Express Consignments; Formal and Informal Entries of Merchandise; Administrative Exemptions

DEPARTMENT OF THE TREASURY

Customs Service

19 CFR Parts 10, 101, 111, 123, 128, 141, 143, 145, 148, 159, and

178

[T.D. 95-31]

RIN 1515-AB53

Express Consignments; Formal and Informal Entries of Merchandise;

Administrative Exemptions

AGENCY: Customs Service, Department of the Treasury.

ACTION: Final rule.

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SUMMARY: This document amends the Customs Regulations by adopting final

rules that implement two Customs Modernization provisions of the North

American Free Trade Agreement Implementation Act that seek to

streamline the commercial operations of the U.S. Customs Service. One

provision concerns raising administrative exemptions from duty, taxes,

and fees on articles such as gifts and personal and household goods;

the other concerns exemptions from entry [[Page 18984]] requirements

for specified merchandise (undeliverable shipments, rail equipment, and

instruments of international traffic). Further, the final rules also

clarify the entry procedures for shipments by express consignment

operators or carriers to make it clear that all such shipments must be

entered, unless they are specifically exempted from entry requirements.

This document addresses public comments solicited by the interim

regulations that were published in the Federal Register on June 13,

1994, and makes certain suggested changes to those interim regulations

to add clarity and improve the readability of the final regulations.

EFFECTIVE DATE: May 15, 1995.

FOR FURTHER INFORMATION CONTACT: For Operational Aspects: Mike Compeau,

Office of Field Operations, (202) 927-0762; For Legal Aspects: William

G. Rosoff, Office of Regulations and Rulings, (202-482-7040).

SUPPLEMENTARY INFORMATION:

Background

On December 8, 1993, the United States enacted the North American

Free Trade Agreement Implementation Act (the Act), Pub. L. 103-182, 107

Stat. 2057. Title VI of the Act (107 Stat. 2170) contains some 60

provisions pertaining to Customs Modernization that seek to streamline

and automate the commercial operations of the U.S. Customs Service. Two

of these streamlining provisions are section 651 of Subtitle C and

section 681 of Subtitle D. Section 651 amends section 321 of the Tariff

Act of 1930, as amended (19 U.S.C. 1321), which pertains to the

administrative exemption of certain articles from duty and taxes to

avoid disproportionate expense and inconvenience to the Government;

section 681 of Subtitle D amends the Harmonized Tariff Schedule of the

United States (HTSUS), at General Note 4 (now General Note 13) and at

various chapter Notes, to exempt certain other articles from

unnecessary ``re-entry'' procedures as imports.

Administrative Exemptions and Section 651 of the Act

Prior to passage of the Act, section 321 authorized administrative

exemptions from duty and taxes only up to specific minimal dollar

limits on articles, such as gifts and personal and household goods, and

in certain other situations. Although the statutorily-specified dollar

amounts were adjusted periodically, as recently as 1983, they have not

kept pace with inflation; the current amounts are not sufficiently high

to permit the Secretary to meet the statutory goal of limiting expense

to the Government disproportionate to the revenue that is collected.

Because of this continuing inflation problem and due to substantial

increases in passenger arrivals and low-value entries, section 321 was

amended by section 651 of the Act to increase the dollar amounts that

trigger eligibility for administrative exemptions. But instead of

setting maximum dollar amounts below which the Secretary was authorized

to make the exemptions applicable, the amendments set minimum dollar

amounts and authorize the Secretary to make the exemptions applicable

up to an amount specified by regulation. Also, the exemptions were made

applicable to the total of duties and taxes.

The provisions of section 651 also added a new provision to section

321 to allow Customs to waive collection of duties, fees, and taxes on

entered merchandise where the duty amount is less than $20; however, no

amendment to the regulations is promulgated at this time.

The regulations pertaining to administrative exemptions and entry

procedures applicable to merchandise subject to section 321 are

scattered throughout the Customs Regulations (19 CFR Chapter I): The

provision containing the authorization to disregard a difference of

less than $10 between the duty actually due on an entry and the

estimated duties deposited is found at Sec. 159.6 (19 CFR 159.6);

provisions pertaining to bona fide gifts are found at Secs. 10.152 and

145.32 (19 CFR 10.152 and 145.32); provisions pertaining to personal or

household articles are found at Secs. 148.51, 148.12 and 148.64 (19 CFR

148.51, 148.12 and 148.64); provisions pertaining to the $5

administrative exemption for all other articles are found at

Secs. 10.151 and 145.31 (19 CFR 10.151 and 145.31); and conditions for

the exemptions provided for at Secs. 10.151 and 10.152 are now found at

Sec. 10.153 (19 CFR 10.153). Also, Sec. 128.24(d) (19 CFR 128.24(d))

refers to low-value shipments (i.e., shipments valued at $5 or less)

and provides that such shipments must be segregated from shipments

valued at more than $5 when the special informal entry procedures

provided for in part 128 are used. (This provision was intended to

cover articles which could be administratively exempted from duties and

taxes under section 321(a)(2)(C) (19 U.S.C. 1321(a)(2)(C)) (see T.D.

89-53, published in the Federal Register on May 8, 1989 (54 FR

19561)).) Other provisions relating to administrative exemptions and

entry requirements are found in parts 111 (Customs brokers), 141 (Entry

of merchandise), and 143 (Special entry procedures) of the Customs

Regulations (19 CFR).

The Harmonized Tariff Schedule and Section 681 of the Act

Under present regulations, shipments which leave the U.S. and go

undelivered to the country of destination (without having left the

custody of the carrier or foreign customs service) are considered

exports and must be ``re-entered'' into the U.S. as imports. Current

regulations also provide that rail equipment brought into the U.S. from

Canada, although not subject to duty, is subject to entry requirements,

and instruments of international traffic (e.g., containers, rail cars

and locomotives, truck cabs, and trailers), although exempt from formal

entry procedures, are subject to certain other procedures.

Section 681 of the Act amended the Harmonized Tariff Schedule of

the United States (HTSUS) at General Note 4 (now General Note 13, see,

Presidential Proclamation 6641, December 15, 1993, published in the

Federal Register on December 20, 1993 (58 FR 67032, 66867)) to exempt

from entry requirements certain shipments returned as undelivered,

thereby facilitating their processing. Section 681 also amended various

HTSUS chapter Notes to eliminate entry requirements for rail cars and

locomotives on which no duty is owed, pursuant to terms of the U.S.-

Canada Free-Trade Agreement (see, U.S.-Canada Free-Trade Implementation

Act of 1988, Pub. L. 100-449, 102 Stat. 1851, 19 U.S.C. 2112 note), and

to eliminate unnecessary entry procedures related to instruments of

international traffic by providing for reporting requirements and the

periodic payment of fees.

The interim regulations implementing aspects of these various

provisions are found in parts 10, 123, and 141 of the Customs

Regulations (19 CFR parts 10, 123, and 141).

Customs Regulations Amended by Interim Regulations

To implement the amendments to section 321 of the Tariff Act of

1930 and provisions of the HTSUS by sections 651 and 681, respectively,

of the Act, and to clarify the procedures for shipments brought into

the U.S. by express consignment operators and carriers, on June 13,

1994, Customs published interim regulations in the Federal Register as

T.D. 94-51 (59 FR 30289). These interim regulations provided for a 30-

day comment period and an effective date of 45 days after

[[Page 18985]] publication, unless comments received demonstrated that

there was good cause for not making the regulations effective on an

interim basis. No comments received by Customs established such good

cause. The published effective date of the interim regulations--July

28, 1994--subsequently became the subject of litigation, when, on July

25, 1994, the National Customs Brokers and Forwarders Association of

America, Inc., filed a motion with the United States Court of

International Trade (CIT) seeking to enjoin the implementation of the

interim regulations, and were granted a temporary restraining order

(TRO). Accordingly, on July 28, 1994, Customs published another

document in the Federal Register as T.D. 94-61 (59 FR 38548) giving

notice that the TRO had been issued and that the effective date of the

regulations was delayed. A hearing was held on August 9, 1994, and on

August 16, 1994, the Court issued a decision in National Customs

Brokers & Forwarders Ass'n of America, Inc. v. U.S., 18 CIT ______, 861

F.Supp. 121 (CIT 1994), which denied the plaintiff's motion for a

preliminary injunction, revoked the temporary restraining order, and

dismissed the case. The interim rules subsequently became effective on

August 23, 1994, when T.D. 94-71 (59 FR 43283) was published in the

Federal Register.

The interim regulations amended or revised twenty-one sections of

the Customs Regulations that are scattered over ten parts of the Code

of Federal Regulations (19 CFR) to conform them to the statutory

changes made by the above-mentioned amendments, and solicited comments

concerning these changes. The sections affected by the interim rule

were Secs. 10.151, 10.152, 10.153, 101.1, 111.3, 123.12, 128.21,

128.23, 128.24, 128.25, 128.26, 141.4, 143.21, 143.23, 143.26, 145.31,

145.32, 148.12, 148.51, 148.64, and 159.6 (19 CFR 10.151, 10.152,

10.153, 101.1, 111.3, 123.12, 128.21, 128.23, 128.24, 128.25, 128.26,

141.4, 143.21, 143.23, 143.26, 145.31, 145.32, 148.12, 148.51, 148.64,

and 159.6).

Eighteen comments were received, which raised five areas of

concern. The comments received and Customs responses to them are set

forth below.

Discussion of Comments

Comments were received from Customs broker organizations (six),

express consignment companies or organizations (five), groups

representing other types of carriers (three), a Port Authority (one), a

group representing the recording industry (one), the Joint Industry

Group (one), and a Customs office (one). The comments raised five areas

of concern involving: (1) Whether the interim regulations codified

existing practices; (2) exempt merchandise under Secs. 10.151 and

10.152; (3) unlicensed transactions under Sec. 111.3; (4) procedures

for express consignments under Secs. 128.21, 128.23, and 128.24; and

(5) entry requirements under Secs. 141.4, 143.23, 143.26, and 145.31

and those pertaining to undeliverable shipments and international

traffic. We address each of these concerns seriatim.

In General

Comment: Five commenters stated that the interim regulations should

not be implemented or that there should be a longer comment period

before implementation. Six commenters called for the immediate

implementation of the interim regulations.

Customs Response: The issue of implementing interim regulations was

addressed by the Court of International Trade (CIT) in National Customs

Brokers & Forwarders Ass'n of America, Inc., v. U.S., 18 CIT ______,

861 F.Supp. 121 (CIT 1994) (National Customs Brokers), wherein, the

court found that Customs acted lawfully in promulgating interim

regulations which affect certain administrative exemptions. Further,

Customs feels that adequate time for commenting and analysis of those

comments has been provided.

Comment: Two commenters stated that Customs had not considered the

revenue effects of implementing the new administrative exemption

levels.

Customs Response: Given that the Customs Modernization provisions

of the Act declare the will and the objectives of Congress and the

President to modernize Customs laws, Customs is not required to make

such a consideration because, by its act of amending section 321,

Congress indicated its policy determination with respect to cost-to-

benefit analysis of expense and inconvenience versus revenue raised

with regard to the entry of exempt low-value shipments. See, the

legislative history of section 651, H.R. Rep. No. 361, 103rd Cong., 1st

Sess., pt. 1, 145 (1993) and S. Rep. No. 189, 103rd Cong., 1st Sess. 93

(1993), and the discussion of this issue by the court in its decision

in National Customs Brokers, cited above.

Comment: One commenter expressed concern that the interim

regulations appear to associate the privileges in 19 U.S.C. 1321 only

with express consignment processing. The commenter stated that since a

carrier is not listed among the parties authorized to make entry of

shipments valued at Sec. 200 or less, a carrier may not be authorized

to make entry, even though the carrier holds the air waybill document/

data. The commenter ``strongly recommends'' that the interim

regulations be amended to clarify that for these entries the carrier

may present the air waybill or bill of lading on behalf of the owner or

consignee.

Customs Response: The commenter's concern is ill-founded. A carrier

is a nominal consignee and, therefore, is entitled to the privileges

provided under the interim regulations for shipments valued Sec. 200 or

less. Regarding the initial concern that the interim regulations

associate the privileges in section 1321 only with express consignment

processing, this is exactly what the interim regulations do not do;

they apply the same rules across the board, as much as is possible, so

that now the privileges under the amended statute are extended

generally and a ``level playing field'' results (i.e., see the

amendments to Secs. 143.21, 143.23, and 143.26, as well as those to

parts 145 and 148). Accordingly, no change to the amendments is made

based on this comment.

Comment: A commenter suggested the total elimination of part 128,

because such regulations are superfluous and duplicative of existing

provisions. The commenter stated that part 128 covers ``express

consignments'' but does not define the term. Therefore, the commenter

suggested that either part 128 be eliminated totally or it be amended

to cover all consignments and all carriers. If it is decided to retain

part 128, the commenter suggested that Secs. 143.26 and 145.31, as well

as other ``interim'' regulations ``designed to accommodate the

`express' industry'' be redesignated in part 128.

Customs Response: Initially, we note that it would be inconsistent

with Pub. L. 103-182, which took special notice of the express

consignment industry (see section 681 and H.R. Rep. No. 361, 103rd

Cong., 1st Sess. pt. 1, 154-155 (1993)), for Custom to now eliminate

that part of the Custom Regulations pertaining to that industry. As for

the contention that Part 128 does not define ``express consignments'',

the definition of ``express consignment operator or carrier'' in

Sec. 128.1(a) contains the following elements: That such businesses

offer their special express service to the public under an advertised,

reliable timely delivery on a door-to-door basis; and, that they

operate in any mode or intermodally by moving cargo under closely

integrated administrative control. Regarding the propriety of having a

separate part 128 to regulate just the express industry, Customs has a

long history of facilitating trade by addressing the

[[Page 18986]] specific needs of groups or industries which have

transactions with Customs. That is why other identifiable groups, such

as vessel carriers (part 4), air carriers (part 122), land carriers

(part 123), warehouses (parts 19 and 144), and foreign trade zones

(part 146) have regulations applicable to their businesses located in

easily identifiable parts of the Customs Regulations. Accordingly, no

change to the amendments is made based on this comment.

Comment: A commenter cited Customs information-gathering and

automation efforts and then argued that in the Interim Regulations

Customs is informing the public that, for a ``majority of importations,

those entered on informal Customs entries,'' Customs does not need the

information which it had said it needed when it implemented these

automation efforts.

Customs Response: The only change from the manifest requirements

for express consignment shipments under part 128 is that the HTSUS

(Harmonized Tariff Schedule of the United States) number is not

required for shipments valued at Sec. 200 or less (i.e., not for all

informal entries). Customs believes that this change does not affect a

``majority of importations.'' Accordingly, no change to the amendments

is made based on this comment.

Comment: A commenter stated that Customs should perform periodic

inspections of all goods, including shipments valued at Sec. 200 or

less.

Customs Response: Customs fully agrees with this comment and, in

fact, does perform examinations of shipments valued at less than

Sec. 200. These examinations are typically performed under structured

programs such as statistically valid compliance measurements, random

examinations, and targeted examinations.

Comment: One commenter stated that the regulations would allow

unfettered entry according to unchallenged declarations of entry.

Another commenter questioned how the FDA will enforce its statutes and

regulations if Customs has no idea whether a package falls within FDA

jurisdiction. This same commenter also questioned how Customs will

enforce visa requirements for apparel and intellectual property rights,

arguing that the Interim Regulations make no mention of how this will

be done.

Customs Response: Customs disagrees with this statement. One of the

concepts that permeates the Customs Modernization provisions is that an

``importer of record'' is held to a standard of ``reasonable care'' in

discharging entry and related activities. This standard, coupled with

the fact that Customs has every authority to challenge the contents of

any documentation or data submitted, including value, presented for

shipments entering the United States, enables Customs to rely on the

specific description provided to determine whether a shipment is

subject to another agency's requirements. However, because the

``reasonable care'' standard was not made express in the interim

regulations, specifically at Sec. 143.26, language providing for this

standard is added, under the authority of 19 U.S.C. 1498(b).

In addition, it is Customs opinion that visa requirements will be

enforced because merchandise for which there are visa requirements is

encompassed by the provisions of Sec. 10.153(g) (merchandise of a class

or kind provided for in any absolute or tariff-rate quota), or, in the

case of express shipments, by the provisions of Sec. 128.24(a)

(merchandise which is subject to quota or other quantitative

restraints). Therefore, merchandise subject to visa does not qualify

for duty-free treatment under the provisions of Sec. 10.151.

Accordingly, no change to the amendments is made based on this comment.

Comment: A commenter stated that Customs would virtually eliminate

any possibility for detection of contraband shipments through

subsequent review of importation documents.

Customs Response: Customs disagrees with this statement. Customs

routinely performs port audits of manifest information, including low-

value shipments. In addition, Customs can examine these shipments prior

to release. (See also the response below to a similar comment under the

heading ``Express consignment procedures under Secs. 128.21, 128.23,

and 128.24''.)

Exempt Merchandise Under Secs. 10.151 and 10.152

Comment: One commenter contended that the preparation of an entry

should not be required for any shipment valued at $200 or less. Two

other commenters contended that shipments under 19 U.S.C. 1321 are

exempt from entry as well as duty. These commenters also referred to

what they believe to be favorable treatment for mail shipments.

Customs Response: Customs does not agree with these comments. These

issues were clearly addressed in the BACKGROUND portion of T.D. 94-51

(the Federal Register document which amended the Customs Regulations on

an interim basis (59 FR 30289)) (see also National Customs Brokers,

which upholds Custom position in this regard). It is Customs position

that the former Sec. 10.151 did not exempt merchandise covered by it

from entry; it exempted such merchandise from formal entry under 19

U.S.C. 1484. T.D. 94-51 clearly explains this. Regarding mail entries,

Sec. 145.31 provides that the district director does not need to

prepare an entry as provided for in Sec. 145.12. This is not a change

from the previous provision, except that a reference to Sec. 145.12 was

added to make it clear that what is meant is that Customs officers need

not prepare an entry for the covered shipment. Accordingly, no change

to the amendments is warranted.

Comment: One commenter questioned Customs ability to determine if

an importer has multiple shipments of low-value merchandise arriving on

one day because an importer can use various couriers, carriers and the

mail.

Customs Response: Customs disagrees that it would be unable to

determine if an importer has multiple shipments. Customs performs post

audits of manifests for both couriers and other carriers and it would

be possible to identify violators through these procedures or simply

through manifest reviews. Importers using the mail have no control over

postal routing and a pattern of repeated shipments of low-value

merchandise would be detected by Customs personnel responsible for

processing the packages.

Comment: One commenter proposed that an invoice be attached to each

manifest to verify the low value of shipments.

Customs Response: Customs disagrees with this proposal. Although

Customs has the authority to require supporting documentation for any

shipment, we feel that it would place an excessive burden on the trade

community to require such documentation which, in the preponderance of

cases, would simply duplicate information already provided.

Accordingly, no change to the amendments is made based on this comment.

Comment: One commenter proposed that Customs maintain the status

quo for shipments with a declared value of $100 or more.

Customs Response: Customs feels that this is not an option. Customs

also notes that the amount set by 19 U.S.C. 1321(a)(2)(C) is a

``floor'' amount of $200.

Comment: One commenter suggested that the $100 ceiling for gifts in

Sec. 10.152 be changed to $200, consistent with the $200 ceiling for

importations by one person on one day in Sec. 10.151.

Customs Response: The dollar amounts currently provided in

[[Page 18987]] Sec. Sec. 10.151 and 10.152 are the ``floor'' amounts

established by Congress when it amended 19 U.S.C. 1321. Although the

Secretary of the Treasury is authorized to prescribe exceptions to any

exemption provided for under section 321, changing a provision to

provide for amounts greater than the floor amounts established requires

an analysis of the expense and inconvenience to the Government compared

to the revenue that would otherwise be collected. See, 19 U.S.C.

1321(b). When such an analysis is undertaken, this comment will be

reconsidered. At this time, however, no change to Sec. 10.152 can be

made.

Unlicensed Transactions Under Sec. 111.3

Comment: A commenter stated that although it does not challenge the

decision as to the type of entry method which may be used for shipments

under 19 U.S.C. 1321, it does challenge Customs taking of the authority

to decide who will make such entries by the addition of Sec. 111.3(e)

to the Customs Regulations. The commenter also cited 19 U.S.C.

1641(b)(6) under which any person who intentionally transacts Customs

business, other than on behalf of that person (i.e., a person

conducting Customs business for his or her own behalf), is liable to a

$10,000 penalty. The commenter noted that, notwithstanding the above

provisions, the Interim Regulations provide that shipments of $200 or

less may be made by the owner, purchaser, or consignee of the shipment.

The commenter argued that a consignee filing such an entry is clearly

conducting Customs business other than on its own behalf and concluded

that in this case the entry documents must be filed by the persons with

the right to make entry under 19 U.S.C. 1484. Three other commenters

challenged the provisions of Sec. 143.26 which allow a consignee to

make entry on shipments valued at $200 or less.

Regarding the amendment to Sec. 111.3(e), another commenter noted

that an importer is already allowed to make entry for his/her own

account without being a Customs broker, and that Customs has issued

instructions and messages showing concern about adequately enforcing

cargo selectivity processing and protecting the revenue in regard to

informal entries. The commenter further stated that extending the right

to file informal entries to parties other than the actual importer or a

licensed broker may compound existing problems. Also, the commenter

asked what the power of attorney requirements would be for the party

presenting an informal entry.

Another commenter noted the amendment to ``Customs business'' in 19

U.S.C. 1641(a)(2) made by Pub. L. 103-182 and noted that this indicates

that the intent of Congress in promulgating the Customs Modernization

provisions of the Act was to further restrict the amount and type of

Customs business that could be performed by unlicensed parties.

Customs Response: In National Customs Brokers, the Court addressed

these very contentions and concluded that ``* * * sections 1498 and

1484 support the conclusion that Customs has acted lawfully in

promulgating regulations for the declaration and entry of exempt

merchandise * * *''

Concerning power of attorney requirements, a power of attorney

continues to be required in each instance in which a Customs broker is

designated by the owner, purchaser, or consignee. The change effected

by the Interim Regulations in this regard is that now, for shipments

entitled to the privileges in 19 U.S.C. 1321, the consignee may make

entry (see Sec. 143.26(b)). Since the consignee in this situation makes

such an entry in its own right, no Customs power of attorney (see 19

CFR 141.34 et seq.) is required in this situation. Accordingly, no

change to the amendments is made based on these comments.

Comment: Arguing that Customs has historically required the person

making entry not only to be knowledgeable about and accountable for the

facts relating to an importation but also to submit documentation to

substantiate that knowledge, a commenter stated that its reading of

Sec. 143.26, combined with the changes to Part 128, indicates that

``express'' entities (and their licensed brokers) may enter all

shipments each individually valued at not over $1250 by merely

submitting an ``entity'' manifest setting forth the freight bill number

and a value not over $1250.

Customs Response: Regarding the ``right to make entry'' issues, as

stated above, these issues were clearly addressed by the CIT's decision

in National Customs Brokers. Regarding the treatment of shipments

carried by express consignment operators or carriers, the Interim

Regulations are very clear in creating a 3-tiered approach (shipments

valued at $200 or less and otherwise qualifying may be entered

informally, as provided for in 19 U.S.C. 1498 and Sec. 128.24, and are

entitled to the privileges in 19 U.S.C. 1321; shipments valued from

$200 to $1250 may be entered informally, as provided for in 19 U.S.C.

1498 and Sec. 128.24; and all other shipments must be entered under the

formal entry procedures). If the commenter is questioning the use of

``in-house'' brokers by couriers, we note that this issue has been

extensively dealt with by the Courts (National Customs Brokers v. U.S.,

13 CIT 803, 723 F.Supp. 1511 (1989); National Customs Brokers &

Forwarders Ass'n of America v. U.S., 14 CIT 108, 731 F.Supp. 1076

(1990); J.F.K. Customs Brokers Ass'n Inc. v. U.S., 745 F.Supp. 113

(E.D.N.Y. 1990)).

Express Consignment Procedures Under Secs. 128.21, 128.23, and 128.24

Comment: One commenter suggested that the manifest requirements in

Sec. 128.21 be modified to require a description (of the imported

merchandise) detailed enough so that the HTSUS classification

applicable to the shipment can be determined from the description.

Another commenter stated that Sec. 128.24(e) permits release of

shipments valued at less than $200 without the requirement for an HTSUS

number and Sec. 128.24(d) exempts such shipments from the filing of an

entry summary.

While two commenters supported not having a HTSUS number

requirement, two other commenters stated that HTSUS numbers should be

required for section 321 releases.

Those opposed to not requiring HTSUS numbers questioned if Customs

would be able to enforce other government agency requirements, visa

requirements, or Intellectual Property Rights (IPR) issues.

Customs Response: The requirement for a specific description of

entered merchandise, as provided in the Interim Regulations, was

contained in the previous provision (19 CFR 128.21(a)(4)). The only

change from the previous provision is that, consistent with the

amendment to 19 U.S.C. 1321(a)(2)(C), no entry summary or estimated

duties are required and tariff classification information is not

required for shipments qualifying for 19 U.S.C. 1321 treatment. In

addition, Customs, under 19 CFR 143.22, has the option of requiring a

formal entry for any shipment for which there are questions regarding

admissibility, enforcement or revenue.

Regarding a requirement for HTSUS numbers on low-value entries,

Customs does not feel that there is sufficient reason to require such

merchandise identification when other required manifest information is

adequate to enforce these provisions. Customs believes that the

requirements to provide shipper/consignee information and a specific

description, along with the country of origin and value of the

merchandise, provide adequate [[Page 18988]] information to meet

Customs enforcement responsibilities on low-value shipments.

Accordingly, no change to the amendments is made based on this comment.

Comment: A commenter suggested that the requirement in

Sec. 128.21(a)(4)(i) for the HTSUS number on the manifest if the

merchandise is required to be formally entered is redundant since the

HTSUS number is provided via the CF 3461 or CF 7501 and the

transmission of that data via the Automated Broker Interface (ABI).

Customs Response: The requirement has been in effect since express

regulations were originally published. As this item is not directly

related to the amendments made by sections 651 and 681 and was not

included in the interim regulations, Customs does not support including

the proposal in the final rule because there has not been a

comprehensive analysis performed at this time. Accordingly, no change

to the amendments is made based on this comment.

Comment: One commenter stated that ``express'' entities may enter

shipments valued at less than $1,250 by merely submitting a manifest

setting forth the freight bill number and the value.

Customs Response: We are unaware of any regulations which state

this. Requirements for entry of express shipments valued between $200

and $1,250 are set forth in Sec. 128.24; however, the information

required goes far beyond a bill number and value. The requirements for

release of shipments valued under $200 are defined in Sec. 143.23 and

also require more than a bill number and value information.

Comment: One commenter stated that it appears that shipments of any

value may be entered via a manifest report.

Customs Response: The commenter did not cite any regulation or

other basis for this comment. We are unaware of any regulation which

would permit this.

Comment: A commenter requested removal or authorization of a waiver

of the requirement in Sec. 128.23 that entry numbers be furnished in a

Customs-approved bar code format. Another commenter argued that

transmission in a bar-coded format is ``operationally impossible.''

Customs Response: The requirement has been in effect since express

consignment regulations were originally published. As this item was not

directly related to the amendments made by sections 651 and 681 and was

not included in the interim regulations, Customs does not support

including the proposal in the final rule because there has not been a

comprehensive analysis performed at this time. Accordingly, no change

to the amendments is made based on this comment.

Comment: Four commenters suggested that Sec. 128.23(b)(1) should

require express consignment entities utilizing the procedures in part

128 to comply with the applicable Automated Commercial System (ACS)

requirements.

Customs Response: Customs disagrees with this proposal, and

believes that such a change to the regulations would actually serve to

confuse the applicability of ACS requirements. Insertion of the word

``applicable'' would create confusion by inferring that the use of

automated procedures is discretionary. Accordingly, no change to the

amendments is made based on this comment.

Comment: One commenter asked that Sec. 128.24(e) be clarified so

that it is clear that the requirement for segregation of shipments

valued at $200 or less from those valued at more than $200 when an

advance manifest is used refers to segregation on the manifest.

Customs Response: We agree with this proposal. There was never any

intent that actual shipments of low-value merchandise be physically

segregated from other shipments. We feel this can be resolved by

rewording the pertinent sentence to read ``such shipments must be

segregated on the manifest from * * *.''

Entry Requirements Under Secs. 141.4, 143.23, 143.26, and 145.31 and

Those Pertaining to Undeliverable Shipments and International Traffic

Comment: A commenter stated that Sec. 141.4(c) provides for

exemption from entry for undeliverable articles under HTSUS General

Note 13(e), subject to certain conditions. One of these conditions

requires that the person claiming the exemption must submit a

certification that the merchandise was intended to be exported to a

foreign country. However, T.D. 55091(4), 95 Treas. Dec. 145 (1960),

allows for the return of merchandise that was erroneously shipped to a

foreign country. Thus, the commenter suggested that merchandise

erroneously shipped to a foreign country should be exempt from entry

under HTSUS General Note 13(e)--since these types of shipments were not

intended to be exported--and that Sec. 141.4(c) should so provide.

Customs Response: Customs does not agree with this suggestion. Two

separate concepts are apparently being confused here: Goods erroneously

shipped that may be administratively treated as nonexports/nonimports,

and goods undeliverable abroad that, pursuant to statute, are required

to be exported to be exempt from entry. As stated by the commenter,

Sec. 141.4(c) provides for the entry exemption statutorily available

under General Note 13(e), which was amended by section 681 of the Act

to provide, in part, that goods undeliverable abroad must have been

exported in the first instance. Exportation is defined at Sec. 101.1(k)

of the Customs Regulations (19 CFR 101.1(k)) in terms of intent to

unite goods to the mass of things belonging to some foreign country.

Thus, an intent to export domestic goods to some foreign country must

be present before the entry exemption available can be considered

applicable. Under the provisions of T.D. 55091(4), however, merchandise

that was erroneously shipped is administratively treated as if it was

never exported, because there was no intent to export the goods, i.e.,

to unite the goods to the mass of things belonging to a foreign

country, in the first instance. While this may seem like a case of

semantics, the concepts embrace different scenarios: The latter

situation addressed in the T.D. is much narrower than the circumstances

required to be met by the entry exemption available under General Note

13(e). To the extent that the commenter believes that the T.D. may be

inconsistent with the provisions of Sec. 141.4(c), it is encouraged to

write in, under the provisions of part 177 of the Customs Regulations,

for a clarification of the T.D., but Customs does not see any apparent

contradiction between these two exemption provisions. Accordingly, no

change to the amendments is made based on this comment.

Comment: A commenter stated that Customs should clarify that the

merchandise involved cannot leave the custody of either the carrier or

the foreign Customs service.

Customs Response: It seems obvious that the statutory requirement

does not require the merchandise to be in the custody of both the

carrier and the foreign Customs service.

Comment: A commenter argued that the Interim Regulations are

inconsistent with an agreement reached between Customs and a railroad

association, which provides that the importer (required to make the

certification regarding age of the car under HTSUS subheading

9905.86.05 or the certification regarding the exportation within 1 year

from the date of importation under HTSUS subheading 9905.86.10) should

not have to make the certification; the requirement should be met by a

certified list from the Association, with information regarding the

cars. [[Page 18989]]

Customs Response: In general, Customs must have a mechanism in

place to ``ensure'' that rail cars and locomotives entering the U.S.

are not subject to duties or taxes. The current interim regulation

gives U.S. Customs the authority to establish evidentiary requirements.

With regard to bonding requirements, Customs is unaware of any

other method to insure the performance of the obligations set forth in

the regulations (other than a bond). Since there is a statutory

requirement, compliance with which is guaranteed by a bond, and since

the legislative history specifically authorized the requiring of such a

bond (see the BACKGROUND to the Interim Regulations, under Other

Exemptions from Entry), we see no alternative to requiring such a bond.

However, the commenter requested Customs to accept the railroad

association's certification of eligibility for importation under HTSUS

subheading 9905.86.05 instead of having the certification of particular

railroads actually importing the cars; that the association should

guarantee the accuracy of that certification and the fact that any car

so imported would be timely exported. If the railroad association would

be willing to post a bond that made it, rather than the actual

importing railroad, responsible for any default of those two

commitments and the association would further agree not to raise as a

defense to an action the fact that it was not the importing railroad,

then Customs would draft the appropriate bond language and seek to

obtain the formal commitment of the Department of the Treasury that the

Customs Service may accept such a bond from the association for the

activity specified. Accordingly, no change to the regulations is made

at this time.

Comment: Three comments--all from express companies--suggested that

Customs should clarify that requiring documents under Sec. 141.4(c)(2)

to support claims for exemption from entry for undeliverable articles

should not be done on a routine basis.

Customs Response: We disagree with this proposal. The express

companies deal primarily with small, low-value shipments. HTSUS General

Note 13(e), however, applies to all shipments. There are no

restrictions upon mode of transport, value, country of origin, quota

merchandise, or other agency requirements. Customs could conceivably

receive claims for importation without entry on shipments of unlimited

quantities or value. We oppose inclusion of any language which could be

interpreted as limiting Customs authority to require supporting

documentation. Accordingly, no change to the amendments is made based

on this comment.

Comment: Four commenters contended that the documentation needed to

enter a shipment valued at $200 or less, provided for in

Sec. 143.23(j), which does not include ``shipping weight,'' should be

consistent with the documentation required to be on manifests submitted

by express carriers under Sec. 128.21(a)(6), which does include

``shipping weight.''

Customs Response: We agree with this proposal. Because the weight

of a shipment can provide valuable enforcement or compliance

information, we feel that ``Weight'' should be included in the list of

required information under Sec. 143.23.

Comment: Four commenters proposed either to eliminate language from

Sec. 143.23(j) which refers to informal entries for shipments valued at

less than $200, or provide statements which essentially assert that an

entry is not required for these shipments.

Customs Response: Customs disagrees with the underlying premise of

these commenters, i.e., that such low-value shipments are exempt from

entry requirements. As stated in the BACKGROUND portion of T.D. 94-51,

the interim regulations amended Part 143 to clarify the procedures for

entries of shipments, including shipments which may be entered under

the procedures provided for by regulation. Only merchandise

specifically exempt from entry, i.e., so-called intangibles, under

General Note 13, is exempt from all forms of entry. By adding paragraph

(j) to Sec. 143.23, Customs was clarifying the entry requirements that

have always been applicable to low-value shipments. Thus, this

amendment to Sec. 143.23 did not constitute a change from current

practice.

Regarding the propriety of promulgating such regulations, the

commenter is advised to see the Court's decision in National Customs

Brokers, which, in responding to the issue of whether merchandise

authorized to be exempt, under section 321 of the Tariff Act of 1930,

must be entered, reiterated that the Secretary is empowered to

promulgate regulations with respect to entry of low-value exempt

merchandise pursuant to 19 U.S.C. 1498(b) (also citing 19 U.S.C. 1484).

Accordingly, no change to the amendments is made based on this comment.

Comment: One commenter stated that, operationally, a hard copy air

waybill must be submitted, even though the required information can be

submitted through AMS.

Customs Response: Customs notes that the reference to ``manifest''

in Sec. 143.23 includes electronic manifests.

Comment: One commenter indicated that couriers do not have to tell

Customs what imported goods actually are.

Customs Response: This is an incorrect statement. Sections 143.23

and 128.21(a) very clearly state that a specific description of the

merchandise is required.

Comment: One commenter proposed that Customs should require the

importer's identification number and the manufacturer's identification

number for low-value shipments.

Customs Response: Customs disagrees with the proposal to require ID

numbers. Customs believes that it can adequately fulfill its

enforcement needs for low-value shipments based on the shipper and

consignee information required in Secs. 143.23 and 128.21(a).

Accordingly, no change to the amendments is made based on this comment.

Comment: Another commenter stated that Customs would be unable to

enforce embargoes because the courier does not have to furnish Customs

and their computer with the country of origin.

Customs Response: Sections 143.23 and 128.21(a) clearly state that

the country of origin of the merchandise is required information for

release of merchandise under section 321 provisions.

Comment: A commenter suggested that Secs. 143.26 and 145.31 be

incorporated into part 128 of the CFR.

Customs Response: Customs disagrees with this proposal. Section

143.26 applies to all shipments which qualify for administrative

exemptions, regardless of whether the shipment is express. Section

145.31 deals with shipments in the mail and is not applicable to

express shipments. Accordingly, no change to these sections is made

based on this comment.

Comment: One commenter suggested that Secs. 143.26 and 145.31

should be revised to state that the consignee, other than the owner or

purchaser, must show direct interest in, and a relationship to, an

importation sufficient to meet basic custom entry requirements.

Customs Response: Customs disagrees with this suggestion. The

suggestion is confusing in that a consignee, by its very nature, must

have an interest in and a relationship to the importation. Accordingly,

no change to these sections is made based on this comment.

[[Page 18990]]

Comment: Two commenters stated that mail importations are exempt

from entry under Sec. 145.31.

Customs Response: Customs believes that it is made clear in the

revised Sec. 10.151 that the provisions included in Sec. 145.31

constitute an entry under informal entry procedures. Information needed

for release of mail shipments under administrative exemptions is

supplied in documentation accompanying the mail package. This

accompanying documentation is the ``other document filed as the entry''

required by Sec. 10.151.

Conclusion

As no material issues were raised in the comments that are not

adequately addressed by existing regulations or by relevant judicial

decisions, Customs has decided to finalize the amendments as proposed,

with the minor editorial changes to Secs. 128.24(e), 143.23, and 143.26

discussed above. Also, conforming amendments to Secs. 10.151, Part 178,

and the general authority citations to Parts 10, 101, 123, and 159 are

made as follows: Sec. 10.151 is revised to add oral declarations to the

forms of evidence showing the fair retail value of imported

merchandise; Part 178 is amended to indicate the OMB-assigned control

numbers for the information collections contained at Secs. 128.21,

128.23, 128.24, 141.4, and 143.23; at part 10, the reference to 19

U.S.C. 1202 is revised to add a parenthetical reference to General Note

20 of the Harmonized Tariff Schedule of the United States (HTSUS); at

Part 101, the parenthetical HTSUS reference is revised to include a

reference to General Note 20; at Part 123, section 1433 is added to the

citations for title 19--it was inadvertently left out of the Interim

Regulation text; and, at part 159, section 1504 is added to the

citations for title 19--it also was inadvertently left out of the

Interim Regulation text.

The Regulatory Flexibility Act, and Executive Order 12866

Based on the supplementary information set forth above and because

the amendments contained in this document reflect existing statutory

requirements or merely implement interpretations and policies that are

already in effect under interim regulations, pursuant to the provisions

of the Regulatory Flexibility Act, 5 U.S.C. 601 et seq., it is

certified that the regulations will not have a significant economic

impact on a substantial number of small entities. Accordingly, the

regulations are not subject to the regulatory analysis or other

requirements of 5 U.S.C. 603 and 604. This document does not meet the

criteria for a ``significant regulatory action'' as specified in E.O.

12866.

Paperwork Reduction Act

The collections of information in these final regulations,

contained in Secs. 128.21, 128.23, 128.24, 141.4, and 143.23, were

previously reviewed and approved by the Office of Management and Budget

(OMB) in accordance with the requirements of the Paperwork Reduction

Act of 1980 (44 U.S.C. 3507) under control numbers 1515-0069

(Secs. 128.21, 128.23 and 128.24) and 1515-0065 (Secs. 141.4 and

143.23). The estimated average annual burden associated with this

collection is .24 hours per respondent or recordkeeper. Comments

concerning the accuracy of this burden estimate and suggestions for

reducing this burden should be directed to the U.S. Customs Service,

Paperwork Management Branch, Room 6316, 1301 Constitution Avenue, NW.,

Washington, DC 20229, or the Office of Management and Budget,

Attention: Desk Officer for the Department of the Treasury, Office of

Information and Regulatory Affairs, Washington, DC 20503.

Drafting Information

The principal author of this document was Gregory R. Vilders,

Attorney, Regulations Branch, U.S. Customs Service. However, personnel

from other offices participated in its development.

List of Subjects

19 CFR Part 10

Customs duties and inspection, Imports, Reporting and recordkeeping

requirements, Value content.

19 CFR Part 101

Customs duties and inspection, Imports, Reporting and recordkeeping

requirements, Shipments.

19 CFR Part 111

Administrative practice and procedure, Brokers, Customs duties and

inspection, Imports, Licensing, Reporting and recordkeeping

requirements.

19 CFR Part 123

Administrative practice and procedure, Canada, Customs duties and

inspection, Imports, International traffic, Railroads, Reporting and

recordkeeping requirements, Trade agreements (US-Canada Free Trade

Agreement).

19 CFR Part 128

Customs duties and inspection, Entry, Express Consignments,

Imports, Manifests.

19 CFR Part 141

Customs duties and inspection, Entry, Invoices, Powers of attorney,

Reporting and recordkeeping requirements.

19 CFR Part 143

Automated broker interface, Customs duties and inspection,

Electronic entry filing, Entry, Imports, Invoice requirements.

19 CFR Part 145

Customs duties and inspection, Imports, Mail, Postal service,

Reporting and recordkeeping requirements.

19 CFR Part 148

Customs duties and inspection, Declarations, Reporting and

recordkeeping requirements, Taxes, Trade agreements.

19 CFR Part 159

Computer technology, Customs duties and inspection, Entry, Imports,

Value content.

19 CFR Part 178

Administrative practice and procedure, Exports, Imports, Reporting

and recordkeeping requirements.

Amendments to the Regulations

For the reasons stated above, the interim rule amending Title 19,

Chapter I, parts 10, 101, 111, 123, 128, 141, 143, 145, 148, 159, and

178 of the Customs Regulations (19 CFR parts 10, 101, 111, 123, 128,

141, 143, 145, 148, 159, and 178), which were published at 59 FR 30289-

30296 on June 13, 1994 (T.D. 94-51), is adopted as a final rule with

the following changes:

PART 10--ARTICLES CONDITIONALLY FREE, SUBJECT TO A REDUCED RATE,

ETC.

1. The general authority citation for part 10 is revised to read as

follows:

Authority: 19 U.S.C. 66, 1202 (General Note 20, Harmonized

Tariff Schedule of the United States (HTSUS)), 1321, 1481, 1484,

1498, 1508, 1623, 1624;

* * * * *

Sec. 10.151 [Amended]

2. In Sec. 10.151, the words ``, an oral declaration,'' are added

following the words ``as evidenced by the'' in the first sentence.

PART 101--GENERAL PROVISIONS

1. The authority citation for part 101 is revised to read as

follows:

Authority: 5 U.S.C. 301; 19 U.S.C. 2, 66, 1202 (General Note 20,

Harmonized Tariff Schedule of the United States (HTSUS)), 1623,

1624. [[Page 18991]]

PART 123--CUSTOMS RELATIONS WITH CANADA AND MEXICO

1. The general authority citation for part 123 is revised to read

as follows:

Authority: 19 U.S.C. 66, 1202 (General Note 20, Harmonized

Tariff Schedule of the United States (HTSUS)), 1431, 1433, 1624;

* * * * *

PART 128--EXPRESS CONSIGNMENTS

1. The authority citation for part 128 continues to read as

follows:

Authority: 19 U.S.C. 66, 1202 (General Note 20, Harmonized

Tariff Schedule of the United States (HTSUS)), 1321, 1484, 1498,

1551, 1555, 1556, 1565, 1624.

Sec. 128.24 [Amended]

2. In Sec. 128.24, the second sentence in paragraph (e) is amended

by adding the words ``on the manifest'' following the words ``Such

shipments must be segregated''.

PART 143--SPECIAL ENTRY PROCEDURES

1. The authority for part 143 continues to read as follows:

Authority: 19 U.S.C. 66, 1481, 1484, 1498, 1624.

2. In Sec. 143.23, paragraph (j)(5) is amended by removing the word

``and''; paragraph (j)(6) is redesignated paragraph (j)(7); and by

adding a new paragraph (j)(6) to read as follows:

Sec. 143.23 Form of entry.

* * * * *

(j) * * *

(6) Shipping weight; and

* * * * *

Sec. 143.26 [Amended]

3. In Sec. 143.26, paragraphs (a) and (b) are each amended by

adding the words ``, using reasonable care,'' after the words ``may be

entered''.

PART 159--LIQUIDATION OF DUTIES

1. The authority citation for part 159 is revised to read as

follows:

Authority: 19 U.S.C. 66, 1500, 1504, 1624. Subpart C also issued

under 31 U.S.C. 5151. Additional authority and statutes interpreted

or applied are cited in the text or following the sections affected.

PART 178--APPROVAL OF INFORMATION COLLECTION REQUIREMENTS

1. The authority citation for part 178 continues to read as

follows:

Authority: 5 U.S.C. 301; 19 U.S.C. 1624; 44 U.S.C. 3501 et seq.

2. Section 178.2 is amended by adding, in appropriate numerical

order according to the section number under the column indicated, the

following information to read as follows:

OMB

19 CFR section description control

No.

------------------------------------------------------------------------

* * * * *

Sec. 128.21 Specific description of merchandise........... 1515-0069

Sec. 128.23 Requirement of submission of Customs-approved 1515-0069

bar-coded entry numbers for ACS processing.

Sec. 128.24 Requirement for Invoice, Advance Manifest, or 1515-0069

Immediate Delivery application form.

* * * * *

Sec. 141.4 Requirement to make entry unless specifically 1515-0065

exempt.

Sec. 143.23 Requirement to file entry summary form........ 1515-0065

------------------------------------------------------------------------

Michael H. Lane,

Acting Commissioner of Customs.

Approved: March 20, 1995.

John P. Simpson,

Deputy Assistant Secretary of the Treasury.

[FR Doc. 95-9192 Filed 4-13-95; 8:45 am]

BILLING CODE 4820-02-P