Marathon Ashland Petroleum, LLC; Application of Further Review of Protest 5301-06-00153, 19 U.S.C. § 1313(p); Drawback; Petroleum; Amendment to Drawback Claim

HQ H005627 February 14, 2011 OT:RR:CTF:ER H005627 CSO Port Director, Houston Attn: Ms. Christina D. Brooks U.S. Customs and Border Protection 2350 N. Sam Houston Parkway East, Suite 1000 Houston, Texas 77032-3126 Re: Marathon Ashland Petroleum, LLC; Application of Further Review of Protest 5301-06-00153, 19 U.S.C. § 1313(p); Drawback; Petroleum; Amendment to Drawback Claim Dear Port Director: On March 16, 2006, Protest 5301-06-100153 was filed with U.S. Customs and Border Protection (“CBP”) on behalf of Marathon Petroleum Company, LLC (f/k/a Marathon Ashland Petroleum Company, LLC) (hereinafter “Marathon”) and was subsequently forwarded to this office as an Application for Further Review (“AFR”). In the protest, Marathon argues that its revised Certificate of Manufacture and Delivery (“CMD”) does not constitute an amendment to the claim because the CMD is not a claim and therefore, there is no regulatory restriction for amending it. Marathon also argues that, in the alternative, the originally filed CMD could be used as the basis for its drawback claims. We find that the revised CMD is an amendment because it changes the scope of the drawback claim and the Houston Drawback Center (“Houston”) should therefore reject the amendment. We also find that the originally filed CMD may not be used as a basis for Marathon’s drawback claims at issue because it references and relies on the specific manufacturing drawback ruling 44-01890-000 that was issued to Marathon Oil Company and is therefore not applicable to Marathon. FACTS: Marathon submitted three drawback claims, entry numbers xxx-xxxx7605, xxx-xxxx3024 and xxx-xxxx3909. All three claims were filed pursuant to 19 U.S.C. § 1313(p). Specifically, drawback was claimed on the process whereby marine fuel oil was blended with other residual fuels to make intermediate fuel that was used as bunker fuel, and subsequently exported. Houston identified drawback claim number xxx-xxxx3024 (“3024”) as the representative claim and thus, we will only analyze this claim because it is representative of the other claims at issue in this protest. Drawback claim number 3024 identified CMD 300323 to support the drawback claim. CMD 300323 was received by CBP on December 5, 2001, and shows the specific manufacturing drawback ruling number, 44-01890-000, which was granted to Marathon Oil Company as the basis for claiming drawback. This original CMD 300323 designated the following imports as the basis for drawback: Entry Number Import Date Date Received Date Consumed xxx-xxxx025-1 02/15/96 03/96-04/96 03/96-05/96 xxx-xxxx028-5 05/09/96 05/96-06/96 05/96-07/96 xxx-xxxx022-8 06/14/96 06/96-07/96 06/96-08/96 After reviewing the original CMD 300323, Houston sent a letter to Marathon’s broker dated December 13, 2001, stating that “[i]n reviewing the CMD it is noted in Exhibit E [sic], item E, that the quantity of raw material required to be designated is not covered fully by the designated imports. Please review your documents and submit corrections where necessary.” Marathon did not respond to Houston’s December 13, 2001 request until December 18, 2003, when its broker provided CBP with an amended CMD 300323 that designated different imports as the basis for drawback, which are as follows: Entry Number Import Date Date Received Date Consumed xxx-xxxx020-7 05/18/98 05/98-06/98 05/98-06/98 xxx-xxxx020-7 05/05/98 05/98-06/98 05/98-06/98 xxx-xxxx021-5 05/17/98 05/98-06/98 05/98-06/98 Houston then denied the drawback claim because it determined that the amended CMD changed the designation of imports. Houston determined that the change in imports was an amendment and thus, must be filed within three years of the date of exportation. Marathon filed its protest on March 16, 2006, and argued in its protest that the CMD is not a “claim” or a “drawback entry” and therefore, is not subject to the time limit requirements of 19 C.F.R. § 191.52(c). Marathon alleged that it was also entitled to drawback because it was the successor to Marathon Oil Company, which was the company listed in ruling number 44-01890-000. This was the ruling number listed on the original CMD 300323. Marathon also requested further review in its protest. On September 20, 2007, Marathon provided CBP with an amendment to the protest and further supplemented the argument that Marathon provided sufficient evidence of successorship to avail itself of the specific manufacturing drawback ruling 44-01890-000. In support of this alternative argument Marathon claims that it provided all necessary documentation for a successorship determination as requested by CBP. Houston argues that the revised CMD 300323 submitted on December 18, 2003, changed the scope of the claim as it altered the designated imports and is thus, an amendment for purposes of 19 C.F.R. § 191.52(c). Houston’s position is that because the revised CMD 300323 was submitted outside of the three year time period, the CMD should not be accepted as a basis for the drawback claim. Houston also maintains that Marathon cannot use the original CMD because it re-designated the imports used in the original CMD for other CMDs and “therefore the availability of the product is compromised and no longer available.” ISSUES: Whether Marathon may submit a revised CMD beyond three years after the date of exportation or destruction of the articles that are the subject of the original drawback claim. Whether Marathon is entitled to drawback pursuant to the specific manufacturing drawback ruling 44-01890-000, which was granted to Marathon Oil Company, not Marathon. LAW AND ANALYSIS: On September 20, 2007, Marathon amended the Protest 5301-06-100153 pursuant to 19 C.F.R. § 174.28 and provided additional arguments. Marathon claims that further review is warranted because the decision against which the protest was filed involves questions of law or fact that have not been ruled upon by the Commissioner of CBP or his designee or by the Courts. Additionally, Marathon suggests that it has been subjected to inconsistent treatment, which would meet the criteria for further review per 19 C.F.R. § 174.24(b). Your office properly granted the AFR because the protest involves questions of law or fact that have not previously been ruled upon, the criteria for further review by this office are satisfied per 19 C.F.R. §§ 174.24(a), 174.24(b) and 174.26(b)(1). Timeliness First, we must address whether the protest was timely filed by Marathon. The refusal to pay a claim for drawback is subject to protest pursuant to 19 U.S.C. § 1514(a)(6). This protest was timely filed on March 16, 2006, within the ninety days of the date of liquidation of three entries. Drawback claim number xxx-xxxx760 and xxx-xxxx302 were liquidated on December 16, 2005, and number xxx-xxxx390 was liquidated on December 23, 2005. We note that Section 2103 of the Miscellaneous Trade and Technical Corrections Act of 2004 (the 2004 Act) amended 19 U.S.C. § 1514 to permit 180 days in which to file a protest but, that amendment is not applicable to this protest. (Public Law 108-429, 108 P.L. 429, 118 Stat. 2434 (2004), 108 enacted H.R. 1047, December 3, 2004). Section 2108 of subtitle B amended Section 1514 effective for goods entered or withdrawn from warehouse for consumption after December 18, 2004. Here, such entries occurred before December 18, 2004. Therefore, the protestant had ninety days to file the protest and timely filed the protest on March 16, 2006. Whether Marathon may submit a revised CMD beyond three years after the date of exportation or destruction of the articles that are the subject of the original drawback claim. Whether CBP will accept the revised CMD depends on whether it constituted an amendment or a perfection of the claim. There is no time limit for perfection of drawback claims. However, for amendments to drawback claims, there is a three year time limit. Because Marathon’s revised CMD changed the scope of the claim, we find that the revised CMD was an amendment and therefore, it should be rejected as untimely. The difference between perfection and amendment is, in general, that an amendment is a change to the basis of the claim for drawback (i.e., the imports or exports upon which the claim is made) and perfection is providing evidence or information to substantiate the drawback claim. CBP regulations provide for the perfection of drawback claims under 19 C.F.R. § 191.52(b), which allows for additional evidence or information to be provided to CBP as long as the drawback claim is complete. Section 191.52(b) states: [i]f Customs determines that the claim is complete according to the requirements of § 191.51(a)(1), but that additional evidence or information is required, Customs will notify the filer in writing. The claimant shall furnish, or have the appropriate party furnish, the evidence or information requested within 30 days of the date of notification by Customs. Customs may extend this 30 day period for good cause if the claimant files a written request for such extension within the 30 day period. The evidence or information required under this paragraph may be filed more than 3 years after the date of exportation or destruction of the articles which are the subject of the claim. Further, 19 C.F.R. § 191.52(b) provides for examples of perfection that include submitting the bill of lading, a copy of the import entry and invoice annotated, a copy of the export invoice annotated and certificates of delivery to show the transfer of an article from one party to another. See 19 C.F.R. § 191.52(b). These types of documents provide evidentiary support for a drawback claim but do not change the scope of the claim. In contrast, amendments to claims change the underlying basis for the claim. To clarify the difference between perfecting a drawback claim and amending one, we held, in part, in HQ 227627 (July, 20, 1999) that: a claim may not be amended by changing the scope of the claim after the expiration of the 3-year period. We find that changing the basis on which drawback is claimed and the amount claimed, is a change in the scope of the claim, is not simply the submission of supporting evidence, and therefore is an untimely amendment of the claim if done more than three years after the date of exportation or destruction. Therefore a change to the designated imports alters the basis on which drawback is claimed and is thus an amendment to the claim, not a perfection of the claim. Title 19 United States Code, Section 1313(r) provides for amending drawback claims that have not been liquidated. The statute requires that amendments to drawback claims must be filed “within 3 years after the date of exportation or destruction of the articles on which drawback is claimed . . .” This requirement is also set forth in the implementing regulations for 19 U.S.C. § 1313(r) found at 19 C.F.R. § 191.52(c). The purpose of a CMD is to document the delivery of articles from the manufacturer or producer to another party, identify articles as those for which a potential right to drawback exists, and assigns the potential rights to the transferee. 19 C.F.R. § 191.24(d). In the original CMD number 300323 provided on December 5, 2001, that was filed with the drawback claim the following imports were designated and were identified by entry number: Entry Number Import Date Date Received Date Consumed xxx-xxxx0251 02/15/96 03/96-04/96 03/96-05/96 xxx-xxxx0285 05/09/96 05/96-06/96 05/96-07/96 xxx-xxxx0228 06/14/96 06/96-07/96 06/96-08/96 Marathon attempted to amend its claim and changed the scope of the drawback claim when it identified different imports upon which its claim is based by providing an amended CMD 300323 on December 18, 2003. The imports identified on the amended CMD were based on different entries and include the following: Entry Number Import Date Date Received Date Consumed xxx-xxxx0207 05/18/98 05/98-06/98 05/98-06/98 xxx-xxxx0207 05/05/98 05/98-06/98 05/98-06/98 xxx-xxxx0215 05/17/98 05/98-06/98 05/98-06/98 In this case, Marathon identified newly designated imports on the amended CMD. This replacement of designated imports constitutes a change in the scope of the claim and is therefore, considered an amendment. The dates of export in this case are from January 1, 1999 to January 12, 1999. Therefore, pursuant to 19 C.F.R. § 191.52(c), Marathon must have made any amendments by January 1, 2002. However, Marathon filed the amended CMD number 300323 on December 18, 2003, almost an entire year after the three-year time limit concluded. Therefore, the amended CMD 300323 was untimely filed and should not be considered when reviewing the drawback claim. We note that Marathon suggests that the instant case is inconsistent with Houston’s decision in protest 5301-04-100062, by alleging that Houston made a decision that allowed the protestant in that case to file an amended CMD and granted the drawback claim. However, this statement does not provide a basis for relief in this case. Marathon has not claimed or provided evidence that its importations were the subject of “treatment” within the meaning of 19 U.S.C. § 177.12(c). Whether Marathon is entitled to drawback pursuant to the specific manufacturing drawback ruling 44-01890-000, which was granted to Marathon Oil Company. In its September 20, 2007, amendment to Protest 5301-06-100153, Marathon stated that in the alternative to using the amended, untimely CMD 300323, the timely filed CMD 300323 may be used “as the basis of recovery for each of these entries due to 19 U.S.C. 1313(s).” We note that in the timely filed CMD 300323, Marathon relied upon the specific manufacturing drawback ruling 44-0890-000 issued to Marathon Oil Company and Marathon argues it is the successor to Marathon Oil Company. In 1997, Marathon argued that Marathon Oil Company was succeeded by Marathon Ashland Petroleum Company LLC (i.e., Marathon). Marathon Oil Company had been issued specific manufacturing drawback ruling 44-01890-000. On June 14, 2000, Marathon Oil Company submitted a successorship application for Marathon Ashland Petroleum Company arguing it was the successor of Marathon Oil Company. Marathon could not claim drawback under the specific manufacturing drawback ruling 44-0890-000 unless a successorship determination was made by CBP. See 19 C.F.R. § 191.8(a). However, CBP was unable to make a successorship determination because Marathon did not provide CBP with sufficient information to establish it was a successor. In a March 14, 2001, letter, CBP informed Marathon that its application, dated June 14, 2000, for a 19 U.S.C. § 1313(s) successorship application was insufficient. In this letter, CBP requested additional information, explaining that further documentation was necessary to establish successorship. Specifically, CBP requested a copy of the Addendum and Joinder to the Asset Transfer and Contribution Agreement that makes Marathon Ashland Petroleum LLC a party to that Agreement. CBP also referenced problems with Agreement No. 4 on page seven that needed to be corrected. The information on page seven had been copied from the general petroleum drawback ruling rather than the specific manufacturing drawback ruling under 19 U.S.C. § 1313(b). Both the Addendum and Joinder to the Asset Transfer and Contribution Agreement and the correction to Agreement No. 4 were required before CBP could make a successorship determination. In order for Marathon to have based its drawback claim on the original CMD 300323, it must have secured a successorship determination pursuant to 19 U.S.C. § 1313(s). Marathon did seek a successorship determination from CBP on June 14, 2000. However, CBP could not reach a determination because Marathon failed to provide the Addendum and Joinder to the Asset Transfer and Contribution Agreement and the correction to Agreement No. 4. Instead of supplying the requested documents, Marathon informed CBP on July 10, 2003, that it “will not seek successorship under 19 U.S.C. 1313(s).” Therefore, Marathon has no basis upon which to make a drawback claim as the successor to Marathon Oil Company because a successorship determination was never made. Hence, neither the original CMD 300323 nor the untimely filed amended CMD 300323 may be used for the drawback claims in this case. HOLDING: Under the facts described, and in response to the request for further review, you are directed to deny the protest in full. This must be accomplished prior to mailing of the decision, in accordance with Section IV of the Customs Protest/Petition Processing Handbook (CIS HB, December, 2007). You are to mail this decision, together with CBP Form 19, to the protestant no later than 60 days from the date of this letter. No later than 60 days from the date of this letter, Regulations and Rulings of the Office of International Trade 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 by other means of public distribution. Sincerely, Myles B. Harmon, Director Commercial and Trade Facilitation Division