Reconsideration of HQ 227385; 19 U.S.C. 1514

HQ 228021 July 9, 1998 PRO-2-02/WAR-5 RR:CR:DR 228021 CB CATEGORY: Protest 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