HQ 229566

September 17, 2002

DRA-2-02 RR:CR:DR 229566 LLB

Category: Drawback

Port Director

U.S. Customs Service

2350 N. Sam Houston Parkway East

Houston, Texas 77032

**Attn: Drawback Office, Vivian Yuan**

Re: Protest No./AFR 5301-02-100114; 19 C.F.R. §§ 191.72,191.28, 191.33;
evidence of exportation; HQ 228272 (November 8, 1999); hearsay evidence;
Fed. R. Evid. §§ 801(a) & 803(6); [Andy Mohan, Inc. v. United
States]{.underline}, 63 CCPA 104, 107 (1976); [See]{.underline} [United
States v. Baar & Beards, Inc.]{.underline}, 46 CCPA 92, C.A.D. 705
(1959); [See]{.underline} [Chrysler Motors Corp. v. United
States]{.underline}, 14 CIT 807, 816, 755 F. Supp. 388, aff\'d, 945 F.2d
1187 (Fed. Cir. 1991)

Dear Sir:

The above-referenced protest was forwarded to this office for further
review. We have considered the arguments raised by the protestant,
Hilti, Inc., and your office. Our decision follows.

FACTS

The protest is against the denial of drawback of drawback entry no.
AA6-xxxx853-6, which was filed, March 29, 1999, pursuant to 19 U.S.C. §
1313(j)(1), and was liquidated on December 21, 2001. The protest was
filed on March 12, 2002, against the denial of drawback claim, which
consisted of 23 exports, the basis of which drawback was claimed. In
liquidating the drawback claim, the port requested export documentation
for three of the designated exports, two of which were exports to Mexico
and one of which was an export to Canada. It is the protestant's
position that the totality of the documents submitted are sufficient to
establish the date and fact of exportation. It is the Drawback Office's
position that the evidence provided by the protestant to support that
the exporters for the Mexican exports waived their right to drawback is
insufficient. Further, the date and fact of

exportation cannot be established for the exported merchandise at issue.
[^1]

A Chronological Summary of Exports was submitted with the drawback
entry. The summary contained the invoice number, export date, export
carrier name, export manifest number, destination country, item number,
exported quantity, and export price per unit.

The protestant has provided the following documentation, in pertinent
part:

\- two undated assignment letters from Hilti Latin America, Ltd. to
Hilti, Inc.

-   a document dated May 8, 2002, from Hilti Canada, Ltd. titled
    "Exports to Canada". The document states that a Canadian Customs
    from B-3 is attached; however, such document is not attached.

-   an invoice from a Canadian Customs broker to Hilti Canada, Ltd.
    dated June 5, 1996 for cargo control number 2ITN15052473. Invoice
    indicates the shipper as Hilti, Inc. The customer order number
    83NT0502096/84NT05209

-   Canadian Customs Entry dated May 31, 2002, indicating Hilti, Inc. as
    the vendor, and the date of shipment as May 22^nd\--^ no year
    indicated. Referencing Customer P.O. No. 83NT0502096/84NT005209

-   sales invoice dated May 22, 1996, referencing P.O. No. 83NT0502096.
    Shipped on BAMA trailer 873

-   sales invoice dated May 22, 1996, referencing P.O. No. 84NT005209.
    Shipped on BAMA trailer 873

-   two Mexican pedimentos, one dated May 22, 1996, and the other dated
    May 29, 1996, with attached packing lists indicating the exporter as
    Hilti Latin America, Ltd.

ISSUES

1\. With regard to the subject exportations to Mexico, whether the
evidence is sufficient to establish that the exporter assigned its right
to drawback to the protestant pursuant to 19 C.F.R. § 191.33

2\. Whether exportation of the merchandise on which drawback is claimed
has been established in accordance with 19 C.F.R. § 191.72

LAW AND ANALYSIS

We note initially that the refusal to pay a claim for drawback is a
protestable issue pursuant to 19 U.S.C. §1514(a)(6). Drawback for the
subject entry was denied on December 21, 2001, when it was liquidated
with no drawback. This protest was timely filed on March 12, 2002, which
is within the 90-day filing deadline set forth in 19 U.S.C. §1514(c)(3).
This protest involves the denial of drawback under 19 U.S.C.
§1313(j)(1).

ISSUE 1

Pursuant to 19 C.F.R. § 191.33(a)(1), under 19 U.S.C. § 1313(j)(1), the
exporter is entitled to drawback; however, pursuant to § 191.33(a)(2),
in pertinent part,

> The exporter or destroyer may waive the right to drawback and assign
> such right to the importer or intermediate party. A drawback claimant
> under 19 U.S.C. § 1313(j)(1) other than the exporter or destroyer
> shall secure and retain certification signed by the exporter or
> destroyer that such party waived the right to claim drawback, and will
> not authorize any other party to claim exportation or destruction . .
> . The certification provided for under this section *may be a blanket
> certification for a stated period.* *The claimant shall file such
> certification at the time of, or prior to the filing of the claim(s)
> covered by the certification.*

(emphasis added). With regard to the two exportations to Mexico, the
Mexican pedimentos and the attached packing lists indicate that the
exporter is Hilti Latin America, Inc. (HLA). Insofar as the drawback
claimant here, Hilti, Inc., is not the exporter, assuming that Hilti,
Inc. is either the importer or intermediate party, Hilti, Inc. was
required to provide certification that HLA waived its right drawback and
assigned its right to Hilti, Inc.

Both assignment letters provided by the protestant are substantially
similar in language and state that HLA[^2] "hereby acknowledges that,
respect to all articles supplied to HLA by Hilti, Inc., Hilti, Inc.
reserves the right to drawback thereon with the knowledge and consent of
HLA. This assignment shall remain in effect until either party provides
written notice that it is no longer valid." These letters do not meet
the requirements of § 191.33(a)(2). First, the letters are undated and
further, do not give a stated period of time; therefore, it cannot be
determined if these letters apply to the exportations in question.
Second, the letters do not certify that HLA would not authorize any
other party to claim the exportation for drawback. Therefore, with
regard to the two exportations to Mexico, the protestant cannot claim
drawback thereon.[^3]

ISSUE 2

Pursuant to the Customs Regulations evidence of exportation is required
as follows:

> Exportation of articles for drawback purposes shall be established by
> complying with one of the procedures provided for in this section (in
> addition to providing prior notice of intent to export if applicable
> (see §§ 191.35, 191.36, 191.42, and 191.91 of this part)). Supporting
> documentary evidence shall establish fully the date and fact of
> exportation and the identity of the exporter. The procedures for
> establishing exportation outlined by this section include, but are not
> limited to:
>
> \(a\) Actual evidence of exportation consisting of documentary
> evidence, such as an originally signed bill of lading, air waybill,
> freight waybill, Canadian Customs manifest, and/or cargo manifest, or
> certified copies thereof, issued by the exporting carrier;

\(b\) Export summary (§ 191.73);[^4]

\(c\) Certified export invoice for mail shipments (§ 191.74);

> \(d\) Notice of lading for supplies on certain vessels or aircraft (§
> 191.112); or
>
> \(e\) Notice of transfer for articles manufactured or produced in the
> U.S. which are transferred to a foreign trade zone (§ 191.183).

19 C.F.R. § 191.72 (footnote added).

In general, the proof of exportation requires evidence of an intent for
the merchandise at issue to unite with the mass of things belonging to
that of another country, and evidence that the merchandise left the U.S.
See 19 CFR 101.1. The documents submitted generally support the intent
for the subject merchandise to join the commerce of another country.
Such intent is shown by the invoices, packing lists and payment records
(provided there are no discrepancies among the documents). Evidence that
the merchandise left the U.S. could consist of, for example, a bill of
lading indicating that the goods are on an outbound vessel or aircraft,
or that the goods were entered into a foreign government's Customs. See
HQ 228272, dated November 8, 1999. Finally, documentation showing the
date of export from the U.S. must carry some certification of
authenticity, either in the form of a signature on an original document
or certification of a copy of the signed document. See HQ 226929, dated
June 4, 1997.

Under evidentiary rules, hearsay testimony is not admissible. The
Federal Rules of Evidence define hearsay as "a statement, other than one
made by the declarant while testifying at the trial or hearing, offered
in evidence to prove the truth of the matter asserted." Fed. R. Evid.
801(c). Under Fed. R. Evid. 801(a), a statement includes a written
assertion. An exception to the hearsay rule is in 803(6) which provides
that:

> A memorandum, report, record, or data compilation, in any form, of
> acts, events, conditions, opinions, or diagnoses, made at or near the
> time by, or from information transmitted by, a person with knowledge,
> if kept in the course of a regularly conducted business activity, and
> if it was the regular practice of that business activity to make the
> memorandum, report, record, or data compilation, all as shown by the
> testimony of the custodian or other qualified witness....

The submitted documents, consisting of a Canadian Customs broker
invoice, a packing list, and Canadian Customs entry, appear to all be
records made at the time of the transaction at issue, and kept in course
of regularly conducted business. However, the document titled "Exports
to Canada Affidavit,"[^5] dated May 8, 2002, signed by David Sires, Vice
President, Tax/Audit, and Assistant Secretary, was not made at the time
of the transaction at issue insofar as it was executed 6 years after the
alleged May 22, 1996, exportation occurred.

Further, affidavits provided as evidence are only \"\... entitled to
little weight, being incomplete and based on unproduced records, and
having been executed years after the transaction to which they attest.\"
[Andy Mohan, Inc. v. United States]{.underline}, 63 CCPA 104, 107
(1976). Mr. Sires' unsworn statement, dated and signed May 8, 2002,
provides the following:

> This affidavit is submitted under Section 191.72(a) of the U.S.
> Customs Code of Federal Regulations. We hereby submit satisfactory
> evidence in the form of this certification that duties were paid to
> Canada on the following imports of our claimed exports. Accordingly,
> the attached B3 includes the following information:
>
> 1\. The Canadian entry number
>
> 2\. The date of import into Canada.
>
> 3\. The Canadian HTS number
>
> 4\. The Canadian rate of duty.
>
> 5\. The amount of duties paid to Canada in Canadian dollars.
>
> 6\. The amount of duties paid to Canada in U.S. dollars.

First, the B3 to which Mr. Sires refers was not attached to his
statement. Second, Mr. Regan's statement was \"executed years after the
transaction to which it attests\" insofar as it has been six years since
the exportations on which the protestant claims drawback

was filed. [See]{.underline} [United States v. Baar & Beards,
Inc.]{.underline}, 46 CCPA 92, C.A.D. 705 (1959) (holding that an
affidavit more than two years after the event to which it related, not
supported by any records, is insufficient to support the basis for the
claim at issue). Hence, Mr. Sires unsworn statement is entitled to
little weight, if any at all.

Notwithstanding the foregoing, review of the remaining documents do not
establish exportation. Although the purchase order number on the sales
invoice can be cross-referenced with the Canadian Customs entry, and the
cargo control number/bill of lading number thereon can be
cross-referenced with the chronological summary of exports, the only
document that mentions a date of exportation is the Canadian Customs
entry. The date of exportation indicated on the Canadian Customs entry
is May 22, 1996; however, this assertion was made by the Canadian
Customs broker and whether the broker had personal knowledge of the date
of exportation is questionable. Based on our review of the documents, it
is likely that the broker obtained the date of exportation from the
export bill of lading insofar as the Customs Broker's invoice indicates
the bill of lading number, the company used for shipment, and the number
of the truck on which the merchandise arrived. Hence, in order for the
Canadian Customs broker's assertion, as to the date of exportation, to
fall within the hearsay exception, the protestant will need to provide a
copy of the bill of lading certified by the export carrier---the entity
which would have personal knowledge of the date of exportation and is
the custodian of the bill of lading.

Compliance with the Customs Regulations on drawback is mandatory and a
condition of payment of drawback. [See]{.underline} [Chrysler Motors
Corp. v. United States]{.underline}, 14 CIT 807, 816, 755 F. Supp. 388,
aff\'d, 945 F.2d 1187 (Fed. Cir. 1991) [citing]{.underline} [Swan &
Finch Co. v. United States]{.underline}, 190 U.S. 143, 146
(1903)(holding that "the allowance of drawback is a privilege and
compliance with the regulations is a prerequisite to securing it where
the regulations are authorized and reasonable."); [see]{.underline}
[also]{.underline}, [United States v. Hardesty Co., Inc.]{.underline},
36 CCPA 47, C.A.D. 396 (1949); [Lansing Co., Inc. v. United
States]{.underline}, 77 Cust. Ct. 92, C.D. 4675 (1976); [Guess? Inc. v.
United States]{.underline}, 944 F.2d 855, 858 (1991) (\"We are dealing
\[in discussing drawback\] instead with an exemption from duty, a
statutory privilege due only when the enumerated conditions are met\").
Hence, in order for the protestant to establish exportation of the
merchandise to Canada, the exports on which drawback has been claimed,
the protestant will need to provide a certified bill of lading.

HOLDING

1\. With regard to the subject Mexican exports, the evidence is
insufficient to establish that the exporter assigned its right to
drawback to the protestant pursuant to 19 C.F.R. § 191.33, insofar as
the assignment letters are undated and the letters do not certify that
the exporter would not authorize any other party to claim the
exportation for drawback. The protest should be DENIED as to these
exports.

2\. With regard to the Canadian export on which drawback has been
claimed, exportation of the merchandise in accordance with 19 C.F.R. §
191.72 has not been established. Exportation may be established with
respect to this export if a certified copy or executed bill of lading is
provided. The protest should be DENIED UNLESS certain documentation is
provided, in accordance with the foregoing instructions.

In accordance with Section 3A(11)(b) of Customs Directive 099 3550-065,
dated August 4, 1993, Subject: Revised Protest Directive, you are to
mail this decision, together with the Customs Form 19, to the protestant
no later than 60 days from the date of this letter. Any reliquidation of
the entry or entries in accordance with the decision must be
accomplished prior to mailing the decision.

Sixty days from the date of the decision, the Office of Regulations and
Rulings

will make the decision available to Customs personnel, and to the public
on the Customs Home Page on the World Wide Web at
www.customs.ustreas.gov, by means of the Freedom of Information Act, and
other methods of public distribution.

Sincerely,

John Durant, Director

Commercial Rulings Division

[^1]: The protestant also raises that the port had no authority to
    require that the documents submitted by the protestant be certified
    by a "disinterested third party". Insofar as the port based its
    denial on the insufficiency of the evidence rather than the
    certification of the documents submitted, we do not reach the issue
    of whether certification of export documents by a disinterested
    third party is required. [See]{.underline} [3V, Inc. v. United
    States]{.underline}, 83 F. Supp. 2d 1351 (Ct. Int'l Trade
    1999)(granting defendant's motion to dismiss for failure to state a
    claim upon which relief may be granted)(holding that there was no
    case or controversy where both the classification assessed and the
    classification protested are duty-free).

[^2]: The other acknowledgment letter refers to Hilti Latin America,
    Inc. as "Proveedor" Hilti Latin America, Inc. It is apparent that
    whomever prepared the letter mistakenly copied the name from the
    Mexican pedimento believing that Proveedor was actually party of
    HLA's name when in fact it is a title equivalent to an exporter on a
    pedimento.

[^3]: As such, we do not reach the issue of whether exportation of the
    merchandise on which drawback is claimed has been established in
    accordance with 19 C.F.R. § 191.72 as to the subject importations to
    Mexico.

[^4]: In pertinent part, "\[a\]ctual evidence of exportation, as
    described in § 191.72 of this subpart, is the primary evidence of
    export for drawback purposes." 19 C.F.R. § 191.73(c).

[^5]: We note that the document containing the vice president's
    statement is not an affidavit as it is labeled. An affidavit is "a
    statement or declaration reduced to writing and sworn or affirmed to
    before some officer who has authority to administer an oath or
    affirmation." [United States v. Paragon Bead Corp.]{.underline}, 3
    Cust. Ct. 644, 646 (1939). Review of the foregoing document does not
    indicate that the vice president's statement was sworn to before a
    notary public or any other officer having such authority, therefore,
    the document is not an affidavit, but merely an unsworn statement.