HQ 219828: Internal Advice Regarding the Use of the Exporter's Summary Procedure for Same Condition Drawback; C.S.D. 84- 95 Reconsidered

Native CBP ruling rendition. Applicability is fact-specific; modification/revocation relationships and original publisher date are retained. Publisher sentinel year0001 means unknown date, not a historical legal adoption.

                                     HQ 219828

                                    May 4, 1988

          DRA-1-03 CO:R:C:E 219828 RB

          CATEGORY: Drawback

          Regional Commissioner of Customs
          Southwest Region
          Houston, Texas 77057

          RE:  Internal Advice Regarding the Use of the Exporter's
               Summary Procedure for Same Condition Drawback; C.S.D. 84-
               95 Reconsidered

          Dear Sir:

               This is in reference to your request for internal advice
          dated September 17, 1987, file DRA-4-O:C JWB:lcs, with
          attachments, requesting a review of Customs Service Decision
          (C.S.D.) 84-95 which permitted a "claimant" other than the
          exporter to use the exporter's summary procedure when filing
          for same condition drawback.

          FACTS:

               Company H imported certain merchandise, duty-paid, which
          it agreed to sell to Company G for export only.  The
          merchandise was moved into a foreign-trade zone in several
          shipments, and thereafter sold to Company G.  During this
          time the merchandise had no official zone status, not having
          yet been formally admitted to the zone (19 CFR 146.22(c)).
          Following its physical segregation therein, the merchandise
          was formally transferred to the zone in zone-restricted
          status on Customs Form (CF) 214, so as to be considered
          exported for purposes of same condition drawback under 19
          U.S.C. 1313(j)(1), the transferor in this situation, or
          exporter, being G company, as noted on the CF 214 as well as
          on the same condition claim form, CF 7539.  G authorized H to
          make entry for and collect the drawback (Block 26 on CF
          7539).

               No prior notice of an intent to export in this manner
          was given to Customs as ordinarily required (19 CFR
          191.141(b)(2)(i)), but H declares in essence that none was
          necessary because, as the drawback claimant, it had been
          authorized to use the exporter's summary procedure (19 CFR
          191.53), which, under the circumstances, operated as a waiver
          of the prior notice requirement in same condition drawback
          (see 19 CFR 191.141(d)).  Citing C.S.D. 84-95 which held that
          a "claimant" other than the exporter could be allowed use of
          the exporter's summary procedure, H maintains that this
          "claimant," and not the transferor or exporter, is the party
          responsible for either complying with the prior notice
          requirement or obtaining a waiver thereof (19 CFR
          191.141(b)(2)(ii)).

          ISSUES:

               Whether the exporter is the party obligated either to
          satisfy, or obtain a waiver of, the regulatory requirement of
          giving prior notice of intent to export under the same
          condition drawback law, 19 U.S.C. 1313(j); and whether a
          "claimant" other than the exporter may be authorized to use
          the exporter's summary procedure for same condition
          drawback.

          LAW AND ANALYSIS:

               Merchandise eligible for same condition drawback, 19
          U.S.C. 1313(j)(1), may be transferred to a foreign-trade zone
          in zone-restricted status pursuant to the fourth proviso to
          section 3 of the Foreign-Trade Zones Act (FTZA), as amended,
          19 U.S.C. 81c(a), and 19 CFR 146.44(c)(1), and thereby be
          considered exported for drawback purposes.  The regulation
          governing same condition drawback in this respect is 19 CFR
          191.165 which states that the procedures described in 19 CFR
          191.141 for same condition drawback generally shall be
          followed as applicable.

               Notably, there is a regulatory prerequisite in same
          condition drawback whereby prior notice of an intent to
          export must be given to Customs, as prescribed in
          {191.141(b)(2)(i).  No such notice was given in this case,
          nor was it validly waived by Customs ({191.141(b)(2)(ii)).
          In this connection, pursuant to 19 CFR 191.166 (and 19 CFR
          191.73; and see 19 Op.  Atty. Gen. 638 (1890), reprinted in
          T.D. 10186), it is the transferor, or exporter [company G in
          this case], which is the sole principal party entitled as
          such to claim same condition drawback.  Any other party
          filing for same condition drawback in this regard does so
          only as an agent of the exporter.  In other words, the real
          party-in-interest, or "claimant" as it were, would, under the
          law, be the exporter. Treating "exporter" and "claimant" as
          separate and distinct parties in {{191.53 and 191.141 would
          irreconcilably collide with this longstanding regulatory
          scheme.


               It is sufficient to say that the owner and shipper to the
               foreign port, i.e., the exporter, may collect the
               drawback, and he may collect it by his duly authorized
               agent (emphasis added)(19 Op. Atty. Gen. 638, 643 (1890);
               also see Headquarters letter dated March 7, 1988, file
               219978; and Headquarters letter dated August 14, 1987,
               file 219467, p.2).

               Along these very lines, an "exporter-claimant" in {191.53
          plainly refers to "[c]laimants who are the exporters of the
          articles on which they claim drawback" (Proposed Rule Making,
          Drawback, Proof of Export, 36 F.R. 4046 (1971); T.D. 72-310).

               It is well settled that drawback regulations are
          mandatory, have the force and effect of law, and that
          compliance therewith is a condition precedent to the right of
          recovery (see, e.g., Swift & Co. v. United States, 10 Cust.
          Ct.  198, 200 (1943)).

               The requirement of prior notice in same condition
          drawback may, however, be waived by the appropriate
          Customs office in the reasonable exercise of its discretion
          "at any time for any exporter-claimant" (emphasis added)
          ({191.141(b)(2)(ii)).  This would include retroactive waivers
          as provided in C.S.D. 85-35.  To this end, in the absence of
          a clear abuse of discretion, Customs Headquarters will not
          substitute its judgment for that of the appropriate field
          office (see C.S.D. 83-1; C.S.D. 83- 68).

          HOLDING:

               The exporter is the party obligated either to satisfy or
          obtain a waiver of the prior notice requirement in same
          condition drawback, {1313(j).  The only "claimant" in same
          condition drawback is the exporter.

          EFFECT ON OTHER RULINGS:

               C.S.D. 84-95 is hereby modified accordingly. Also, C.S.D.
          86-25, which appears to preclude retroactive waivers of the
          prior notice requirement, is modified in conformance with
          C.S.D. 85-35.

                                    Sincerely,


                                     John A. Durant
                                     Acting Director
                                     Commercial Rulings Division