Detention of Merchandise

DEPARTMENT OF THE TREASURY

Customs Service

19 CFR Part 151

RIN 1515-AB75

Detention of Merchandise

AGENCY: Customs Service, Department of the Treasury.

ACTION: Proposed rule.

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SUMMARY: This document proposes amendments to the Customs Regulations

to provide for procedures regarding the detention of merchandise that

is undergoing extended Customs examination. It is intended that the

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Customs Regulations regarding this subject accurately reflect recent

amendments to the underlying statutory authority, enacted as part of

the Customs modernization portion of the North American Free Trade

Agreement Implementation Act.

DATES: Comments must be received on or before August 5, 1996.

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

to the Regulations Branch, Office of Regulations and Rulings, U.S.

Customs Service, 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, Suite

4000, Washington, DC.

FOR FURTHER INFORMATION CONTACT: Jeremy Baskin, Penalties Branch, 202-

482-6950.

SUPPLEMENTARY INFORMATION:

Background

On December 8, 1993, amendments to certain Customs and navigation

laws became effective as the result of the enactment of the North

American Free Trade Agreement (NAFTA) Implementation Act, Public Law

103-182, Title VI of which is the Customs modernization portion

thereof, popularly known as the Customs Modernization Act (Mod Act).

Section 613 of the Mod Act amended the provisions of section 499 of the

Tariff Act of 1930, as amended (19 U.S.C. 1499), to provide for the

detention of merchandise in any case where Customs is unable, upon

initial examination, to make a determination as to whether that

imported merchandise complies with requirements of the laws of the

United States. Much of the new legislation brought the law into

conformity with existing Customs practice with regard to the

examination and detention of merchandise.

Prior to this amendment, Customs, while having extensive

examination authority, had no specific statutory or regulatory

procedures for detaining merchandise whose admissibility had not yet

been determined. The Mod Act codified Customs current detention

practices. Importers are provided an accelerated method to receive

administrative or judicial review of any decision to exclude.

Customs has five days after merchandise is presented for

examination to determine whether such merchandise should be detained or

can be released. Through this document Customs is proposing that

merchandise shall be considered to be presented for Customs examination

when it is in a condition to be viewed and examined by a Customs

officer. Mere presentation to the examining officer of a cargo van,

container or instrument of international traffic in which the

merchandise to be examined is contained will not be considered to be

presentation of the merchandise for Customs examination for purposes of

starting the five-day period in which the decision to detain or release

must be made. Further, consistent with the provisions of Sec. 151.7 of

the Customs Regulations (19 CFR 151.7), relating to the examination of

merchandise at a place other than the public stores, the importer shall

bear any expense involved in preparing the merchandise for Customs

examination.

Customs is required to issue a written notice of detention to the

importer or other party having an interest in the subject merchandise.

The notice shall advise the importer or other interested party of the

initiation of the detention, the specific reason for same, the

anticipated length of the detention, the nature of the tests or

inquiries to be conducted and the nature of any information which, if

supplied to Customs, may accelerate the disposition of the detention.

The importer or other interested party shall be afforded the

opportunity to remedy the cause for detention and bring the detained

merchandise into compliance within 30 days after issuance of the

notice. After 30 days or such longer period as authorized by law, if

Customs has not made a final determination to release or seize, the

goods are deemed to be excluded. Under Customs proposal, the 30-day

limitation may be extended when the importer or interested party

requests in writing an extension of the detention period, in order to

comply with Customs requirements. In the absence of a written request

for an extension, the importer or interested party may file a protest

as to the exclusion. If, within 30 days after filing of the protest,

Customs fails to act, the importer or interested party may seek

judicial review in the Court of International Trade. The detention/

exclusion period will generally not extend beyond 60 days (unless a

longer period is authorized by law) without the importer or interested

party being afforded judicial review. At any time during the detention

period, the merchandise may be seized and forfeited, if the facts so

warrant. The proposed regulations also permit Customs to allow

exportation of the goods in lieu of seizure with all costs of

exportation being borne by the importer.

The law compels Customs to make timely decisions, provide timely

notices, disclose available testing results and descriptions of

procedures and methodologies that are not proprietary to Customs or the

holder of any copyright or patent, and process any exclusion protests

within a prescribed statutory time period. If a notice to exclude is

not issued within such time period, the burden of proof is on Customs

to show, by a preponderance of the evidence, good cause as to why an

admissibility decision had not been made prior to the time the importer

commenced suit. If Customs makes the decision to exclude, an importer

wishing to challenge the decision shall bear the burden of proof. These

procedures are applicable to those cases where Customs has the

responsibility and authority to determine the admissibility of the

merchandise. They do not apply to those situations where the decision

of admissibility lies with another Federal agency.

This document proposes to amend the regulations to accurately

reflect the statutory changes promulgated by the Mod Act.

Comments

Before adopting the proposed amendments, consideration will be

given to any written comments (preferably in triplicate) that are

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 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, 1099 14th Street, NW., Suite 4000, Washington, DC.

Regulatory Flexibility Act and Executive Order 12866

For the reasons given in the preamble to this document, pursuant to

the provisions of the Regulatory Flexibility Act (5 U.S.C. 601 et

seq.), it is certified that the proposed amendments would not have a

significant economic impact on a substantial number of small entities.

Thus, they are not subject to the requirements of 5 U.S.C. 603 or 604.

Nor would the proposed rule result in a ``significant regulatory

action'' under E.O. 12866.

Paperwork Reduction Act

The collection of information contained in this notice of proposed

rulemaking has been submitted to the Office of Management and Budget

for review in accordance with the Paperwork Reduction Act of 1995 (44

U.S.C. 3507).

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An agency may not conduct or sponsor, and a person is not required

to respond to a collection of information unless the collection of

information displays a valid control number.

The collection of information in this document is in Sec. 151.16

(d) and (f). This information is necessary and will be used to

determine the admissibility of imported merchandise and to otherwise

comply with the requirements of the Mod Act and protect the revenue.

The likely respondents and/or recordkeepers are business or other for-

profit institutions.

Estimated annual reporting and/or recordkeeping burden: 500 hours.

Estimated average annual burden per respondent/recordkeeper: 2

hours.

Estimated number of respondents and/or recordkeepers: 250.

Estimated annual frequency of responses: 1.

Comments on the collection of information should be sent to the

Office of Management and Budget, Attention: Desk Officer of the

Department of the Treasury, Office of Information and Regulatory

Affairs, Washington, DC 20503. A copy should also be sent to the

Regulations Branch, Office of Regulations and Rulings, U.S. Customs

Service, 1301 Constitution Avenue, NW., Washington, DC 20229. Comments

should be submitted within the time frame that comments are due

regarding the substance of the proposal.

Comments are invited on: (a) Whether the collection of information

is necessary for the proper performance of the functions of the agency,

including whether the information shall have practical utility; (b) the

accuracy of the agency's estimate of the burden of the collection of

the information; (c) ways to enhance the quality, utility, and clarity

of the information to be collected; and (d) ways to minimize the burden

of the collection of information on respondents, including through the

use of automated collection techniques or other forms of information

technology.

List of Subjects in 19 CFR Part 151

Examination, Sampling and testing of merchandise.

Proposed Amendments to the Regulations

It is proposed to amend part 151, Customs Regulations (19 CFR part

151), as set forth below:

PART 151--EXAMINATION, SAMPLING AND TESTING OF MERCHANDISE

1. The general authority citation for part 151, and the specific

authority for subpart A, would continue to read as follows:

Authority: 19 U.S.C. 66, 1202 (General Notes 20 and 21,

Harmonized Tariff Schedule of the United States), 1624. Subpart A

also issued under 19 U.S.C. 1499. * * *

2. It is proposed to amend part 151 by adding a new Sec. 151.16 to

read as follows:

Sec. 151.16 Detention of merchandise.

(a) Other agencies not affected. The provisions of this section are

not applicable to detentions effected by Customs on behalf of other

agencies of the U.S. Government.

(b) Decision to detain or release. Within the 5-day period

(excluding weekends and holidays) following the date on which

merchandise is presented for Customs examination, Customs shall decide

whether to release or detain the merchandise. Merchandise which is not

released within such 5-day period shall be considered to be detained

merchandise. For purposes of this section, merchandise shall be

considered to be presented for Customs examination when it is in a

condition to be viewed and examined by a Customs officer. Mere

presentation to the examining officer of a cargo van, container or

instrument of international traffic in which the merchandise to be

examined is contained will not be considered to be presentation of

merchandise for Customs examination for purposes of this section. All

costs relating to the preparation of merchandise for examination shall

be borne by the importer.

(c) Notice of detention. If a decision to detain merchandise is

made, Customs shall issue a notice to the importer or other party

having an interest in such merchandise no later than 5 days (excluding

weekends and holidays) after such decision. The notice shall be

prepared by the Customs officer detaining the merchandise and shall

advise the importer or other interested party of the:

(1) Initiation of the detention;

(2) Specific reason for the detention;

(3) Anticipated length of the detention;

(4) Nature of the tests or inquiries to be conducted; and

(5) Nature of any information which, if supplied to the Customs,

may accelerate the disposition of the detention.

(d) Providing testing results. Upon written request by the importer

or other party having an interest in the detained merchandise, Customs

shall provide copies of the results of any testing conducted on the

merchandise together with a description of the testing procedures and

methodologies used (unless such procedures or methodologies are

proprietary to the holder of a copyright or patent or were developed by

Customs for enforcement 9 purposes). The results and test description

shall be in sufficient detail to permit the duplication and analysis of

the testing and the results.

(e) Seizure and forfeiture; denial of entry or exportation. If

otherwise provided by law, detained merchandise may be seized and

forfeited. In lieu of seizure and forfeiture, Customs may deny entry

and, where not otherwise prohibited by law, permit the merchandise to

be exported with all expenses of exportation being borne by the

importer.

(f) Final decisions; extension of time. A final decision with

respect to detained merchandise will be made within 30 days from the

date the shipment was detained. The 30-day limitation may be extended

when the importer or interested party requests in writing an extension

of the detention period, in order to comply with Customs requirements.

(g) Effect of failure to make a determination. The failure by

Customs to make a final determination with respect to the admissibility

of detained merchandise within 30 days after the merchandise has been

presented for Customs examination, or such longer period if

specifically authorized by law, or such extension of time as allowed by

paragraph (f) of this section, shall be treated as a decision by

Customs to exclude the merchandise for purposes of Sec. 514(a)(4) of

the Tariff Act of 1930, as amended (19 U.S.C. 1514(a)(4)). Such

decision may be the subject of a protest.

(h) Effect of failure to decide protest. If a protest which is

filed as a result of exclusion of detained merchandise is not allowed

or is denied in whole or in part before the 30th day after the day on

which the protest was filed, it shall be treated as having been denied

on such 30th day.

(i) Burden of proof and decisions of the court. Once an action

respecting a detention is commenced, unless Customs establishes by a

preponderance of the evidence that an admissibility decision has not

been reached for good cause, the court shall grant the appropriate

relief which may include, but is not limited to, an order to cancel the

detention and release the merchandise.

George J. Weise,

Commissioner of Customs.

Approved: April 18, 1996.

John P. Simpson,

Deputy Assistant Secretary of the Treasury.

[FR Doc. 96-14124 Filed 6-4-96; 8:45 am]

BILLING CODE 4820-02-P