ENT-1-03/BON-2-RR:IT:EC 225832 CC
Port Director
U.S. Customs Service
477 Michigan Avenue
Detroit, MI 48226-2568
RE: Application for further review of Protest No. 3801-94- 103714; Notice of Redelivery; Pork bellies; U.S.D.A. inspection; Who is liable for failure to redeliver
Dear Sir or Madam:
The above-referenced protest was forwarded to this office
for further review. We have considered the facts and issues
raised, and our decision follows.
FACTS:
The merchandise the subject of this protest consists of pork
bellies. The subject merchandise was shipped by vehicle from
Canada. On April 13, 1994 the subject merchandise was entered by
the protestant as the importer of record and released in Detroit;
no United Stated Department of Agriculture (U.S.D.A.) inspection
of the subject goods occurred. The protestant, as principal,
executed a continuous bond securing the entry of the pork
bellies. On May 31, 1994, Customs issued a Notice to Redeliver,
Customs Form (CF) 4647, citing U.S.D.A. regulation 327.6 as the
reason for the redelivery request. Also, remarks included in the
redelivery notice state as a reason for the request, "Failed to
report for U.S.D.A. Import Inspection."
The protest was filed on July 13, 1994. The protestant
claims that the carrier it contracted with to transport the goods
was responsible for ensuring that the goods were inspected by the
U.S.D.A. The protestant claims that the carrier's failure to
stop for U.S.D.A. inspection was an irregular delivery, in
violation of section 18.8 of the Customs Regulations (19 CFR
18.8), making the carrier responsible for liquidated damages.
The protestant, who was the importer of record, claims it gave
clear, written instructions to the carrier to clear the shipment
with both Customs and the U.S.D.A. In addition, the protestant
claims that a Customs inspector told the carrier that the
shipment did not require U.S.D.A. inspection. Consequently, the
protestant claims that any liquidated damages for failure to
redeliver are the responsibility of the carrier, not the
protestant.
In lieu of a meeting, a further submission was made on May
3, 1996, on behalf of the protestant, which explained in more
detail the protestant's position. The export procedures employed
by the protestant were described in more detail in this
submission. For example, it was stated that the protestant
notifies the U.S.D.A. at Detroit of the impending arrival of its
shipments. Included with the submission is a copy of the
purported written notification to the U.S.D.A. In addition, this
submission provided further information on how the protestant
educates its carriers as to their responsibilities. The
protestant states that it provides instruction sheets to drivers
for entering merchandise into the U.S., which include
instructions to stop at Customs and then at the Food Safety
Inspection Service. The driver must read and sign these sheets.
Included with the submission was a copy of the signed instruction
sheet for the subject entry. In addition, the protestant argues
in the submission that the notice to redeliver was improperly
issued.
The protestant also protests "the classification, value and
amount of duties" and claims "that a refund of the amounts
deposited at the time of entry or as liquidated should issue for
any merchandise ultimately refused admission."
ISSUE:
Whether the importer or the carrier is liable for damages
for the failure to redeliver the subject merchandise?
LAW AND ANALYSIS:
Initially, we note that a demand for redelivery is a
protestable matter pursuant to 19 U.S.C. 1514(a)(4). In
addition, the subject protest was timely filed in accordance with
19 U.S.C. 1514(c)(3)(B).
The regulations concerning the redelivery of merchandise are
contained in 19 CFR 141.113 and 113.62. Paragraph (c) of section
141.113 states the following:
If at any time after entry the port director finds
that any merchandise contained in an importation is not
entitled to admission into the commerce of the United
States for any reason not enumerated in paragraph (a)
[merchandise not legally marked] or (b) [textiles and
textile products] of this section, he shall promptly
demand the return to Customs custody of any such
merchandise which has been released.
Section 113.62 of the Customs Regulations (19 CFR 113.62)
contains the basic importation and entry bond conditions.
Paragraph (d) of this provision states the following:
If merchandise is released conditionally from
Customs custody to the principal before all required
evidence is produced, before its quantity and value are
determined, or before its right of admission into the
United States is determined, the principal agrees to
redeliver timely, on demand by Customs, the merchandise
released if it:
(1) Fails to comply with the laws or regulations
governing admission into the United States;
(2) Must be examined, inspected, or appraised as
required by 19 U.S.C. 1499; ...
The protestant cites several statutes and regulations in its
protest, e.g., 9 CFR 327.6, 9 CFR 327.7, and 21 U.S.C. 610.
These regulations and statute provide for the inspection of
certain merchandise, and as stated by protestant provide that
"movement, or transportation, of the goods is prohibited unless
domestic inspection of the products have been made."
Thus, the protestant's major argument is not that the goods
were not subject to inspection and therefore the issuance of the
notice of redelivery is invalid. Instead, the protestant claims
that the carrier is the party who should be held liable for the
failure to redeliver, since it was the carrier who was
responsible for the merchandise not being examined by the
U.S.D.A. In support of this claim, the protestant argues that it
instructed the carrier to deliver the merchandise for inspection
and the carrier failed to do so.
To protect the government from losses as a result of
noncompliance with Customs regulations, Customs normally requires
an importer to file a bond with Customs. As stated in
T.D. 84-213:
As a part of the entry documentation the importer,
consignee, or an authorized agent usually is required
to file a bond with Customs. The bond, among other
things, guarantees that proper entry summary with
payment of estimated duties and taxes when due, will be
made for imported merchandise and that any additional
duties and taxes subsequently found to be due will be
paid. The bond also guarantees redelivery of imported
merchandise to Customs custody if found not to comply
with applicable laws and regulations.
One consolidated bond is used for most purposes, including
entry of merchandise: CF 301. The terms of the CF 301 bind the
principal(s) and surety(ies) named on the bond to the government
in the amounts set forth on the bond. In addition, the CF 301
incorporates part 113, subpart G, of the Customs Regulations. As
stated above, those regulations require the principal to
redeliver merchandise on demand by Customs. Also, they state
that the principal and surety agree to pay any additional duties,
taxes, and charges imposed. 19 CFR 113.62(a)(ii). In several
court cases, it has been found that the principal and surety were
jointly and severally liable for damages for breach of a Customs
bond for the failure to redeliver merchandise upon a proper
demand by Customs. See, e.g., United States v. Peerless
Insurance Company, 12 CIT 1182, 703 F. Supp. 955 (1988), and
United States v. Cocoa Berkau, Inc., 16 CIT 270, 789 F. Supp.
1160 (1992).
The issue here is who is liable for the failure to redeliver
the subject merchandise. Since, as stated above, the principal
and surety of the bond used to secure entry of the merchandise
are liable, the question is who was the principal of the bond in
this case.
A continuous bond secured entry of the subject merchandise.
Customs records show that listed as the principal on the bond is
the protestant, as the importer. Consequently, we find that the
protestant is liable for the failure to redeliver the subject
merchandise.
The protestant claims that the carrier is responsible for
redelivery under section 18.8 of the Customs Regulations (19 CFR
18.8). The protestant also cites 50 FR 49037 (1985),
T.D. 85-191, in support of its claim, which was the final rule
amending Part 18 of the Customs Regulations at that time. Part
18 of the Customs Regulations provides for transportation in bond
entries; section 18.8 provides for a bonded carrier's liability.
Customs records do not show, nor has the protestant presented any
evidence to show, that the carrier was a bonded carrier that made
a transportation in bond entry for the subject merchandise.
Consequently, the protestant's claim that the carrier is liable
for any damages due to the failure to redeliver, in accordance
with 19 CFR 18.8, is without merit.
Thus, this matter is similar to Henry Mast Greenhouses, Inc.
v. United States, Slip Op. 95-198 (Ct. Int'l Trade Dec. 4, 1995).
In that case the plaintiff argued it was not liable for the
payment of duty because it was not the importer; instead, the
plaintiff argued, its subsidiary was the importer. The court
decided against the plaintiff, stating the following:
...[T]he official documents name Plaintiff as the
importer of record and the consignee. Plaintiff is
named as the principal on the bond, Plaintiff's
importer number appears on the bond, and the
merchandise was invoiced directly from the Dutch
manufacturer to Plaintiff's place of business. More
telling, the American subsidiary does not appear
anywhere on the official documents. As ubiquitous as
the Plaintiff is on the entry documents, the American
subsidiary is conspicuously absent. Consequently, the
American subsidiary cannot, under the facts of this
case, be the importer for purposes of duty liability.
As shown above, the protestant is listed as the importer of
record in the entry documents and in Customs records. The bond
lists the protestant as liable for the failure to redeliver
merchandise, among other things. We have no evidence before us
that lists the carrier, in any entry documents or bond, as being
liable for the failure to redeliver. Consequently, the
protestant is liable for the failure to redeliver.
The protestant also argues that the notice to redeliver was
invalid because the goods were not found to be ineligible for
admission into domestic commerce. The reason the goods were not
found to be ineligible for admission, the protestant argues, is
that the Customs official at the port of entry waived the
requirement that the goods be inspected.
Notice for redelivery was sent to the protestant because it
failed to have the subject goods inspected by the U.S.D.A.
pursuant to 9 CFR 327.6. Consequently, Customs could not waive
the requirement for inspection; only U.S.D.A. could waive the
requirement for inspection. Although the protestant has argued
that it notifies the U.S.D.A. of the impending arrival of
shipments, and has provided such a written notice to the U.S.D.A.
for the subject entry, no evidence has been provided that the
U.S.D.A. waived the inspection. The protestant's argument,
therefore, that the inspection was waived and the notice of
redelivery was invalid is without merit.
Finally, the protestant requests in the protest "a refund of
the amounts deposited at the time of entry or as liquidated."
The subject merchandise was entered under subheading 0203.19.40
of the Harmonized Tariff Schedule of the United States (HTSUS), a
duty-free provision. Customs records show that no duties were
deposited upon entry, nor were any duties due or paid at
liquidation. Therefore, there can be no duties to refund, and
this claim is denied.
HOLDING:
The protestant is liable for any damages for the failure to
redeliver the subject merchandise upon demand by Customs. The
carrier did not make a transportation in bond entry and was not
bonded; therefore, the carrier has no liability for failure to
redeliver. Therefore, the protest should be DENIED.
In accordance with Section 3A(11)(b) of Customs Directive
099 3550-065, dated August 4, 1993, Subject: Revised Protest
Directive, this decision should be mailed by your office to the
Protestant no later than 60 days from the date of this letter.
Any reliquidation of the entry in accordance with the decision
must be accomplished prior to mailing of the decision. Sixty
days from the date of the decision the Office of Regulations and
Rulings will take steps to make the decision available to customs
personnel via the Customs Rulings Module in ACS and the public
via the Diskette Subscription Service, Freedom of Information Act
and other public access channels.
Sincerely,
Director, International Trade
Compliance Division