Application for Further Review of Protest No 2809-2015-100233 concerning a claim for drawback under 19 U.S.C. § 1309(b).

H268703 September 29, 2017 DRA 1-02 H268703 SMS OT:RR:CTF:ER Port Director U.S. Customs and Border Protection Port of San Francisco 555 Battery Street, Rm. 109 San Francisco, CA 94111 Attn: Rolando Jocson, Drawback Specialist RE:      Application for Further Review of Protest No: 2809-2015-100233 concerning a claim for drawback under 19 U.S.C. § 1309(b). Dear Port Director: The above-referenced protest has been forwarded to our office for further review. We have considered the points raised by Prospect Enterprises, Inc. dba Kansas Marine Company, (“Kansas Marine”) regarding the denial of the drawback claim related to food products laden as vessel supplies on board cruise ships. We regret the delay in our response. FACTS: Kansas Marine is in the business of selling imported, duty-paid food items to various cruise lines. Kansas Marine, identified as the exporter, submitted ten drawback claims for foods and confections laden as supplies for vessels, to the U.S. Customs and Border Protection (“CBP”) San Francisco Drawback Office (“Drawback Office”) between November 13, 2013 and August 20, 2014. The drawback claims were assigned the following drawback entry numbers: xxx-xxxx127-5; xxx-xxxx135-8; xxx-xxxx136-6; xxx-xxxx143-2; xxx-xxxx146-5; xxx-xxxx150-7; xxx-xxxx151-5; xxx-xxxx171-3; xxx-xxxx172-1; and xxx-xxxx178-8. Beginning on January 24, 2014, the Drawback Office started requesting more information from Kansas Marine, in order to complete the liquidation of the claims. Subsequently, a full desk review of claim xxx-xxxx127-5 was commenced, and on March 26, 2014, the Drawback Office requested more documentation regarding proof of export. Between May 6, 2014 and October 20, 2014, Drawback Rejection Notices were issued to Kansas Marine and the Drawback Office again requested more information to substantiate the claims and determine proper rights to drawback. In particular, the Drawback Office requested an updated Export Chronological Summary, to include the export bill of lading (“BOL”) or vessel voyage number, and an explanation with sample documentation of the delivery process from the Kansas Marine warehouse to the cruise line. In response to the Drawback Office’s requests, CITTA Brokerage Company (“CBC”), on behalf of Kansas Marine, amended its claim, including CBP Forms 7551 and export summaries, on February 14, 2014, April 9, 2014, and June 5, 2014. Kansas Marine included in its claim: 1) a certified copy of the export invoices containing details of the goods, identity of the exporter, and a received stamp containing the dates, receiver initial, and vessel names; 2) an affidavit from the exporter “attesting to any remaining information required to establish proof of export”; and 3) a chronological summary of exports. Summary of Proof of Export Documents: Lead Drawback Entry: xxx-xxxx127-5 On December 26, 2013, Kansas Marine submitted an “Exporters Chronological Summary Report” (in date and part order) with exports from December 27, 2010 to December 22, 2011, which included: the date of export, the “unique export identifier”, the exporter (Kansas Marine), the description and quantity of the merchandise, and the Harmonized Tariff Schedule (“HTS”) number. Exporter’s Summary Report, contained the invoice number as the unique export identifier and the product number. Amended “Exporters Chronological Summary Reports” were submitted on February 14, 2017, which included less exports and ranged from December 30, 2010 until December 22, 2011. The February 14, 2011 submission contained the same data fields as described above for the original December 26, 2013 submission. On April 9, 2014, the “Exporters Chronological Summary Reports” were again resubmitted to the Drawback Office. This submission contained the same export date range and other data fields as the previous submission, and was amended to include a field for “Destination Country” which was described as “** vessel supplies.” On May 7, 2014, the Drawback Office determined that the unique export identifier provided by Kansas Marine was for the purchase order, instead of the export BOL number or the vessel voyage number. Accordingly, on June 5, 2014, Kansas Marine again submitted an amended Export Chronological Summary that included the invoice number, as the unique export identifier, and listed the purchase order in a separate column. A Declaration and Affidavit of Exporter, dated May 27, 2014, and signed by the Vice President of Kansas Marine, was also submitted, which described the procedures for lading vessels operated by cruise lines. In the affidavit, Kansas Marine explained that when an order is received from a cruise ship, it generates an invoice, identifying the merchandise and the ship on which the goods are to be laden. The order is then filled and the merchandise is removed from Kansas Marine’s warehouse and loaded onto a delivery truck, delivered, then placed onto the vessel by the longshoreman; but, no BOL is generated. As verification that the goods listed on the invoice are laden on the cruise ship, the invoice is stamped and signed by the master or other officer of the vessel, who oversees the lading of the goods. The date of delivery is the date of lading. Submitted with the affidavit was a list of “exports by invoice”, which included the date of lading, invoice number, purchase order number, port, carrier name, vessel name, part number, and quantity and description of the merchandise; an Entry Summary CBP Form 7501 dated June 18, 2010; two sample invoices dated April 22, 2010 and June 11, 2010; a purchase order dated June 11 2010; a Chronological Summary of Exports, a Certificate of Delivery with an attached October 4, 2013 spreadsheet of imports; “Receipts to Stock Journal” dated June 10, 2010; a sample Product History Detail sheet; and Lot Invoices dated May 27, 2014. Additionally, Kansas Marine submitted over 80 certified copies of invoices dated between December 28, 2010 and December 21, 2011, which included date stamps of receipt. Drawback Entry: xxx-xxxx135-8 November 13, 2013, February 14, 2014, April 9, 2014, and June 5, 2014 – Exporter’s Chronological Summary Report, listing: Dates of Export ranging from November 12, 2010 to December 26, 2010; unique export identifier; purchase order; exporter; description and quantity of merchandise, destination country - ** vessel supplies, and HTS number. Exporter’s Summary Report- Report- In Part Order, contained the invoice number as the unique export identifier and the purchase order. Drawback Entry: xxx-xxxx136-6 January 13, 2014, February 11, 2014, and April 9, 2014 – Exporter’s Chronological Summary Report, listing: Dates of Export ranging from January 13, 2011 to January 30, 2011; unique export identifier; exporter; description and quantity of merchandise, destination country - ** vessel supplies, and HTS number. Exporter’s Summary Report- Report- In Part Order, contained the invoice number as the unique export identifier and the purchase order. Drawback Entry: xxx-xxxx143-2 April 9, 2014 – Exporter’s Chronological Summary Report, listing: Dates of Export ranging from February 17, 2011 to April 15, 2013; unique export identifier; exporter; description and quantity of merchandise, destination country, vessel supplies (“VE”), and HTS number. Exporter’s Summary Report- Report- In Part Order, contained the invoice number as the unique export identifier and the purchase order. Drawback Entry: xxx-xxxx146-5 March 17, 2014 and April 9, 2014 – Exporter’s Chronological Summary Report, listing: Dates of Export ranging from March 18, 2011 to May 29, 2011; unique export identifier; exporter; description and quantity of merchandise, destination country -VE, and HTS number. Report- In Part Order, contained the invoice number as the unique export identifier and the purchase order. Drawback Entry: xxx-xxxx150-7 April 9, 2014 – Exporter’s Chronological Summary Report, listing: Dates of Export ranging from June 1, 2011 to August 30, 2011; unique export identifier; exporter; description and quantity of merchandise, destination country-VE, and HTS number. Report- In Part Order, contained the invoice number as the unique export identifier and the purchase order. Drawback Entry: xxx-xxxx151-5 April 9, 2014 and June 5, 2014 – Exporter’s Chronological Summary Report, listing: Dates of Export ranging from September 1, 2011 to December 31, 2011; unique export identifier; exporter; description and quantity of merchandise, destination country-VE, and HTS number. Report- In Part Order, contained the invoice number as the unique export identifier and the purchase order. Drawback Entry: xxx-xxxx171-3 May 1, 2014 and June 5, 2014– Exporter’s Chronological Summary Report, listing: Dates of Export ranging from November 7, 2011 to June 30, 2012; unique export identifier; exporter; description and quantity of merchandise, destination country-VE, and HTS number. Report- In Part Order, contained the invoice number as the unique export identifier and the purchase order. A Declaration and Affidavit of Exporter, dated June 9, 2014, and signed by the Vice President of Kansas Marine, was also submitted, which described the procedures for lading vessels operated by cruise lines. Submitted with the affidavit was a list of “exports by invoice”, which included the date of lading, invoice number, purchase order number, port, carrier name, vessel name, part number, and quantity and description of the merchandise. Drawback Entry: xxx-xxxx172-1 May 19, 2014 and November 17, 2014 – Exporter’s Chronological Summary Report, listing: Dates of Export ranging from May 21, 2011 to August 31, 2013; unique export identifier; exporter; description and quantity of merchandise, destination country-VE, and HTS number. Exporter’s Summary Report- In Part Order, contained the invoice number as the unique export identifier and the purchase order. Drawback Entry: xxx-xxxx178-8 November 10, 2014 – Exporter’s Chronological Summary Report, listing: Dates of Export ranging from April 6, 2012 to June 29, 2014; unique export identifier; exporter; description and quantity of merchandise, destination country (PO, B, FT, and PI), and HTS number. Exporter’s Summary Report- In Part Order, contained the invoice number as the unique export identifier and the product number. Between October 10, 2014 and January 2, 2015, CBP liquidated the drawback entries at “zero”, for failure to provide sufficient proof of export, effectively denying the claims. On April 2, 2015, Kansas Marine, filed the instant protest, for denial of its drawback claims. Submitted with its protest, Kansas Marine started acquiring Drawback Notices, CBP Form 7514, for each of the exports included in the claim. The submitted CBP Forms 7514 contains an incomplete “Declaration of Master or Other Officer” section; they do not include the name or signature of any officer of the vessel of laden. Also submitted with its protest, Kansas Marine has amended the chronological summary of exports to include the name of the vessel upon which the goods were laden. These more recently submitted forms have been backdated and date stamped to correspond with the export invoice date. Kansas Marine asserts, in its June 5, 2014 submission, that all of the documentation submitted was comparable to that requested in CBP Form 7514 and should be sufficient to establish exportation. Kansas Marine maintains that Drawback Notice, CBP Form 7514, is not the only proof of export allowed for vessel supplies pursuant to 19 C.F.R. § 191.112, and that the list included in 19 C.F.R. § 191.72, is not all inclusive of documentary evidence sufficient to fully establish the date and fact of exportation, as well as the identity of the exporter. Conversely, the Drawback Office contends that, while CBP Form 7514 is not required, the combination of the requirements listed in 19 C.F.R. §§ 191.37, 191.112(d)(1), and (f)(1) must be fully met, which the Drawback Office believes were not. Specifically, the Drawback Office asserts that Kansas Marine’s Declaration and Affidavit of Exporter does not support proof of export, and cannot take the place of the declaration by the master or other officer of the vessel. Additionally, the Drawback Office contends that the export invoices, certified as a true and correct copy by the Vice President of Kansas Marine, are not sufficient proof, as they were not certified by a disinterested third party, having knowledge of the exportation or corroborated by any other documentation. ISSUES: Whether the documentation, not created at the time of transaction nor kept in the normal course of business, is reliable evidence to establish proof of export. Whether an affidavit, from an interested party, is an acceptable method of supplementing evidence of exportation. Whether Kansas Marine provided sufficient proof of exportation, pursuant to 19 C.F.R. §§ 191.72 and 191.112. LAW AND ANALYSIS: We note initially that the refusal to pay a claim for drawback is protestable pursuant to 19 U.S.C. § 1514(a)(6). The instant protest was timely filed, within 180 days from the date of liquidation. See 19 U.S.C. § 1514(c)(3)(A). CBP denied Kansas Marine’s first drawback claim on October 10, 2014, when it liquidated the subject entries without drawback, and this protest was filed on April 2, 2015, within 180 days. Kansas Marine requests further review per 19 C.F.R § 174.24. Under 19 C.F.R. § 174.24, further review shall be accorded a party when the decision against which the protest was filed is alleged to involve questions of law or fact which have not been ruled upon by CBP. See 19 C.F.R. § 174.24(b). Upon review of the application for further review, we find that these facts have not been the subject of a CBP ruling. See 19 C.F.R § 174.24(b) and 19 C.F.R § 174.26(b)(1)(iv). Accordingly, further review is warranted. In general, proof of exportation requires evidence of the intent for the merchandise to unite with the mass of things belonging to that of another country, and evidence that the merchandise was severed from the United States. See 19 C.F.R. § 191.2(m)(1). The CBP regulations contained in 19 C.F.R. § 191.72 explain that: “exportation of articles for drawback purposes must be established by complying with one of the procedures provided for in this section. . . .” Documentary evidence of exportation must establish fully the date and fact of exportation and the identity of the exporter. The procedures for establishing exportation include, but are not limited to: (a) Documentary evidence of exportation (originals or copies) issued by the exporting carrier, such as a bill of lading, air waybill, freight waybill, Canadian Customs manifest, and/or cargo manifest;” (b) Export summary (§ 191.73); (c) Official postal records (originals or copies) which evidence exportation by mail (§ 191.74); (d) Notice of lading for supplies on certain vessels or aircraft (§ 191.112); or (e) Notice of transfer for articles manufactured or produced in the U.S. which are transferred to a foreign trade zone (§ 191.183). 19 C.F.R. § 191.72. Section 309 of the Tariff Act of 1930, as amended (19 U.S.C.§ 1309(b)) allows drawback on articles laden as supplies on certain vessels or aircraft of the United States, or as supplies, including equipment laden, or used in, the maintenance or repair of, certain foreign vessels or aircraft. Section 1309, provides that such articles laden as supplies upon any such vessel or aircraft of the United States, shall be considered to be exported within the meaning of the drawback provisions. 19 U.S.C. § 1309(b); see also, 19 C.F.R. § 191.111. Unless otherwise provided, the exporter (or destroyer) shall be entitled to claim drawback, unless the exporter (or destroyer), through certification, waives the right to claim drawback and assigns such right to the manufacturer, producer, importer, or intermediate party. See 19 C.F.R. § 191.82. The exporter is defined in the regulations as the principal party in interest in the export transaction that has the power and responsibility for determining and controlling the sending of the items out of the United States. See 19 C.F.R. § 191.2 (m)(2). In the case of deemed exportations, through aircraft or vessel supplies under 19 U.S.C. 1309(b), the party who has the power and responsibility for lading the vessel supplies on the qualifying aircraft or vessel, is the exporter. Id, see e.g., HQ 227826 (Oct. 20, 1998) (For purposes of claiming drawback under 19 U.S.C. §1309(b), only the entity which transfers title to an airline or vessel owner, in a transaction in which certain contractual and evidentiary criteria are met, and which obtains the CF 7514 signed by the carrier on a qualifying flight or vessel operator for a qualifying voyage, will be considered to have the power and responsibility for the lading onto an eligible aircraft or vessel).  The regulations governing drawback under 19 U.S.C. § 1309(b) are codified in subpart K and the exportation procedures necessary to file a drawback claim under 19 U.S.C. § 1309 are outlined in 19 C.F.R. § 191.112, which states in pertinent part: The drawback claimant shall file with the drawback office the drawback entry on Customs Form 7551 annotated for 19 U.S.C. 1309, and attach thereto a notice of lading on Customs Form 7514, in quadruplicate, unless the export summary procedure, provided for in § 191.73, is used. If the export summary procedure is used, the requirements in § 191.73 shall be complied with, as applicable, and the requirements in paragraphs (d)(1) and (f)(1) of this section shall also be complied with. 19 C.F.R. § 191.112(b). These procedures outline two different manners in which to provide proof of export in a drawback claim on articles laden as supplies on a vessel. Either 1) file CBP Form 7551 with CBP Form 7514 attached, or 2) follow the export summary procedures provided in 19 C.F.R. § 191.73 and 19 C.F.R. §§ 191.112(d)(1) and 191.112(f)(1). Additionally, under 19 C.F.R. § 191.112(c), in the case of drawback claims made under 19 U.S.C. § 1309(b), the drawback notice of lading, CBP Form 7514, may be filed either before or after the lading of the articles. However, if filed after lading, the notice must be filed within three years of exportation. See 19 C.F.R § 191.112(c). Accordingly, if a claimant chooses not to submit CBP Form 7514, they must submit a Chronological Summary of Exports (19 C.F.R. § 191.73); the name of the vessel on which the articles were or are to be laden (19 C.F.R. § 191.112(d)(1)); and the master or an authorized representative of the vessel, having knowledge of the facts of exportation, must complete the “Declaration of Master or Other Officer” (19 C.F.R. § 191.112(f)(1)). Additionally, the declaration of the master or other officer or representative may be filed as a separate document from the notice of lading. See 19 C.F.R. § 191.112(f)(4). The regulations do not require a specific form to confirm exportation, but describe acceptable documentary evidence if such evidence identifies the goods at issue and shows the fact and date of exportation. See Headquarters Ruling (“HQ”) H082576 dated, January 18, 2012. Therefore, any procedure used to establish export, whether or not included in 19 C.F.R. § 191.72 (a) through (e) outlined above, must “establish fully the date and fact of exportation.” See also Customs Directive No. 3740-009, Drawback Proof of Export Requirements, dated May 13, 2002 (explaining that proofs of export must individually or collectively contain all of the legal elements required by the CBP regulations). Whether documentation, not created at the time of transaction nor kept in the normal course of business, is reliable evidence to establish proof of export. When analyzing the accuracy of export documentation, CBP has consistentl