HQ 0222492 - Further review of protest #2605-0-000003 concerning the validity of charging fees for the establishment of a container station - United States International Trade Commision Rulings

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HQ 222492

February 4, 1991

PRO-2-02 CO:R:C:E 222492 TLS

CATEGORY: ENTRY PROTEST

District Director
U.S. Customs Service
International and Terrace Streets
Nogales, Arizona 85621

RE: Further review of protest #2605-0-000003 concerning the validity of charging fees for the establishment of a container station

Dear Sir:

The above-referenced protest has been forwarded to this office for further review. We have considered the points raised by the protestant and your office. Our decision follows.

FACTS:

This protest involves the exaction of fees for the establishment of a container freight station. The protestant contends that it should not have been charged a fee; rather, the costs of establishing the station should have been offset from the Customs User Fee Account. It is further argued that Customs had no authority to charge the fees as no statutory authority exists that specifically requires that such fees be charged for the designation and operation of container stations.

The facts show that the container freight station at issue had already been approved as a Customs bonded warehouse at the time of the fee exaction. The protestant claims that the security and background investigations for which the fee is to apply had already been completed. Therefore, the fee went beyond the actual services provided for the container station. The importer argues that only administrative services were left uncompensated for after the bonded warehouse approval. The fee charged amounted to $1021.00, which was established by notice in T.D. 85-70 (March 29, 1985).

ISSUE:

Whether or not the collection of fees for the designation or operation of container stations is permissible under existing United States Code statutes.

LAW AND ANALYSIS:

Sections 19.40 through 19.49 of the Customs Regulations outline the procedures for the establishment and use of container stations. In particular, 19 CFR 19.40 was amended by the Federal Register publication of T.D. 83-56 to give Customs the authority to charge fees for the establishment of container stations. 48 Fed. Reg. 9853 (March 9, 1983). The notice also provided that a fee schedule is to be published in the Federal Register and Customs Bulletin periodically to revise the fee to reflect increased costs. The fee charged in the present case was set by publication of T.D. 85-70 in the Customs Bulletin for March 29, 1985.

The protestant argues that the container freight station at issue here had already been established at the time of the fee exaction. The $1,021.00 fee, therefore, it is argued, was charged only for the administrative approval that followed. The protestant's argument seems to suggest that the fee should have been exacted before the station was established and any charges made afterwards cannot apply to that particular task.

We do not read the applicable law in such a way. Section 19.40 of the Customs Regulations does not make reference to when the fee may be exacted in relation to when the act requiring the charging of a fee is performed by Customs. Furthermore, section 19.40(c)(1) makes no mention of when the fee should be charged in relation to when the services are performed. The only requirement noted, in fact, is that the fee schedule be published in the Federal Register.

The protestant makes much light of the language of section 58c of the Tariff Act of 1930. Specifically, it is argued that the establishment and control of container stations are Customs commercial operations covered under that provision. The relevant subsections read as such:

(e)(6) Notwithstanding any other provision of law except paragraph (2), during any period when fees are authorized under subsection (a) of this section, no charges, other than such fees, may be collected-- (i) cargo inspection, clearance, or other customs activity, expense, or service performed...
(ii) customs personnel provided, in connection with the arrival or departure of any commercial vessel, vehicle, or aircraft, or its passengers, crew, stores, material, or cargo, in the United States;...

(f)(1) There is established in the general fund of the Treasury a separate account which shall be known as the "Customs User Fee Account". Notwithstanding section 1524 of this title, there shall be deposited as offsetting receipts into the Customs User Fee Account all fees collected under subsection (a) of this section except that portion of such fees that is required under paragraph (3) for the direct reimbursement of appropriations.

(3) The Secretary of the Treasury, in accordance with section 1524 of this title and without regard to apportionment or any other administrative practice or limitation, shall directly reimburse, from the fees collected under subsection (a) of this section, each appropriation for the amount paid out of that appropriation for the costs incurred by the Secretary in providing-

(B) all preclearance services; for which the recipients of such services are not required to reimburse the Secretary of the
Treasury.... (emphasis added.)

The importer claims that the expenses for the establishing the container station in this case should be paid out of the Customs User Fee Account instead of directly reimbursed from its own expense account. It is true that the account is to be used to offset expenses that the Customs Service incurs "in conducting commercial operations." Upon closer reading, however, we note that an exception is made for services the recipients of which are required to reimburse the Secretary of the Treasury. Hence, the underscored language as emphasized above. The exception is clearly made to uphold the impact of Customs laws mandating direct reimbursement from recipients of certain services. As noted before, Customs Regulations section 19.40 requires direct reimbursement from the recipient of services provided by the Customs Service in establishing and maintaining container stations. It is beyond dispute that Customs in this case incurred expenses in inspecting and overseeing the establishment of a container station. We cannot ignore the unambiguous terms of the relevant law here. Therefore, we must find that the protestant is required to directly reimburse the U.S. Customs Service for services rendered in the establishment of the container station in this case.

The protestant also argues that Customs has relied on section 555 and 556 of the Tariff Act of 1930 to establish container freight stations and set fees for them. We disagree. Customs' authority for establishing the container stations and charging fees for such are generally based on sections 499 and 624 of the Tariff Act. Section 499 requires that imported merchandise be inspected, examined, or appraised and reported by the appropriate customs officer to have been truly and correctly invoiced and found to comply with requirements of the laws of the United States before it is delivered from customs custody. 19 U.S.C. 1499 (1990). Section 624 gives the Secretary of the Treasury the authority "to make such rules and regulations as may be necessary to carry out the provisions [set forth in other parts of the Tariff Act]." 19 U.S.C. 1624 (1990). These statutes allow the Customs Service and its parent agency, the Department of the Treasury, to set and implement regulations allowing Customs to, inter alia, establish container stations. In particular, the inspection procedures performed by Customs personnel at container stations are covered by section 499. The regulations provided for under sections 19.40 to 19.49 of the Customs Regulations are consistent with section 624. Thus, sections 555 and 556 of the Tariff Act are not directly relevant to Customs' authority to charge fees for the establishment of container stations as provided for under Customs regulation 19.40.

HOLDING:

You are to deny this protest in full. A Form 19, Notice of Action, should be attached hereto.

Sincerely,

John Durant, Director

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