HQ 226572: Extension of time to file drawback claims; 19 CFR 191.61; 19CFR 191.23(c); 19 CFR 191.43; 19 CFR 191.45; 19 U.S.C.1313(r)(1); Campell v. United States

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 226572 

                             May 1, 1996

DRA-2-RR:IT:EC 226572 JRS          

CATEGORY:  Drawback

George C. Steuart, Esq.
Steuart & Parker
1919 Pennsylvania Ave., N.W.
Suite 300
Washington, D.C.  20036

RE:  Extension of time to file drawback claims; 19 CFR 191.61; 19
CFR 191.23(c); 19 CFR         191.43; 19 CFR 191.45; 19 U.S.C.
1313(r)(1); Campell v. United States

Dear Mr. Steuart:

     This is in response to your letter dated October 4, 1995,
wherein you request an extension of time to file certain drawback
claims by Associated Textile Converters in the Miami drawback
office. 

FACTS:

     You allege, on behalf of your client, Associated Textile
Converters, Inc. ("ATC"), that the Customs drawback office in New
York was responsible for the untimely filing of drawback claims by
Associated Textile Converters in the port of Miami.  You assert
that, based on 19 CFR 191.61, "ATC should be allowed to file those
claims [based on exports in 1991 and 1992] which ATC was prohibited
from filing due to Customs' wrongful denial of ATC's drawback
application."  

     As evidence that a Customs officer was responsible for the
untimely filing of certain drawback claims, you outline the
following events: 

     By letter dated March 2, 1994, ATC "applied" for  a general
drawback contract (T.D. 83-73) for piece goods in Customs' New York
office on March 10, 1994.  Per the telephonic request of New York
Customs, ATC's former attorney submitted, on April 25, 1994, a new
amended page 2 of the Notification of Acceptance of General
Drawback Contract (T.D. 83-73) and added a reference to "Appendix
A" which set forth the names and addresses of ATC's unrelated sub-contractors.  Subsequently, on July 28, 1994, Customs "denied"
ATC's "application" in a letter (misdated July 28, 1993):

     Please be advised that an approval of a manufacturer's
     statement may not be issued to a company which does not
     conduct manufacturing operations in accordance with
     drawback regulations.  Therefore, your application is
     denied.  If your circumstances change, you may reactivate
     your request.  At that time, you must submit a thoroughly
     prepared statement, describing in detail the
     manufacturing operations which Associated Textile
     Converters, Inc. performs... .
 
     You allege that ATC's "application" under T.D. 83-73 documents
the fact that ATC "intended to be a manufacturer by operation of
law in accordance with T.D.'s 55027(2) and 55207(1)", and that
Customs' letter of July 28, 1994, ignored facts presented in the
GENERAL STATEMENT portion of the T.D. 83-73 which states that
"another producer may process piece goods for our account under
contract within the principal and agency relationship outlined in
T.D. 55027(2) and 55207(1)."  You also assert that "[Q]uite
naturally this incorrect letter from the Drawback Liquidation
Section in New York delayed ATC's establishing its drawback
program."

ISSUE:

     Whether the documentary evidence as set forth in the FACTS
section establishes that the Customs Service was responsible for
the untimely filing of ATC's drawback claims so as to permit the
drawback claimant an extension of time to file such claims.

LAW AND ANALYSIS:

     Section 191.61 of the Customs Regulations (19 CFR 191.61)
states the time limitation for the filing of drawback claims:

          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. 

(Please note that this regulation was adopted, almost verbatim, by
Congress in the 1993 amendment of the drawback statute, 19 U.S.C.
1313(r)(1), by section 632(r)(1) of the North American Free Trade
Agreement Implementation Act, Public Law 103-182, 107 Stat. 2057
(December 8, 1993): "...No extension will be granted unless it is
established that the Customs Service was responsible for the
untimely filing.")

     Section 191.23 of the Customs Regulations (19 CFR 191.23)
governs the issue of the approval of specific drawback contracts
filed either with a Customs field office under 19 U.S.C. 1313(a)
or, with Customs Headquarters under 19 U.S.C. 1313(b), (d), (g), or
(h), or in any combination of section 1313(a) with section 1313(b),
(d), or (g) .  Paragraph (c) of section 191.23 provides for
drawback entries filed before a specific drawback contract is
issued:

          Drawback entries may be filed before the
          drawback contract covering the claim is
          approved, but no drawback shall be paid until
          the contract is approved.

     Subpart D of 19 CFR Part 191 controls the procedure of the
general drawback contracts. 
Section 191.43 of the Customs Regulations (19 CFR 191.43) provides
that:

          The port director [formerly regional
          commissioner] shall acknowledge in writing the
          receipt of the letter of acceptance of the
          manufacturer or producer of an offer for a
          general drawback contract.  The general
          drawback contract for that manufacturer or
          producer shall be effective for a period of 15
          years from the date of the letter of
          acknowledgment.

Section 191.45 of the Customs Regulations (19 CFR 191.45) further
states:

          Drawback will be paid on articles manufactured
          or produced and exported in accordance with the
          law, regulations, and general drawback
          contract.  (Emphasis ours.)

     At the outset, it is clear from reading the above-quoted
regulations that there is not an "approval" process for general
contracts as there is for specific contracts, such as substitution
manufacturing contracts under section 1313(b).  Section 191.43, CR,
uses the word "acknowledge" rather than "approve."  Customs does
not approve or reject general contracts, but simply acknowledges
receipt of a general contract.  The reason is because the
compliance with the terms of a general contract will not be
determined until any filed claims are liquidated; general drawback
contracts save the resources of the Customs Service until
liquidation.  See 19 CFR 191.45 and 191.71(d).

     Customs New York letter of July 28, 1994 (misdated 1993) did
not state that ATC could not file any claims.  The Customs New York
letter, at most, is a statement by New York that it would most
likely deny drawback on any claim filed because New York
Liquidation believed that such a claim would not comply with the
terms of the general contract.  If ATC was "intending to become a
manufacturer" as stated in your letter, ATC nevertheless could have
filed claims with Customs until it became eligible as a
manufacturer in its own right under T.D. 83-73, but it chose not do
so.  Customs New York letter did not prevent ATC from filing any
claim or from protesting any denial of drawback if, in fact,
drawback was subsequently denied for its failure to be a
"manufacturer" as required by T.D. 83-73.  See generally HQ 223072,
dated August 12, 1991 and HQ 224879, dated March 31, 1994.

     Contrary your assertions, New York Customs was well aware of
T.D.s 55027(2) and 55207(1) by the fact that Customs asked ATC
through ATC's then-attorney for the list of sub-contractors to whom
ATC subcontracted its work.  See April 25, 1994, letter.   Through
that information, it was revealed to Customs that ATC did not
manufacture finished piece goods.  The first sentence in the
GENERAL STATEMENT of T.D. 83-73 unequivocally states: "We process
goods for our own account."  New York Customs reported to this
office that they verbally informed ATC's attorney that although ATC
could not claim drawback as a "manufacturer" under T.D. 83-73 since
ATC did not manufacture finished piece goods at that time, ATC,
however, could claim drawback if the sub-contractors who
manufactured finished piece goods delivered the CMDs (Certificates
of Manufacture and Delivery) to ATC and assigned to ATC their right
to drawback.

     We find the case of Campbell v. United States, 107 U.S. 407
(1882) to be dispositive on the issue at hand.  In Campbell, the
collector of customs, upon receipt of the claimant's drawback
entry, refused to issue a certificate of drawback on claimant's
exportation of linseed cake manufactured from imported, duty-paid
linseed, and therefore denied drawback.  The court stated that upon
exportation there resulted a contract [implied from the statute]
that when exported the government would refund the amount of 17
cents per hundred pounds the duty on the imported seed so converted
into cake.  The Supreme Court held that it is the law which gives
the right, and the fact that the customs officers refuse to obey
the regulations [in failing to issue the drawback certificate]
cannot defeat a right which the Act of Congress gives.  

     In the instant case, the issue is whether the alleged error by
Customs caused ATC to miss the statutory filing deadline.  The
manufacture and exports occurred almost three years before the
Customs letter of July 28, 1994, was sent.  That letter could have
nothing to do with that passage of time.  At most, the letter of
July 28, 1994, signaled an intention to question the validity of
ATC's assertion that it was a manufacturer entitled to drawback if
ATC filed a claim.  If ATC could show that its manufacturing
operations met the published terms of T.D. 83-73, and that its 1991
and 1992 exports complied with the statutory requirements for
drawback, the Customs letter of July 28, 1994, could not possibly
be a successful bar to drawback following the court's analysis in
the Campbell case.  There is simply no valid connection between the
Customs letter and ATC's failure to file.
 
     Since the facts do not show that ATC's failure to file its
claims was due to Customs' refusal to acknowledge ATC's
notification to operate under T.D. 83-73, we conclude that there is
no basis for an extension of the time period for the filing of the
two pending drawback claims in the Customs Miami drawback office.

HOLDING:

     An extension of time is NOT warranted on the facts presented
because the Customs Service was not responsible for the untimely
filing of claims by the drawback claimant.

                              Sincerely,



                              Director
                              International Trade Compliance
Division