FOR-2-03-CO:R:C:E 225025 CB
District Director
Tampa District
U.S. Customs Service
4430 E. Adamo Street
Suite 301
Tampa, FL 33605
RE: Permissible Foreign Trade Zone Operations; Delivery from
FTZ to Duty Free Shop; Class 9 Bonded Warehouse
Dear Madam:
This is in response to your memorandum (your file FOR-1:DD:
IC:dh) dated October 12, 1993, wherein you have requested our
determination regarding duty free shops and foreign trade zones.
FACTS:
Currently, the Tampa District is having discussions with the
Foreign Trade Zone Group, Inc. of Port Canaveral, Florida ("the
operator"), concerning their desire to operate a "duty free shop"
serving cruise line passengers from the various sales site located
in port cruise terminals with deliveries made to the passengers
from a foreign trade zone. The operator wishes to implement
procedures, essentially identical, to those that have been
promulgated solely for Class 9 bonded warehouses.
It is your district's position that all "duty free" type
operations must be a Class 9 bonded warehouse. Additionally, that
the foreign trade zone regulations only allow for CF-7512
withdrawals to be received by the exporting carrier and does not
allow for blanket withdrawals that can be later accounted for with
the sales slip method used by Class 9 bonded warehouse operators.
ISSUE:
Is the proposed operation permissible under the Foreign Trade
Zones Act?
LAW AND ANALYSIS:
The statute governing the creation and operation of foreign
trade zones is the Foreign Trade Zones Act of 1934 (the "FTZ Act"),
as amended (48 Stat. 998; 19 U.S.C. 81a through 81u). Pursuant
to the provisions of section 3 of the Foreign Trade Zones Act, as
amended (19 U.S.C. 81c), merchandise of every description may be
brought into a zone without being subject to the Customs laws for
the purposes set forth in the statute. Under the FTZ Act (more
specifically, 81 U.S.C. 81o(d)), "[n]o retail trade shall be
conducted within the zone except under permits issued by the
grantee and approved by the Board. Such permittees shall sell no
goods except such domestic or duty-paid or duty-free as are brought
into the zone from customs territory."
We are enclosing herewith, for your information, a copy of a
memorandum received from the Office of Cargo Enforcement and
Facilitation ("Cargo Enforcement"). We are in agreement with their
conclusion that the nature of the duty-free industry is that of a
retail business which is prohibited under the FTZ Act. The
district does not have any latitude or discretion to allow the
proposed operation in a foreign trade zone. We are also in
agreement with Cargo Enforcement that the only possible use of a
zone by a duty-free enterprise is to sell merchandise to a cruise
ship as vessel supplies. As stated, all the merchandise would have
to be admitted in zone restricted status because the merchandise
would probably be transferred from a bonded warehouse to a zone.
HOLDING:
A foreign trade zone operator cannot operate a duty-free type
operation based in a foreign trade zone using the Class 9 bonded
warehouse procedures.
The Office of Regulations and Rulings will take steps to make
this decision available to Customs personnel via the Customs
Rulings Module in ACS and to the public via the Diskette
Subscription Service, Lexis, Freedom of Information Act and other
public access channels within 60 days from the date of this
decision.
Sincerely,
John Durant, Director
Commercial Rulings Division