HQ 0222945 - Protest #2501-89-000074; shipment of wrong merchandise exportation or non-exportation; free of duty re-importation. - United States International Trade Commision Rulings

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HQ 222945

November 5, 1991

ENT-1-03-CO:R:C:E 222945 TLS

CATEGORY: ENTRY

District Director
U.S. Customs Service
880 Front Street Room 5-S-9
San Diego, California 92188

RE: Protest #2501-89-000074; shipment of wrong merchandise exportation or non-exportation; free of duty re-importation.

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:

The protestant exported a surface grinder machine to Mexico with the intent of it remaining there permanently. Allegedly, the receiving company saw it to be the wrong machine upon receipt without having opened the package. It is explained that the markings on the package had shown it to be the wrong machine. The package was shipped back to the United States not having been opened and with the machine having been left intact, according to the protestant. About a month later, the correct machine was shipped to the receiving company.

Duties were paid on the reshipment of the first machine back to the United States after the alleged discovery of the mistake occurred. The importer protests the assessment of duties upon the reshipment because it views the transaction as a non- exportation/non-importation. It holds this view because it claims that the first machine was never intended to be shipped to and become part of the commerce of Mexico. The protestant requests that the entry be cancelled and/or that the duties paid be refunded.

Customs contends that it charged duties in this case because even if the wrong machine was shipped, the overriding intent was that a machine was to be exported and in fact was. The Service considers this to be the controlling factor in whether or not an exportation occurred. According to Customs officials, such intent was evident because the importer did not submit any evidence that a machine was not shipped with the intent that it enter the trade and commerce of another country. They believe the evidence submitted only shows that the wrong machine was shipped, not that the shipment itself was not intended.

ISSUE:

Whether the shipment of the wrong merchandise to a foreign country and the subsequent reshipment back to the United States is a non-exportation/non-importation under Customs laws in absence of a showing of lack of intent to export.

LAW AND ANALYSIS:

The case law on this particular issue has been well established. The Supreme Court ruled that "exportation" is the severance of goods from the mass of things belonging to [the United States] with the intention of uniting them to the mass of things belonging to some foreign country. Swan & Finch Co. v. United States, 190 U.S. 143 (1903). The Swan & Finch holding has been followed in at least two Customs Court cases, F.W. Myers & Co. v. United States, 29 Cust. Ct. 202, C.D. 1468 (1952) and Nassau Distributing Co., Inc. v. United States, 29 Cust. Ct. 151, C.D. 1459 (1952). The controlling factor in each of these cases was the intention of the party at the time of shipment.

Based on the protestant's own account of the transaction at issue, it did intend to ship a machine to Mexico from this country that would become part of the commerce of Mexico. As it turns out, the shipping was meant to be done but the wrong machine was shipped. The protestant cites to T.D. 55091(4) (1960), which ruled that whenever merchandise is returned to the United States following discovery that it was erroneously shipped, the transaction may be regarded as a nonexportation/nonimportation where it is clear that every effort is made to prevent the shipment from leaving the United States upon discovery of the error. At issue in this case is the interpretation of the phrase, "erroneously shipped." It is protestant's contention that the subject machine was erroneously shipped because it was the wrong machine.

We cannot agree with protestant's reading of the law in this case. It is clear that "erroneously shipped" refers to a shipment that was never meant to take place but somehow did, and not to any particular contents of the shipment. The error here was not in the shipment itself but what was in fact shipped. The case law on this subject is only concerned with the shipping (i.e., exporting) aspect of the transaction. Customs law might address an error in shipping the wrong package in another part of the legal lexicon, but not under the guise of nonexportation/nonimportation. Furthermore, it is clear that no effort was made to prevent the shipment because the shipment was meant to be made. Again, as noted before, the protestant acknowledges such. Therefore, we do not find that the subject transaction constitutes a nonexportation/nonimportation as it has been defined in Customs law. If the wrong machine was shipped, the exporter should pursue other options under Customs law.

HOLDING:

The shipping of the subject machine in this case is not a nonexportation/nonimportation under Customs law. The Customs Service was proper in assessing duties on the reimportation of the machine absent any legitimate request for relief under Customs laws. You are instructed to deny this protest in full. A copy of this decision should be sent to the protestant with a Notice of Denial on Customs Form 19.

Sincerely,

John Durant, Director

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