should be DENIED.

Sixty days from the date of the decision, the Office of Regulations and Rulings will make the decision available to Customs personnel, and to the public on the Customs Home Page on the World Wide Web at www.customs.ustreas.gov, by means of the Freedom of Information Act, and other methods of public distribution.

Sincerely,

John A. Durant
Director,

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