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HQ 229481

September 17, 2002

DRA-2-02-RR:CR:DR 229481 IOR


Port Director
Miami Service Port
P.O. Box 025280
Miami, FL 33102-5280

ATTN: Marilyn Rodriguez, Drawback Office

RE: Application for Further Review, Protest No. 5201-01-100773; exportation; yacht; 19 USC 1313(j)(1); 19 CFR 101.1; 19 CFR 191.72

Dear Sir:

The above-referenced protest was forwarded to this office for further review. Our decision follows a September 12, 2002 telephone conference between an attorney-in-fact for the protestant, and members of my staff.


The subject protest concerns the denial of drawback claimed under drawback entry no. 5201-406-xxxx658-0. Consumption entry no. 5201-406-xxxx455-0 was filed October 18, 1998, for a motor yacht (“yacht”), and duty was paid. The importer of record was the protestant’s broker, and the protestant, Percal Limited (“Percal”) was the ultimate consignee of the imported merchandise. A Notice of Intent to Export, CF 7553 was filed with Customs in Port Everglades, Florida on December 4, 1998, identifying the exporter as Percal. The ultimate destination was asserted to be Cozumel, Mexico. There is a statement from the Captain of the yacht, dated November 25, 1998, stating that the yacht had been solely offered for sale, and had carried out routine maintenance, but had not cruised or been used in any other way. Drawback entry no. 5201-406-xxxx658-0, was filed with Customs on August 2, 1999, by the protestant, Percal, for drawback on the duty paid upon the importation of the yacht.

Documents submitted in support of the exportation consist of the following:

A Certificate of registry identifying the yacht as being registered in the Channel Islands as of October, 1993, and being owned by Percal. The residence of Percal is identified as the Channel Islands.

A U.S. Clearance of Vessel to a Foreign Port, CF 1378, for the yacht, bound for Cozumel, Mexico, dated December 18, 1998.

A Collection Receipt, CF 368, dated December 18, 1998, for the receipt of a clearance fee for the yacht.

A Delivery Certificate, CF 7552, showing a transfer of the yacht from the protestant’s broker to Percal, showing the delivery date as October 15, 1998.

 The document submitted was in Spanish, and the information described above is from an English translation of the document, also provided by the protestant.:

This is the official crew list for the pleasure yacht named Percal sailing under Guernsey flag with gross tonnage 144 tons and 43 net – registered under the command of Captain Luis Picazo and arriving at this port from Fort Lauderdale USA, on a pleasure cruise.

The document is stamped by Mexican Customs Authorities on December 22, 1998, and by the Mexican Port Authority in Cozumel on December 23, 1998. The document includes a list of the crew members and three guests.

There is a statement from the Vice President of Percal, dated May 15, 2001, that the yacht departed Port Everglades on December 18, 1998, made a fuel stop in Key West, and to pick up the three guests for the final leg of the trip to Cozumel.

Chief Officer’s Log Book records showing movement of the yacht from Fort Lauderdale, Florida to Key West, Florida on December 18, 1998, and movement from Key West to Cozumel on December 21 and 22, 1998. Another log entry submitted shows a movement from Cozumel to Isla Mujeres, on January 9, 1999.

The drawback claim was liquidated with no drawback, on June 22, 2001. Customs denial of drawback is based on the protestant’s failure to establish exportation of the yacht.

According to the attorney-in-fact for the protestant, the owner of the yacht is Percal, the protestant, and the owners of Percal are non-U.S. resident Mexican citizens, with no intention of becoming U.S. residents.


Whether the exportation of the yacht for purposes of drawback under 19 U.S.C. §1313(j)(1) has been established.


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 C.F.R. Part 174). We note that the refusal to pay a claim for drawback is a protestable issue under 19 U.S.C. §1514(a)(6). This protest involves the denial of drawback under 19 U.S.C. §1313(j)(1).

Drawback is granted upon the exportation of imported merchandise upon which was paid any duty, tax, or fee imposed under Federal law because of its importation, if the merchandise has not been used within the United States before such exportation. 19 U.S.C. §1313(j)(1). The party entitled to claim drawback is the exporter of the merchandise. 19 CFR 191.33.

Under 19 CFR 101.1, exportation is defined as a severance of goods from the mass of things belonging to this country with the intention of uniting them to the mass of things belonging to some foreign country. The shipment of merchandise abroad with the intention of returning it to the United States with a design to circumvent provisions of restriction or limitation in the tariff laws or to secure a benefit accruing to imported merchandise is not an exportation. Removing a yacht from U.S. territorial waters on a temporary foreign pleasure cruise with the intent to return the yacht to the U.S. would not constitute an exportation. C.S.D. 79-85.

The protestant cites to HQ 102051, dated April 23, 1976, as support that an exportation of the yacht has been established. In HQ 102051, a yacht had been entered into the U.S. and subsequently sold in the U.S. to a British subject, and the yacht then cleared the U.S. and “entered Mexico”. Approximately sixteen months later, the yacht was returned to storage in the U.S. Customs determined that under those facts, the yacht would be dutiable upon its sale or offer for sale to a U.S. resident. First, the fact that an entry may have to be filed upon the return of merchandise to the U.S. and duty paid, does not mean that the merchandise had been exported for purposes of drawback. See Mitsubishi International Corp. v. United States, 55 Cust. Ct. 319, C.D. 2597 (1965). HQ 102051 did not make a determination of whether an exportation for purposes of drawback had occurred. It was stated that “delivery of the yacht in Mexico to a British subject who is a non-resident of the United States and who has no intention of becoming a resident, evidences a severance of the yacht from the mass of things belonging to this country with the intention of uniting it to the mass of things belonging to some foreign country.” There was no determination that the yacht had in fact been united to the mass of things belonging to some foreign country.

In determining the adequacy of export evidence, one must consider whether the drawback claimant has presented evidence reliably demonstrating that an exportation of the yacht occurred. 19 CFR 101.1 requires physical separation of the yacht from the U.S., coupled with the requisite intent. Intent is to be determined from the facts and circumstances surrounding a given case. Intent at the time of shipment abroad is the controlling factor in determining whether or not the shipment was exported. See HQ 114301; F.W. Meyers & Co., Inc., v. United States, 29 Cust. Ct. 202, C.D. 1468 (1952). Intent is shown by acts or contracts. American Customs Brokerage Co. v. United States, 72 Cust. Ct. 245, 375 F.Supp. 1360 (1974); Rentner v. United States, 15 Ct. Cust. 147 (1927).

In the instant case, the CF 1378 Clearance of Vessel to a Foreign Port was issued by Port Everglades on December 18, 1998. This document does not demonstrate intent to join the yacht with the mass of things belonging to a foreign country. However, it does appear to demonstrate physical severance of the yacht from the United States, although a stop was made in Key West. The stop in Key West for supplies and passengers does not preclude a finding that the yacht was physically severed from the U.S. after it left Key West. The Drawback Office takes the position that a CF 1378 cannot be considered an export document because Customs does not verify vessel departure or follow up to determine whether the vessel returns to the U.S., and because the form is required each time a vessel clears the U.S. for foreign, whether or not there is an intent to return. The CF 1378 alone, does not absolutely show that the yacht left the U.S., as is apparent since a stop was made in Key West in this case. However, the CF 1378 is evidence of severance with the U.S. that combined with other evidence can be used to establish exportation.

The Certificate of Registry in the Channel Islands, appears to show an intent to join the yacht to the commerce of a country other than the U.S., particularly as the place of business of the owner, Percal, is in the Channel Islands.

The documentation submitted establishes that the protestant is the owner of the yacht, and was the exporter of the yacht, and that the yacht was brought to the U.S. to sell, but no sale occurred. There is no evidence to indicate that the owners of Percal are other than non-U.S. resident Mexican citizens. The protestant asserts that the Crew List is a cruising license. It is not apparent from the Crew List, that the Crew List is anything but a Crew List. However, whether or not the document is a cruising license, it along with the Log Book submissions does establish the intent of the vessel to be cruising in Mexico, and that it in fact did cruise in Mexico. There is no evidence of any intent to return the yacht to the U.S. at the time it cleared Port Everglades, and left Key West. Under these specific facts presented here, limited purpose of the yacht in the U.S., clearance documentation, foreign registry, non-resident foreign ownership, and documentation of cruising in a foreign country, we find that there was a physical severance of the yacht from the U.S. and an intent of uniting the yacht with the mass of things belonging to some foreign country.


The evidence of a limited purpose importation, clearance documentation, foreign registry, non-resident foreign ownership, and documentation of cruising in a foreign country, with no evidence to the contrary, is sufficient to establish the exportation of the yacht for purposes of drawback under 19 U.S.C. §1313(j)(1).

This protest should be GRANTED. In accordance with Section 3A(11)(b) of Customs Directive 099 3550-065, dated August 4, 1993, Subject: Revised Protest Directive, you are to mail this decision, together with the Customs Form 19, to the Protestant no later than 60 days from the date of this letter. Any reliquidation of the entry or entries in accordance with the decision must be accomplished prior to mailing the decision.

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.


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