Establishment of Conditional Release Period for Textiles and Textile Products

DEPARTMENT OF THE TREASURY

19 CFR PART 141

RIN 1515-AB39

Establishment of Conditional Release Period for Textiles and

Textile Products

AGENCY: Customs Service, Treasury.

ACTION: Notice of proposed rulemaking.

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SUMMARY: This document proposes to amend the Customs Regulations to

establish a conditional release period of 180 days on all entries of

textiles and textile products. This proposed amendment will permit

Customs to issue notices of redelivery to importers of textiles or

textile products up to 30 days after the end of the conditional release

period if investigation or information reveals that the merchandise was

imported in violation of visa or quota restrictions or other

requirements of law. Failure to comply with a notice of redelivery will

render the importer liable for liquidated damages under the terms of

the basic importation bond.

DATES: Comments must be received on or before May 31, 1994.

ADDRESSES: Written comments (preferably in triplicate) may be addressed

to the Regulations Branch, U.S. Customs Service, Franklin Court, 1301

Constitution Avenue, NW., Washington, DC 20229. Comments submitted may

be inspected at the Regulations Branch, Office of Regulations and

Rulings, Franklin Court, 1099 14th Street, NW., suite 4000, Washington,

DC.

FOR FURTHER INFORMATION CONTACT: Jeremy Baskin, Penalties Branch,

Office of Regulations and Rulings (202-482-6950).

SUPPLEMENTARY INFORMATION:

Background

Customs has encountered a significant enforcement problem with

regard to textiles and textile products that are subject to the

provisions of section 204, Agricultural Act of 1956, as amended (7

U.S.C. 1854), and that are imported into the United States in violation

of quota restrictions or without the appropriate visa from the country

of origin. This problem involves merchandise that is the product of a

country to which stringent quotas or visa requirements apply and that

is transshipped through a second country having less rigorous quota and

visa standards. Such transshipment operations are often performed in

order to facilitate the making of a false claim, upon importation into

the United States, that the merchandise is a product of the country

through which it was transshipped and therefore subject to the more

lenient quota and visa entry standards applicable to products of that

country. Discovery of these violations often occurs only after a

significant investigative effort that has been concluded well after the

time of entry and release of the offending merchandise into the

commerce of the United States.

While the penalty provisions of section 592 of the Tariff Act of

1930, as amended (19 U.S.C. 1592), are in principle available for

assessment against any party who has committed fraud, gross negligence

or negligence in connection with the entry of such transshipped

merchandise, it is not always possible to establish the requisite

culpability. The fact that section 592 penalties may not be

successfully assessed in each case involving transshipped merchandise

does not alter the fact that the entry of such merchandise into the

commerce of the United States in violation of visa and quota

requirements causes significant harm to domestic industry.

When penalty liability cannot be readily assessed or quantified,

claims for liquidated damages may be available to compensate for the

harm done. Under condition (d) of the Basic Importation and Entry Bond,

set forth in Sec. 113.62(d) of the Customs Regulations (19 CFR

113.62(d)), the importer agrees to redeliver timely, on demand by

Customs, any merchandise which has been conditionally released from

Customs custody if it fails to comply with the laws or regulations

governing admission into the United States. Under the last sentence of

that regulatory provision, any demand for redelivery must be made no

later than 30 days after the date that the merchandise was released or

30 days after the end of the conditional release period (whichever is

later). In C.S.D. 86-21, Customs noted that the end of the conditional

release period refers to a set time limitation established by

regulation, e.g., the 180-day period established with regard to Federal

motor vehicle safety standards in Sec. 12.80(e)(2) of the Customs

Regulations (19 CFR 12.80(e)(2)).

Textiles and textile products which exceed quota limits or do not

conform to visa requirements clearly are not entitled to admission into

the United States. However, inasmuch as no specific, different

conditional release period is provided for by regulation with regard to

such merchandise, under Sec. 113.62(d) Customs may issue a Notice of

Redelivery only within 30 days after release of the merchandise. In

view of the lengthy time required to detect violations relating to

transshipment, Customs often is unable to issue a timely Notice of

Redelivery and thus is foreclosed from assessing liquidated damages for

failure to redeliver the merchandise to Customs custody.

In order to address the problems discussed above, Customs proposes

in this document to amend Sec. 141.113 of the Customs Regulations (19

CFR 141.113) by adding a new paragraph (b) to provide for a specific

conditional release period of 180 days from the date of release for all

textiles and textile products subject to section 204 of the

Agricultural Act of 1956. Under Sec. 113.62(d), Customs would then have

up to 30 days from the end of the conditional release period to issue a

Notice of Redelivery. Failure to redeliver merchandise within the time

period specified in the Notice of Redelivery (generally 30 days from

the date of the notice) will result in the assessment of a claim for

liquidated damages under the Basic Importation and Entry Bond as

provided in Sec. 113.62(k) of the regulations. In addition, as a

consequence of the addition of this new paragraph (b) to Sec. 141.113,

this document also proposes to redesignate present paragraphs (b)-(g)

as (c)-(h) and to add within present paragraph (b) (redesignated as

(c)) a cross-reference to new paragraph (b) to accompany the existing

cross-reference to paragraph (a).

Comments

Before adopting the proposed amendments as a final rule,

consideration will be given to any written comments (preferably in

triplicate) timely submitted to Customs. Comments submitted will be

available for public inspection in accordance with the Freedom of

Information Act (5 U.S.C. 552), Sec. 1.4, Treasury Department

Regulations (31 CFR 1.4), and Sec. 103.11(b), Customs Regulations (19

CFR 103.11(b)), on regular business days between the hours of 9 a.m.

and 4:30 p.m. at the Regulations Branch, Office of Regulations and

Rulings, Franklin Court, 1099 14th Street, NW., suite 4000, Washington,

DC.

Executive Order 12866

This document does not meet the criteria for a ``significant

regulatory action'' as specified in Executive Order 12866.

Regulatory Flexibility Act

Pursuant to the provisions of the Regulatory Flexibility Act (5

U.S.C. 601 et seq.), it is certified that, if adopted, the proposed

amendments will not have a significant economic impact on a substantial

number of small entities. Establishment of a conditional release period

for textiles and textile products, which is necessary for law

enforcement purposes, will affect only the relatively small percentage

of importers who import such merchandise contrary to law. Accordingly,

the proposed amendments are not subject to the regulatory analysis or

other requirements of 5 U.S.C. 603 and 604.

List of Subjects in 19 CFR Part 141

Bonds, Customs duties and inspection, Entry procedures, Imports,

Release of merchandise.

Proposed Amendments to the Regulations

Accordingly, for the reasons set forth above, it is proposed to

amend part 141, Customs Regulations (19 CFR part 141), as set forth

below.

Part 141--Entry of Merchandise

1. The authority citation for part 141 continues to read in part as

follows:

Authority: 19 U.S.C. 66, 1448, 1484, 1624.

* * * * *

Section 141.113 also issued under 19 U.S.C. 1499, 1623.

2. Section 141.113 is amended by redesignating paragraphs (b)

through (g) as (c) through (h), by adding the words ``or (b)'' after

the words ``paragraph (a)'' in newly designated paragraph (c), and by

adding a new paragraph (b) to read as follows:

Sec. 141.113 Recall of merchandise released from Customs custody.

* * * * *

(b) Textiles and textile products. For purposes of determining the

admissibility of textiles and textile products subject to the

provisions of Sec. 12.130 of this chapter, the release from Customs

custody of any such textile or textile product shall be deemed

conditional during the 180-day period following the date of release. If

the district director finds during the conditional release period that

a textile or textile product is not entitled to admission into the

commerce of the United States based on quota restrictions or the

absence of a correct visa or for any other reason, he shall promptly

demand its return to Customs custody.

* * * * *

Approved: March 18, 1994.

Samuel H. Banks,

Acting Commissioner of Customs.

John P. Simpson,

Deputy Assistant Secretary of the Treasury.

[FR Doc. 94-7517 Filed 3-29-94; 8:45 am]

BILLING CODE 4820-02-P