HQ 0223703 - Ruling request concerning the manipulation and commingling of domestic and imported distilled spirits in a bonded warehouse; 19 U.S.C. 1562; 19 CFR 19.11(d); 19 CFR 144.15; Customs Bonded Warehouse Manual. - United States International Trade Commision Rulings

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HQ 223703

July 2, 1992

WAR-3-01 CO:R:C:E 223703 TLS

CATEGORY: ENTRY

Mr. Daniel Femniak
Heublein Inc.
16 Munson Road
P.O. Box 388
Farmington, Connecticut 06034-0388

RE: Ruling request concerning the manipulation and commingling of domestic and imported distilled spirits in a bonded warehouse; 19 U.S.C. 1562; 19 CFR 19.11(d); 19 CFR 144.15; Customs Bonded Warehouse Manual.

Dear Mr. Femniak:

The above-referenced ruling request has been received by this office for consideration. We have considered the points raised in the request and our decision follows.

FACTS:

The requester proposes to import into a Customs bonded warehouse two different kinds of distilled spirits. These imports are to be commingled with domestically-produced distilled spirits which are to be entered from a Bureau of Alcohol, Tobacco, and Firearms (ATF) bonded warehouse. The commingled stock would be manipulated into one package which will be sold in duty-free shops.

ISSUE:

Whether the requester may legally enter domestically- produced distilled spirits into a bonded warehouse for manipulation with imported distilled spirits.

LAW AND ANALYSIS:

Section 5214(a)(9) of 26 U.S.C. provides that distilled spirits on which the internal revenue tax has not been paid or determined may be withdrawn from the bonded premises of any distilled spirits plant in approved containers without payment of tax, for transfer (for the purpose of storage pending exportation) to any customs bonded warehouse from which distilled spirits may be exported. Distilled spirits transferred under this provision may not withdrawn for domestic consumption. See also 19 CFR 144.15(c).

Section 1555 of 19 U.S.C. provides in pertinent part that bonded warehouses may be utilized to store imported merchandise, manufacture merchandise in bond, or repack, sort, or clean imported merchandise by permission and under Customs supervision. Section 1562 of 19 U.S.C. provides in part the following:

All merchandise [withdrawn from bonded warehouses] shall be withdrawn in the original packages in which imported unless, upon the application of the importer, it appears to the appropriate customs officer that it is necessary to the safety or preservation of the merchandise to repack or transfer the same: Provided, That upon permission therefor being granted by the Secretary of the Treasury, and under customs supervision, at the expense of the proprietor, merchandise may be cleaned, sorted, repacked, or otherwise changed in condition, but not manufactured, in bonded warehouses established for that purpose and be withdrawn for exportation to a foreign country... (Emphasis in original.)

Section 4.2 of the Customs Bonded Warehouse Manual also covers eligibility of merchandise for bonded warehouse entry. Under section 4.2(a)(2), domestic distilled spirits may entered into bonded warehouses if it is transferred directly from an ATF bonded warehouse.

In the present case, it is clear that the importer's proposal to enter domestic distilled spirits into a customs bonded warehouse from an ATF bonded warehouse is permissible. It is even more clear that imported distilled spirits may be entered pursuant to 19 U.S.C. 1557. The repacking procedure described herein falls squarely within what may be authorized under 19 U.S.C. 1562. Whether the procedure is to be authorized or not is the responsibility of the director of the Customs district that will be supervising the manipulation. See Customs Bonded Warehouse Manual, Parts 6.2 and 1.5.

To the extent that the domestic distilled spirits may be entered into a customs bonded warehouse, if the repacking with imported distilled spirits is authorized, the repacked merchandise may not be withdrawn for domestic consumption. The importer proposes to withdraw the manipulated merchandise for sale in duty-free stores. This activity is also discussed in the Customs Bonded Warehouse Manual. Any domestic distilled spirits transferred to a customs bonded warehouse under the authority of 26 U.S.C. 5214(a)(9) may be withdrawn for sale by duty-free stores to individuals departing the United States. Customs Bonded Warehouse Manual, Part 11.5(a). It is clear that the non-taxed domestic distilled spirits in this case may be entered into a customs bonded warehouse under 26 U.S.C. 5214(a)(9) as long as they are transferred from an ATF bonded warehouse in approved containers.

Therefore, based on the foregoing, we find that the proposed transaction is permissible under Customs laws and regulations to the extent that the director of the Customs district supervising the bonded warehouse authorizes the type of manipulation proposed by the importer.

HOLDING:

The importer may transfer non-taxed domestic distilled spirits from a Bureau of Alcohol, Tobacco, and Firearms bonded warehouse to a Customs bonded warehouse in approved containers. To the extent that the proposed repacking of the domestic merchandise with imported distilled spirits is authorized by the director of the Customs district supervising the bonded warehouse, the importer may also withdraw the manipulated merchandise for sale in duty-free stores to individuals departing the United States. (Note to importer: The Customs Bonded Warehouse Manual for Proprietors, Importers, and Customs Officers may be purchased from the Superintendent of Documents, U.S. Government Printing Office, Washington, D.C. 20402.)

Sincerely,

John Durant, Director

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