HQ 0224950 - Application for Further Review of Protest No. 1401-93-100168; Liability for duties; Missing package after merchandise "permitted"; Unconcealed shortage; 19 CFR 158.3 - United States International Trade Commision Rulings

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HQ 224950

March 18, 1994

ENT-1-03/ENT-1-07-CO:R:C:E 224950 JRS

CATEGORY: ENTRY

Assistant District Director of Customs
Commercial Operations Division
101 East Main Street, Room 107
Norfolk, Virginia 23510

RE: Application for Further Review of Protest No. 1401-93-100168; Liability for duties; Missing package after merchandise "permitted"; Unconcealed shortage; 19 CFR 158.3

Dear Sir:

This is in response to your request dated September 13, 1993, requesting further review of the above-referenced protest. We have considered the issue raised and our decision follows.

FACTS:

On December 10, 1992, construction tools were imported from Germany into the Norfolk district. On December 30, 1992, an entry (CF 3461) was made covering the 9 packages listed on the manifest and the goods were released the same day. The importer's broker filed the entry summary (CF 7501) for the 9 manifested and invoiced packages on January 14, 1993. Subsequently, on April 16, 1993, the entry was liquidated.

On June 11, 1993, the importer filed a protest challenging the payment of duties on 1 out of the 9 packages entered. The importer, as part of this protest, has provided evidence (in the form of its insurance claim documents against Givens Trucking Co., Inc. and related "faxes") that 9 packages were delivered to the Givens warehouse, the place where containers are stripped. (No date is specified as to when Givens received the merchandise; however, we assume that it was sometime after December 30, 1992.) The importer states that on January 5, 1993, Southgate Trucking received only 8 of the 9 boxes from Givens, which it subsequently delivered to the importer. The importer requests a refund of the $703.83 in duties that were paid against the items (hand drills and parts) in the missing box/package.

We note that, notwithstanding the filing of the instant protest, the importer also filed a petition under section 520 of the Tariff Act of 1930, as amended (19 U.S.C. 1520(c)). Customs in Norfolk denied the section 520(c) petition on November 18, 1993 (see Protest No. 1401-93-200063, filed October 16, 1993) for the reason that same issue raised was pending under this protest and no clerical error was alleged.

ISSUE:

Whether Customs may properly refund the duties assessed on a package which is declared missing by the importer after it was permitted and released from customs custody.

LAW AND ANALYSIS:

Initially, we note that this protest was timely filed pursuant to 19 U.S.C. 1514(a)(5). The subject entry was liquidated on April 16, 1993, and this protest was filed on June 11, 1993.

It is a fundamental legal postulate that customs duty attaches when goods are imported, and they are imported when they come within the jurisdiction of the customs district. See Mills & Gibb Corporation v. United States, 13 Ct. Cust. Appls. 72, T.D. 40933 (1925); United States v. Shallus, 2 Ct. Cust. Appls. 332, T.D. 32074 (1911). The courts have consistently held that where foreign goods are landed in the United States their loss or destruction before they have become available to the owner does not preclude the duties from becoming a personal debt of the owner or consignee to the government. See Art Craft Jewelry Co. v. United States, 64 Cust. Ct. 414, 418, C.D. 4010 (1970), citing and discussing American Pillowcase & Lace Co. v. United States, 20 Cust. Ct. 53, C.D. 1083 (1948), aff'd, 21 Cust. Ct. 228, Abs. 52646 (1948).

Under section 158.3 of the Customs Regulations, CR (19 CFR 158.3), an allowance in the assessment of duties for lost or missing packages of merchandise included in an entry summary whenever it is established to the satisfaction of the district director before the liquidation of the entry summary becomes final that the merchandise claimed to be lost or missing was not "permitted." To be "permitted" as defined by section 158.1, CR, the quantities of merchandise being delivered or available for delivery from customs custody must be ascertained.

The intent of section 158.3, CR, and other sections in Part 158 is to give effect to the principle that the importer is entitled to a reduction in liquidation for merchandise that either is not delivered because it is lost or missing or is completely or partially damaged prior to importation. See T.D. 85-159.

The importer has not presented any evidence that the missing package was not available for delivery from the carrier within the provisions of section 448(a) of the Tariff Act of 1930, as amended (19 U.S.C. 1448(a)). For instance, the record does not reveal that any Manifest Discrepancy Report was filed at the time of entry summary. On the contrary, all evidence points to the fact that 9 packages were imported by the carrier. In fact, the protestant/importer does not dispute that the 9 invoiced and manifested packages were landed in the United States and released; he only asserts that there was a shortage in the number of packages actually delivered to its premises after the goods left Givens warehouse. Deficiencies occurring after importation are not provided for under 19 U.S.C. 1499. Thus, the importer is not entitled to relief from the payment of duties on the missing package, in accordance with section 158.3, for all 9 packages were "permitted" and the importer has failed to prove otherwise. He remains liable for the duties assessed on the missing package.

HOLDING:

No refund of duties assessed on a package declared missing is permissible under 19 CFR 158.3 after the merchandise was released from customs custody.

In accordance with Section 3A(11)(b) of Customs Directive 099 3550-065, dated August 4, 1993, Subject: Revised Protest Directive, this decision should be mailed by your office to the protestant no later than 60 days from the date of this letter. Any reliquidation of the entry in accordance with the decision must be accomplished prior to mailing of the decision. Sixty days from the date of the decision the Office of Regulations and Rulings will take steps to make the decision available to customs personnel via the Customs Rulings Module in ACS and the public via the Diskette Subscription Service, Lexis, Freedom of Information Act and other public access channels.

Sincerely,

John Durant, Director

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