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HQ 115494

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January 8, 2002

BON 1-03 RR:IT:EC 115494 GG

CATEGORY: ENTRY

Mr. Stephen M. Sarro
Customs Compliance Manager
Danzas AEI Customs Brokerage Services
29200 Northwestern Highway
Southfield, MI 48034

RE: Container stations; 19 CFR § 19.41; requirement to move in-bond freight to container station upon arrival at port of destination

Dear Mr. Sarro:

This is in response to your ruling request, dated September 10, 2001, which raises several issues with respect to CFS’s and your company’s custodial bonds.

FACTS:

Danzas AEI Intercontinental (“Danzas”) is an international freight forwarder and customs broker. Much of Danzas’ inbound freight is imported in Los Angeles, New York, Seattle, Miami, San Francisco and Chicago, and is then moved in-bond to other Danzas facilities throughout the United States. These facilities have been assigned a Customs FIRMS code. A firms code is an alpha-numeric number which is used to identity a particular location within a port of entry. Danzas, the bonded carrier for the in-bond movements, transports the merchandise under its Type 2 custodial bond. The CF 7512 transportation entry is presented to Customs upon arrival at the port of destination. Subsequently, the freight is either entered for consumption, exported, or placed into general order.

In another scenario, consolidated freight arrives via international air and ocean carriers under an airline master airway bill or ocean bill of lading. Several Danzas house bills cover the individual shipments which comprise the consolidated shipment. This freight may be containerized or non-containerized, i.e., palletized or loose. It is moved intra-port under a CF 6043 delivery ticket to the local Danzas facility, either by Danzas if Danzas possesses a cartman’s license, or by an outside cartman. Break bulk activities occur at that facility prior to entry, exportation or removal to general order.

ISSUE:

Whether upon arrival at the port of destination the in-bond freight may be placed at a Danzas facility which does not qualify as a container freight station (CFS)? Whether the described break-bulk activities which occur following intra-port movements may be accomplished at a Danzas facility which is not a CFS?

LAW AND ANALYSIS:

A container station is a secured area within the United States into which containers of merchandise may be moved for the purpose of breaking bulk and redelivery of the cargo. See 19 CFR §19.41. According to Treasury Decision (T.D.) 82-135, “a container station is important because it serves as a central location at a port for processing containerized merchandise which otherwise could not be handled timely at the dock, wharf, pier, or bonded carrier’s terminal.”

The language in 19 CFR §19.41 implies that movement to a CFS is discretionary, not mandatory. Specifically, that section provides that:

Containerized cargo may be moved from the place of unlading to a designated container station, or may be received directly from a bonded carrier after transportation in-bond, before the filing of an entry of merchandise . . .

(Emphasis added)

The discretionary nature of transfers to a CFS is reinforced by language found in the aforementioned T.D. 82-135. That document, which amended the Customs Regulations to allow transfers to CFS’s following in-bond movements, provides the following background information:

A problem has arisen because Part 19 may be interpreted so as to restrict the use of container stations for imported merchandise brought into a port by an importing carrier only to facilities within the port of arrival after complying with appropriate procedures. Although a bonded carrier may transport containerized cargo to its own facility at a port of destination, this interpretation precluded the placement of the in-bond merchandise in a container station at the port of destination.

Customs realized that the same conditions which existed at a port of arrival before the establishment and use of container stations there also exist when containerized cargo is transported in-bond to a port of destination from the port of arrival in the United States. The bonded carrier’s terminal at the port of destination may be unable to process containerized cargo timely and may be unable to provide adequate facilities to permit Customs examination of the imported merchandise, thereby causing a great inconvenience and expense in storage charges to the importer. Alternatives to processing containerized cargo at the carrier’s terminal include moving the entire container to a general order warehouse, public stores, or the importer’s premises for examination.

Therefore, the same rational for the use of a container station for containerized cargo arriving directly at a port of arrival applies to the delivery of containerized cargo transported in-bond to a container station at a port of destination. Bonded carriers would be permitted to transport merchandise directly to these stations rather than holding the containers at their own facilities.

The language appearing both in the regulation and in the background section of T.D. 82-175 demonstrate a clear intent on the part of Customs to allow containerized cargo to be processed at facilities other than just CFS’s. In the two scenarios presented by Danzas, the safekeeping and proper disposition of the merchandise at facilities not designated as CFS’s would be guaranteed by the conditions of Danzas’ basic custodial bonds.

HOLDING:

Upon arrival at the port of destination, containerized merchandise transported in-bond does not have to be delivered to a CFS but may be taken instead to the carrier’s facility for processing. Unladen containerized cargo may be transported within the port by a licensed cartman and processed at a facility of the carrier to which the designation of CFS does not attach.

Sincerely,

Larry L. Burton
Chief
Entry Procedures and Carriers Branch

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