ENT-1-03/ENT-1-07-RR:IT:EC 226400 GOB
Port Director of Customs
1901 Crossbeam Drive
Charlotte, North Carolina 28217
RE: Application for further Review of Protest No. 1512-95-100133; Immediate transportation; 1994 and 1995 duty rates; 19
U.S.C. 1315(a); Uruguay Round Agreements Act
Dear Sir:
The above-referenced protest was forwarded to this office
for further review. We have considered the issues raised by your
office and by Glaxo Inc. ("the protestant") in its protest and in
its additional submission of October 25, 1995. Our decision
follows.
FACTS:
The protestant protests the following three entries, all of
which were filed on January 3, 1995: xxxx-xxx-xxxx910-9; xxxx-xxx-xxxx914-1; and xxxx-xxx-xxxx915-8. The entries were
liquidated on April 21, 1995. The protest was timely filed.
The protestant makes the following statements and claims in
its protest.
The subject merchandise is pharmaceutical products which
arrived at Norfolk, Virginia on December 28, 1994, when it was
entered for immediate transportation ("IT") to Durham, North
Carolina. On January 3, 1995, the protestant's broker filed the
CF 3561 and CF 7501 for each of the subject entries. The CF
7501's showed a 1994 duty rate of 6.3% ad valorem pursuant to
subheading 3004.90.60 of the Harmonized Tariff Schedule of the
United States ("HTSUSA").
On December 8, 1994, Congress passed the Uruguay Round
Agreements Act ("URAA"), pursuant to which duties were reduced or
eliminated on various products. Duties were eliminated on
pharmaceutical products. On December 23, 1994, President Clinton
signed Proclamation 6763 which implemented the duty elimination
of the subject pharmaceutical products under new subheading
3004.90.90, HTSUSA. The Presidential Proclamation stated that
certain of the changes, including the duty elimination with
respect to the subject pharmaceutical products "shall be
effective with respect to goods entered, or withdrawn from
warehouse for consumption, on and after January 1, 1995."
The protestant cites 19 U.S.C. 1315(a) and Ruling 225111
dated October 4, 1994. It quotes the following language from
Ruling 225111:
The imposition of antidumping duties is governed by 19
U.S.C. 1673e(b). Both under the general rule and the special
rule set forth in that statute, the date that the merchandise
is entered for consumption governs. If the qualifying language of 19 U.S.C. 1315 is to have any meaning at all it must act
to insure that goods which have moved under an immediate
transportation entry and were not entered for consumption until
after the issuance of the antidumping duty order are subject to
antidumping duties.
The protestant claims that, similar to the situation in
Ruling 225111, the duties in the subject protest are "otherwise
specially provided for", as Proclamation 6763 provides that the
reduced Uruguay Round duty rates, including the elimination on
pharmaceutical products, "shall be effective with respect to
goods entered or withdrawn from warehouse for consumption, on and
after January 1, 1995."
The protestant states:
As the subject pharmaceutical products imported by Glaxo
were entered for consumption on January 3, 1995, they must be
assessed duty based on the rate in effect in 1995, which
happens to be zero, notwithstanding that I.T. entries were filed
in December 1994. A contrary finding would gut the meaning of
the qualifying introductory clause from 19 U.S.C. 1315(a) just
as surely as it would have in HRL 225111.
...Nothing in the terms of 19 U.S.C. 1315(a) requires that
it be a statute which "otherwise specially provides for" the
applicable duty rate.
The protestant further contends that the 1995 duty rate
should be applied for equitable reasons in light of the confusion
at the end of 1994 with respect to the potential applicability of
the 1995 rates to year-end shipments. It cites Customs'
Administrative Messages of December 15, 1994 (94-1271), December
21, 1994 (94-1316), December 28, 1994 (94-1380), and January 4,
1995 (unnumbered) with respect to this confusion. The protestant
states that not until the January 4, 1995 message did Customs
state that the filing of IT entries would preclude the use of the
1995 rates.
In its submission dated October 25, 1995, made after a
conference with this office, the protestant states as follows:
...Glaxo's situation is distinguishable from a staged rate
scenario...
The removal of duties on pharmaceutical products imported
into the United States was the result of a "zero for zero"
tariff elimination agreement specifically negotiated for the
pharmaceuticals sector by certain countries...
The pharmaceuticals agreement (document L/7430) specifically
states, at p. 2: "Each government will fully implement the
duty elimination on the date of entry into force of the World
Trade Organization (WTO) agreement, for that government." The WTO agreement entered into force with respect
to the United States on January 1, 1995 and, concomitantly, the
duty elimination on pharmaceuticals was made effective
for entries for consumption on and after that date by
Presidential Proclamation 6763. Thus, where pharmaceutical products imported into the United States are concerned,
Presidential Proclamation 6763 implemented a separate,
agreement which, in essence, called for the immediate
elimination of duties on such products entered for consumption on and after January 1, 1995.
The protestant further states:
...the administrative messages which Customs Headquarters
issued in December 1994 to ABI filers to assist
importers in securing reduced Uruguay Round duty rates for
year-end shipments were incomplete in that they were, for all
intents and purposes, silent as to the impact which the filing of
I.T. entries could have in this regard.
...we note that the effect of those administrative messages
is that Customs has penalized one class of importers,
namely, those who filed I.T. entries, while arbitrarily
benefitting another class, namely, those importers who did not
file I.T. entries.
ISSUE:
Whether the 1994 or 1995 duty rates apply with respect to
the merchandise entered on the subject entries.
LAW AND ANALYSIS:
The relevant statute is 19 U.S.C. 1315(a), which provides,
in pertinent part:
1315. Effective date of rates of duty
(a) Articles entered or withdrawn from warehouse for
consumption
Except as otherwise specially provided for, the rate or
rates of duty imposed by or pursuant to this chapter or any
other law on any article entered for consumption or
withdrawn from warehouse for consumption shall be the rate or rates in effect when the documents comprising the entry for
consumption or withdrawal from warehouse for consumption and
any estimated or liquidated duties then required to be paid
have been deposited with the Customs Service by written,
electronic or such other means as the Secretary by regulation
shall prescribe, except that --
* * *
(2) any article which is not subject to a quantitative
or tariff-rate quota and which is covered by an entry
for immediate transportation made at the port of
original transportation under section 1552 of this title, if
entered for consumption at the port designated by the
consignee, or his agent, in such transportation entry
without having been taken into the custody of the
appropriate customs officer under section 1490 of this title,
shall be subject to the rate or rates in effect when the
transportation entry was accepted at the port of
original importation; and
19 CFR 141.69(b) provides as follows:
(b) Merchandise entered for immediate transportation.
Merchandise which is not subject to a quantitative or
tariff-rate quota and which is covered by an entry for
immediate transportation made at the port of original
importation, if entered for consumption at the port
designated by the consignee or his agent in such
transportation entry without having been taken into custody
by the district director for general order under section
490, Tariff Act of 1930, as amended (19 U.S.C. 1490), shall
be subject to the rates in effect when the immediate
transportation entry was accepted at the port of original
importation.
Also relevant is Presidential Proclamation 6763 of January
23, 1994, issued under 19 U.S.C. 2483, 2902, 3331, and 3332 and
titles I and IV of the Uruguay Round Agreements Act (108 Stat.
4809, Pub. L. 103-465), which made modifications to the
Harmonized Tariff Schedule in proclamation paragraph (2)(a). 60
FR 1007, 1009. The proclamation implemented the duty elimination
of pharmaceutical products classifiable under subheading
3004.90.90, HTSUSA. The proclamation provided that it was to be
effective with respect to goods entered on or after January 1,
1995.
The protestant bases its position that the rate of duty
imposed by subheading 3004.90.90, HTSUSA, applies to its entry
because the language of 19 U.S.C. 1315(a) begins with the words
"[e]xcept as otherwise specially provided for" and HQ Ruling
225111 which interpreted the relationship of 19 U.S.C. 1315(a)
and 1673e.
We note that 19 CFR 141.69(b) does not contain the "except
as otherwise specially provided for" language of 19 U.S.C.
1315(a).
In HQ 225111, the protestant argued that 19 U.S.C. 1315(a)
changed the date of entry and that antidumping duties were the
types of duties covered by 19 U.S.C. 1315(a). The plain words of
19 U.S.C. 1315(a) do not change the date of entry; the statute
only requires that, for specified merchandise, the rate of duty
in effect when an immediate transportation entry was accepted
shall be applied to those goods when entered for consumption.
Further, in the ruling, Customs rejected the argument that
antidumping duties were nothing more than regular Customs duties.
Finally, without attempting to explore the scope of the beginning
"except" phrase, the ruling noted that it could not be
interpreted to exclude from antidumping duties merchandise that
was entered after the date of an antidumping duty order.
As noted in HQ 225111, the relevant language of 19 U.S.C.
1315(a) was enacted by the Customs Simplification Act of 1953
(Act of August 8, 1953, Chapter 397, Sec. 3(a), 67 Stat. 508).
The legislative history showed a Congressional concern to address
the problems created by a series of judicial decisions ending
with the case of Mussman & Shafer, Inc. v. U.S., 27 Cust. Ct. 180
(1951), aff'd 40 C.C.P.A. 108 (1953). The facts in Mussman &
Shafer are similar to the facts here. In the former, plywood was
entered for imediate transportation at New York on September 16,
1946 and entered for consumption at Cincinnati on October 18,
1946. Because of differing arrival dates of the in-bond carrier
at Cincinnati, the goods were released from Customs' custody in
three groups: before October 25, 1946, on October 25, 1946 and
after October 25, 1946. A Presidential proclamation (Proc. 2708
of October 18, 1946) made such plywood free of duty if entered on
or after October 25, 1946.
At that time, 19 U.S.C. 1315 provided:
1315. Effective date of rates of duty
On and after June 18, 1930, all goods, wares, and
merchandise previously imported, for which no entry has been
made, and all goods, wares, and merchandise previously
entered without payment of duty and under bond for
warehousing, transportation, or any other purpose, for which
no permit of delivery to the importer or his agent has been
issued, shall be subjected to the duties imposed by this
chapter and to no other duty upon the entry or the
withdrawal thereof. Insofar as duties are based upon the
quantity of any merchandise, such duties shall, except as
provided in paragraph 813 and section 562 of this Act
(relating respectively to certain beverages and to
manipulating warehouses), be levied and collected upon the
quantity of such merchandise at the time of its importation.
No administrative ruling resulting in the imposition of a
higher rate of duty or charge than the Secretary of the
Treasury shall find to have been applicable to imported
merchandise under an established and uniform practice shall
be effective with respect to articles entered for
consumption or withdrawn from warehouse for consumption
prior to the expiration of thirty days after the date of
publication in the weekly Treasury Decisions of notice of
such ruling; but this provision shall not apply with respect
to the imposition of antidumping duties.
The Customs Court held that the plywood that was released on
and after October 25, 1946 was entitled to the benefits of
Proclamation 2708. The court found that entry was complete as to
the plywood released before the effective date. The court upheld
the Customs liquidation as to those goods. The plaintiff did not
appeal. The Government appealed only with respect to the plywood
released on October 25, 1946. The appellate court held on
January 14, 1953 that as to that portion of the shipment released
on October 25, 1946, the benefits of the tariff change made by
Proclamation 2708 applied.
Against that background, the Customs Administrative bill
which had been considered by Congress since 1950 became the
vehicle for the amendment of 19 U.S.C. 1315. The present
language of the relevant part of 19 U.S.C. 1315 was introduced by
Representative Jenkins in Section 3 of H.R. 5106, 83d Cong., 1st
Sess. (May 11, 1953). The stated explanation of the language is
set forth in Hearings before Committee on Ways and Means on H.R.
5106, 1-3, 17, 18, and 26, 83d Cong., 1st Sess. (May 27, 28 and
29, 1953). At page 17, the stated purpose was to clarify the
applicable duty rates that were confused by court decisions.
With respect to immediate transportation entries, the bill was to
provide that the applicable rate of duty was the rate in effect
when the entry for immediate transportation was accepted by
Customs at the port of transportation.
Representative Jenkins introduced HR 5877, 83d Cong., 1st
Sess. on June 22, 1953, July 9, 1953, and July 14, 1953. All
versions contained the change with respect to 19 U.S.C. 1315 set
forth in HR 5106. HR 5877 was enacted as the Customs
Simplification Act of 1953 and amended 19 U.S.C. 1315 as
discussed above. The House and Senate Reports on HR 5877
specifically state that the amendment was to address the Mussman
& Shafer appellate decision. See H. Rpt. 760, 83d Cong., 1st
Sess., 6-8 (July 9, 1953) and S. Rpt. 632, 83d Cong., 5,6 (July
24, 1953). The Senate Report is reprinted in U.S. Code
Congressional and Administrative News, 2283, 2287 (1953).
The HTSUSA was enacted as section 1202 by section 1204 of
the Omnibus Trade and Competitiveness Act of 1988 (Act of August
23, 1988, 102 Stat. 1107, 1148; Pub. L. 100-418). That section
authorized the President to modify the statute by proclamation.
As a statute, it seems clear that the Tariff Schedule could only
be amended by Congress under its legislative authority, including
authorizing the President's limited ability to make changes by
proclamation.
The case of Mussman & Shafer and the present protest both
involved goods that were entered for immediate transportation.
In both cases, Presidential Proclamations were issued that made
the respective goods free of duty for goods that were entered for
consumption on a date after the immediate transportation entry
was authorized by Customs. In both cases, the entry for
consumption was made (in the Mussman & Shafer case the second and
third categories) on or after the effective date of the
proclamation.
To hold that the words "except as otherwise specially
provided for" are to be interpreted in a way to reach the same
result as in Mussman & Shafer would be to hold that Congress was
unable to achieve the purpose sought. An interpretation of these
words more consistent with the body of that statute and the
legislative purpose shown by the history of the provision would
be to hold that the words may refer to immediate transportation
merchandise subject to a quota or merchandise governed by
paragraph (c) of 19 U.S.C. 1315.
In any event, for the reasons stated here and in HR 225111,
reliance on that ruling by the protestant here is misplaced.
HOLDING:
The protest is 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, the Freedom of Information
Act and other public access channels.
Sincerely,
Director,
International Trade Compliance
Division