HQ 221645: Application for Further Review of Protest No. 2809-8-001245

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 221645

                        February 10, 1992


DRA-1-06-CO:R:C:E  221645  SR

CATEGORY:  Entry/Drawback

District Director
555 Battery St.
P.O. Box 2450
San Francisco, CA 94126

RE:  Application for Further Review of Protest No. 2809-8-001245

Dear Sir:

     The above-referenced protest was forwarded to our office on
Application for Further Review of Protest No. 2809-8-001245,
dated May 26, 1988.  We have considered the facts and the issue
raised; our decision follows.

FACTS:

     Applied Magnetics Corporation imports magnetic recording
heads.  A large number of shipments were entered between October
13, 1982 through December 14, 1983.  Some of the merchandise was
found to be defective and was then reexported to Korea between
January 6 and December 18, 1983.  On October 11, 1985, the first
form J request for same condition drawback was filed.  The claims
were filed in accordance with the "Accelerated Payment Provision"
for which the protestant received $39,000.00.  An audit was
performed to verify that the merchandise had been exported or
destroyed under Customs supervision within 3 years from the date
of exportation.  

     Customs auditors determined that Applied Mechanics had not
kept the appropriate inventory records that would identify the
consumption entry number from which the merchandise was received. 
Customs auditors also determined that the exported merchandise
was not the same magnetic recording heads that were imported. 
The drawback entry was liquidated on February 26, 1988, with the
drawback denied.  The monies paid under the accelerated payment
program were refunded on April 4, 1988.  

     The protest was filed on May 26, 1988, against the denial of
drawback.  It was filed on the 90th day after liquidation and is,
therefore, timely.  The protestant wishes to amend the drawback
claim to add import entries and change the accounting method used

                               -2-


from FIFO to another blanket identification method.  The
protestant claims that Customs erred by not giving immediate
notice that the drawback claim was "incomplete", as required by
19 C.F.R. 191.61.  

     There are many discrepancies in the facts of this case.  For
example the importer's attorneys claim that the merchandise was
tested in a warehouse, the Custom's auditors found that some of
the merchandise was rejected by consumers; substitution drawback
is mentioned in the Customs reports whereas only same condition
drawback was available at the time these importations and
exportations were taking place.  Due to the discrepancies in the
facts presented, we will assume for the purpose of this ruling,
that the audit was accurate.  The audit found that the claimant's
records failed to substantiate that exported merchandise was
imported under the claimed consumption entry.  We also assume
that might be possible to match exports to other import entries
if the claimant is permitted to amend its claim.

     It is mentioned in the auditor's report that the protestant
reimported the tapes after they were repaired and only paid duty
on the value added.  There is no documentation in the file to
show that this is correct; however, if this is so then the
protestant must be denied drawback for this reason.  Subpart B
Headnotes to Subpart B, Part 1, Schedule of the Tariff Schedules
of the United States state that this subpart does not apply to
any article exported with the benefit of drawback.  The
classification provision that allows duty only on the value added
to articles repaired abroad falls under the Subpart B Headnotes.
 
ISSUE:

     Whether protestant can amend a claim for drawback after more
than 3 years have expired after exportation.

LAW AND ANALYSIS:

     The proper completion of a drawback claim is provided for in
19 C.F.R. 191.61, which states as follows:

     A drawback entry and all documents necessary to complete a
     drawback claim, including those issued by one Customs
     officer to another, shall be filed or applied for, as
     applicable, within 3 years after the date of exportation of
     the articles on which drawback is claimed, . . .  Claims not
     completed within the 3 year period shall be considered
     abandoned.  No extension will be granted unless it is
     established that a Customs officer was responsible for the
     untimely filing.  


                               -3-

     The protestant claims that their protest was untimely filed
because Customs neglected to tell them that their drawback entry
was incomplete, as required by 19 CFR 191.142(g)(2).  19 CFR
191.142(g)(2) states that "[u]pon review of a drawback claim by
the liquidator, if the claim is determined to be incomplete, the
liquidator shall notify promptly the claimant, who shall then 
have the opportunity to amend the claim prior to its denial.  The
claimant shall respond in writing within 20 days of Customs
notice."

     A complete drawback entry consists of (1) the filing of the
appropriate drawback entry form completely filled out with all
the necessary information required on the form, (2) proof of
exportation (i.e., the "Notices of Exportation of Articles with
Benefit of Drawback" (CF 7511)) and its supporting documents, and
(3) certificate(s) of delivery, when necessary, or certificate(s)
of manufacture and delivery.  T.D. 83-212; 19 CFR 191.2(i) and
191.62.  

     In this case all the appropriate forms were filled out and
submitted; the drawback entry was a complete entry.  It was not
until the Customs auditor examined the protestant's bookkeeping
records that it was determined that the company could not qualify
for drawback.  Although an importer claiming drawback must
complete the claim within 3 years, there is no time limit placed
on Customs.  19 U.S.C. 1504, which was added to the Tariff Act of
1930 by the Customs Procedural Reform and Simplification Act of
1978, Public Law 95-410, does not prescribe a time limit within
which Customs must liquidate or complete drawback entries (see
C.S.D. 79-445, HQ 209929).  Therefore, although Customs must
inform a drawback claimant if the claim is incomplete, 19 C.F.R.
191.141(g)(2) does not apply to verification of the filed claim
documents.

     The protestant states that the protest was filed within
three years of the request for drawback and therefore, timely
filed.  The last exportation occurred in December of 1983.  The
protestant states that they made a request to amend or correct
the drawback entry on October 20, 1987; the protest is dated May
26, 1988.  Supplementary filing of drawback claims are provided
for in 19 CFR 191.64 as follows: "[w]ith the permission of the
regional commissioner, a claimant may amend or correct a drawback
entry or file a timely supplemental entry.  Corrections or
amendments permitted shall be certified by the appropriate
parties."  Section 191.64 does not provide an extension of time
beyond the three years allowed in Section 191.61.  Section 191.61
provides that a drawback entry must be complete within 3 years
after the date of exportation of the articles on which drawback
is claimed.  The protestant's request to amend was not made
within 3 years of the date of exportation of the magnetic
recording heads; therefore, it was not timely filed.


                               -4-


     This issue was addressed in Headquarters Ruling Letter (HQ)
207897 dated June 15, 1977.  In this ruling the importer was
informed by Customs that his drawback claim could not be approved
until certain information and/or an application for an amendment
from the company were forthcoming to enable it to file drawback
claims on a schedule basis.  Because this information was not
furnished until the 3 year period had expired the claim for
drawback was denied.  In C.S.D. 81-173, drawback was denied to an
importer because he had failed to submit proof of exportation or
certificates of manufacture within the 3 year period prescribed
by law.

     In HQ 222857, dated September 24, 1991.  This ruling states
"We assume that drawback entries and documents necessary to
complete the drawback claims (see 19 CFR 191.62 - 191.67), as
opposed to the documentation necessary to verify the claims, have
been timely filed.  If not, of course, the drawback claims must
be denied (see 19 CFR 191.61)."  This language shows that only
documentation required to verify a claim can be submitted after
the 3 year time period.  The amendment of importation entries and
the change of accounting methods would be a change of an already
complete claim; it would be more than a verification of the
claim.  The submission from the protestant's attorneys states
that the protestant should be allowed to amend the drawback claim
based on C.S.D. 84-100 and C.S.D. 84-19.  These cases did allow
the correction of erroneous drawback claims, however, the 3 year
time limit was not at issue in either of these cases.

HOLDING:

     The protestant may not amend a claim for drawback after 3
years have passed from the last date of exportation according to
19 C.F.R. 191.61.  Accordingly you are directed to deny the
protest.  A copy of this decision should be furnished to the
protestant in order to satisfy the notice requirement of section
174.30(a), Customs Regulations.

                                   Sincerely,



                                   John A. Durant
                                   Director