Request for Internal Advice on Toyota Motor Manufacturing, Kentucky, Inc.; NAFTA Duty Deferral; Foreign Trade Zones; Export Claims; 19 U.S.C. §81c(a); 19 U.S.C. §1313; 19 U.S.C. §1558; 19 U.S.C. §1515(a); 19 CFR §181.53

HQ 228270 January 3, 2002 DRA-2-02/ FOR2-03 RR:CR:DR 228270 IOR CATEGORY: Entry Director, Trade Agreements U.S. Customs Service 1300 Pennsylvania Ave., NW Washington, D.C. 20229 Attn: Joyce Metzger RE: Request for Internal Advice on Toyota Motor Manufacturing, Kentucky, Inc.; NAFTA Duty Deferral; Foreign Trade Zones; Export Claims; 19 U.S.C. §81c(a); 19 U.S.C. §1313; 19 U.S.C. §1558; 19 U.S.C. §1515(a); 19 CFR §181.53 Dear Madam: This is in reply to your memorandum of November 2, 1998, on behalf of the Port Director, Cleveland, Ohio, seeking internal advice regarding the liquidation of certain NAFTA duty deferral export entries submitted on behalf of Toyota Motor Manufacturing, Kentucky, Inc. (“TMMK”). The following is based on our review of submissions from TMMK and documentation received from your office and follows two meetings with counsel for and representatives of TMMK, on January 7, 1999, and July 11, 2001. The entries are the subject of Protest no. 4115-98-100002. FACTS: Toyota Motor Manufacturing, Kentucky, Inc., (“TMMK”), imports foreign parts into a U.S. foreign trade zone (“FTZ”) to manufacture motor vehicles. The vehicles are then withdrawn from the FTZ for export to Canada under the North American Free Trade Agreement (“NAFTA”) duty deferral program. According to the file, the Port of Cleveland liquidated and issued duty bills on TMMK entries, where TMMK did not provide satisfactory evidence of Canadian duties paid within the regulatory period of 60 calendar days, to qualify for the waiver or reduction of duties provided for under 19 CFR 181.53(a)(3). TMMK protested the duty bills and claimed that they partially submitted satisfactory evidence within the 60-day period. TMMK wants the opportunity to perfect and present any missing satisfactory evidence in order to waive any U.S. duties owed on these entries. According to the Port, prior to the liquidation of the entries, Customs staff met with TMMK staff on several occasions to describe and explain what is required for a duty deferral claim and several letters were sent by TMMK attempting to explain the subject protest. According to the record, Customs Forms (CF) 7501 were timely filed. The Port has taken the following position with respect to the protest: 1. It does not dispute that TMMK did pay the Canadian duties. However, TMMK did not, in all cases, present its claims to Customs within the 60-calendar-day time frame. 2. The protested entries did not have the required information that is to be reported in Part II of the CF 7501. In some instances, incomplete summary sheets were submitted within 60 days, others were submitted incomplete and after 60 days had passed, and other entries were never followed-up with a Part II submission before a substantial amount of time had passed. 3. The information provided by protestant does not contain accurate Canadian entry numbers, tariff classification numbers, rate of duty or amount of Canadian duties paid. Your memorandum indicates that TMMK submitted complete claims subsequent to the receipt of duty bills, which was after the expiration of the 60-day period, and the port has now concluded that TMMK did pay Canadian duties. However, it is your position that the 60-calendar-day period is a date certain for submitting satisfactory evidence in support of the claim and that a claim cannot (or should not) be perfected thereafter. The port concludes that TMMK has not met all of the essential procedural requirements with respect to the NAFTA duty deferral entries in question as required by 19 C.F.R. §181.53(a)(3)(ii), because the information initially provided was insufficient to fulfill the requirements of the regulations. Reference to a “Part I”, is to the CF 7501 NAFTA duty deferral entry (“08” type entry) that contains the U.S. import/export information setting forth the exporter’s obligation of U.S. duties due and payable. Reference to a “Part II”, is to the Canadian entry information and amount of duty paid to Canada, required to be submitted to Customs within 60 days after the date of exportation to Canada, on a CF 7501, under 19 CFR 181.53(a)(3). Reference to an “initially-filed Part II” is to a document filed with Customs by TMMK prior to the submission of a Part II. The submission provided by the port to this office, divided the entries into different groups, depending upon the filing date of the initially-filed Part II or just the Part II, in relation to the filing date of the Part I. In determining whether the initially-filed Part II or Part II was filed within 60 days from the export date, the port relied on the entry date on the Part I. According to the applicable regulations, 19 CFR 181.53(a)(2)(iii)(B), “for purposes of completing [the CF] 7501…, any reference on the form to the entry date shall be taken to refer to the date of exportation of the good or the date the goods are entered into a duty-deferral program in Canada….” The regulations further require that the CF 7501 be filed “no later than 10 working days after the date of exportation to Canada…or 10 working days after being entered into a duty-deferral program in Canada….” According to TMMK, the export date of the merchandise is not the date given in the entry date space on the CF 7501, but is the date in the “entry date” column on the initially-filed Part II or Part II. Most of the initially-filed Part II’s have several dates in the column for “entry date”. For purposes of this decision, we are using the earliest date on the initially-filed Part II as the export date for purposes of determining what documents were filed within 60 days of the exportation of the merchandise. We do not have the initially-filed Part II’s for all of the entries which are a subject of the protest and internal advice request, therefore this decision cannot specifically address all of the entries. Three examples are addressed below. Entry BG9-xxxx030-7 Entry BG9-xxxx030-7 was initially included in Attachment F of the port’s submission, in the group of “incorrect summaries filed untimely”. The Part I is date-stamped as having been filed on August 9, 1996, and is broken down into 9 line items of vehicles and parts, including the quantity, value, duty rate and duty for each line item. Attached to the Part I is a spreadsheet of “Canadian Vehicles” for the week of July 29, 1996 to August 4, 1996. The spreadsheet breaks down the information on the Part I as to the day each vehicle was produced, with the value, weight, and duty attributable to the items used each day in production, and is broken down into 10 different classification numbers, each of which correspond to all but one of the classification numbers on the Part I. One of the classification numbers on the spreadsheet is not on the Part I. The spreadsheet shows the use of all of the entered merchandise, in the production of 81 vehicles. On the Part I the entry date is identified as “8.8.96”. The import date is identified as “072996”. Customs Automated Commercial System (ACS) indicates an entry date of July 29, 1996. According to the port’s Attachment F summary, the export date was July 29, 1996. July 29, 1996 is the date in Block 27 of the CF 7501, for the “import” date. TMMK, at the meeting of July 11, 2001, explained that on the Part I, the “import date” represents the date the vehicles physically crossed the border from the U.S. into Canada, and the “entry date” on the initially-filed Part II represents the date of entry into Canada, and is the same as the date of entry on the Canadian Customs form. The initially-filed Part II for entry BG9-xxxx030-7, contains the following information: Customs Entry # BG9-xxxx030-7 Date Range: 7-29-96 – 8-4-96 60th Day: 9-28-96  Exit # Broker’s ref. # Entry Date  50784 411-981418 8-16-96  50773 411-975256 8-9-96  03225 310-343839 8-15-96  32974 815-932043 8-21-96  03224 411-983082 8-21-96  03228 310-347869 8-27-96   The initially-filed Part II is date-stamped October 4, 1996, and is not on a CF 7501. This document is identified as a “NAFTA Duty Deferral” pertaining to “Canadian Export Vehicles”. According to TMMK’s submission of May 9, 2001, the “exit number” refers to a small group of vehicles that were exported to Canada together on one Canadian entry. The “Broker’s Ref. #” refers to a number on the bottom of each Canadian B-3. The “entry date” refers to the date of entry, of a group of vehicles, into Canada. Therefore the earliest “export date” for entry BG9-xxxx030-7, was August 9, 1996. According to this information, the 60 day time period in which a claim for a waiver of duties must be filed, ended on October 8, 1996. Therefore, the initially-filed Part II was filed within 60 days of the export of the merchandise, whether the entry date is considered the “entry” date on the Part I, or the “entry” date on the initially-filed Part II. At the top of the document the Customs entry number of the Part I is referenced. According to TMMK, the “date range” of “7-29-96 to 8-4-96” shows the dates the vehicles were completed at the subzone. There is a “60th day” identified as “9-28-96”, which according to TMMK, was TMMK’s internal deadline for filing a duty waiver claim, and is based on the date range and not the export date. We note that some of the Exit #’s on the initially-filed Part II correspond to the last five digits of the 14-digit Canadian entry number on the Part II. However, Customs had no knowledge of what the Exit number represented, and even TMMK in its subsequent submissions has never indicated that the Exit number had any relation to the Canadian entry number. In the other representative entries, there does not appear to be any consistent correspondence between the Exit numbers and the Canadian entry numbers. There is a third document, referred to as the “Part II”. This document is not date-stamped. This document is on a CF 7501, contains 11 line items of vehicles, each having a 14-digit Canadian entry number, the date of import into Canada, a classification number, rate of duty, and two different amounts of duty, one being in parentheses. The duty shown is that paid upon entry into Canada, and the amount in parentheses is the amount of duty paid in Canadian Dollars. There is a Block 37 summary, which shows three lines of duty. The first is the amount of duty owed for the entry of the merchandise under the Part I, the second is the total amount paid in Canadian duty (in U.S. dollars) on the merchandise shown on the CF 7501, and the third is the difference between the first amount and the second amount. For this entry the amount of Canadian duty paid is greater than the U.S. duty owed according to the CF 7501. With respect to the 11 line items, each represents motor vehicles. None of the line items identify a quantity of vehicles. With respect to the Canadian entry numbers, none correspond to the Broker Ref. #’s on the initially-filed Part II. As stated above, the last five digits of the Canadian entry numbers correspond to three of six of the Exit numbers on the initially-filed Part II. With respect to the dates of import into Canada, the different dates, varying by the line items, are August 1, August 9, August 13, and August 16, 1996. We note that only the August 9 and 16 dates correspond to the entry dates listed on the initially-filed Part II. According to the port, all of the Part II’s were submitted to Customs in September and October, 1997, including this one. There is a fourth document, referred to as the “Amended Part II”. According to a summary prepared by the port, the Amended Part II was submitted to Customs on September 28, 1998. The Amended Part II consists of 12 line items of vehicles, each with a 14-digit Canadian entry number, tariff classification, Canadian entry date, duty rate, and amount of Canadian duty paid. Four of the line items were not on the Part II. Three line items from the Part II are not on the Amended Part II. Relating to the Amended Part II, the file has lists of Vehicle Identification Numbers (VIN), shipment notifications which list the VIN, description and unit price of each vehicle on a Canadian entry form (B3), and the completed B3 forms. It is not clear whether the VIN lists, shipment notifications and B3 forms were submitted with the Amended Part II or afterwards. A comparison between the Part II and Amended Part II shows that the Canadian duty amounts on the Amended Part II were changed. The quantity of vehicles which are the subject of the Amended Part II, can be determined by reference to the B3 and comparison of the tariff classification numbers, and amount of duty paid. As to the export dates, on the Amended Part II, they are August 1, August 13, August 15, August 16, and August 21. We note that only the August 15, 16 and 21 dates correspond to the entry dates on the initially-filed Part II. We also note that if August 1, 1996 was in fact an export date of the merchandise, the initially-filed Part II, filed on October 4, 1996, would not have been filed within 60 days of the export of the merchandise to Canada. There are several inconsistencies and questions that arise from a review of the supporting documentation (VIN lists, shipment notifications and B3 forms). First, not all of the 81 VINs on the VIN list appear on the shipment notifications. Second, in TMMK’s submissions of November 13, 2001 and May 9, 2001, TMMK stated that the typical exit number refers to 15 vehicles in a single rail car load. However, there are 15 vehicles identified on each shipment notification, and with respect to Entry BG9-xxxx030-7, four different shipment notifications, with a total of 60 vehicles, all contained references to the same exit number, 50784. The number 50784 also appears to correspond to a Canadian entry number. Entry BG9-xxxx827-7 Entry BG9-xxxx827-7 was initially included in Attachment E of the Port’s submission, in the group of “Part II summaries not initially provided”. The Part I is date-stamped as having been filed on April 26, 1996, and is broken down into 10 line items of vehicles and parts, including the quantity, value, duty rate and duty for each item. Attached to the Part I is a spreadsheet of “Canadian Vehicles” for the week of April 15, 1996 to April 21, 1996. The spreadsheet breaks down the information on the Part I as to the day each vehicle was produced with the value, weight and duty attributable to the items used each day in production. The classification numbers on the spreadsheet correspond to those on the CF 7501. On the Part I the entry date is written in as “4-25-96”. The import date is identified as “041596”. ACS indicates an entry date of April 15, 1996. On the first page are written the words “Canadian Duty Deferral” (written by TMMK). The initially-filed Part II for entry BG9-xxxx827-7, contains the following type of information, of which we provide two rows as an example: TMM Entry # BG9-xxxx827-7 Date: 4/15/96 – 4/21/96 60th Day: 6-17-96 Canada Import Date 60th Day  Reference # Canadian Entry # Entry Date    02552 411-900930 96/04/24 4/15/96 6/14/96  02593 411-905962 96/05/02 4/24/96 6/23/96   This initially-filed Part II is date-stamped by Customs on June 17, 1996. The information in this initially-filed Part II is similar to that for entry BG9-xxxx030-7, except the term “reference #” is used instead of “exit #”, and the 9-digit reference number is under a column headed “Canadian Entry #” instead of “Broker’s ref. #”. In this document a distinction is made between the entry date and Canadian import date, although there is no indication of what that distinction is. In its May 9, 2001 submission, TMMK described the “entry” dates used on the initially-filed Part II as the date of importation into Canada. Using the later date of April 24, 1996, described as the “entry” date, the document was filed within 60 days of entry into Canada. The remaining “entry” dates are through June 13, 1996. There is a third document, referred to as the Part II. The Part II is not date- stamped. This document is on a CF 7501, contains 54 line items consisting of vehicles, each having a Canadian entry number, the date of import into Canada, a classification number, rate of duty, and the amount of Canadian duty owed, both in Canadian and U.S. dollars. The Part II includes a “Block 37 summary” which shows three lines of amounts. The first is the amount of duty owed for the entry of the merchandise under the Part I, the second is the total amount paid in Canadian duty (in U.S. dollars) on the merchandise shown on the Part II, and the third is the difference between the first amount and the second amount. For this entry, the amount of Canadian duty paid is greater than the U.S. duty owed according to the CF 7501. With respect to the 14-digit Canadian entry numbers on the Part II, none correspond in any way to the 9-digit “entry numbers” or the 5-digit “reference numbers” on the initially-filed Part II. With respect to the dates of entry into Canada, on the Part II, they range from April 15, 1996 through May 10, 1996. According to the Port, all of the Part II’s were filed in September and October, 1997, including this one. There is a fourth document, referred to as the “Amended Part II”. The Amended Part II is date-stamped September 17, 1998. The Amended Part II consists of 72 line items of vehicles, each with a 14-digit Canadian entry number, tariff classification, Canadian entry date, duty rate, and amount of Canadian duty paid. At least 13 of the line items were not on the Part II at all. At least 11 of the described items on the Amended Part II have the same Canadian entry number and tariff classification as on the Part II, but have different entry dates. The last five digits of one of the Canadian entry numbers on this document correspond to one of the "reference #’s” on the initially-filed Part II. There are two entries, BG9-xxxx662-7, and BG9 -xxxx296-4, for which the initially-filed Part II’s provided to Customs are not date-stamped at all. Therefore for those entries, there is no evidence that the initially-filed Part II’s were filed within 60 days of the export of the merchandise. Entry BG9-xxxx662-7 is also an example of different information provided in the initially-filed Part II. The Part I information is essentially the same as that described for the entries above. The type of information on the initially-filed Part II for entry BG9-xxxx662-7 consists of the following, of which we provide two rows as an example: Customs Entry # BG9-xxxx662-7 Date Range: 6-25-97 – 6-29-97  60th Day: 8-22-97  Exit # Transaction # Entry Date  4821 567xx000071142 7-4-97  4823 567xx000013835 7-9-97   The difference in information on the initially-filed Part II, from the examples above, is that the “Transaction #” provided is a 14-digit Canadian entry number. The Part II consists of twelve line items of vehicles, each having a 14-digit Canadian entry number, the date of entry into Canada, a classification number, rate of duty, and the amount of Canadian duty paid. There is also the Block 37 summary as with the above two entries. According to the Port, all of the Part II’s were filed in September and October, 1997, including this one. Of the twenty-four 14-digit “Transaction #’s” on the initially-filed Part II, fourteen correspond to the Canadian entry numbers on the Part II. The remaining transaction numbers do not correspond to any of the Canadian entry numbers on the Part II. The entry dates on the initially-filed Part II do not correspond to any of the entry dates on the Part II. For example, line items 10,11, and 12 each reference Canadian entry number 567xx000071142, and each indicates an entry date of June 30, 1997, as opposed to the entry date of July 4, 1997 as indicated on the