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HQ 226400




January 16, 1996

ENT-1-03/ENT-1-07-RR:IT:EC 226400 GOB

CATEGORY: ENTRY

Port Director of Customs
1901 Crossbeam Drive
Charlotte, North Carolina 28217

RE: Application for further Review of Protest No. 1512-95-100133; Immediate transportation; 1994 and 1995 duty rates; 19 U.S.C. 1315(a); Uruguay Round Agreements Act

Dear Sir:

The above-referenced protest was forwarded to this office for further review. We have considered the issues raised by your office and by Glaxo Inc. ("the protestant") in its protest and in its additional submission of October 25, 1995. Our decision follows.

FACTS:

The protestant protests the following three entries, all of which were filed on January 3, 1995: xxxx-xxx-xxxx910-9; xxxx-xxx-xxxx914-1; and xxxx-xxx-xxxx915-8. The entries were liquidated on April 21, 1995. The protest was timely filed.

The protestant makes the following statements and claims in its protest.

The subject merchandise is pharmaceutical products which arrived at Norfolk, Virginia on December 28, 1994, when it was entered for immediate transportation ("IT") to Durham, North Carolina. On January 3, 1995, the protestant's broker filed the CF 3561 and CF 7501 for each of the subject entries. The CF 7501's showed a 1994 duty rate of 6.3% ad valorem pursuant to subheading 3004.90.60 of the Harmonized Tariff Schedule of the United States ("HTSUSA").

On December 8, 1994, Congress passed the Uruguay Round Agreements Act ("URAA"), pursuant to which duties were reduced or eliminated on various products. Duties were eliminated on pharmaceutical products. On December 23, 1994, President Clinton signed Proclamation 6763 which implemented the duty elimination of the subject pharmaceutical products under new subheading 3004.90.90, HTSUSA. The Presidential Proclamation stated that certain of the changes, including the duty elimination with respect to the subject pharmaceutical products "shall be effective with respect to goods entered, or withdrawn from warehouse for consumption, on and after January 1, 1995."

The protestant cites 19 U.S.C. ? 1315(a) and Ruling 225111 dated October 4, 1994. It quotes the following language from Ruling 225111:

The imposition of antidumping duties is governed by 19 U.S.C. 1673e(b). Both under the general rule and the special rule set forth in that statute, the date that the merchandise is entered for consumption governs. If the qualifying language of 19 U.S.C. 1315 is to have any meaning at all it must act to insure that goods which have moved under an immediate transportation entry and were not entered for consumption until after the issuance of the antidumping duty order are subject to antidumping duties.

The protestant claims that, similar to the situation in Ruling 225111, the duties in the subject protest are "otherwise specially provided for", as Proclamation 6763 provides that the reduced Uruguay Round duty rates, including the elimination on pharmaceutical products, "shall be effective with respect to goods entered or withdrawn from warehouse for consumption, on and after January 1, 1995."

The protestant states:

As the subject pharmaceutical products imported by Glaxo were entered for consumption on January 3, 1995, they must be assessed duty based on the rate in effect in 1995, which happens to be zero, notwithstanding that I.T. entries were filed in December 1994. A contrary finding would gut the meaning of the qualifying introductory clause from 19 U.S.C. ? 1315(a) just as surely as it would have in HRL 225111.

...Nothing in the terms of 19 U.S.C. ?1315(a) requires that it be a statute which "otherwise specially provides for" the applicable duty rate.

The protestant further contends that the 1995 duty rate should be applied for equitable reasons in light of the confusion at the end of 1994 with respect to the potential applicability of the 1995 rates to year-end shipments. It cites Customs' Administrative Messages of December 15, 1994 (94-1271), December 21, 1994 (94-1316), December 28, 1994 (94-1380), and January 4, 1995 (unnumbered) with respect to this confusion. The protestant states that not until the January 4, 1995 message did Customs state that the filing of IT entries would preclude the use of the 1995 rates.

In its submission dated October 25, 1995, made after a conference with this office, the protestant states as follows:

...Glaxo's situation is distinguishable from a staged rate scenario...

The removal of duties on pharmaceutical products imported into the United States was the result of a "zero for zero" tariff elimination agreement specifically negotiated for the pharmaceuticals sector by certain countries...

The pharmaceuticals agreement (document L/7430) specifically states, at p. 2: "Each government will fully implement the duty elimination on the date of entry into force of the World Trade Organization (WTO) agreement, for that government." The WTO agreement entered into force with respect to the United States on January 1, 1995 and, concomitantly, the duty elimination on pharmaceuticals was made effective for entries for consumption on and after that date by Presidential Proclamation 6763. Thus, where pharmaceutical products imported into the United States are concerned, Presidential Proclamation 6763 implemented a separate, agreement which, in essence, called for the immediate elimination of duties on such products entered for consumption on and after January 1, 1995.

The protestant further states:

...the administrative messages which Customs Headquarters issued in December 1994 to ABI filers to assist importers in securing reduced Uruguay Round duty rates for year-end shipments were incomplete in that they were, for all intents and purposes, silent as to the impact which the filing of I.T. entries could have in this regard.

...we note that the effect of those administrative messages is that Customs has penalized one class of importers, namely, those who filed I.T. entries, while arbitrarily benefitting another class, namely, those importers who did not file I.T. entries.

ISSUE:

Whether the 1994 or 1995 duty rates apply with respect to the merchandise entered on the subject entries.

LAW AND ANALYSIS:

The relevant statute is 19 U.S.C. 1315(a), which provides, in pertinent part:

? 1315. Effective date of rates of duty

(a) Articles entered or withdrawn from warehouse for consumption

Except as otherwise specially provided for, the rate or rates of duty imposed by or pursuant to this chapter or any other law on any article entered for consumption or withdrawn from warehouse for consumption shall be the rate or rates in effect when the documents comprising the entry for consumption or withdrawal from warehouse for consumption and any estimated or liquidated duties then required to be paid have been deposited with the Customs Service by written, electronic or such other means as the Secretary by regulation shall prescribe, except that --
(2) any article which is not subject to a quantitative or tariff-rate quota and which is covered by an entry for immediate transportation made at the port of original transportation under section 1552 of this title, if entered for consumption at the port designated by the consignee, or his agent, in such transportation entry without having been taken into the custody of the appropriate customs officer under section 1490 of this title, shall be subject to the rate or rates in effect when the transportation entry was accepted at the port of original importation; and

19 CFR 141.69(b) provides as follows:

(b) Merchandise entered for immediate transportation. Merchandise which is not subject to a quantitative or tariff-rate quota and which is covered by an entry for immediate transportation made at the port of original importation, if entered for consumption at the port designated by the consignee or his agent in such transportation entry without having been taken into custody by the district director for general order under section 490, Tariff Act of 1930, as amended (19 U.S.C. 1490), shall be subject to the rates in effect when the immediate transportation entry was accepted at the port of original importation.

Also relevant is Presidential Proclamation 6763 of January 23, 1994, issued under 19 U.S.C. 2483, 2902, 3331, and 3332 and titles I and IV of the Uruguay Round Agreements Act (108 Stat. 4809, Pub. L. 103-465), which made modifications to the Harmonized Tariff Schedule in proclamation paragraph (2)(a). 60 FR 1007, 1009. The proclamation implemented the duty elimination of pharmaceutical products classifiable under subheading 3004.90.90, HTSUSA. The proclamation provided that it was to be effective with respect to goods entered on or after January 1, 1995.

The protestant bases its position that the rate of duty imposed by subheading 3004.90.90, HTSUSA, applies to its entry because the language of 19 U.S.C. 1315(a) begins with the words "[e]xcept as otherwise specially provided for" and HQ Ruling 225111 which interpreted the relationship of 19 U.S.C. 1315(a) and 1673e.

We note that 19 CFR 141.69(b) does not contain the "except as otherwise specially provided for" language of 19 U.S.C. 1315(a).

In HQ 225111, the protestant argued that 19 U.S.C. 1315(a) changed the date of entry and that antidumping duties were the types of duties covered by 19 U.S.C. 1315(a). The plain words of 19 U.S.C. 1315(a) do not change the date of entry; the statute only requires that, for specified merchandise, the rate of duty in effect when an immediate transportation entry was accepted shall be applied to those goods when entered for consumption. Further, in the ruling, Customs rejected the argument that antidumping duties were nothing more than regular Customs duties. Finally, without attempting to explore the scope of the beginning "except" phrase, the ruling noted that it could not be interpreted to exclude from antidumping duties merchandise that was entered after the date of an antidumping duty order.

As noted in HQ 225111, the relevant language of 19 U.S.C. 1315(a) was enacted by the Customs Simplification Act of 1953 (Act of August 8, 1953, Chapter 397, Sec. 3(a), 67 Stat. 508). The legislative history showed a Congressional concern to address the problems created by a series of judicial decisions ending with the case of Mussman & Shafer, Inc. v. U.S., 27 Cust. Ct. 180 (1951), aff'd 40 C.C.P.A. 108 (1953). The facts in Mussman & Shafer are similar to the facts here. In the former, plywood was entered for imediate transportation at New York on September 16, 1946 and entered for consumption at Cincinnati on October 18, 1946. Because of differing arrival dates of the in-bond carrier at Cincinnati, the goods were released from Customs' custody in three groups: before October 25, 1946, on October 25, 1946 and after October 25, 1946. A Presidential proclamation (Proc. 2708 of October 18, 1946) made such plywood free of duty if entered on or after October 25, 1946.

At that time, 19 U.S.C. 1315 provided:

? 1315. Effective date of rates of duty

On and after June 18, 1930, all goods, wares, and merchandise previously imported, for which no entry has been made, and all goods, wares, and merchandise previously entered without payment of duty and under bond for warehousing, transportation, or any other purpose, for which no permit of delivery to the importer or his agent has been issued, shall be subjected to the duties imposed by this chapter and to no other duty upon the entry or the withdrawal thereof. Insofar as duties are based upon the quantity of any merchandise, such duties shall, except as provided in paragraph 813 and section 562 of this Act (relating respectively to certain beverages and to manipulating warehouses), be levied and collected upon the quantity of such merchandise at the time of its importation. No administrative ruling resulting in the imposition of a higher rate of duty or charge than the Secretary of the Treasury shall find to have been applicable to imported merchandise under an established and uniform practice shall be effective with respect to articles entered for consumption or withdrawn from warehouse for consumption prior to the expiration of thirty days after the date of publication in the weekly Treasury Decisions of notice of such ruling; but this provision shall not apply with respect to the imposition of antidumping duties.

The Customs Court held that the plywood that was released on and after October 25, 1946 was entitled to the benefits of Proclamation 2708. The court found that entry was complete as to the plywood released before the effective date. The court upheld the Customs liquidation as to those goods. The plaintiff did not appeal. The Government appealed only with respect to the plywood released on October 25, 1946. The appellate court held on January 14, 1953 that as to that portion of the shipment released on October 25, 1946, the benefits of the tariff change made by Proclamation 2708 applied.

Against that background, the Customs Administrative bill which had been considered by Congress since 1950 became the vehicle for the amendment of 19 U.S.C. 1315. The present language of the relevant part of 19 U.S.C. 1315 was introduced by Representative Jenkins in Section 3 of H.R. 5106, 83d Cong., 1st Sess. (May 11, 1953). The stated explanation of the language is set forth in Hearings before Committee on Ways and Means on H.R. 5106, 1-3, 17, 18, and 26, 83d Cong., 1st Sess. (May 27, 28 and 29, 1953). At page 17, the stated purpose was to clarify the applicable duty rates that were confused by court decisions. With respect to immediate transportation entries, the bill was to provide that the applicable rate of duty was the rate in effect when the entry for immediate transportation was accepted by Customs at the port of transportation.

Representative Jenkins introduced HR 5877, 83d Cong., 1st Sess. on June 22, 1953, July 9, 1953, and July 14, 1953. All versions contained the change with respect to 19 U.S.C. 1315 set forth in HR 5106. HR 5877 was enacted as the Customs Simplification Act of 1953 and amended 19 U.S.C. 1315 as discussed above. The House and Senate Reports on HR 5877 specifically state that the amendment was to address the Mussman & Shafer appellate decision. See H. Rpt. 760, 83d Cong., 1st Sess., 6-8 (July 9, 1953) and S. Rpt. 632, 83d Cong., 5,6 (July 24, 1953). The Senate Report is reprinted in U.S. Code Congressional and Administrative News, 2283, 2287 (1953).

The HTSUSA was enacted as section 1202 by section 1204 of the Omnibus Trade and Competitiveness Act of 1988 (Act of August 23, 1988, 102 Stat. 1107, 1148; Pub. L. 100-418). That section authorized the President to modify the statute by proclamation. As a statute, it seems clear that the Tariff Schedule could only be amended by Congress under its legislative authority, including authorizing the President's limited ability to make changes by proclamation.

The case of Mussman & Shafer and the present protest both involved goods that were entered for immediate transportation. In both cases, Presidential Proclamations were issued that made the respective goods free of duty for goods that were entered for consumption on a date after the immediate transportation entry was authorized by Customs. In both cases, the entry for consumption was made (in the Mussman & Shafer case the second and third categories) on or after the effective date of the proclamation.

To hold that the words "except as otherwise specially provided for" are to be interpreted in a way to reach the same result as in Mussman & Shafer would be to hold that Congress was unable to achieve the purpose sought. An interpretation of these words more consistent with the body of that statute and the legislative purpose shown by the history of the provision would be to hold that the words may refer to immediate transportation merchandise subject to a quota or merchandise governed by paragraph (c) of 19 U.S.C. 1315.

In any event, for the reasons stated here and in HR 225111, reliance on that ruling by the protestant here is misplaced.

HOLDING:

The protest is DENIED.

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, the Freedom of Information Act and other public access channels.
Sincerely,

Director,
International Trade Compliance
Division

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