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HQ 224446


September 27, 1993

BAG-5-02-CO:R:C:E 224446 PH

CATEGORY: BAGGAGE

Terence C. Heverin, Director
Office of Inspection & Control Training
U.S. Customs Service Academy, Building 70 - FLETC Glynco, Georgia 31524

RE: Internal Advice; Returning Resident; Administrative Waiver; 19 U.S.C. 1321(a)(2)(B); Subheadings 9804.00.65; 9804.00.72; 9816.00.20, HTSUSA

Dear Mr. Heverin:

In your memorandum of January 19, 1993 (Your File: PER 3- 10 IC:TR FEC) to the Director, Office of Regulations and Rulings, you requested an official agency position relating to the returning resident exemptions under subheading 9804.00.72, Harmonized Tariff Schedule of the United States Annotated (HTSUSA), and 19 U.S.C. 1321. You included correspondence between your office and the Office of the Chief Counsel regarding this matter, including a memorandum dated December 22, 1992, from the latter office setting forth its opinions on the issues raised and noting that only the Office of Regulations and Rulings could issue the official agency position on the issues.

We have been requested to respond to your request. We are treating your request as a request for internal advice under 19 CFR 177.11. Our ruling on the issues raised follows. (We are not ruling on the question of whether a returning resident must arrive "directly" from a beneficiary country to qualify for the duty-free treatment under subheading 9804.00.72, HTSUSA, because this issue is in the rulemaking process (see Notice of Proposed Rulemaking published in the Federal Register on July 27, 1993 (58 FR 40095) and the Customs Bulletin and Decisions on August 4, 1993 (Vol. 27, No. 31, page 7).)

FACTS:

In 1991, your office was reviewing its lesson plans for the Basic Inspector Training Program. In the course of this review, you noted possible discrepancies in 19 U.S.C. 1321 and the Customs Regulations issued thereunder (19 CFR 148.51(a)(1) and (2)), and in certain related provisions. You requested advice on the questions set forth in the ISSUES portion of this ruling.

ISSUES:

(1) May a returning resident who is entitled to the duty- free treatment under subheading 9804.00.65 or 9804.00.72, HTSUSA, also receive the duty-free treatment in 19 U.S.C. 1321(a)(2)(B)?

(2) May a returning resident arriving from other than an insular possession, who does not meet the requirements to receive the duty-free treatment under subheading 9804.00.65 or 9804.00.72, HTSUSA, receive the duty-free treatment in 19 U.S.C.

(3) When collecting duties for unaccompanied merchandise entered under the duty-free provisions of subheading 9804.00.72, HTSUSA (i.e., when the articles are valued at more than the permitted aggregate dollar amount), should the 10% "flat rate" of duty under subheading 9816.00.20, HTSUSA, be used, or should the specific tariff provision be used?

LAW AND ANALYSIS:

Subheading 9804.00.65, HTSUSA, provides for the duty-free treatment of articles, not over $400 in aggregate fair retail value in the country of acquisition, accompanying a returning United States resident. The provision contains certain limitations for alcoholic beverages and tobacco products.

Subheading 9804.00.70, HTSUSA, provides for the duty-free treatment of articles, not over $1200 in aggregate fair market value in the country of acquisition, whether or not accompanying a returning United States resident, if the returning United States resident "arrives directly or indirectly" from American Samoa, Guam or the Virgin Islands of the United States. Of the allowed $1200, not more than $400 may have been acquired elsewhere than in the insular possession, or not more than $600 may have been acquired in one or more beneficiary countries (see U.S. Note 4, Subchapter IV, Chapter 98, HTSUSA). Articles which were acquired elsewhere than in one of the named insular possessions may not be entered under this provision if they do not accompany the returning United States resident. This provision also contains certain limitations for alcoholic beverages and tobacco products.

Subheading 9804.00.72, HTSUSA, provides for the duty-free treatment of articles, not over $600 in aggregate fair market value in the country of acquisition, whether or not accompanying a returning United States resident, if the returning United States resident arrives directly from a beneficiary country (see U.S. Note 4, Subchapter IV, Chapter 98, HTSUSA). Of the allowed $600, not more than $400 may have been acquired elsewhere than in beneficiary countries. Articles which were acquired elsewhere than in beneficiary countries may not be entered under this provision if they do not accompany the returning United States resident. This provision also contains certain limitations for alcoholic beverages and tobacco products. Also, in addition to certain restrictions applicable to each of the foregoing provisions, a returning resident may claim exemption under only one of these provisions on his or her arrival and may not have claimed an exemption from any of the provisions within 30 days preceding his or her arrival.

Subheading 9816.00.20, HTSUSA, provides for a 10% flat rate of duty on the fair retail value of articles for personal or household use, or as bona fide gifts, not imported for the account of another person, valued in the aggregate at not over $1,000 fair retail value in the country of acquisition "[a]ccompanying a person, arriving in the United States (exclusive of duty-free articles and articles acquired in American Samoa, Guam or the Virgin Islands of the United States)". This provision is restricted by the condition that the person claiming the benefit of the provision may not have received the benefits of subheading 9816.00.20 or 9816.00.40, HTSUSA, within the 30 days immediately preceding his or her arrival.

Under 19 U.S.C. 1321(a)(2)(B)--

(a) The Secretary of the Treasury, in order to avoid expense and inconvenience to the Government disproportionate to the amount of revenue that would otherwise be collected, is authorized, under such regulations as he shall prescribe,

... (2) admit articles free of duty and of any tax imposed on or by reason of importation, but the aggregate fair retail value in the country of shipment of articles imported by one person on one day and exempted from the payment of duty shall not exceed--

... (B) $25 in the case of articles accompanying, and for the personal or household use of, persons arriving in the United States who are not entitled to any exemption from duty under subheading 9804.00.30 or 9804.00.70 of section 1202 of this title ... .

The privilege of this subdivision (2) shall not be granted in any case in which merchandise covered by a single order or contract is forwarded in separate lots to secure the benefit of this subdivision (2).

Under subsection (b) of 19 U.S.C. 1321--

The Secretary of the Treasury is authorized by regulations to diminish any dollar amount specified in subsection (a) of this section and to prescribe exceptions to any exemption provided for in such subsection whenever he finds that such action is consistent with the purpose of such subsection or is necessary for any reason to protect the revenue or to prevent unlawful importations.

ISSUES (1) and (2)

Insofar as these issues are concerned, we note that it is a basic tenet of statutory construction that the "starting point in statutory interpretation is 'the language [of the statute] itself'" and that "[w]hen ... the terms of a statute [are] unambiguous, judicial inquiry is complete, except in 'rare and exceptional circumstances'" (United States v. James, 478 U.S. 597, 604, 606 (1986); see also, 73 Am Jur. 2d (1974), Statutes, section 194, and cases cited therein; see also Central Soya Co., Inc., v. United States, 761 F. Supp. 133, 137 (CIT 1991), aff'd, 953 F.2d 630 (Fed. Cir. 1992)). In this case, the statutory language (i.e., in 19 U.S.C. 1321(a)(2)(B)) authorizes regulations to admit free of duty articles the aggregate fair retail value of which does not exceed $25 if they accompany and are for the personal or household use of persons arriving in the United States who are not entitled to any exemption from duty under subheading 9804.00.30 or 9804.00.70, HTSUSA (assuming the articles otherwise qualify under the provision).

Thus, under the clear wording of the statute the duty-free treatment under 19 U.S.C. 1321(a)(2)(B) is not applicable to persons arriving in the United States who are entitled to any exemption from duty under subheading 9804.00.30 or 9804.00.70, HTSUSA, but there is no such restriction with regard to the subheadings about which you asked (i.e., subheadings 9804.00.65 and 9804.00.72, HTSUSA). The Customs Regulations issued under the authority of this provision (19 CFR 148.51) are consistent with the foregoing. Whether a person qualifies for a duty exemption under subheading 9804.00.65 or 9804.00.72, HTSUSA, is irrelevant to the application of the duty exemption provided for in 19 U.S.C. 1321(a)(2)(B). Moreover, as long as the other provisions of section 1321(a)(2)(B) are met, the applicability or inapplicability of any tariff provision other than subheadings 9804.00.30 and 9804.00.70, HTSUSA, is irrelevant to the operation of 19 U.S.C. 1321(a)(2)(B).

ISSUE (3)

Subheading 9816.00.20, HTSUSA, explicitly requires that the articles subject to that provision accompany the person claiming the benefit of the provision. This requirement was clearly intended by Congress (see Senate Report (Finance Committee) 95- 778, 95th Cong., 2nd Sess., on the Customs Procedure Reform and Simplification Act of 1978, page 27, reprinted at 1978 U.S.C.C.A.N. 2211, 2238-2239). As set forth in the question presented, the merchandise at issue is not accompanied by a person and its value exceeds the aggregate fair market value provided for in subheading 9804.00.72, HTSUSA. We assume that the question is addressed to the portion of the merchandise which exceeds the aggregate fair market value provided for in subhead- ing 9804.00.72, HTSUSA (the merchandise within the aggregate fair market value provided for would qualify for duty-free treatment under the provision, assuming it otherwise qualifies with the requirements therein). Since the merchandise is unaccompanied, the statutory language of subheading 9816.00.20, HTSUSA, specifically excludes the merchandise from the "flat rate" provided for therein. Therefore, the portion of the merchandise exceeding the aggregate fair market value provided for in subheading 9804.00.72, HTSUSA, would be subject to the rate of duty appropriate for the specific tariff provision applicable.

HOLDINGS:

(1) A returning resident who is entitled to the duty-free treatment under subheading 9804.00.65 or 9804.00.72, HTSUSA, may also receive the duty-free treatment in 19 U.S.C. 1321(a)(2)(B), if applicable.

(2) A returning resident arriving from other than an insular possession, who does not meet the requirements to receive the duty-free treatment under subheading 9804.00.65 or 9804.00.72, HTSUSA, may receive the duty-free treatment in 19 U.S.C. 1321(a)(2)(B), if applicable.

(3) When collecting duties for unaccompanied merchandise entered under the duty-free provisions of subheading 9804.00.72, HTSUSA (i.e., when the articles are valued at more than the permitted aggregate dollar amount), the specific tariff provision and not the 10% "flat rate" of duty under subheading 9816.00.20, HTSUSA, should be used for the portion of the merchandise the aggregate fair market value of which exceeds the amount provided for in subheading 9804.00.72.

Sincerely,

John Durant, Director

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