PRO-2-02 RR:CR:DR 227931 cb
Myron Paul Barlow, Esq.
Miller & Company
4929 Main Street
Kansas City, MO 64112
RE: Reconsideration of HQ 227654; 19 U.S.C. 1514
Dear Mr. Barlow:
This is in response to your letter of February 28, 1998,
wherein you are attempting to protest our decision issued under
HQ 227654, dated December 2, 1997. We have considered the points
you raised and our decision follows.
FACTS:
On December 2, 1997, the Customs Service issued Headquarters
Ruling 227654, which held that: (1) The sale for consumption of
diesel fuel from a foreign trade zone constitutes prohibited
retail trade under 19 U.S.C. 81o(d); and (2) that the placing of
diesel fuel in a truck's fuel tank in a foreign trade zone to be
consumed by the truck destined for Canada does not constitute an
"exportation" under 19 U.S.C. 81c(a).
You have filed a "protest" under 19 U.S.C. 1514(a). It is
your contention that: (1) by denying your client the duty and
tax free benefits provided by the Foreign Trade Zones Act of
1934, HQ 227654 unlawfully imposes duties, charges and exactions;
and (2) that the ruling constitutes an order and finding
excluding diesel fuel from delivery to the foreign trade zone for
purposes of the proposed sales. You have also incorporated, by
reference, the arguments contained in previous submissions and
addressed in HQ 227654.
ISSUE:
Is HQ 227654 subject to the protest procedures set forth in
19 U.S.C. 1514(a)?
LAW AND ANALYSIS:
Section 1514 of Title 19, United States Code, provides for
protest procedures involving decisions of the Customs Service.
Subsection 1514(a) provides that decisions of the Customs Service
are protestable if they concern:
. . .
(3) all charges or exactions of whatever character within
the jurisdiction of the Secretary of the Treasury;
(4) the exclusion of merchandise from entry or delivery or
a demand for redelivery to customs custody under any
provision of the customs laws, except a determination
appealable under section 1337 of this title.
. . . .
It is well settled law that it is the importation which
triggers the liability for duties. Hawaiian Independent Refinery
v. United States, 81 Cust. Ct. 117, C.D. 4777 (1978) ("...
dutiability is expressly conditioned therein upon the importation
of foreign articles into the Customs territory of the United
States. . . .'") (emphasis in original). The amount and rate of
duties is generally fixed when the imported good is entered under
19 U.S.C. 1315. Likewise, it is well settled law that
merchandise admitted into a foreign trade zone is not imported.
See Hawaiian Independent, supra. This conclusion is based on the
fact that, under the applicable statute and regulations, a
foreign trade zone is not within the Customs territory of the
United States. 19 CFR 146.1. However, even with respect to
foreign trade zones, there is no blanket exclusion from the
liability from duty imposed as a result of the importation. See
Nissan Motor Mfgr. Corp. U.S.A. v. U.S., 884 F.2d 1375, 7 CAFC
143 (1989).
Regarding your contention that Customs decision constitutes
a charge or exaction, the Customs Court addressed this issue in
Carlingswitch, Inc.v. United States, 85 Cust. Ct. 63, C.D.
4873, aff'd, 68 CCPA 49, C.A.D. 1264, 651 F.2d 768 (1981). The
court concluded that "[a]t the very least, to constitute an
exaction' under section 514(a)(3), there would have had to have
been some compulsion on the part of Customs requiring plaintiff
to have paid the monies." 85 Cust. Ct. at 66. In arriving at
this interpretation, the court looked at the plain meaning of the
word and noted the dictionary definitions. Likewise, in
determining whether a demand against a bond constitutes a charge,
the Court of International Trade (CIT) looked at the dictionary
definition of this term. St. Paul Fire and Marine Insurance Co.
v. United States, 14 CIT 43 (1990).
The CIT noted that "[a] charge' has been interpreted as an
obligation or duty; a claim or encumbrance; a liability, an
expense or the price of an object; an entry in an account of
what's due from one party to another, 1 West's Law & Commercial
Dictionary in Five Languages 211 (1958); West's Legal Thesaurus
and Dictionary 127 (1985); Webster's Third New Int'l Dictionary
377 (1981); Black's Law Dictionary 211 (5th Ed. 1979)." St.
Paul Fire, supra at 46. The court also noted that, in order to
have a "charge" or "exaction", there must be an actual assessment
of specific sums of money on imported merchandise. Id. In the
case at hand, Customs is not compelling your client to make any
payment nor has there been an assessment of specific sums. Thus,
following the court's rationale, HQ 227654 is not protestable
under 19 U.S.C. 1514(a)(3) as a decision concerning a charge or
exaction.
In the alternative, it is your position that HQ 227654 is a
finding excluding diesel fuel from delivery into the foreign
trade zone. Like the Customs Court in Carlingswitch, supra, we
must look at the plain meaning of the term "exclude" as used in
the statutory provision at issue. We find that "exclude" is
defined as:
exclude. 1. to shut or keep out; prevent the entrance of.
... 2. to shut out from consideration, privilege, etc. 3.
to expel and keep out. The Random House Dictionary of the
English Language, Unabridged Edition, 1973.
exclude 1. To keep out: Bar. 2. To omit from notice or
consideration: Disregard. 3. To put out: Expel.
Webster's II New Riverside University Dictionary, 1984.
Based on the cited definitions of the word "exclude", we disagree
with your argument that HQ 227654 constitutes a finding of
exclusion. Said ruling discusses the admission of diesel fuel
into the zone and the entry of fuel from the zone. It addresses
the sale of said merchandise once it has been admitted into the
foreign trade zone. The decision analyses the statutory
prohibition against retail sale as applied to the facts set forth
in your ruling request. We conclude that the ruling is not a
decision concerning the exclusion of merchandise from entry or
delivery under 19 U.S.C. 1514(a)(4). Thus, HQ 227654 is not a
protestable decision under 19 U.S.C. 1514(a)(4).
In your "protest" you reaffirm the arguments originally
presented in your ruling request and subsequent submission. No
additional information or arguments have been presented with your
letter of February 26, 1998. In view of the fact that no
additional information has been presented which would persuade
this office to reach a different conclusion, HQ 227654 is hereby
affirmed.
The Court of International Trade has exclusive jurisdiction
to review a ruling issued by the Customs Service relating to
entry requirements or similar matters, prior to importation. 28
U.S.C. 1581(h). Thus, if your client wishes to contest our
decision, as set forth in HQ 227654, an administrative protest is
not the proper vehicle.
HOLDING:
HQ 227654 is not a protestable decision under 19 U.S.C.
1514(a). This ruling constitutes a final administrative
decision. HQ 227654 is hereby affirmed in its entirety.
Sincerely,
John A. Durant, Director
Commercial Rulings Division