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HQ 116393




February 16, 2005

ENT-7-06-RR:IT:EC 116393 GOB

CATEGORY: ENTRY

Frank J. Desiderio, Esq.
Grunfeld, Desiderio, Lebowitz, Silverman & Klestadt LLP 399 Park Avenue
25th Floor
New York, NY 10022-4877

RE: Withdrawals from Duty-Free Stores; 19 CFR §§ 19.6, 144.37, 148.85

Dear Mr. Desiderio:

This letter is in reply to your submission of January 18, 2005 on behalf of International Shoppes, Inc. (“ISI”).

FACTS:

In your submission, you state in pertinent part as follows:

International Shoppes, Inc. is a bonded warehouse proprietor currently operating duty free shops (Class 9 Bonded Warehouses and Cribs) at locations in JFK and Philadelphia International Airports. ISI has been approved as a duty free store by Customs, maintains a continuous importation bond and a warehouse proprietor’s bond. . . .

To move merchandise between its facilities, ISI maintains a fleet of vehicles and operates as a licensed cartman. ISI maintains a centralized inventory control and recordkeeping system for its warehoused merchandise. ISI currently utilizes “blanket permit” withdrawal and sales ticket procedures (pursuant to the provisions of 19 C.F.R. §19.6 and 19 C.F.R. §147.37(h) (2004), respectively) to deliver duty free merchandise to: (1) individuals departing directly from the Customs territory; and (2) personal or official use of foreign governments and international organizations set forth in Subpart I, Part 148 of the Customs Regulations 19 C.F.R. §148 (2004). . . .
A brief summary of the procedure currently employed for deliveries of product for diplomatic use within a 25 miles radius of JFK follows: ISI receives a request for duty-free goods from qualified personnel . . . ; ISI checks product availability; a DS-1504 (U.S. Department of State – “Request for Customs Clearance of Merchandise”) is prepared; the DS-1504 is signed and stamped by the appropriate official of the foreign government; the DS-1504 is submitted to the Department of State, Office of Foreign Missions, where it is approved and stamped; approved copies of the DS-1504 are presented to Customs officials at JFK; upon approval of the DS-1504 by the foreign government [and] the Department of State, a sales ticket is prepared containing all information required by 19 C.F.R. § 144.37(h)(2004); the order is communicated to the warehouse for staging and delivery; after Customs stamps the DS-1504 indicating approval the items are delivered to the qualified individuals via ISI’s delivery trucks; all paperwork evidencing delivery, receipt by qualified individuals etc. is filed; when the merchandise covered by the various blanket permits has been withdrawn, the "Blanket Permit Summary” is effected via a CF 7501 or sales ticket register in accordance with the provisions of 19 C.F.R. §144.37 and §19.6(d)(5)(2004).

You request confirmation of your position that the “‘25 mile rule’ set forth in 19 C.F.R. §19.35 (2004), relates only to the location of the Class 9 warehouse and does not relate to deliveries of conditionally free merchandise for diplomatic use. The preparation of a formal warehouse withdrawal is, therefore, not required. Withdrawal utilizing the ‘sales ticket’ procedure may be employed for sales for diplomatic use regardless of the delivery point.”

ISSUE:

Whether a bonded warehouse proprietor may use the sales ticket procedure of 19 CFR §144.37(h) and the blanket permit procedure of 19 CFR §19.6(d) for sales from its duty-free stores for diplomatic use without regard to the location where the goods are delivered to the purchaser.

LAW AND ANALYSIS:

Duty-free sales enterprises are provided for in 19 U.S.C. 1555(b), which was enacted by section 1908, title I, Omnibus Trade and Competitiveness Act of 1988 (Pub. L. No. 100-418; 102 Stat. 1315). Under this provision:

Duty-free sales enterprises may sell and deliver for export from the customs territory duty-free merchandise in accordance with this subsection and such regulations as the Secretary may prescribe to carry out this subsection.

A duty-free sales enterprise may be located anywhere within –
the same port of entry, as established under section 1 of the Act of August 24, 1912 (37 Stat. 434), from which a purchaser of duty-free merchandise departs the customs territory; or

25 statute miles from the exit point through which the purchaser of duty-free merchandise will depart the customs territory.

Section 19.35(b), Customs and Border Protection (“CBP”) Regulations (19 CFR §19.35(b)) tracks the basic language of 19 U.S.C. §1555(b).

Section 148.85, CBP Regulations (19 CFR §148.85, provides in pertinent part as follows:

§ 148.85 Subsequent importations for the personal or family use of diplomatic, consular and other privileged personnel.

The privilege of importing free of duty and without the filing of any entry articles for personal or family use, but not as an accommodation for others or for sale or other commercial use, shall be granted upon the request of the Department of State and upon appropriate instructions from the United States Customs Service in each instance, to the following:

Ambassadors, ministers, charges d’affaires, secretaries, counselors and attaches of foreign embassies and legations accredited to the United States under subheading 9806.00.40, Harmonized Tariff Schedule of the United States (HTSUS) (19 U.S.C. 1202);

Other representatives, officers and employees of foreign governments, under subheading 9806.00.50, HTSUS; [Emphasis supplied.]
. . .

Subheadings 9806.00.40 and 9806.00.50, Harmonized Tariff Schedule of the United States (“HTSUS”), provide for duty-free treatment for:

Articles entered for the personal or family use of the following persons who are aliens on duty in the United States:

Upon the request of the Department of State, ambassadors, ministers, charge d’affaires, secretaries, counselors and attaches of foreign embassies and legations

Upon the request of the Department of State, other representatives, officers and employees of foreign governments

Section 144.37(h), CBP Regulations (19 CFR §144.37(h)) provides in pertinent part as follows:

§ 144.37 Withdrawal for exportation.

(h) Class 9 warehouse withdrawals for exportation – Applicability of sales ticket procedure. Merchandise in a Class 9 warehouse (duty-free store) may be withdrawn for any of the purposes set forth in this subpart. However, only conditionally duty-free merchandise in a Class 9 warehouse intended for exportation or for delivery to persons and organizations set forth in subpart I, part 148, of the chapter, will be eligible for withdrawal under the sales ticket procedure specified in this paragraph.

Sales ticket content and handling. Sales ticket withdrawals shall be made only under a blanket permit to withdraw (see §19.6(d) of this chapter) and the sales ticket shall serve as the equivalent of the supplementary withdrawal. A sales ticket is an invoice of the proprietor’s design . . . [Emphasis supplied.]

Section 19.6(d), CBP Regulations (19 CFR §19.6(d)) provides in pertinent part as follows:

§ 19.6 Deposits, withdrawals, blanket permits to withdraw and sealing requirements. . . .
Blanket permits to withdraw-(1) General. (i) Blanket permits may be used to withdraw merchandise from bonded warehouses for: . . .
The personal or official use of personnel of foreign governments and international organizations set forth in subpart I, part 148 of this chapter . . . . . .
Withdrawals under blanket permit. Withdrawals may be made under blanket permit without any further Customs approval, and shall be documented by placing a copy of the withdrawal document in the proprietor’s permit file folder. . . .

Withdrawals under blanket permit from duty-free stores. Withdrawals under blanket permit from duty-free stores shall be made on the sales ticket described in §144.37(h) of this chapter. . . . . .
Blanket permit summary. When all of the merchandise covered by an entry on which a blanket permit to withdraw was issued has been withdrawn, including withdrawals made for purposes other than duty-free store delivery, vessel or aircraft supply, or diplomatic use, the proprietor shall prepare a report on a copy of Customs Form 7501, or a form on the letterhead of the proprietor, which provides an account of the disposition of the merchandise covered by the blanket permit. The form shall bear the words “BLANKET PERMIT SUMMARY” in capital letters conspicuously printed or stamped in the top margin. On the form, the proprietor shall certify that the merchandise listed thereunder was withdrawn in compliance with §19.6(d), and shall account for all of the merchandise withdrawn under blanket permit by HTSUS (Harmonized Tariff Schedule of the United States) number, HTSUS quantity (where applicable) and value. If applicable, the account shall separately list and identify merchandise withdrawn for (i) Duty-free store exportation, (ii) Vessel or aircraft supply use, and (iii) Personal or official use of persons and organizations set forth in subpart I, part 148, of this chapter. If all of the merchandise was withdrawn under the sales ticket procedure of §144.37(h) of this chapter, the sales ticket register may be substituted for the blanket permit summary. The form will be placed in the permit file folder and treated as provided in §19.12(a) of this part. [All emphasis supplied.]

Based upon the above authorities, we conclude that a bonded warehouse proprietor may use the sales ticket procedure of 19 CFR §144.37(h) and the blanket permit procedure of 19 CFR §19.6(d) for sales from its duty-free stores for diplomatic use without regard to the location where the goods are delivered to the purchaser. The 25 mile requirement of 19 U.S.C. §1555(b) and 19 CFR §19.35(b) applies only to the location of the duty-free store. There is no requirement in statute or regulations that delivery to the purchaser occur within 25 miles of the pertinent port or duty-free store.

Our conclusion is consistent with 19 CFR §148.85 which provides for importation by qualified individuals without the filing of an entry.

HOLDING:

Based upon the above authorities, ISI may use the sales ticket procedure of 19 CFR §144.37(h) and the blanket permit procedure of 19 CFR §19.6(d) for sales from its duty-free stores for diplomatic use without regard to the location where the goods are delivered to the purchaser. The 25 mile requirement of 19 U.S.C. §1555(b) and 19 CFR §19.35(b) applies only to the location of the duty-free store. There is no requirement that delivery to the purchaser occur within 25 miles of the pertinent port or duty-free store.

Sincerely,

Glen E. Vereb
Chief

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