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HQ 222425


October 19, 1990

TRA-8-CO:R:C:E 222425 PH

CATEGORY: ENTRY

District Director
U.S. Customs Service
77 Southeast 5th Street,
Miami, Florida 33131

RE: Internal Advice; Transportation and Exportation Entry; Bond Required; Container Station; Warehouse; 19 U.S.C. 1553

Dear Madam:

With your May 18, 1990, memorandum (File: TRA 8-DD:C E CC) you forwarded a request for advice dated April 12, 1990, filed by Peter S. Herrick, Esq., on behalf of Marine Cargo Management, Inc. (the "inquirer"). Our ruling on the request follows.

FACTS:

According to the file, the inquirer has two wholly owned subsidiaries, TecMarine Lines, Inc. ("subsidiary 1"), and Marine Agencies, Inc. ("subsidiary 2"). The inquirer is an approved bonded carrier and is licensed as a bonded cartman for the ports of Miami, Port Everglades, and West Palm Beach, Florida, and currently holds Class 3 (International Carrier), Class 3a (Instruments of International Traffic), and Class 2 (Basic Custodial) bonds, each in the amount of $100,000. The inquirer does not hold a Class 1 (Basic Importation and Entry) bond. Subsidiary 1 is an international ocean carrier and subsidiary 2 is the ocean carrier's shipping agent. We understand that the inquirer is not licensed as a Customs broker.

The inquirer receives ocean shipments of cargo in containers at each of the above-named Florida ports. These shipments are bound for ultimate exportation from the United States to the country of final destination. Cargo may also be transported in bond on a Transportation and Exportation Entry by other bonded carriers from ports of arrival outside the Miami Customs District and delivered to the inquirer and subsidiary 1 at any of its approved Customs Freight Station facilities where the inquirer holds a license. At the Customs Freight Station the cargo is recontainerized and/or consolidated for ultimate exportation from the United States to the country of final destination.

The cargo is often transported from the port of arrival in the United States, or from the Customs Freight Station following delivery to the inquirer or subsidiary 1, by the inquirer as a bonded carrier or cartman on a Transportation and Exportation Entry to a bonded warehouse. At the bonded warehouse the cargo is stripped from the container in which it arrived and stuffed into a second container for exportation. The reason given for this change in containers is that the first container is not to be forwarded to the ultimate destination of the cargo. The cargo may also be consolidated in the second container with other cargo in bond to be exported and shipped to the same foreign destination by subsidiary 2.

After the second container is stuffed, it is moved by the inquirer under bond from the bonded warehouse to the port of exportation. The port of exportation may be the port at which the cargo arrived or it may be a different port. This latter movement is being done on a second Transportation and Exportation Entry.

The cargo is normally containerized and shipped under a single bill of lading covering carriage of the cargo from its initial foreign point of shipment to its final foreign port of destination, including such transportation in bond as is necessary in the United States.

The inquirer requests a ruling on the issues set forth below.

ISSUES:

1. Whether the movement of and activities related to the cargo as described above may be done on a single Transportation and Exportation Entry.

2. Whether, in the circumstances described above, the inquirer is required to hold a Class 1 (Basic Importation and Entry) bond.

LAW AND ANALYSIS:

The basic statute concerning the entry of merchandise is found in section 484, Tariff Act of 1930, as amended (19 U.S.C. 1484). Under paragraph (a) of this statute, the right to make such entry is limited to the owner or purchaser of the merchandise or a Customs broker (see section 641, Tariff Act of 1930, as amended (19 U.S.C. 1641) when appropriately designated by the owner, purchaser, or consignee of the merchandise. Under section 552, Tariff Act of 1930 (19 U.S.C. 1552), merchandise, with an exception irrelevant in this case, may be entered for transportation in bond to another port, under such rules and regulations as are prescribed by the Secretary of the Treasury. Under section 553, Tariff Act of 1930, as amended (19 U.S.C. 1553), merchandise, with an exception irrelevant in this case, shown to be destined to a foreign country may be entered for transportation in bond through the United States by bonded carrier under such rules and regulations as are prescribed by the Secretary of the Treasury. The entry and withdrawal procedures for a Customs bonded warehouse are provided for in section 557, Tariff Act of 1930, as amended (19 U.S.C. 1557).

The Customs Regulations issued under the foregoing and other proper authorities and pertaining to the entry of merchandise are found in 19 CFR Parts 141, 142, and 143; those pertaining to Customs brokers are found in 19 CFR Part 111; those pertaining to transportation in bond are found in 19 CFR Part 18; and those pertaining to merchandise entry and withdrawal procedures for Customs bonded warehouses are found in 19 CFR Part 144. The Customs Regulations pertaining to Customs container stations are found in 19 CFR 19.40-19.49.

In the interest of clarity, we will summarize the facts, as we understand them, below. This ruling is based on this summary of facts. Basically, in this case containerized cargo arriving by vessel in the United States and destined for a foreign country is transported by bonded carrier or cartman to a container station or a bonded warehouse. At the container station the cargo is re-containerized and/or consolidated and transported by bonded carrier either to the port of exportation or to a bonded warehouse. At the bonded warehouse the cargo is stripped from the container in which it arrived and stuffed into a second container for exportation and transported by bonded carrier to the port of exportation. The container station is operated by the bonded carrier which transports the containers from the container station to the port of exportation or the bonded warehouse and from the bonded warehouse to the port of exportation. The bonded carrier which transports the containers to the container station may be operated by the operator of the container station or it may be an unrelated party.

In the case of the containerized cargo transported from the port of arrival in the United States by the inquirer-bonded carrier and cartman to the container station where it is re- containerized and/or consolidated and then transported by the inquirer-bonded carrier and cartman directly to the port of exportation, a single Transportation and Exportation Entry may be filed by the inquirer to cover the entire movement. The movement would be subject to the procedural requirements in 19 CFR 18.20- 18.24, 18.11(b), 18.1-18.8 (note, in particular, sections 18.2(c) and (d), 18.3, and 18.8), 18.10 (listing the kinds of entries and withdrawals which may be made for merchandise to be transported in bond - we have ruled that these entries and withdrawals may be made by a bonded carrier), and 19.40-19.49 (note, in particular, sections 19.42-19.45). The inquirer would not need a Class 1 bond for this movement.

In the case of the containerized cargo transported from the port of arrival in the United States by a bonded carrier other than the inquirer to the container station where it is re- containerized and/or consolidated and then transported by the inquirer-bonded carrier and cartman directly to the port of exportation, a single Transportation and Exportation Entry, filed by the initial bonded carrier, could cover the entire movement. However, it is difficult to imagine a situation in which the initial bonded carrier, if actually not related to the inquirer, would wish to file a Transportation and Exportation Entry for the entire movement, because in doing so the bonded carrier would be making itself liable (see 19 CFR 18.8) for shortages, irregular deliveries, or nondeliveries occurring during the entire movement (except for the time the cargo was at the container station, after formal receipt by the container station operator (see 19 CFR 19.44)), including that part of the transportation and delivery of the cargo performed by an unrelated party (i.e., the inquirer). A more likely scenario would be, as you suggest, for the initial bonded carrier to transport the cargo to the container station on an Immediate Transportation Entry and for the inquirer to transport the cargo from the container station to the port of exportation on a Transportation and Exportation Entry which it (i.e., the inquirer) had filed. The inquirer would not need a Class 1 bond in this movement.

In the case of the containerized cargo transported from the port of arrival in the United States by the inquirer-bonded carrier and cartman to the bonded warehouse where it is stripped from the container in which it arrived and stuffed into a second container which is transported by the inquirer-bonded carrier and cartman to the port of exportation, three entries would be required. The cargo would be transported from the port of arrival to the bonded warehouse on an Immediate Transportation Entry filed by the inquirer. The cargo would have to be entered into the bonded warehouse by a party with the right to make entry (in this case, probably a Customs broker, see 19 U.S.C. 1484) with an entry under 19 CFR 144.11. The cargo would be withdrawn for exportation or transportation and exportation under the provisions of 19 CFR 144.37 (i.e., it could be withdrawn and transported from the bonded warehouse to the port of exportation on an Exportation Entry or a Transportation and Exportation Entry filed by the inquirer). The inquirer would not need a Class 1 bond for the movements from the port of arrival to the bonded warehouse and from the bonded warehouse to the port of exportation. The inquirer would need a Class 1 bond to make warehouse entry but, more importantly, may not make such entry unless it has the right to make entry (see 19 CFR 111.4, with regard to the penalties for intentionally transacting customs business without holding a valid Customs broker's license).

In the case of the containerized cargo transported from the port of arrival in the United States by a bonded carrier other than the inquirer to the bonded warehouse where it is stripped from the container in which it arrived and stuffed into a second container which is transported by the inquirer-bonded carrier and cartman to the port of exportation, the same entries as described in the immediately preceding paragraph would be required, except that the movement performed by the initial bonded carrier would be on an Immediate Transportation Entry filed by that bonded carrier.

In the case of the containerized cargo transported from the port of arrival in the United States by the inquirer-bonded carrier and cartman to the container station where it is re- containerized and/or consolidated and then transported to the bonded warehouse where it is stripped from the container in which it arrived and stuffed into a second container which is transported by the inquirer-bonded carrier and cartman to the port of exportation, three entries also would be required. The cargo could be transported from the port of arrival to the container station and from the container station to the bonded warehouse on a single Immediate Transportation Entry filed by the inquirer. The cargo would have to be entered into the bonded warehouse by a party with the right to make entry (in this case, probably a Customs broker, see 19 U.S.C. 1484) with an entry under 19 CFR 144.11. The cargo would be withdrawn for exportation or transportation and exportation under the provisions of 19 CFR 144.37 (i.e., it could be withdrawn and transported from the bonded warehouse to the port of exportation on an Exportation Entry or a Transportation and Exportation Entry filed by the inquirer). The inquirer would not need a Class 1 bond for the movements from the port of arrival to the container station and then the bonded warehouse and from the bonded warehouse to the port of exportation. The inquirer would need a Class 1 bond to make warehouse entry but, as stated above, may not make such entry unless it has the right to make entry.

In the case of the containerized cargo transported from the port of arrival in the United States by a bonded carrier other than the inquirer to the container station where it is re- containerized and/or consolidated and then transported by the inquirer-bonded carrier and cartman to the bonded warehouse where it is stripped from the container in which it arrived and stuffed into a second container which is transported by the inquirer- bonded carrier and cartman to the port of exportation, for the reasons noted above, four entries should be used. The entire movement from the port of arrival to the bonded warehouse via the container station could be on a single Immediate Transportation Entry filed by the bonded carrier other than the inquirer but if such a procedure were followed, that bonded carrier would be making itself liable for shortages, irregular deliveries, or nondeliveries occurring during the entire movement (except for the time the cargo was at the container station, after formal receipt by the container station operator), including that part of the transportation and delivery of the cargo performed by an unrelated party (i.e., the inquirer). As noted above, a more likely scenario would be for the initial bonded carrier to transport the cargo from the port of arrival to the container station on an Immediate Transportation Entry which it filed and for the inquirer-bonded carrier and cartman to transport the cargo from the container station to the bonded warehouse on an Immediate Transportation Entry which it filed. Once again, the cargo would have to be entered into the bonded warehouse by a party with the right to make entry. The cargo could be withdrawn for exportation or transportation and exportation and moved to the port of exportation on an Exportation Entry or a Transportation and Exportation Entry filed by the inquirer. The cargo could be transported from the port of arrival to the container station and from the container station to the bonded warehouse on a single Immediate Transportation Entry filed by the inquirer. The inquirer would not need a Class 1 bond for the movements from the container station to the bonded warehouse and from the bonded warehouse to the port of exportation. The inquirer would need a Class 1 bond to make warehouse entry but, as stated above, may not make such entry unless it has the right to make entry.

HOLDING:

1. Except for the movement of the cargo from the port of arrival to the container station where it is re-containerized and/or consolidated and from the container station to the port of exportation, in which all of the transportation is provided by the inquirer-bonded carrier and cartman, none of the described activities would be done on a single Transportation and Exportation Entry. The procedures for the other movements and activities are as follows:
a. The movement of the cargo from the port of arrival to the container station by the bonded carrier other than the inquirer would be on an Immediate Transportation Entry and the movement from the container station to the port of exportation by the inquirer-bonded carrier and cartman would be on a Transportation and Exportation Entry. The initial bonded carrier could file a single Transportation and Exportation Entry for the entire movement but it is extremely unlikely that it would do so because by doing so it would be making itself liable for shortages, irregular deliveries, or nondeliveries during not only the time when it was transporting the cargo but also the time when the inquirer was handling the cargo.
b. The movement of the cargo from the port of arrival to the bonded warehouse where it is stripped from the container in which it arrived and stuffed into a second container which is transported to the port of exportation would require three entries whether the first leg of the transportation was provided by the inquirer-bonded carrier and cartman or another bonded carrier: an Immediate Transportation Entry filed by the bonded carrier providing the transportation for the first leg of transportation; a Warehouse Entry by a party who is entitled to make entry in the bonded warehouse; and a Transportation and Exportation Entry for the movement to the port of exportation.
c. The movement of the cargo from the port of arrival to the container station where it is re-containerized and/or consolidated and then transported to the bonded warehouse where it is stripped from the container in which it arrived and stuffed into a second container which is transported to the port of exportation would require three entries when all of the transportation was provided by the inquirer-bonded carrier and cartman: one Immediate Transportation Entry filed by the inquirer for the movement to the container station and then the warehouse; a Warehouse Entry by a party who is entitled to make entry in the bonded warehouse; and a Transportation and Exportation Entry for the movement to the port of exportation.
d. The movement of the cargo from the port of arrival to the container station where it is re-containerized and/or consolidated and then transported to the bonded warehouse where it is stripped from the container in which it arrived and stuffed into a second container which is transported to the port of exportation, when the transportation from the port of arrival to the container station is provided by a bonded carrier other than the inquirer-bonded carrier and cartman, should, for the reasons given in Holding 1a above, be done on four entries: one Immediate Transportation Entry filed by the initial bonded carrier for the movement to the container station; a second Immediate Transportation Entry filed by the inquirer-bonded carrier and cartman for the movement from the container station to the warehouse; a Warehouse Entry by a party who is entitled to make entry in the bonded warehouse; and a Transportation and Exportation Entry for the movement to the port of exportation.

2. A bonded carrier may make entries for immediate transportation, transportation and exportation, or exportation and warehouse withdrawals for transportation, exportation, or transportation and exportation. Only the owner or purchaser of merchandise, or a customs broker when appropriately designated by the owner, purchaser, or consignee of the merchandise, may make a warehouse entry. The inquirer may not make entry of any of the cargo into the bonded warehouse in the situations described above (see Holdings 1b, 1c, and 1d) unless the inquirer is a party entitled to make entry under 19 U.S.C. 1484 (i.e., the owner or purchaser of the merchandise, or a Customs broker appropriately designated by the owner, purchaser, or consignee of the merchandise), in which case the inquirer would be required to hold a Class 1 bond. The inquirer, as a bonded carrier, may make the Immediate Transportation Entries, the Transportation and Exportation Entries, and the withdrawals from warehouse for Transportation and Exportation in the situations described above without holding a Class 1 bond.

Sincerely,

John Durant, Director

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