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HQ 227931

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April 8, 1998

PRO-2-02 RR:CR:DR 227931 cb

CATEGORY: PROTEST

Myron Paul Barlow, Esq.
Miller & Company
4929 Main Street
Kansas City, MO 64112

RE: Reconsideration of HQ 227654; 19 U.S.C. ?1514

Dear Mr. Barlow:

This is in response to your letter of February 28, 1998, wherein you are attempting to protest our decision issued under HQ 227654, dated December 2, 1997. We have considered the points you raised and our decision follows.

FACTS:

On December 2, 1997, the Customs Service issued Headquarters Ruling 227654, which held that: (1) The sale for consumption of diesel fuel from a foreign trade zone constitutes prohibited retail trade under 19 U.S.C. ?81o(d); and (2) that the placing of diesel fuel in a truck's fuel tank in a foreign trade zone to be consumed by the truck destined for Canada does not constitute an "exportation" under 19 U.S.C. ?81c(a).

You have filed a "protest" under 19 U.S.C. ?1514(a). It is your contention that: (1) by denying your client the duty and tax free benefits provided by the Foreign Trade Zones Act of 1934, HQ 227654 unlawfully imposes duties, charges and exactions; and (2) that the ruling constitutes an order and finding excluding diesel fuel from delivery to the foreign trade zone for purposes of the proposed sales. You have also incorporated, by reference, the arguments contained in previous submissions and addressed in HQ 227654.

ISSUE:

Is HQ 227654 subject to the protest procedures set forth in 19 U.S.C. ?1514(a)?

LAW AND ANALYSIS:

Section 1514 of Title 19, United States Code, provides for protest procedures involving decisions of the Customs Service. Subsection 1514(a) provides that decisions of the Customs Service are protestable if they concern:

. . .
(3) all charges or exactions of whatever character within the jurisdiction of the Secretary of the Treasury; (4) the exclusion of merchandise from entry or delivery or a demand for redelivery to customs custody under any provision of the customs laws, except a determination appealable under section 1337 of this title. . . . .

It is well settled law that it is the importation which triggers the liability for duties. Hawaiian Independent Refinery v. United States, 81 Cust. Ct. 117, C.D. 4777 (1978) ("... dutiability is expressly conditioned therein upon the importation of foreign articles into the Customs territory of the United States. . . .'") (emphasis in original). The amount and rate of duties is generally fixed when the imported good is entered under 19 U.S.C. ?1315. Likewise, it is well settled law that merchandise admitted into a foreign trade zone is not imported. See Hawaiian Independent, supra. This conclusion is based on the fact that, under the applicable statute and regulations, a foreign trade zone is not within the Customs territory of the United States. 19 CFR 146.1. However, even with respect to foreign trade zones, there is no blanket exclusion from the liability from duty imposed as a result of the importation. See Nissan Motor Mfgr. Corp. U.S.A. v. U.S., 884 F.2d 1375, 7 CAFC 143 (1989).

Regarding your contention that Customs decision constitutes a charge or exaction, the Customs Court addressed this issue in Carlingswitch, Inc.v. United States, 85 Cust. Ct. 63, C.D. 4873, aff'd, 68 CCPA 49, C.A.D. 1264, 651 F.2d 768 (1981). The court concluded that "[a]t the very least, to constitute an exaction' under section 514(a)(3), there would have had to have been some compulsion on the part of Customs requiring plaintiff to have paid the monies." 85 Cust. Ct. at 66. In arriving at this interpretation, the court looked at the plain meaning of the word and noted the dictionary definitions. Likewise, in determining whether a demand against a bond constitutes a charge, the Court of International Trade (CIT) looked at the dictionary definition of this term. St. Paul Fire and Marine Insurance Co. v. United States, 14 CIT 43 (1990).
The CIT noted that "[a] charge' has been interpreted as an obligation or duty; a claim or encumbrance; a liability, an expense or the price of an object; an entry in an account of what's due from one party to another, 1 West's Law & Commercial Dictionary in Five Languages 211 (1958); West's Legal Thesaurus and Dictionary 127 (1985); Webster's Third New Int'l Dictionary 377 (1981); Black's Law Dictionary 211 (5th Ed. 1979)." St. Paul Fire, supra at 46. The court also noted that, in order to have a "charge" or "exaction", there must be an actual assessment of specific sums of money on imported merchandise. Id. In the case at hand, Customs is not compelling your client to make any payment nor has there been an assessment of specific sums. Thus, following the court's rationale, HQ 227654 is not protestable under 19 U.S.C. ?1514(a)(3) as a decision concerning a charge or exaction.

In the alternative, it is your position that HQ 227654 is a finding excluding diesel fuel from delivery into the foreign trade zone. Like the Customs Court in Carlingswitch, supra, we must look at the plain meaning of the term "exclude" as used in the statutory provision at issue. We find that "exclude" is defined as:
exclude. 1. to shut or keep out; prevent the entrance of. ... 2. to shut out from consideration, privilege, etc. 3. to expel and keep out. The Random House Dictionary of the English Language, Unabridged Edition, 1973.
exclude 1. To keep out: Bar. 2. To omit from notice or consideration: Disregard. 3. To put out: Expel. Webster's II New Riverside University Dictionary, 1984.

Based on the cited definitions of the word "exclude", we disagree with your argument that HQ 227654 constitutes a finding of exclusion. Said ruling discusses the admission of diesel fuel into the zone and the entry of fuel from the zone. It addresses the sale of said merchandise once it has been admitted into the foreign trade zone. The decision analyses the statutory prohibition against retail sale as applied to the facts set forth in your ruling request. We conclude that the ruling is not a decision concerning the exclusion of merchandise from entry or delivery under 19 U.S.C. ?1514(a)(4). Thus, HQ 227654 is not a protestable decision under 19 U.S.C. ?1514(a)(4).

In your "protest" you reaffirm the arguments originally presented in your ruling request and subsequent submission. No additional information or arguments have been presented with your letter of February 26, 1998. In view of the fact that no additional information has been presented which would persuade this office to reach a different conclusion, HQ 227654 is hereby affirmed.

The Court of International Trade has exclusive jurisdiction to review a ruling issued by the Customs Service relating to entry requirements or similar matters, prior to importation. 28 U.S.C. ?1581(h). Thus, if your client wishes to contest our decision, as set forth in HQ 227654, an administrative protest is not the proper vehicle.

HOLDING:

HQ 227654 is not a protestable decision under 19 U.S.C. decision. HQ 227654 is hereby affirmed in its entirety.

Sincerely,

John A. Durant, Director
Commercial Rulings Division

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