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HQ 228893

April 4, 2001
228893 RND

Clarence. J. Erickson
Soller, Shayne, & Horn
46 Trinity Place
New York, N.Y. 10006

RE: Unused Merchandise Drawback

Dear Mr. Erickson:

This is in reply to your letter of July 13, 2000, wherein you requested a ruling on behalf of your client, Zara International, (Zara). Specifically you ask for a ruling “clarifying Customs’ position” on whether it is mandatory that “C.F. 7501s, import invoices, packing lists, calculation sheets,” or other ancillary supporting documents be filed simultaneously with the Notice of Intent to Export, Destroy, or Return Merchandise for Purposes of Drawback (NOI)(Customs Form 7553) in order to make subsequently a valid, drawback claim under 19 U.S.C. §1313(j). Since your request does not concern a specifically described transaction nor a “specific set of facts” per 19 C.F.R. 177.1(d)(1) but instead asks for a claraification of Customs position generally, this reply constitutes an information letter per 19 C.F.R. 177.1(d)(2).

Your question seems to be: whether supporting documentation for an unused merchandise drawback claim under 19 U.S.C. §1313(j), i.e., “import invoices, C.F. 7501s, packing specs, and calculation sheets,” must be submitted with C.F. 7553, Notice of Intent to Export, Destroy or Return Merchandise for Purposes of Drawback, in order to sustain a subsequently filed drawback claim?

The drawback statute was substantively amended by section 632, title VI - Customs Modernization, Pub. L. No. 103-182, the North American Free Trade Agreement Implementation ("NAFTA") Act (107 Stat. 2057), enacted December 8, 1993. The unused merchandise drawback statute which pertains to Zara’s inquiry is 19 U.S.C. §1313(j). Section 1313(j) provides, in pertinent part, as follows:

(1) If imported merchandise, on which was paid any duty, tax, or fee imposed under Federal law because of its importation-- (A) is, before the close of the 3-year period beginning on the date of importation-- (i) exported, or

(ii) destroyed under customs supervision; and (B) is not used within the United States before such exportation or destruction; then upon such exportation or destruction 99 percent of the amount of each duty, tax, or fee so paid shall be refunded as drawback.

Therefore, §1313(j) provides a refund of 99 percent of the duty paid on imported merchandise if that merchandise is exported unused within 3 years of its importation. Section 1313(j) is also subject to Customs Regulations contained in 19 C.F.R. Part 191, Subpart C – Unused Merchandise Drawback. An importer, including Zara, must comply with the regulations as well as the statute in order to make a valid drawback claim.

Section 1313(l) of the drawback statute grants the Secretary of the Treasury authority to prescribe rules and regulations the compliance with which are required to determine the allowance of the drawback privileges set forth in §1313. The Customs Regulations pertaining to drawback were revised (the proposed revised regulations were published in the Federal Register (62 FR 3082), on January 21, 1997, and were the subject of considerable comment and consideration. Responses to the comments were published with the final rule document (63 FR 10970), on March 5, 1998. Since Zara’s inquiry concerns what additional documentation, if any, is required to be submitted to Customs with C.F. 7553 a discussion of the regulation requiring C.F. 7553 follows.

Within 19 C.F.R. Part 191, Subpart C is the current regulation requiring Customs Form 7553: §191.35, Notice of Intent to Export; Examination of Merchandise. Section 191.35 sets forth the requirements for filing and documentation prior to exportation of merchandise which will be the basis for a drawback claim, as follows:

Notice. A notice of intent to export merchandise which may be the subject of an unused merchandise drawback claim (19 U.S.C. §1313(j)) must be provided to the Customs Service to give Customs the opportunity to examine the merchandise. The claimant, or the exporter, must file at the port of intended examination a Notice of Intent to Export, Destroy, or Return Merchandise for Purposes of Drawback on Customs Form 7553 at least 2 working days prior to the date of intended exportation unless Customs approves another filing period or the claimant has been granted a waiver of prior notice (see §191.91 of this part).

From the first sentence of §191.35(a) it is clear that the purpose behind requiring filing C.F. 7553 is to give “to give Customs the opportunity to examine the merchandise.” In addition, the following statement was included with the proposed new regulations which appeared in the Federal Register, January 21, 1997:

Claimants filing a claim under 19 U.S.C. §1313 (j) or (c) must notify Customs prior to exportation or destruction (notice of destruction procedures also are applicable to drawback under 19 U.S.C. 1313 (a) and (b)). This notice should be filed at the port of intended examination or destruction. It must provide the information needed by Customs to determine if the merchandise should be examined

(62 Fed. Reg. 3088). Section 191.35(b) states the required information:

The notice shall certify that the merchandise has not been used in the United States before exportation. In addition, the notice shall provide the bill of lading number, if known, the name and telephone number, mailing address, and, if available, fax number and e-mail address of a contact person, and the location of the merchandise.

The following Comment and Customs Response appeared in the Final Rules published March 5, 1998:

Comment: It was recommended that the information required on the notice of intent in proposed §191.35(b) include, in addition to the name and telephone number of a contact person, the mailing address, fax number and, if available, the e-mail address.

Also, it was stated that the phrase, "* * * the bill of lading number, if known", as set forth therein, was unnecessary, since the bill of lading number would not be known prior to export of the merchandise (the bill of lading is numbered upon preparation of the Outward Manifest).

Customs Response: The recommendation that other information regarding the contact person should be stated has merit and is adopted. The comment suggesting deletion of the requirement for the bill of lading number, if known, is not adopted (i.e., the requirement is subject to the caveat "if known")

(63 FR 10986; T.D. 98-16). It is clear therefore from the plain language of the regulations and the regulatory history that no additional documentation is required to be submitted simultaneously to Customs with C.F. 7553. Therefore, it is not mandatory that additional documentation is required to be submitted simultaneously to Customs with a timely filed, complete and accurate Customs Form 7553, Notice of Intent to Export, Destroy, or Return Merchandise for Purposes of Drawback.


John Durant, Director

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