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HQ 220933


February 1, 1991

PRO-2-02-CO:R:C:E 220933 CB

CATEGORY: LIQUIDATION PROTEST

Regional Commissioner
U.S. Customs Service
North Central Region
Suite 1501
55 East Monroe Street
Chicago, ILL 60603-5790

RE: Application for further review of Protest No. 3401-7-000047 under 19 U.S.C. 1514

Dear Sir:

The above-referenced protest was forwarded to this office for further review. We have considered the points raised and our decision follows.

FACTS:

Forty nine (49) lifts of softwood lumber were consigned on a revenue waybill issued on December 29, 1986. The lumber was destined for Winnipeg, Manitoba, Canada. The record indicates that fifteen (15) of the lifts were of 2x6's and thirty four (34) of the lifts were of 2x4's.

On January 2, 1987, the Customs Service issued telex no. 016673 advising all field offices of the imposition of a temporary 15 percent surcharge on all listed softwood lumber products from Canada, effective as of December 31, 1986. The surcharge was imposed by Presidential Proclamation 5595 of December 30, 1986. Subsequently, the Customs Service sent out telex no. 00563 dated January 14, 1987, advising the field offices of the termination of the collection of the 15 percent surcharge on shipments exported from Canada as of January 8, 1987. The telex indicated that the additional duty should still be collected on shipments exported from Canada on or after December 31, 1986, and on or before January 7, 1987, unless the products were in transit on a through bill of lading to the United States on or before December 30, 1986.

The subject lumber was unloaded at Winnipeg and resold for export to the United States as evidenced by invoices no. 2935, 2879, and 2898. Sixteen (16) lifts of 2x6's were exported by truck. Fifteen (15) lifts of 2x6's were on the rail car which is claimed as on a through bill of lading. The record indicates -2-
that the revenue waybill submitted covers fifteen (15) lifts of 2x6's; however, invoice no. 2879 covers sixteen (16) lifts of 2x6's and invoice no. 2935 covers an additional sixteen (16) lifts of 2x6's which are not covered at all by the submitted waybill.

The merchandise covered by the four entries in question was sold by the exporter from the distribution center in Winnipeg, Manitoba, Canada. This transaction is shown by the invoice between the exporter and the U.S. purchaser. Entry was made at the price between these two parties. The District Office asserts that the transaction shows the sale that caused the merchandise to be exported to the United States, and it shows that the merchandise could have been in transit to the United States only at this point. According to the District Office, upon inquiries to the U.S. purchaser, the purchaser complained that its name had been used as a consignee although shipments were sold in transit to other importers.

Protestant asserts that evidence of a through bill of lading was presented to the District Office. These sales were direct shipped to the U.S., with interlining carriers to provide delivery. The lumber was sold to the U.S. purchaser and delivered to Fargo, North Dakota. It is the District Office's position that it is clear from the documents submitted that the revenue waybill is not a through bill of lading to the United States. Rather, it is a bill of lading to ship the merchandise to Winnipeg. The documents also indicate that each shipment of lumber destined for the United States was sold from the distribution center in Winnipeg and each shipment was transported by truck and exported on or after December 31, 1986.

ISSUE:

Whether the subject softwood lumber was subject to the fifteen (15) percent surcharge?

LAW AND ANALYSIS:

Customs telex no. 00563 advised all field offices to collect the surcharge on products exported from Canada, unless the products were in transit on a through bill of lading. It is the protestant's contention that the subject merchandise was not subject to the surcharge because it was in transit on a through bill of lading to the United States on or before December 30, 1986.

There is no question that the subject lumber was brought into the United States during the period in issue. It was entered after the Presidential Proclamation went into effect and -3-
had started the period running. The period was terminated by the Secretary of Commerce under the delegated authority (to terminate) given by the Presidential Proclamation. The notice indicated that the period ended for goods that were exported from Canada on or before January 7, 1987. The notice also contained the further exemption that goods exported on or after December 31, 1986 and on or before January 7, 1987, were exempt if they were in transit to the United States on a Through Bill of Lading on or before December 30, 1986. The question that remains is whether the subject lumber was in transit on a Through Bill of Lading, as claimed by the protestant.

A general legal rule is that a protestant has the burden of proof and that the claimant for an exemption must show entitlement to that exemption. For the reasons stated below, protestant has failed to show that the goods were on a through bill of lading in transit to the United States on or before December 30, 1986.

The Uniform Commercial Code notes that a through bill of lading is one with the final destination noted thereon, although transportation of goods may extend over lines of connecting carriers. See U.C.C. 7-302 (1989). A through bill of lading has been defined, by the courts, as governing the "entire transportation of goods and applies to connecting carriers even though they are not parties to the contract; whether a particular bill so qualifies is a question of fact, and relevant indicia include whether the final destination is designated thereon, the method by which the connecting carriers are compensated and, more generally, conduct of the carriers." Tokio Marine & Fire Ins. Co., Ltd. v. Hyundai Merchant Marine Co., Ltd., 717 F. Supp. 1307, 1309 (N.D. Ill.).

In the instant case, the bill of lading issued by Butram Enterprises to Alberta Stake and Lath, dated December 15, 1986, shows the final destination as Fargo, North Dakota. However, the second carrier is shown as MacCosham Cartage from Edmonton to Winnipeg, Canada. The bill of lading shows only that the Butram Enterprises shipment from Smith, Alberta to Edmonton, Alberta was prepaid. The bill fails to show how MacCosham Cartage or Searcy Trucking was to be compensated. The revenue waybill presented by protestant appears to cover a shipment from Edmonton to Calgary to Winnipeg, Manitoba. No connecting carriers are shown. Nor, is there a final destination shown. The invoice to Burrows Lumber Co. from Carponi Freight Services appears to cover only a shipment from Edmonton, Alberta to Winnipeg, Manitoba on a Canadian Pacific railcar. Additionally, the record shows that MacCosham Cartage Co. billed Burrows Lumber rather than Alberta -4-

Stake and Lath. The record also shows that Searcy Trucking billed Burrows Lumber for the shipment from Winnipeg, Manitoba. Therefore, based on the record, protestant has failed to show that the goods were in transit on a through bill of lading.

HOLDING:

The subject lumber was subject to the 15 percent surcharge imposed by the Presidential Proclamation. The record fails to support protestant's claim that the merchandise was in transit on a through bill of lading and, thus, exempt from the surcharge. This protest should be denied in full.

Sincerely,

John Durant, Director

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