CBP Finds Military's Export Documentation Permissible for Drawback Claims

CBP found that the Houston Drawback Center was mistaken in rejecting a drawback claim for infrared camera systems that a contractor imported for use by the Defense Department. The agency ruled (here) in favor of the importer, FLIR Systems, in response to a request for further review of protest. The company procured the camera systems in 2008 for use in Operation Iraqi Freedom “in direct support of wartime activities,” said CBP.

The company made several entries for the imported cameras and requested duty-free treatment under subheading 9808.00.3000 “for articles for military departments: materials certified to the Commissioner of Customs by the authorized procuring agencies to be emergency war material purchased abroad.” CBP instead classified the cameras as 9013.80.9000 because FLIR didn't have the requisite certifications from the Defense Contract Management Agency. The company filed a drawback claim in 2010 requesting a refund on duties paid on the entries.

While the drawback center questioned whether FLIR had acceptable proof of export, CBP noted that the requirements differ when the U.S. military is the exporter. While “commercial documents, such as bills of lading, are not available,” the company did provide several military documents and a signed memorandum. “Consequently, we accept these documents as certified copies of original documentation issued by the exporting carrier, the U.S. military,” said CBP. The agency also found that the military documents provide details on the date of export to the U.S. military bases.

The drawback center also took issue with the lack of information on “the eventual disposition of the camera systems” within the foreign market. CBP subsequently “sought clarification” from the military, which said that any camera systems not destroyed would not be brought back to the U.S.

The original drawback denial also questioned FLIR's ability to collect drawback even though it wasn't the exporter. As the exporter, the military has the right to claim drawback, but can also waive its right in favor of FLIR, said CBP. Although FLIR provided a waiver letter to CBP signed by the contracting officer, it wasn't clear to the drawback center “whether the individual issuing the letter had the authority to waive the right to claim drawback on behalf of the government.” Following an inquiry by CBP, the military explained that contracting officers are able to contract on behalf of the U.S. military pursuant to a specific warrant, said CBP. The contracting officer on the camera systems did have drawback waiver authority, said CBP. As a result, FLIR satisfied the waiver requirement. CBP ruled that the protest be granted “for any portion of the drawback claim where a designated camera system can be traced from importation to exportation.”