PRO-2-02/WAR-5 RR:CR:DR 228021 CB
David Serko, Esq.
Serko & Simon LLP
Suite 3371
One World Trade Center
New York, NY 10048
RE: Reconsideration of HQ 227385; 19 U.S.C. 1514
Dear Mr. Serko:
This is in response to your letter of May 12, 1998, wherein
you are attempting to protest our decision issued under
Headquarters Ruling (HQ) 227385, dated February 12, 1998. We
have considered the points you raised and our decision follows.
FACTS:
On February 12, 1998, the Customs Service issued HQ 227385,
which affirmed the holding in HQ 225287, dated June 4, 1994.
That ruling held that duty-free gasoline and diesel fuel for
automobiles may not be sold at a duty-free store provided for in
19 U.S.C. 1555(b).
You have filed a "protest" under 19 U.S.C. 1514(a). It is
your contention that by denying your client the duty and tax free
benefits provided by the Foreign Trade Zones Act of 1934, Customs
has illegally denied entry and imposed duties, charges or
exactions.
ISSUE:
Is HQ 227385 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 227385 is not protestable
under 19 U.S.C. 1514(a)(3) as a decision concerning a charge or
exaction.
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 227385, an administrative protest is
not the proper vehicle.
HOLDING:
HQ 227385 is not a protestable decision under 19 U.S.C.
1514(a). This ruling constitutes a final administrative
decision. HQ 227385 is hereby affirmed in its entirety.
Sincerely,
Stuart Seidel
Assistant Commissioner
Office of Regulations & Rulings