HQ 0223842 - Protest and application for further review no. 1303-91- 100130; effective date of merchandise processing fee's exemption for least-developed beneficiary developing countries; General Note 3(c)(ii)(B), HTSUS; 19 U.S.C. 58c(a)(9)(A); 19 U.S.C. - United States International Trade Commision Rulings

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HQ 223842

July 14, 1992

ENT-1-03 CO:R:C:E 223842 C

CATEGORY: ENTRY LIQUIDATION

District Director of Customs
U.S. Customs Service
40 South Gay Street
Baltimore, MD 21202

RE: Protest and application for further review no. 1303-91- 100130; effective date of merchandise processing fee's exemption for least-developed beneficiary developing countries; General Note 3(c)(ii)(B), HTSUS; 19 U.S.C. 58c(a)(9)(A); 19 U.S.C.

Dear Sir:

This responds to the referenced protest and application for further review. We have reviewed all relevant materials and our response follows.

FACTS:

PROTESTANT imported merchandise from Sierra Leone on August 30, 1990. It was released on August 31, 1990, and liquidated on December 28, 1990. At the time of entry summary, a merchandise processing fee (MPF) was assessed on the imported merchandise. On October 1, 1990, between the date of entry and the date of liquidation, an amendment to 19 U.S.C. 58c became effective. That amendment provided that the MPF of section 58c(a)(9) would not apply to articles that are products of least-developed beneficiary developing countries (LDDC's) as set forth in General Note 3(c)(ii)(B) of the Harmonized Tariff Schedule of the United States (HTSUS). Sierra Leone is among those countries listed therein. In this timely filed protest, PROTESTANT asserts that the liquidation of the entry should not have included the MPF. You asserted that the merchandise was entered prior to the effective date of the amendment to 19 U.S.C. 58c and, thus, the exemption does not apply.

ISSUE:

On the facts of this case, should the entry have been liquidated without assessment of a merchandise processing fee? LAW AND ANALYSIS:

Public Law 101-382, dated August 20, 1990, and entitled the Customs and Trade Act of 1990, amended the law pertaining to the merchandise processing fee. (P.L. 101-382, 101st Cong. 2d Sess., 104 Stat. 629.) Section 111(b)(2) of the Act amended 19 U.S.C. 58(b)(8) by providing, in pertinent part, the following under section 58c(b)(8)(B): "No fee may be charged under subsection (a)(9) or (10) for the processing of any article that is - (iii) a product of any country listed in subdivision (c)(ii)(B) or (c)(v) of general note 3 [of the HTSUS]." As stated above, Sierra Leone is among those countries listed therein; thus, products of Sierra Leone, under the amended provision, are not subject to the MPF.

Under section 115 of the Act, it is provided that the exemption provided by the above amendment takes effect on October 1, 1990. Your position is that the amendment is effective for merchandise "entered or released" on or after October 1, 1990. Thus, since the merchandise in question was entered or released prior to October 1, 1990, it is not subject to the exemption.

We agree with your interpretation of the statute. Under the law, the MPF accrues upon entry or release of the merchandise. Under 19 U.S.C. 58c(a)(9), the fee is applied "for the processing of merchandise that is formally entered or released during any fiscal year." (Emphasis added.) Section 58c(b)(8)(E) defines entry or release of merchandise as follows: "For purposes of subsection (a)(9) and (10) of this section, merchandise is entered or released, as the case may be, if the merchandise is - (i) permitted or released under section 1448(b) of this title, (ii) entered or released from customs custody under section 1484(a)(1)(A) of this title, or (iii) withdrawn from warehouse for consumption." (See also 19 C.F.R. 24.23(a)(2).) The foregoing makes it clear that the intent of the law is to have the MPF accrue upon entry or release of imported merchandise, a stage in the entry process coming usually well before liquidation. Therefore, imported merchandise entered or released prior to the date the exemption became effective is properly subject to imposition of the fee. Merchandise entered or released on or after the date the exemption became effective is properly exempted from the fee.

On the facts here, the imported merchandise in question was entered and released prior to October 1, 1990. (The merchandise was released under a permit for immediate delivery and the time of entry was the date of entry summary as provided under 19 C.F.R. 141.68(c).) Therefore, it was properly subject to the MPF. The only way for it to have been freed from the MPF is if it had been entered on or after October 1, 1990, the date LDDC's became exempt from the fee. The amendment of the statue by P.L. 101-382 did not have the effect of negating the accrual of the MPF where such accrual lawfully occurred prior to the effective date. It applied only to merchandise entered or released on or after such date.

Based on the foregoing, we conclude that the MPF was properly assessed on the imported merchandise in question.

HOLDING:

The merchandise processing fee was properly assessed on merchandise entered (or released) prior to October 1, 1990, the effective date of the exemption applicable to least-developed beneficiary developing countries.

You are instructed to deny this protest. Please attach a copy of this decision to the CF 19 Notice of Action to be sent to PROTESTANT to fulfill the notice requirement of 19 C.F.R. 174.30(a).

Sincerely,

John Durant, Director

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