HQ 224791: Internal Advice Request Regarding Alternate Forms of Record Retention; evidence of exportation; exporter's summary procedure; 19 CFR 191.53(e)(1) and (e)(2)

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 224791

                        December 15, 1993

DRA-1-02/DRA-2-03-CO:R:C:E  224791 JRS         

CATEGORY:  Drawback

Chief, Drawback Branch
New York Region
U.S. Customs Service
6 World Trade Center
New York, New York 10048-0945 

RE:  Internal Advice Request Regarding Alternate Forms of Record
     Retention; evidence of exportation; exporter's summary
     procedure; 19 CFR 191.53(e)(1) and (e)(2)

Dear Madame:

     This is in response to your request of June 16, 1993, on the
above-referenced subject.

FACTS:

     The Eastman Kodak Company (hereinafter simply referred to as
the "Company") is currently operating under the general
manufacturing drawback contract for steel, T.D. 81-74.  The
Company exports film, cameras, steel sheet, parts of film
magazines, and liquid nicotine.  Its customs broker has proposed
an alternate form of record retention.  In lieu of retaining the
hard copy of the bills of lading to support its claims when using
the exporter's summary procedure, the Company proposes to
microfilm the hard copy ocean bill of lading, air waybill or
straight form bills of lading along with its copy of the paid
freight forwarder's bill.  The Company intends to microfilm both
documents in the regular course of business one week after its
payment of the freight forwarder's bill and immediately destroy
the originals.  The microfilm documents will be retained for a
minimum of 5 years. 
   
     Your office is reluctant to accept this form of record
retention as proof of exportation because of Customs inability to
verify the authenticity of microfilmed documents.  Moreover, your
office is concerned that it would be possible to microfilm the
same export document numerous times and file many claims for
drawback designating different import entries, though only one
export had occurred.

ISSUE:

     Whether a microfilm copy of either a hard copy ocean bill of
lading, air waybill or straight form bill of lading is an 
acceptable form of record retention for the proof of exportation
for drawback purposes under the exporter's summary procedure.

LAW AND ANALYSIS:

     The Customs Regulations require that the exporter-claimant
shall maintain complete and accurate records of exportation for
at least 3 years after payment of such claims, see 19 CFR
191.53(e)(1), and shall support the drawback entry with a
chronological summary of the exports and any additional evidence
required by Customs to establish fully the identity of the
exported articles and the fact of exportation, see 19 CFR
191.53(e)(2).  The number listed on the freight or air waybill,
bill of lading, manifest No., etc., on the "Chronological Summary
of Exports" is to be used to associate the claim with exportation
evidence retained by the claimant (19 CFR 191.52(d)).

     The use of the word "shall" in the above-cited regulations
denotes a mandatory requirement of law which may not be waived. 
See C.S.D. 79-399.  The drawback claimant is required to keep the
original bills of lading accurate and available for audit
purposes as proof of exportation.  The rationale for the
retention of the original bills of lading is that there is a
certification on it by a disinterested third party (the carrier)
that the articles, in fact, have been exported.  This kind of
evidence is more reliable than copies of self-serving internal
company or corporate invoices documenting exportation.  See T.D.
78-283; C.S.D. 79-254; C.S.D. 82-59.  Unless the regulations are
amended to allow for microfilmed copies of the original bills of
lading, such a requirement for the retention of originals "or
certified copies thereof, issued by the exporting carrier" (19
CFR 191.52(c)(2)) cannot be waived.

     The proposal to eliminate the original bills of lading after
payment of the freight forwarder's bill by microfilming both
documents together in the regular course of business appears to
be a rational method of reducing the paperwork burden for a
business.  In United States v. Carroll, 860 F.2d 500, 518 (1st
Cir. 1988), the court held that when a print of a microfilm copy
of bank checks, kept by a bank in the regular course of business,
is properly identified by a custodian of records as a complete
and accurate reproduction thereof, such prints are "duplicates"
under the Federal Rules of Evidence and the microfilm itself need
not be produced as the "best evidence".

     Although it is clear that a court of law equates the
microfilm and reproductions therefrom as equally competent as the
original check for evidentiary purposes, when satisfactorily
identified, see Williams v. United States, 404 F.2d 1372, 1373
(5th Cir. 1968), cert. denied, 394 U.S. 992, 89 S.Ct. 1482
(1969), the Federal Rules of Evidence, although instructive and
informative, are inapplicable to the requirements of the Customs
Regulations.  However, it is possible that if the legislation
introduced on November 4, 1993 (H.R. 3450) and passed by the 103d
Congress is signed by the President, an alternative recordkeeping
format other than the original records may be applicable here if
given prior approval/permission by Customs as part of a
recordkeeping compliance program.  See H.R. 3450 (Title VI -
Customs Modernization, Subtitle A).

     Before the Customs Service could approve the use of
microfilmed copies instead of the actual documents, the applicant
must establish that the microfilming was done pursuant to a
routine procedure designed to assure the accuracy and genuineness
of the copies, that it must be made at or near the time of the
event it records, and that the microfilmed copies were created
for purposes that would tend to assure accuracy and
trustworthiness (i.e., as a matter of routine to reflect regular
business transactions, rather than for a calculated use such as
litigation oriented records).  We think the creation of copies
only to support a claim for drawback is not such a purpose. 
Customs should also know the identity of the individuals who
prepared the copies in the regular course of business and the
identity of the custodian of the records; this information could
be included on a portion of the microfilmed copy. 
 
     We note that a recent audit of the Company revealed no
problem with the authenticity of the documents retained as proof
of exportation on a random selection and verification of past
exportations.  The Office of Regulatory Audit in Boston reported
that each ocean bill of lading is tied to the Company's export
invoice by a "seal" number.  The Company can trace the payment of
its freight forwarder's bill to each bill of lading.  The payment
records ties the bills of lading and the export invoice numbers
together to prove exportation of the various exported articles.  


HOLDING:

     The Customs Regulations (namely, 19 CFR 191.52(c)(2) and
191.53(e)) currently do not provide for the retention of a
microfilmed copy instead of an original bill of lading or
certified copy thereof as proof of exportation for drawback
purposes under the exporter's summary procedure.

     The Office of Regulations and Rulings will take steps to
make this decision available to Customs personnel via the 
Customs Rulings Module in ACS and the public via the Diskette
Subscription Service, Lexis, Freedom of Information Act and other
public access channels 60 days from the date of this decision.

                               Sincerely,




                               John Durant, Director