CBP Ruling H016693

HQ H016693 January 10, 2012 DRA 2-02, DRA 4 OT:RR:CTF:ER H016693 GGK Michael Benefiel, Chief Houston Drawback Office U.S. Customs and Border Protection 2350 N. Sam Houston Parkway East Suite 1000 Houston, TX 77032 Attn: Christina Brooks Re: Internal Advice regarding Application for Further Review, Protest Number 5301-06-100274 Dear Mr. Benefiel, This is in response to your request for internal advice regarding protest 5301-06-100274 filed by Celanese Ltd. ("Celanese"). FACTS: On May 4, 2005, Celanese filed drawback claim N04-00011313 for unused merchandise drawback pursuant to 19 U.S.C. § 1313(j)(1) with Customs and Border Protection's ("CBP") Houston Drawback Center. Celanese imported the seven underlying consumption entries of methyl acetate between February 2002 and February 2003, and exported them to Canada between May 2002 and April 2003. After review, the Houston Drawback Center liquidated the drawback claim without benefit of drawback on April 28, 2006. Soon thereafter, Celanese filed protest 5301-06-100274 on July 6, 2006, which is currently pending. The Houston Drawback Center forwarded an internal advice request to Headquarters regarding whether the documentation provided by Celanese sufficiently established: 1) proof of exportation of the merchandise to Canada and the identity of the exporter; and 2) direct identification using the first-in, first-out inventory accounting method ("FIFO"). After reviewing the protest and accompanying documentation, Headquarters contacted the Houston Drawback Center on November 3, 2011, to discuss the sufficiency of the FIFO accounting method used by Celanese. Subsequent to the telephone discussion, Christina Brooks, the Drawback Specialist assigned to the protest, withdrew her request for internal advice regarding direct identification under FIFO. Consequently, this internal advice will only address the remaining issue regarding proof of export. Specifically, the Houston Drawback Center questions whether the documents submitted sufficiently establish the identity of the exporter and constitute sufficient proof of exportation of the merchandise to Canada. As a part of the verification and review process, the Houston Drawback Center requested proof of export documentation for three export transactions listed on Celanese's Exporters Chronological Summary. The export transactions are identified by unique export identifier numbers: 80536254, exported on May 8, 2002; 80664239, exported on March 12, 2003; and 80681636, exported on April 25, 2003. For proof of export, Celanese submitted three bills of lading and three "load sheets" issued by Langer Transport. According to Celanese, the load sheets are internal records kept by Langer Transport. The documents provide the following information: 1. Export Transaction 80536254 The first bill of lading is identified by "Shipper's No. 80536254" and "Our Order No. 326490." According to the document, an amount of "METHYL ACETATE//3//UN1231//PGII," which correlates with Celanese's FIFO accounting figures, was loaded onto vehicle or car number 742 on May 8, 2002, at Carteret, New Jersey. The methyl acetate was consigned to 3M Canada Company and destined for delivery at 801 Clarke Road, Dock #1, London Ontario, N5V3B1. Furthermore, the shipper of the methyl acetate was Celanese Ltd., with a billing address of P.O. Box 819005, Dallas, Texas, 75381-9005. Finally, the first bill of lading has two original certifications stating that the document is a "true and correct copy of the original" signed by agents of Celanese Basic Chemical and Langer Transport. The correlating load sheet for the first bill of lading is identified as "Record 193952 in LOAD SHEET" and includes a "SHIPPERS #: 326490." In addition, the load sheet lists a pick-up date of May 8, 2002, a delivery date of May 9, 2002, and a "TANK #: 742." The commodity listed on the load sheet is methyl acetate and the classification given is "3-UN 1231-PGII." Celanese LTD. is listed on the load sheet as the shipper and the customer is identified as 3M Canada Company. Moreover, the origin is noted on the load sheet as Carteret, New Jersey and the destination is specified as London, Ontario. Lastly, the load sheet does not include any signatures or certifications. 2. Export Transaction 80664239 The second bill of lading is identified by "Shipper's No. 80664239" and "Our Order No. 394552." According to the document, an amount of "METHYL ACETATE//3//UN1231//PGII," which correlates with Celanese's FIFO accounting figures, was loaded onto vehicle or car number 3332 on March 12, 2003, at Carteret, New Jersey. The methyl acetate was consigned to 3M Canada Company and destined for delivery at 801 Clarke Road, Dock #1, London Ontario, N5V3B1. Furthermore, the shipper of the methyl acetate was Celanese Ltd., with a billing address of P.O. Box 819005, Dallas, Texas, 75381-9005. Finally, the second bill of lading has two original certifications stating that the document is a "true and correct copy of the original" signed by agents of Celanese Basic Chemical and Langer Transport. The correlating load sheet for the second bill of lading is identified as "Record 226838 in LOAD SHEET" and includes a "SHIPPERS #: 394552" and a "CUSTOMER #: 80664239." In addition, the load sheet lists a pick-up date of March 12, 2003, a delivery date of March 13, 2003, and a "TANK #: 3332." The commodity listed on the load sheet is methyl acetate and the classification given is "3-UN 1231-PGII." Celanese LTD. is listed on the load sheet as the shipper and the customer is identified as 3M Canada Company. Moreover, the origin is noted on the load sheet as Carteret, New Jersey and the destination is specified as London, Ontario. Lastly, the load sheet does not include any signatures or certifications. 3. Export Transaction 80681636 The third bill of lading is identified by "Shipper's No. 80681636" and "Our Order No. 404190." According to the document, an amount of "METHYL ACETATE//3//UN1231//PGII," which correlates with Celanese's FIFO accounting figures, was loaded onto vehicle or car number 3316 on April 25, 2003, at Carteret, New Jersey. The methyl acetate was consigned to 3M Canada Company and destined for delivery at 801 Clarke Road, Dock #1, London Ontario, N5V3B1. Furthermore, the shipper of the methyl acetate was Celanese Ltd., with a billing address of P.O. Box 819005, Dallas, Texas, 75381-9005. Finally, the third bill of lading has two original certifications stating that the document is a "true and correct copy of the original" signed by agents of Celanese Basic Chemical and Langer Transport. The correlating load sheet for the third bill of lading is identified as "Record 231551 in LOAD SHEET" and includes a "SHIPPERS #: 404190" and a "CUSTOMER #: 80681636." In addition, the load sheet lists a pick-up date of April 25, 2003, a delivery date of April 28, 2003, and a "TANK #: 3316." The commodity listed on the load sheet is methyl acetate and the classification given is "3-UN 1231-PGII." Celanese LTD. is listed on the load sheet as the shipper and the customer is identified as 3M Canada Company. Moreover, the origin is noted on the load sheet as Carteret, New Jersey and the destination is specified as London, Ontario. Lastly, the load sheet does not include any signatures or certifications. ISSUES: Whether the documents submitted by Celanese constitute sufficient proof to establish exportation of the merchandise to Canada and the identity of the exporter. LAW AND ANALYSIS: The Houston Drawback Center's internal advice request questions whether the documents submitted by Celanese constitute sufficient proof of export. In particular, the Houston Drawback center does not believe the documents sufficiently establish the identity of the exporter and proof of exportation of the merchandise to Canada. The documents at issue include bills of lading and "load sheets" issued by Langer Transport, the carrier, for each of the three export transactions under review and verification. Based on our review, we determine that the documents establish an intent to export the merchandise to Canada, the identity of the exporter, and the identity and location of the ultimate consignee. However, the documents fail to establish the time and fact of exportation; therefore, the documents do not constitute sufficient proof of export. Under 19 U.S.C. § 1313(j)(1), drawback is authorized if imported merchandise on which was paid any duty, tax, or fee imposed under federal law because of its importation is, within three years of the date of importation, exported or destroyed under CBP's supervision and was not used in the United States before such exportation or destruction. In general, there are two primary requirements for proof of export. The first requirement is evidence of an intent for the merchandise at issue to unite with the mass of things belonging to some foreign country. See 19 C.F.R. § 101.1 (defining "exportation" 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 second requirement is evidence that the merchandise exited the United States. See 19 C.F.R. § 191.72. For drawback claims, the methods of establishing compliance with the exportation requirement are set forth in 19 C.F.R. § 191.72. Specifically, the CBP regulations require that "[s]upporting documentary evidence shall establish fully the date and fact of exportation and the identity of the exporter." 19 C.F.R. § 191.72. However, this regulation does not set forth specific requirements to support the date and fact of export rather, the regulation gives examples of documentary evidence that are sufficient to establish the date and fact of export. In HQ 228272 (November 8, 1999), CBP explained that alternative methods may be used to establish date and fact of export other than those listed at 19 C.F.R. § 191.72(a) through (e) as long as the alternative methods firmly establish date and fact of export. Information that may be used to establish evidence of exportation includes, but is not limited to, "an originally signed bill of lading, air waybill, freight waybill, Canadian Customs manifest, and/or cargo manifest, or certified copies thereof, issued by the exporting carrier etc." 19 C.F.R. § 191.72(a). Further, CBP issued Directive 3740-009 that provides more clarity on the requirements of 19 C.F.R. § 191.72(a). Directive 3740-009 was released to the public approximately in May 2002 and states that all proofs of export (including bills of lading) must contain the following four necessary data elements: 1) fact/date of export; 2) intent to join the commerce of another country; 3) identity of the exporter; and, 4) quantity and description of merchandise exported. Moreover, Directive 3740-009 instructs the following: When Drawback Specialists and/or the Inspector General's (IG) staff conduct random, full-desk reviews, perform a claim verification, or post-audit reviews, then the proof of export can only be originally signed or originally certified by the exporting carrier or the exporting carrier's agent. With respect to Celanese's drawback claim, the applicable procedures for establishing exportation, which are enumerated under 19 C.F.R. § 191.72 and 191.73, include actual evidence of exportation and the Chronological Summary of Exports. Actual evidence of exportation is the primary proof of exportation for drawback purposes, per 19 C.F.R. § 191.73(c), and consists of "documentary evidence, such as an originally signed bill of lading, air waybill, freight waybill, Canadian Customs manifest, and/or cargo manifest, or certified copies thereof, issued by the exporting carrier." 19 C.F.R. § 191.72(a). In addition to the requirements set forth in 19 C.F.R. § 191.72, allowance of drawback based on exportations to Canada or Mexico, is also subject to the regulations implementing the North American Free Trade ("NAFTA") Act in 19 C.F.R. Part 181. See North American Free Trade Agreement, Part II, Final Rule, 60 Fed. Reg. 46,334, 46,338 (Sept. 6, 1995) (stating that 19 C.F.R. part 181, subpart E, "covers all exports to Canada or Mexico, whether a claim for preferential tariff treatment is made or not"); HQ 228272 (November 8, 1999) (holding that allowance of drawback based on exportations to Canada and Mexico is subject to both 19 C.F.R. § 191.72 and regulations implementing NAFTA in 19 C.F.R. § 181.47). Under NAFTA, there are specific restrictions regarding the amount of drawback the United States may grant. These restrictions are found in 19 C.F.R. § 181.44. Celanese's instant drawback claim, however, is not subject to NAFTA drawback restrictions specified in 19 C.F.R. § 181.44. Under 19 U.S.C. § 3333(a)(2), as implemented by 19 C.F.R. § 181.45(b), an imported good subsequently exported to Canada or Mexico, in the same condition is eligible for full drawback under 19 U.S.C. §1313(j)(1), and is not subject to NAFTA drawback restrictions, that is, without regard to the limitation on drawback set forth in 19 C.F.R. § 181.44. HQ 230089 (May 26, 2004). The completion of NAFTA drawback claims and evidence of exportation is covered in 19 C.F.R. § 181.47, which states in paragraph (a), that unless stated otherwise in Subpart E, the procedural and documentation requirements shall be in accordance with Part 191. For 19 U.S.C. § 1313(j)(1) drawback claims, 19 C.F.R. § 181.47(b)(2)(ii) governs. As noted above, 19 C.F.R. § 101.1 and 19 C.F.R. § 191.72 require proof of: 1) an intent for the merchandise at issue to unite with the mass of things belonging to some foreign country, and 2) the date and fact of exportation and the identity of the exporter. Under 19 C.F.R. § 181.47(b)(2)(ii)(G), there is an additional requirement that supporting documentation must establish the identity and location of the ultimate consignee of the exported goods. Finally, 19 C.F.R. § 181.47(b)(2)(ii)(G) provides the following: Acceptable documentary evidence of exportation to Canada or Mexico shall include a bill of lading, air waybill, freight waybill, export ocean bill of lading, Canadian customs manifest, cargo manifest, or certified copies thereof, issued by the exporting carrier. Again, this regulation by its terms does not require a specific form. See, e.g., HQ 228272 (November 8, 1999) (indicating that for drawback claims subject to 19 C.F.R. § 181.47, alternative methods may be used to establish date and fact of export other than those listed at 19 C.F.R. § 191.72(a) through (e) as long as the alternative methods firmly establish date and fact of export). Rather, this regulation, along with 19 C.F.R. § 191.72, describes examples of acceptable documentary evidence. Based on all of the above, we thus analyze whether the documents provided for export transactions 80536254, 80664239, and 80681636 constitute sufficient proof of export for purposes of receiving drawback. As noted above, when documents are required by Drawback Specialists for review and verification of claims, then copies of original documents must be originally certified by the exporting carrier or carrier agent. See Directive 3740-009. Here, all three bills of lading include original certifications from an agent of Langer Transport, the exporting carrier. Furthermore, all three bills of lading correlate with the three export transactions under verification and review. Specifically, the unique identifiers (80536254, 80664239, and 80681636) listed on the Exporters Chronological Summary match the "Shipper's No." found on each of the three bills of lading. Since the bills of lading match the export transactions from the Exporters Chronological Summary under review and verification, we may consider the documents to verify proof of export. In examining the bills of lading, we find that the documents sufficiently establish an intent to unite the methyl acetate with a mass of things belonging to some foreign country. See 19 C.F.R. § 101.1. Specifically, the bills of lading indicate that the methyl acetate will be delivered to London, Ontario. Moreover, the bills of lading establish the identity of the exporter by listing Celanese Ltd. as the shipper. See 19 C.F.R. § 181.47(b)(2)(ii)(G); 19 C.F.R. § 191.72. Finally, the bills of lading properly identify 3M Canada Company as the ultimate consignee of the exported methyl acetate and provide a London, Ontario address for the location of the ultimate consignee. See 19 C.F.R. § 181.47(b)(2)(ii)(G). The bills of lading, however, do not establish the time and fact of exportation as required by 19 C.F.R. § 181.47(b)(2)(ii)(G) and 19 C.F.R. § 191.72. Specifically, although the bills of lading specify a date on which the methyl acetate was loaded onto a truck bound for Canada, no information is found that would identify when or whether the merchandise entered Canada. See, e.g., HQ 228272 (November 8, 1999). Thus, the time and fact of exportation is not established by the bills of lading. Celanese asserts that the load sheets constitute proof of delivery because they list the time and date that the methyl acetate was delivered to 3M Canada Company in Canada by Langer Transport. Unfortunately, the load sheets are not original signed documents. Rather, they are copies of internal records from Langer Transport. Consequently, in order for the documents to be considered during verification and review, Langer Transport, or its agent, must certify that the load sheets are true and correct copies. No such certifications are present on the three load sheets submitted. Finally, in light of the missing certifications on the load sheets, we will not reach the question of whether the information included on the documents is sufficient to establish the time and fact of exportation. Therefore, Celanese has failed to provide any valid documentary evidence establishing time and fact of exportation for export transactions 80536254, 80664239, and 80681636. HOLDING: The documents provided do not provide sufficient proof of export. The bills of lading sufficiently prove an intent to export, the identity of the exporter, and the identity and location of the ultimate consignee of the exported goods. However, the bills of lading do not establish the time and fact of exportation. Moreover, the load sheets are not properly certified; therefore, they do not constitute proper evidence demonstrating the time and fact of exportation. Sixty days from the date of this letter, 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 public methods of distribution. Sincerely, Myles B. Harmon, Director Commercial and Trade Facilitation Division 6