HQ H021614

June 20, 2008

PRO-2-05

ENT-13

ENT-1-03

OT:RR:CTF:ER H021614 DCC

Ms. Jennifer Tagliaferro

Supervisory Entry Specialist

U.S. Customs and Border Protection

Protest & Control, Room 402

1100 Raymond Boulevard

Newark, New Jersey 07102

Dear Sir or Madam:

This letter is in response to your request for internal advice, dated
January 3, 2008, pursuant to 19 C.F.R. § 177.11. Your request concerns
Claim No. 4601-05-200278 filed by Freight Savers Shipping Co., Ltd.
("Freight Savers") on behalf of Seiyo Logistics Co. ("Seiyo") filed on
June 15, 2005. Upon receiving this claim, you treated it as request to
reliquidate the entry due to a mistake of fact pursuant to 19 U.S.C. §
1520(c). You subsequently referred Seiyo's request for reliquidation to
this office along with a request for internal advice.

Because no grounds for a mistake of fact claim were presented, we
determine there is no basis for granting Seiyo's claim under section
1520(c). Instead, this letter addresses the underlying issue presented
in Seiyo's initial protest (No. 4601-05-100099, filed January 19, 2005).
Namely, whether customs duties paid by Seiyo are eligible for refund
when its imported merchandise was seized by CBP and later released under
bond for exportation from the United States pursuant to 19 U.S.C. §§
1557 or 1558, and what evidence is necessary to support such a claim.

FACTS:

Seiyo attempted to enter 12,000 men's cotton trousers, classified under
tariff item 6203.42.4015, Harmonized Tariff Schedule of the United
States ("HTSUS"), on December 29, 2003. Seiyo paid a total of \$8,275.62
in ordinary duties and fees at the time of filing the entry summary.

CBP selected the shipment for examination and on February 10, 2004,
determined that the certificate of origin and visa for the entry were
fraudulent. CBP subsequently denied entry and seized the shipment under
CBP Fines, Penalties, and Forfeiture ("FP&F") Case No.
2004-4601-000293-01. According to the seizure report, the shipment
contained 1,053 cartons of men's 100% cotton woven pants.

Freight Savers filed an Election of Proceedings, dated March 23, 2004,
for the seized merchandise, which requested CBP to consider Freight
Savers' petition administratively rather than forfeit the merchandise or
pursue litigation.

On August 6, 2004, Freight Savers filed Immediate Export ("IE") Entry
No. xxxxx802-1 (CBP Form 7512). This form describes the merchandise as
1,053 cartons of "Mens 100% Cotton Woven Pants" with a gross weight of
28,660 pounds, or 13,000 kgs., and a value of \$48,000. The form
references the FP&F penalty case, and includes a written notation that
states: "This Merchandise is Prohibited to Enter Into the U.S." The form
also indicates that the merchandise was to be exported on the CMA CGM
vessel "Rhone" under Booking No. NAM132723.

On August 12, 2004, Seiyo executed a Hold Harmless Release Agreement
with CBP in which the importer agreed to release the U.S. Government
from any claims related to the seizure of the imported merchandise in
exchange for the return of the importer's seized merchandise. On
September 28, 2004, Seiyo allegedly exported the subject merchandise. As
evidence of the exportation, Seiyo submitted Bill of Lading No.
NA1033534, dated September 28, 2004, which indicates 1,053 cartons of
"fleece knitted tops," with a gross weight of 13,000 kgs. The Bill of
Lading also indicates that the shipment was destined for Singapore
aboard the GMA CGM vessel "Potomac" under booking number NAM137930.

On January 3, 2005, CBP liquidated Seiyo's original import entry, Entry
No. xxxxxxx506-2. Seiyo subsequently filed its first claim challenging
the liquidation (Protest No. 4601-05-100099) on January 19, 2005. In a
letter accompanying the protest, dated January 17, 2005, Freight Savers
alleged that the shipment was approved for export by CBP after Seiyo
paid a penalty on Immediate Exportation (IE) entry No. 790-688-021, and
that the merchandise was exported on September 28, 2004.

On January 24, 2005, CBP requested Freight Savers to provide additional
information within 30 days. Specifically, CBP requested that Freight
Savers submit a constructed entry summary for Entry No. xxxxxxx506-2,
including the following documents: original CF 7501; CF 3461; single
entry bond (if applicable); rated invoices; packing lists; bills of
lading or carrier's certificates; and any other required agency
documents. CBP denied Protest No. 4601-05-100099 on April 8, 2005
because the Seiyo failed to provide proof of export and proof of release
from CBP's office of Fines, Penalties and Forfeiture.

On April 22, 2005, Freight Savers filed a second claim (Protest No.
4601-05-100903), which included a copy of the export Bill of Lading (B/L
No. NA1033534), Immediate Export Entry No. xxxxx802-1 (CBP Form 7512),
the original protest, and entry packet. The port later denied this
protest as untimely on November 18, 2005.

On June 15, 2005, Freight Savers filed its third claim (Claim No.
4601-05-200278). This petition was accompanied by a letter requesting
that the entry be cancelled. Your office treated this claim as a
"mistake of fact" request for reliquidation pursuant to 19 U.S.C. §
1520(c) and referred it to this office for review.

On July 28, 2005, Freight Savers sent a letter to CBP requesting that
CBP to close out the Immediate Exportation entry. The letter notes that
the importer was unable to cancel the entry because the duty was already
paid. Finally, on January 23, 2006, Freight Savers filed its fourth
claim (Protest No. 4601-06-100257), which was denied by the port as
untimely on March 24, 2006.

The letter does not address whether the protests filed on April 22,
2005, January 23, and March 24, 2006 were legally sufficient inasmuch as
each was denied by the port.

ISSUE:

Whether customs duties paid by an importer are eligible for refund when
the imported merchandise is seized by CBP and later released under bond
for exportation from the United States pursuant to 19 U.S.C. §§ 1557 and
1558.

[]{.mark}

LAW AND ANALYSIS:

[Customs' Custody of Seized Merchandise]{.underline}

The threshold issue is whether the subject merchandise remained in
Customs' custody until the time of exportation. The answer to this
question determines whether Seiyo may seek a refund of duties under 19
U.S.C. §§ 1557 or 1558.

Before analyzing whether the merchandise was released from CBP's custody
we note that in your request for internal advice, you asked whether the
holding in *Resource Club v. United States*, 491 F. Supp. 2d 1296 (Ct.
Int'l Trade 2007), may be applicable to the instant case. In that case,
the plaintiff (*i.e.*, Resource Club) imported a shipment of women's
jeans with a Cambodian visa. CBP detained the shipment pending
verification of the authenticity of the visa. After determining that the
visa was fraudulent, CBP notified Resource Club that the shipment had
been seized. CBP denied the importer's petition for relief from the
seizure, but issued a decision letter that authorized remission of the
goods for "export only."

Unlike the facts in this case, however, the importer subsequently
abandoned the goods to CBP. Resource Club then filed a protest
challenging the assessment, collection, and retention of duties paid,
arguing that 19 U.S.C. § 1563(b) authorized a refund of duties paid on
merchandise abandoned to the government. Ultimately, the Court of
International Trade ("CIT") affirmed CBP's decision not to refund the
duties because the abandoned merchandise had not been stored in a bonded
warehouse as required by the section 1563(b) and section 158.43(a)-(b)
of the CBP regulations (19 C.F.R. § 158.43(a)-(b)). Although *Resource
Club* and the instant case both involve merchandise seized by CBP
because the importer failed to present a bona fide visa, the legal basis
for claiming a refund in *Resource Club* is different because the
merchandise was abandoned to CBP. Because Seiyo's never abandoned its
merchandise, section 1563(b) is inapplicable to the instant refund
claim.

When merchandise is released from Customs' custody prior to exportation,
19 U.S.C. § 1558 authorizes the refund of ordinary duties under limited
circumstances, *i.e.*, when the drawback of duties is expressly provided
for by law (section 1558(a)(1)); when prohibited articles have been
regularly entered in good faith and are subsequently exported pursuant
to U.S. law (section 1558(a)(2)); and---for country of origin marking
duties assessed under section 1304(h)---when improperly marked articles
are exported. *See* 19 C.F.R. § 158.45(b)-(d).

When merchandise remains under Customs' custody, however, the statute
and regulations generally provide for a refund of all duties paid. The
refund of duties paid on merchandise that has not been released from
CBP's custody is governed by 19 U.S.C. § 1557(a)(2), which provides as
follows:

> \(2\) Merchandise upon which the **duties have been paid** and **which
> shall have remained continuously in bonded warehouse or otherwise in
> the custody and under the control of customs officers**, may be
> entered or withdrawn at any time within 5 years after the date of
> importation . . . for transportation and exportation to a foreign
> country . . . under such regulations as the Secretary of the Treasury
> shall prescribe, and upon such entry or withdrawal, and exportation or
> shipment, the **duties thereon shall be refunded**.

19 U.S.C. § 1557(a)(2) (emphasis added).

The CBP Regulations implementing section 1557(a)(2) are codified at 19
C.F.R. § 158.45(a), and allow for the refund of duties paid provided the
merchandise is exported under CBP supervision. Specifically, section
158.45(a) authorizes the issuance of refunds for merchandise that
remains under Customs' custody provided the entry has not been
completed; or the merchandise is covered by a liquidated or unliquidated
consumption entry. Under either scenario, however, the merchandise must
be exported under Customs' supervision in accordance with the provisions
of 19 C.F.R. §§ 18.25 through 18.27.

In the instant case the subject merchandise remained under CBP's custody
from the time of importation on December 29, 2003 until released under
bond for export. Freight Savers initially filed Protest Number
4601-05-100099, which was denied by CBP on April 8, 2005 for lack of
proof of export and release from FP&F. Freight Savers subsequently
provided a copy of IE Entry No. xxxxx802-1. This form was perforated
with a message that reads: "USCS 08-06-04 NYS," which indicates the
document was filed with CBP at the New York Seaport on August 6, 2004.
Because CBP Form 7512 was received by CBP, it indicates that the seized
merchandise was released by CBP to Freight Savers under bond for export
from the United States aboard the designated carrier. Because the seized
merchandise was within CBP's custody until it was released for export,
19 U.S.C. § 1557(a)(2) and 19 C.F.R. § 158.45(a) of the regulations
govern the issuance of any refunds upon the exportation of the
merchandise.

[Exportation of Subject Merchandise]{.underline}

As noted above, the port denied Seiyo's initial claim in part because of
a lack of evidence that the seized merchandise was exported from the
United States. In response, Freight Savers filed its second claim
(Protest No. 4601-05-100903), which included a copy of the IE Entry (CBP
Form 7512) and export Bill of Lading (B/L No. NA1033534) to substantiate
it claim that the merchandise was exported.

Upon reviewing the documentation, however, the evidence fails to show
that the subject merchandise was exported as claimed. We found several
unexplained discrepancies that undermine Seiyo's claim. First, although
all of the commercial and entry documents describe the seized
merchandise as men's cotton pants, the export bill of lading describes
the merchandise as "fleece kitted tops." Second, the ocean carrier,
booking number, and container numbers listed on the IE Entry do not
match the corresponding information reported on the export bill of
lading. We note, however, that the several items on the CBP Form 7512
match data from other documents, including the original entry number
(xxxxxxx506-2); gross weight of the merchandise (13,000 kgs); number of
cartons (1,053); value (\$48,000); bill of lading for original entry
(B/L No. NYKS 485373142); and stated reason for export (*i.e.*,
"merchandise is prohibited to enter into the U.S."). Based on the
discrepancies in the documentation, we conclude that documentation fails
to substantiate Seiyo's claim that the seized merchandise was in fact
exported from the United States.

HOLDING:

For the reasons discussed above, we determine that there is insufficient
evidence of the exportation of the subject merchandise and therefore the
duties and fees paid are not eligible for refund under 19 U.S.C. §
1557(a)(2).

You are to mail this decision to the protestant no later than 60 days
from the date of this letter. On that date, this office will make the
decision available to CBP personnel, and to the public on the CBP Home
Page on the World Wide Web at www.cbp.gov, by means of the Freedom of
Information Act, and other methods of public distribution.

> Sincerely,
>
> Myles B. Harmon, Director
>
> Commercial and Trade Facilitation Division