HQ 0223476 - Request for binding ruling; Transportation and Storage of Cargo Pending Lay-Order; International Carriers Bond; 19 CFR 4.37 and 4.31(1) - United States International Trade Commision Rulings

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HQ 223476

December 23, 1991

BON-3-02-CO:R:C:E 223476 CB

CATEGORY: ENTRY

Dennis T. Snyder, Esq.
7600 Red Road
Suite 200
S. Miami, FL 33143

RE: Request for binding ruling; Transportation and Storage of Cargo Pending Lay-Order; International Carriers Bond; 19 CFR 4.37 and 4.31(1)

Dear Mr. Snyder:

This is in response to your letter of June 12, 1991, to the Carrier Rulings Branch wherein you requested a binding ruling on behalf of King Ocean Services de Venezuela S.A. and its wholly owned Florida corporation, Sun Terminals, Inc..

FACTS:

According to your letter, King Ocean Services de Venezuela S.A. is a steamship company which operates several container ships in the South and Central American trade. King Ocean restricts its operations to house-to-house containers. It does not accept palletized cargo, nor does it permit the stuffing or devanning of containers on its premises. King Ocean's U.S. landside operations are conducted by a wholly owned Florida corporation, Sun Terminals, Inc..

Sun Terminals, Inc. has a leasehold interest in a pier area north of the Port of Miami known as Albury Docks. King Ocean vessels have been loading and unloading at Albury Docks for several years. Typically, inbound containers are off loaded and stacked or parked adjacent to the pier during the lay order period. Once Customs entry is made, the container is trucked directly to importer's premises for devanning. If U.S. Customs designates the container for intensive examination, it is trucked to a bonded devanning station for this purpose.

Outbound containers are prepositioned at Albury prior to arrival of the vessel, where they are readily available for lading as soon as incoming containers are fully discharged. You state that the facilities at Albury Docks are no longer adequate to handle the volume of traffic generated by King Ocean, and
there is no room for expansion on to adjacent property. Sun Terminals, Inc. has acquired a five acre parcel located approximately five miles from Albury Docks, is within the existing port limits, and is in the area nearest Albury Docks where local zoning permits cargo handling operations.

By letter dated May 8, 1991, Sun Terminals applied to the district director for permission to immediately transport landed containers to the new facility where they would be stored during the lay order period. The district director granted Sun Terminals' request for a six month trial, but directed that an immediate request for a ruling to determine the legality of the proposed operation be made to Headquarters.

ISSUE:

Does the District Director of Customs, Miami, have the discretionary authority to permit full containers of merchandise to be transported to and stored during the lay order period at a facility within the port limits but approximately five miles distant from the place of unlading?

LAW AND ANALYSIS:

Section 448, of the Tariff Act of 1930, as amended (19 U.S.C. 1448(a)), provides in pertinent part that:

After the entry, preliminary or otherwise, of any vessel... such customs officer may issue a permit to the master of the vessel,..., to unlade merchandise or baggage...but merchandise or baggage so unladen shall be retained at the place of unlading until entry is made and a permit for its delivery granted.

The "place of unlading", although not specifically defined in the Customs Regulations, is by implication addressed in section 4.30(l), Customs Regulations. That section provides that a district director may issue a permit to unlade if (1) it is determined that the applicant provides sufficient space, capable of being locked, sealed, or otherwise secured for the storage immediately upon unlading of cargo, and (2) that the applicant provides an adequate number of vehicles, capable of being locked, sealed, or otherwise secured, for the transportation of such cargo between the point of unlading and the point of storage.

The Customs Service has previously ruled on this issue. In C.S.D. 79-368, the Customs Service held that an air carrier was permitted to store merchandise away from its own premises as long as the storage facility was within the port limits. In the instant case, your client was granted permission to utilize the
inland facility on a six month trial basis contingent upon certain conditions. Therefore, upon termination of that six month trial period, the district director may approve the use of the inland facility if she is satisfied that the conditions set forth in 19 CFR 4.30(l) are met. It is assumed that the permit to unlade will specify the correct location of the place of unlading.

The trial period was approved by letter dated June 6, 1991. In that letter the district director advised you that a rider must be attached to your vessel bond so that the bond included the proposed container yard. However, there is no need for a rider because the existing bond covers the container yard. In C.S.D. 79-360, the Customs Service concluded that an air carrier's blanket bond, by its terms, covers any off-airport facilities located within the port limits. Along the same lines, in C.S.D. 79-368 it was held that no additional bond or bond rider is necessary to secure the carrier's performance for off- premises storage. However, it was also held that the procedure must be done under a written request which states the specific storage location and obligates the bond to guarantee performance.

The present International Carrier Bond incorporates all of the conditions set forth in 19 CFR 113.64. Under section 113.64(b), the principal agrees to comply with all laws and regulations applicable to unlading, safekeeping, and disposition of the merchandise. If the principal defaults, the obligors agree to pay liquidated damages. Therefore, inasmuch as the conditions of the bond are in effect wherever the merchandise is unladen and the container yard is located within the port limits, no rider is required for the proposed facility, assuming the district director is satisfied that all other requirements for the facility have been met.

HOLDING:

A district director may authorize the use of an off-wharf or off-pier facility located within the geographical area of any port provided the district director is satisfied all other requirements for the facility have been met. The International Carrier Bond does not require a rider because, by its terms, the bond covers all such locations.

Sincerely,

John Durant, Director

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