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HQ 230186

May 17, 2004

RR:CR:DR DRA-4 230186 AL

Category: DRAWBACK

Port Director
U.S. Customs and Border Protection
Residual Liquidation & Protest Branch
1100 Raymond Boulevard, Suite 402
Newark, New Jersey 07102
Attention: Ms. Susan M. Masser

RE: Protest No. 4601-03-100992; 19 USC 1313(j)(1)

Dear Ms. Masser:

The above-referenced protest has been forwarded to this office for further review. The following decision is based on the consideration of points raised by the protestant, Active Media Services, Inc. (“Active”), and by your office.


The protestant filed drawback entry 823-XXXX311-5 under 19 USC 1313(j)(1) which was received by the Port on June 28, 2001. An attachment to the subject claim listed 27 imports which entered the United States between August 17, 2000 to October 20, 2000. One of the 27 entries, illustrative of all 27 entries, was entry number 231-XXXX205-5 which covered merchandise that entered the United States on September 25, 2000.

A certificate of delivery (“CF 7552”) was provided by the claimant which stated that the transferor is Ann Taylor, Inc. and the transferee is Active International. The CF 7552 was signed and dated on June 1, 2001 by Mr. Mele who identified himself as VP of Ann Taylor, Inc. Attached to the CF 7552 is the same list of twenty-seven import entries attached to the drawback claim, but the last column calculated 100% of the duty unlike the other attachment to the drawback claim which calculated 99% of the duty. As indicated on both lists, the merchandise was delivered to Active international

In a letter dated April 29, 2002, Sharon P. Marshall, Acting General Counsel of Active International stated that Active Media Services, Inc. is a Delaware corporation and that Active International is d/b/a Active Media Services, Inc. on February 20, 2001. The list identifies 2,409 pieces of style number 40585 from import entry 231-XXXX205-5 as being covered.

For purposes of exportation, a CF 7553 or a “Notice of Intent to Export, Destroy or Return Merchandise for Purposes of Drawback” (“NOI”) was dated on May 16, 2001, with the intended date of export of May 24, 2001 at “East Coast Dist.” in Closter, New Jersey. The CBP officer examined the goods on May 30, 2001. The NOI lists eight style numbers of which four are not listed on the attachment to the drawback claim and the CF 7552. The eight style numbers are: 45937; 50457; 45898; 43179; 49032; 47506; 42852; and 45953. The four not listed on the list of imports attached to the drawback claim and the CF 7552 are: 50457; 45898; 43179; and 49032. Subsequent to the examination, an amendment to the NOI was made on June 27, 2001 in a letter addressed to the Port from the Northeastern Customs Brokerage Co., Inc. (“broker”) who had filed the drawback claim on behalf of the claimant, Active International. The amendment changed the value of the merchandise and the number of pieces being claimed. Originally, the goods were valued at $883XXX and counted at 41,260 pieces but were amended to a value of $823XXX and 43,582 pieces. In addition, the broker stated that the list of style numbers on the NOI was a random selection.

A bill of lading was furnished with the following information:

Shipper/Exporter: K2 Optical
B/L Number: NYCK6038201
Consignee: HDP2 Direction Generale (“HDP2”) Vessel: Hong Kong Express
Port of Loading: New York
Port of Discharge: Le Havre (France)
Description of Goods: 69,150 pcs of wearing apparel

The export invoice indicates that HDP2 purchased from Active International 43,582 pieces of “Wg. Apparel Close-Out Merchandise” at a total cost of $823XXX. The date of this document is “June-01.”

The protestant also relies on a document which it refers to as an “affidavit” for proof of the receipt of goods by HDP2 in France. This “affidavit” states that it “. . . verifies receipt of the following apparel merchandise received from the United States.” The “affidavit” lists twenty-seven style numbers along with their respective number of pieces for each style number that total 43,582 pieces. The “affidavit” is signed by Mr. Ben Kaftari but there is no date on this document. In addition to this “affidavit,” Mr. Kaftari’s signature is also found on another document which is referred to as a “wavier of all drawback rights” on behalf of K2 Optical. This “waiver” states that K2 Optical “. . . acted only as a shipping agent . . . for the shipment of assorted Ann Taylor clothing on behalf of Active International Inc., for the purpose of obtaining better freight rates.”


Whether the exportation of merchandise identified by style numbers, 50457; 45898; 43179; and 49032, would result in eligibility for drawback.

Whether the evidence shows that merchandise identified by style numbers, 45937; 47506; 42852; and 45953, was exported and therefore, eligible for drawback.


Initially, we note that the protest was timely filed under the statutory and regulatory provisions for protests (see 19 USC § 1514 and 19 CFR Part 174). We note that the refusal to pay a claim for drawback is a protestable issue under 19 USC § 1514(a)(6). This protest involves the denial of drawback under 19 USC § 1313(j)(1) for a single drawback entry.

Based on the documents provided by the claimant in response to the requests made by the Port, the information was found to be insufficient to approve drawback for purposes of 19 USC 1313(j)(1). The Port asserts the following:

The CF 7553 which was amended on June 27, 2001 was inspected on May 30, 2001 and at the time of the inspection, no discrepancies were found, so the exam was successful. However, if the exported merchandise was manipulated after examination, the examination should be considered invalid.

On the CF 7553, the styles do not appear on the calculation sheet and some of the styles on the calculation sheet do not appear on the NOI.

The export invoice that was provided does not identify style numbers. The only information provided on the invoice is the total cost of the invoice of $823,179.93 which was revised on January 21, 2003 and owed to Active from HDP2.

Active later stated that the subject merchandise was not purchased by HDP2 Direction Generale but by East Coast International, Inc. (“East Coast”) for $108,000.

The bill of lading states that 69,150 pieces were exported to HDP2, but only 43,582 pieces are being claimed for drawback.

HDP2 stated that it received the goods but the statement that is allegedly provided by an HDP2 official is signed by a K2 Optical official.

In its protest, the protestant asserts the following:

All necessary documents were then supplied as requested, whenever requested. The request for verifying exported styles was supplied as requested. The quantity that was shipped was also submitted, and the export do[c]umentation from the steam ship company, clearly shows the goods were exported to the foreign country.

Issue 1.

Section 313(j)(1) of the Tariff Act of 1930, as amended (19 USC § 1313(j)(1)), provides for a refund of duties on imported merchandise, exported or destroyed under CBP’s supervision, within three years from the date of importation, and not used within the United States before such exportation or destruction.

The subject merchandise was imported into the United States by Ann Taylor, Inc. According to the list of imports attached to the CF 7552, 43,582 pieces of the imported merchandise were transferred to Active International on February 20, 2001. This same list was attached to the drawback claim. The imported merchandise each was identified by a style number. The NOI submitted by the protestant described eight style numbers of which four were not on the list of imported merchandise covered by the CF 7552 and the drawback claim. Those styles numbers are: 50457, 45898, 43179, and 49032.

According to 19 USC 1313(j)(1), drawback is available only on the exportation of the imported merchandise. Although the broker stated that the listed eight styles were merely illustrative, that statement is not evidence under the principle in Bar Bea Truck Leasing Co. v. United States, 5 CIT 124 (1983) (unsupported assertions of fact are not evidence). The evidence of the CF 7553 shows that merchandise consisting of 41,260 pieces of wearing apparel identified by eight style numbers and packed in 840 cartons, was examined by a CBP officer on May 30, 2001. The place of examination was at “East Coast Dist.” in Closter, New Jersey. The claim asserts a date of exportation of June 10, 2001. A bill of lading issued on June 10, 2001, asserts that 1256 cartons containing 69,150 pieces of wearing apparel were loaded on the vessel, “Hong Kong Express” on June 10, 2001. By a handwritten note dated June 27, 2001, the broker asserted that the shipment consisted of 43,582 pieces and had a lower value. It is clear that if export occurred, as asserted, on June 10, 2001, there would be no means available for CBP to verify the asserted changes on June 27, 2001. It is also obvious that there is a conflict in the number of pieces shown on the claimant’s bill of lading (1250 cartons and 69,150 pieces) and the numbers shown on the CF 7553 (840 cartons and 41,260 pieces) as well as those on the Broker’s note of June 27, 2001 (43,582 pieces). No explanation of these discrepancies has been provided.

By regulation, 19 CFR 191.35(a), a NOI for a drawback claim is required to be filed at least two working days before the intended date of export. This regulation allows CBP to verify the goods on which drawback is to be claimed after export. The broker’s note of June 27, 2001 does not meet the requirement of this regulation since it was filed after the claimed export date of June 10, 2001. The failure to comply with a similar regulation was upheld as the basis for denial of drawback in United States v. Lockheed Petroleum Services, Ltd., 709 F.2d 1472 (Fed. Cir. 1983). Therefore, because the merchandise described by the above four style numbers has not been identified as imported duty-paid merchandise, exportation of that merchandise does not result in eligibility for drawback.

Issue 2.

The claim lists twenty-seven import entries that cover the imported merchandise on which the claim is based. One of those import entries is entry number 231-XXXX854-3. This entry’s invoice identifies the merchandise by style number 62-47506 and provides the quantity of the merchandise as 3,737 pieces (311.4 dozen) with an invoice price of $139XXX. The invoice also provides the classification of the merchandise as subheading 6204.69.4010, HTSUS. The invoice information can be linked to its CF 7501. The attachment to the claim and the CF 7552 lists entry 231-XXXX854-3. The list further stated that this entry imported 1645 pieces of merchandise and identified the merchandise by style number 47506. The NOI identified the location of the goods at East Coast Dist. in Closter, New Jersey.

The protestant relies on a bill of lading issued to K2 Optical in Tampa, Florida which covers merchandise loaded in New York on the vessel, “Hong Kong Express.” The bill of lading states that the goods were loaded on the “Hong Kong Express” on June 10, 2001. The protestant also relies on the invoice purporting to show a sale of wearing apparel from Active to HDP2 covering 43,582 pieces of wearing apparel. Two copies of that invoice are in the file. The first copy has a date of “June-01.” The second copy has a revision date of January 21, 2003 and contains a note which states the invoice value of the imported goods at $823XXX. However, according to a letter dated January 21, 2003, the goods were sold to East Coast Dist. for $108,000. A copy of a check dated July 12, 2001 for that amount from East Coast International to Active International was provided to support this purchase. The address of East Coast International shown on the letterhead of the letter dated January 21, 2003 differs form the location of the goods shown on the NOI, albeit both are in Closter, New Jersey. The telephone number is identical on both documents.

While it is clear that the goods covered by style 47506, imported under entry number 231-XXXX854-3, are listed on the CF 7552 and the NOI, which would indicate that they were examined by CBP at East Coast Dist. in Closter, New Jersey on May 30, 2001, it is not evident that those same goods were sold to HDP2 or were loaded on the “Hong Kong Express,” in New York on June 10, 2001.

In a letter dated May 6, 2002, about one year after the goods were examined, the broker asserted that the style numbers described on the NOI constituted a random sampling of numbers at the original time of processing. However, as noted above, that assertion is not evidence, even if the assertion was in the form of an affidavit, it would not be entitled to enough weight to contradict the evidence of the NOI itself. See Andy Mahon Inc., American Customs Brokg. Co. Inc. v. United States, 537 F.2d 516, 63 CCPA 104 (1976) (Affidavits that are incomplete, based on unproduced records and executed years after the transaction to which they attest are entitled to little weight).

There are significant conflicts in the material presented. There is a discrepancy in both the number of cartons and pieces between the goods examined (840 cartons and 41,260 pieces) and the goods stated to be loaded on the vessel (1250 cartons and 69,150 pieces). Further, the bill of lading fails to identify any merchandise by style number. The invoice purportedly covering the sale between Active and HDP2 fails to list any style numbers. Moreover, the number of pieces (43,582 pieces) covered on the invoice differs from the bill of lading (69,150 pieces). At most, the documents provide an adequate link only to the imports indicated on the list of imports identified by style numbers. Therefore, for purposes of 19 USC 1313(j)(1), the export documents provided in this protest lack sufficient information to show that the exported merchandise was the same as that of the imported merchandise.

Since the bill of lading purports to cover the shipment of wearing apparel sold by Active to HDP2, the unexplained discrepancy of almost 33% between the two documents raises a question as to the merchandise exported. Furthermore, East Coast’s letter to Active dated January 21, 2003, about 18 months after the bill of lading stated that the goods were loaded on the “Hong Kong Express,” indicates that East Coast bought the wearing apparel from Active and paid for those goods with a check dated July 12, 2001. That sale price differs from the purchase price between Active and HDP2 by about 800%. That difference is explained in another copy of the invoice as the difference between the actual price and the import price.

The relationship of Mr. Kaftari to the transaction adds further confusion. Mr. Kaftari on behalf of K2 Optical, in a letter to CBP, dated July 13, 2001, identified himself only as a shipping agent. This letter is dated one day after the check stated to have been the purchase price paid by East Coast from Active. Mr. Kaftari also signed an unsworn, undated document described as an “affidavit” that asserted receipt of the various wearing apparel in France by HDP2. This document is at odds with Mr. Kaftari’s July 13, 2001 letter to CBP in which he claims that he only acted as a shipping agent.

In any event, there is no credible evidence linking the imported goods covered by the CF 7552 in New Jersey, some of which apparently were examined by CBP on May 30, 2001 with the goods loaded on the “Hong Kong Express” on June 10, 2001 in New York. Consequently, because the link between the examined goods and the goods loaded 10 days later has not been shown, denial of drawback is warranted under the principle of Guess?, Inc. v. United States, 944 F.2d 855 (Fed. Cir .1991) (We are dealing instead with an exemption from duty, a statutory privilege due only when enumerated conditions are met). There, the dispute was whether the evidence showed that the exported goods were fungible with the imported goods. Here, the dispute is whether the evidence shows that the imported goods were exported. Aside from the discrepancies in amounts and the failure to maintain identity by style numbers on the various documents, if Active sold the goods to East Coast, it could not have sold the same goods to HDP2. The goods shipped by K2 Optical on board the Hong Kong Express to HDP2 differ in quantity by about 33% from the quantity covered by the invoice from Active to HDP2 and beyond the term “wearing apparel.”


The merchandise identified by style numbers, 50457; 45898; 43179; and 49032, are not eligible for drawback.

Based on the export documents, it is not evident that the merchandise identified by style numbers, 45937; 47506; 42852; and 45953, imported by Ann Taylor, Inc., and transferred to Active, is the same merchandise exported to HDP2 for purposes of 19 USC 1313(j)(1).

This protest should be denied.

In accordance with the Protest/Petition Processing Handbook (CIS HB, January 2002, pp. 18 and 21), 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 in accordance with this 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 CBP personnel, and to the public on the CBP Home Page on the World Wide Web at www.cbp.gov, by means of the Freedom of Information Act, and other methods of public distribution.


Myles B. Harmon, Director
Commercial Rulings Division

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