[Federal Register: November 8, 2002 (Volume 67, Number 217)]
[Rules and Regulations]
[Page 68027-68036]
From the Federal Register Online via GPO Access [wais.access.gpo.gov]
[DOCID:fr08no02-6]
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DEPARTMENT OF THE TREASURY
Customs Service
19 CFR Parts 4, 19, 122, 123, 127, 141, 142 and 178
[T.D. 02-65]
RIN 1515-AC57
General Order Warehouses
AGENCY: Customs Service, Department of the Treasury.
ACTION: Final rule.
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SUMMARY: This document amends the Customs Regulations principally to
create a new class of bonded warehouse exclusively for the receipt of
general order merchandise, and to include procedures for authorizing
and operating general order warehouses. This amendment of the Customs
Regulations is in response to a recent increase in the amount of
unentered merchandise being moved into general order facilities. This
increase has resulted from changes in the law, and it has prompted the
importing community to request that Customs put in place uniform,
national procedures for approving and operating warehouses receiving
general order merchandise.
In addition, changes are made to the Customs Regulations to
implement certain amendments to the law made by the Customs
modernization portion of the North American Free Trade Agreement
Implementation Act. The amendments concern the circumstances where the
title to unclaimed and abandoned merchandise vests in the Government,
in lieu of sale of the merchandise at public auction.
EFFECTIVE DATE: December 9, 2002.
FOR FURTHER INFORMATION CONTACT: Tim Sushil, Office of Field
Operations, 202-927-0564.
SUPPLEMENTARY INFORMATION:
Background
Title VI of the North American Free Trade Agreement Implementation
Act, 107 Stat. 2057 (Pub. L. 103-182; December 8, 1993), popularly
known as the Customs Modernization Act (Mod Act), amended a number of
Customs and navigation laws.
Some of these amendments affected the treatment of general order
merchandise. General order merchandise is merchandise that is required
to be deposited in a bonded warehouse at the risk and expense of the
consignee because it is not timely entered as provided by law or
regulation, entry for it is incomplete because estimated duties, fees
or interest has not been paid, entry cannot be made for it due to lack
of proper documentation or other cause, or because it is not correctly
or legally invoiced. See 19 U.S.C. 1490(a). Customs has denominated the
type of bonded warehouse in which this type of merchandise must be
deposited as a general order warehouse. See 19 CFR 127.1.
In particular, section 656 of the Mod Act amended 19 U.S.C. 1448(a)
to provide, among other things, that the
[[Page 68028]]
owner or master of any vessel or vehicle, or agent thereof, would be
required to notify Customs of any merchandise or baggage unladen from
the vessel or vehicle, for which entry was not made within the time
prescribed by law or regulation; and if entry were not made within the
prescribed time, the master or person in charge of the importing vessel
or vehicle, or agent thereof, would be responsible for such unentered
merchandise until it was removed from the carrier's control and placed
in general order status in accordance with 19 U.S.C. 1490.
In concert with this, section 658 of the Mod Act amended 19 U.S.C.
1490 by deleting the requirement that a Customs officer take unentered
merchandise into Customs custody and send it to a bonded warehouse.
Instead, carriers are now required to notify both Customs and a bonded
warehouse of the unentered merchandise, and the bonded warehouse is
then responsible for arranging for the transportation and storage of
the merchandise at the risk and expense of the consignee.
These, and related, statutory amendments were implemented by a
final rule document amending the Customs Regulations, that was
published in the Federal Register (63 FR 51283) on September 25, 1998,
as T.D. 98-74.
Based on the statutory amendments, and the Customs Regulations
implementing them, imported merchandise could not remain at the wharf,
pier or other place of unlading more than 15 calendar days after its
landing; or, if transferred from the arriving carrier to any party
under a Customs-authorized permit to transfer or in-bond entry, the
merchandise could not remain in the custody of that party more than 15
calendar days after its receipt under a Customs-authorized permit to
transfer or more than 15 calendar days after its arrival at the port of
destination, as provided in Sec. Sec. 4.37, 122.50, 123.10, Customs
Regulations (19 CFR 4.37, 122.50, 123.10). There is no provision in
these regulations for any extension of this 15-day period.
Customs and the trade have consequently seen an increase in the
amount of unentered merchandise moving into general order facilities,
including merchandise, such as hazardous materials, requiring
specialized storage facilities. Due to this increase in merchandise
moving into temporary storage in general order status, the trade
community has sought the establishment of national, uniform criteria
for the approval and operation of general order warehouses.
Accordingly, by a document published in the Federal Register (65 FR
42893) on July 12, 2000, Customs proposed that a new class of bonded
warehouse, a class 11 warehouse, be established exclusively to handle
the receipt of general order merchandise as described in Sec. 127.1,
Customs Regulations (19 CFR 127.1).
It was further proposed that a class 3, 4, or 5 bonded warehouse,
as described in Sec. 19.1(a)(3), (4), or (5), Customs Regulations (19
CFR 19.1(a)(3), (4), or (5)), could likewise be used for the deposit of
general order merchandise, but only if there were no class 11 warehouse
otherwise available to receive the merchandise, and provided the class
3, 4, or 5 warehouse had also been certified by the port director as
meeting the criteria for a class 11 warehouse, following an application
under Sec. 19.2, Customs Regulations (19 CFR 19.2).
To this end, Sec. 19.1 was proposed to be amended to include
provisions for general order warehouses. Matters relating to inventory
control and minimum space requirements for general order warehouses
were also addressed in the proposed rule, in Sec. Sec. 19.2 and 19.12,
respectively.
Additionally, an amendment to Sec. 19.2(f) was proposed to allow
the port director to require a business entity seeking approval to
establish a Customs bonded warehouse to submit fingerprints, as part of
the application process, for all its employees, as opposed to only
those of all officers and managing officials of the business entity, as
is currently the case; this proposed change would pertain to an
application by a business entity to establish any Customs bonded
warehouse, including a general order warehouse.
Furthermore, the proposed rule put forth amendments to Sec. Sec.
4.37, 19.9, 122.50 and 123.10, Customs Regulations (19 CFR 4.37, 19.9,
122.50 and 123.10), that would make it the responsibility of the
warehouse proprietor to prepare a Customs Form (CF) 6043 (Delivery
Ticket), or other similar Customs document as designated by the port
director or an electronic equivalent as authorized by Customs, that
covered the proprietor's receipt of the merchandise and its transport
to the warehouse from the custody of the carrier (or from any other
party to whom custody of the merchandise had been transferred by a
Customs-authorized permit to transfer or in-bond entry). This was
intended to recognize and specifically implement the existing
requirement described above that the warehouse proprietor be
responsible for the transportation and storage in general order status
of unentered merchandise following due notification by the arriving
carrier or other bonded carrier of the presence of such merchandise.
Moreover, Sec. Sec. 4.37, 122.50 and 123.10 were to be amended to
provide that if a carrier or other party to whom the original carrier
had properly transferred unclaimed and abandoned goods refused to
relinquish custody over the goods to a general order warehouse
proprietor, the carrier or other party would be liable for liquidated
damages under the international carrier or custodial bond, as
applicable; and Sec. Sec. 4.37, 122.50 and 123.10 were to be further
amended to provide that in cases where the warehouse proprietor was
unable to accept goods into general order because the goods were
required to be exported or destroyed, or for other good cause, the
carrier or other party to whom the original carrier had properly
transferred the goods would be responsible under bond for exporting or
destroying the goods, as necessary. It was further proposed that Sec.
127.13, Customs Regulations (19 CFR 127.13), be changed consistent with
Sec. Sec. 4.37, 122.50 and 123.10.
Also, the proposed rule would revise Sec. 127.14 to require that
the warehouse proprietor assume the responsibility and expense for the
destruction of general order merchandise, in the event that such
destruction were found to be warranted under the circumstances (i.e.,
where the port director concludes that the merchandise has no
commercial value or cannot be disposed of at public auction
(unsalable)); however, before destroying the merchandise, the warehouse
proprietor would first have to make a reasonable effort to identify and
inform the importer (owner) or consignee of the merchandise regarding
its intended destruction.
Mod Act Changes; Title to Unclaimed Merchandise Vesting in Government
In addition, under the proposed rule, Sec. 127.14(a) would be
revised and a new subpart E would be added to part 127 essentially to
conform with and implement a number of amendments made by section 659
of the Mod Act to 19 U.S.C. 1491 concerning the provision that under
certain conditions title to unclaimed and abandoned merchandise could
vest in the United States, as an alternative to the Government having
to sell such merchandise at public auction.
Time Limit Within Which To Make Entry; Conforming Changes
Finally, in conformance with the changes already made under T.D.
98-74 to Sec. Sec. 4.37, 122.50, and 123.10, as
[[Page 68029]]
discussed above, the proposed rule would similarly revise Sec. Sec.
141.5 and 142.2, Customs Regulations (19 CFR 141.5, 142.2), to require
that the entry of merchandise be made within 15 calendar days (as
opposed to 5 working days) after landing from a vessel, aircraft or
vehicle, or after arrival at the port of destination in the case of
merchandise transported in bond.
Discussion of Comments
Six commenters responded to the notice of proposed rulemaking. A
description of the issues raised by these commenters, and Customs
response to each issue, is set forth below.
It is initially noted, however, that one commenter made certain
suggestions during the proposed rulemaking comment period that were
outside the scope of the notice, in particular: in connection with the
unentered merchandise described in Sec. Sec. 4.37(b), 122.50(b) and
123.10(b), to require that a carrier notify a general order warehouse
of the presence of such unentered merchandise within the 15-day period,
as opposed to the 20-day period, described in those sections; and to
add a requirement in part 127 that carriers provide all information to
the warehouse that they have on the consignee of unclaimed merchandise
in order to facilitate the preparation of notices of sale for the
merchandise. Such recommendations which, while related, fell outside
the scope of the original notice of proposed rulemaking, are not
addressed in this document. If found warranted, they would need to be
the subject of another rulemaking document.
General Order Warehouses; Part 19
Comment
One commenter objected to the provision in proposed Sec. 19.1(c)
requiring that an available class 11 (General Order) warehouse be used
to handle general order merchandise, in preference to another available
general order (G.O.) warehouse of class 3, 4, or 5. The commenter
asserted that a mandatory requirement to this effect would be unfair,
would competitively disadvantage G.O. warehouses of class 3, 4 or 5,
and would eliminate choice for the importing public in this area.
Customs Response
Customs agrees. Section 19.1(c) is revised to eliminate any
requirement to use a class 11 warehouse over an existing class 3, 4 or
5 warehouse that has been approved to handle general order merchandise.
Carriers and the importing community should, and will, continue to have
a choice as to the particular G.O. warehouse to which their shipments
may be sent.
Comment
One commenter suggested that class 11 G.O. warehouses be allowed to
rent or lease additional space for the storage of G.O. merchandise.
Customs Response
Section 19.1(c) already provides for this. Any warehouse eligible
to receive general order merchandise (a class 3, 4, 5, or 11 warehouse)
may rent or lease suitable premises for the storage of such
merchandise, if there is no space at the warehouse otherwise available.
Comment
Several commenters requested that Customs elaborate on the
provision in proposed Sec. 19.2(d) regarding minimum space
requirements and other criteria for becoming a G.O. facility. In
particular, one commenter asked that Customs impose regulatory limits
on the number of G.O. warehouses that could operate in a port and,
furthermore, that Customs specify in its regulations those parties that
could not qualify to operate a G.O. warehouse.
Customs Response
Customs does not believe that further elaboration upon these
matters in the regulations is warranted. Both the number of facilities
and the space required for G.O. merchandise will vary from port to
port; therefore no one standard can or should be applied.
Comment
One commenter objected to proposed Sec. 19.2(f) which provided
that the port director ``may'' require a business entity seeking to
establish a Customs bonded warehouse to submit fingerprints from all
its employees, as part of the application process, instead of limiting
the submission of fingerprints to those of all officers and managing
officials of the business entity, as is currently the case. On the
other hand, several commenters wanted the word ``may'' in proposed
Sec. 19.2(f) replaced with ``should''.
Customs Response
Customs disagrees with both views. The port director should have
the discretion to determine the extent of scrutiny that is called for
in given circumstances with respect to a business entity that is
applying for approval to establish a Customs bonded warehouse,
including the ability to require fingerprints from all employees of the
business entity.
Comment
In proposed Sec. 19.12(a), one commenter was concerned about the
expense of an automated inventory system that would be a requirement
for a general order warehouse. The commenter requested that small
warehouses be allowed to continue with a manual system. In the
alternative, it was suggested that Customs should bear some of the
costs associated with an automated inventory system.
Customs Response
Customs has concluded that the requirement for an automated
inventory system should apply to all general order warehouses. Most
warehouses already have an automated system that could likewise be
extended to include G.O. merchandise; against this backdrop, automation
should not impose an unreasonable cost. In addition, it is noted that
in Sec. 19.12(a) existing G.O. warehouses will be given a phase-in
period of 2 years within which to automate their recordkeeping. This
time frame should be adequate and provide ample time especially for
smaller operators to defray some of the costs that they incur with
automation. In this regard, Customs will not be involved in the cost,
support, or maintenance of an automated inventory system. It is
properly the responsibility of the warehouse proprietor to choose an
automated system that best suits the particular needs of the warehouse
and that fulfills Customs regulatory requirements.
Comment
In proposed Sec. 19.12(a), several commenters thought that the
``phase-in'' period for automation was overly long.
Customs Response
Customs finds that this two-year phase-in allowance is reasonable
and prudent. As already observed, it will afford some of the smaller
G.O. warehouses needed time to acquire and install an automated record
system and to defray their cost in so doing.
Transferring Unentered Merchandise to a G.O. Warehouse; Sections 4.37,
122.50 and 123.10
Comment
One commenter asked that an explicit statement be included in
Sec. Sec. 4.37(b), 122.50(b) and 123.10(b) limiting to 15 calendar
days the period during which unentered merchandise may remain in the
custody of the arriving carrier or other bonded carrier to whom such
merchandise was properly transferred.
[[Page 68030]]
Customs Response
Customs believes that this 15 calendar-day limitation is already
clearly set forth in the cited regulatory provisions and that no change
is needed.
Comment
Two commenters objected to the provision in proposed Sec. Sec.
4.37(c), 19.9(a), 122.50(c) and 123.10(c) making it the responsibility
of the G.O. warehouse proprietor to prepare the transfer documentation
(CF 6043 or other approved form or an electronic equivalent) to cover
the proprietor's receipt of unentered merchandise and its transport to
the G.O. warehouse from the custody of the arriving carrier (or other
bonded carrier).
Customs Response
Customs agrees. The preparation of the transfer documentation (CF
6043 or other approved form or electronic equivalent) should remain
with the bonded carrier (or other party to which the bonded carrier has
properly transferred the merchandise). Customs acknowledges that this
is the existing procedure in most ports. As a practical matter, the
G.O. warehouse proprietor does not have sufficient information as to
the identity and quantity of the unentered cargo to expeditiously and
knowledgeably prepare such transfer documentation prior to acceptance
of the goods. Thus, shifting the responsibility for preparation of the
delivery ticket from the arriving carrier (or other bonded carrier) to
the warehouse proprietor would unnecessarily delay the transfer of
unentered merchandise to general order. Sections 4.37(c), 19.9(a),
122.50(c) and 123.10(c) are changed accordingly.
Comment
Two commenters suggested that the phrase ``Customs-approved bonded
warehouse'' appearing in proposed Sec. Sec. 4.37(d), 122.50(d), and
123.10(d) should be replaced by ``Customs-approved bonded General Order
warehouse''.
Customs Response
Customs agrees. Sections 4.37(d), 122.50(d), and 123.10(d) are
changed accordingly.
Comment
One commenter requested clarification as to the difference between
the liquidated damages provision in proposed Sec. 4.37(d) and the
penalties authorized under Sec. 4.37(a). This commenter also requested
that the phrase ``carrier or other party may be liable for* * *'' in
proposed Sec. 4.37(d) be changed to ``the carrier shall, as determined
by the port director, be liable for* * *''.
Customs Response
The penalty contained in Sec. 4.37(a) (also see Sec. Sec.
122.50(a) and 123.10(a)) may be assessed against the master or owner of
an arriving vessel, or the agent of the master or owner, for failing to
timely notify Customs of the presence of unclaimed merchandise that has
been unladen from the vessel. The penalty is up to $1,000 per bill of
lading; however, if the value of the unclaimed merchandise on the bill
is less than $1,000, the penalty will simply be equal to the value of
such merchandise.
Liquidated damages in Sec. 4.37(d) (also see Sec. Sec. 122.50(d)
and 123.10(d)) may be assessed against an arriving carrier or other
party to whom the arriving carrier has properly transferred the
unentered, unreleased merchandise if the carrier or other party fails
to timely relinquish custody over the merchandise to a warehouse
authorized to receive it. To this end, Sec. 4.37(d) is changed to make
clear that liquidated damages would only apply if the carrier fails to
``timely'' relinquish custody over the subject merchandise. Sections
122.50(d) and 123.10(d) are likewise changed. However, Customs finds
that the change suggested by the commenter is not needed. If
applicable, liquidated damages would be assessed under the
international carrier bond of the arriving carrier or the custodial
bond of the other party, as appropriate.
Comment
With respect to proposed Sec. Sec. 4.37(e), 122.50(e) and
123.10(e), several commenters wanted to give G.O. warehouse proprietors
the right to refuse any shipments that they did not want to accept. One
commenter wanted a right to return merchandise to the carrier, and
asked that a provision be added to the regulations that the carrier
must accept the return of such merchandise, if the merchandise was sent
to the warehouse improperly because it was hazardous material or was
otherwise required to be exported or destroyed.
Customs Response
A bonded warehouse proprietor may not lawfully decline to accept
general order merchandise that the warehouse is eligible to receive and
is capable of storing. The underlying general order statute (19 U.S.C.
1490(a)) does not envision an unfettered right on the part of the
warehouse proprietor to refuse general order goods. However, as already
stated in Sec. Sec. 4.37(e), 122.50(e) and 123.10(e), if the port
director finds that the warehouse proprietor cannot accept goods
because they are required by law to be exported or destroyed, or for
other good cause, such goods will remain in the custody of the arriving
carrier or other bonded carrier for purposes of export or destruction.
It is incumbent upon the warehouse proprietor to take reasonable steps
to inquire about and ascertain the nature and condition of the goods
before accepting them. Once goods are accepted into the custody of the
warehouse proprietor, the appropriate disposition of the goods would at
that point accordingly become the responsibility of the proprietor.
Title to Unclaimed Merchandise Vesting in Government; Part 127
Comment
Several commenters objected to the provisions in proposed subpart E
of part 127 regarding unclaimed merchandise the title to which vests in
the U.S. Government. In particular, they wanted to be compensated by
the Government for their storage and transportation charges on cargo to
which the Government decides to take title and retain for its own use.
These commenters contended that not being reimbursed for any expenses
they incurred for the six-month G.O. period would impose a great
financial burden upon them.
Customs Response
Customs believes that the commenters' concerns are unfounded. It is
true that under the conditions specified in 19 U.S.C. 1491(b), the
title to unclaimed merchandise may vest in the U.S. Government free and
clear of any liens or encumbrances. Yet, while the Government may
retain title to unclaimed merchandise free and clear of any liens or
encumbrances, all transfer and storage charges or expenses accruing on
the merchandise are, nevertheless, required to be paid by the Federal,
State or local government agency that receives the merchandise,
pursuant to 19 U.S.C. 1491(c). Such transfer and storage charges would
include those accruing with respect to the merchandise while subject to
general order. Section 127.42(b) is revised to make this clear.
Adoption of Proposal
In view of the foregoing, and following careful consideration of
the comments received and further review of the matter, Customs has
concluded that the proposed amendments with the
[[Page 68031]]
modifications discussed above and the additional changes discussed
below should be adopted as a final rule.
Additional Changes
Section 19.1(b) is amended to provide that a class 11 (general
order) warehouse may be designated as a constructive manipulation
(class 8) warehouse when the exigencies of the service so require.
Also, Sec. 127.21 is changed to grant port directors the authority
to defer sales of unclaimed and abandoned (general order) merchandise.
Currently, Sec. 127.21 requires that unclaimed and abandoned
merchandise be sold at the first regular sale held after the
merchandise becomes subject to sale, unless a deferment on selling it
is authorized by the Commissioner of Customs. Customs has decided that
this deferral authority be at the port level.
Furthermore, Sec. 127.28(a) is changed so as to more clearly
emphasize the necessity that drugs, seeds, plants, nursery stock and
other articles, when so required, must be inspected by a representative
of the Department of Agriculture to determine whether the articles
comply with the law and regulations administered by that Department,
especially given that, where found to be in noncompliance, such
articles would need to be immediately destroyed.
Finally, Customs has decided that Sec. 127.41(a) should be revised
to state that the port director may provide for the vesting of title to
unclaimed and abandoned merchandise in the United States, with the
concurrence of the Assistant Commissioner, Office of Field Operations,
rather than with the concurrence of the Commissioner of Customs, as
initially proposed.
Regulatory Flexibility Act and Executive Order 12866
The amendments primarily dealing with general order warehouses are
intended to expedite the handling and disposition of general order
merchandise, and to further facilitate consistent and uniform treatment
in the administration of general order warehouses. Also, the amendments
dealing with the Mod Act are intended to conform with, implement and
enforce the provisions of the statutory law and ensure the protection
of the revenue. As such, pursuant to the provisions of the Regulatory
Flexibility Act (5 U.S.C. 601 et seq.), it is certified that these
amendments will not have a significant economic impact on a substantial
number of small entities. Accordingly, the amendments are not subject
to the regulatory analysis or other requirements of 5 U.S.C. 603 and
604. Nor do they meet the criteria for a ``significant regulatory
action'' as specified in E.O. 12866.
Paperwork Reduction Act
The collections of information in this final rule document had in
part already been reviewed by the Office of Management and Budget (OMB)
in accordance with the Paperwork Reduction Act of 1995 (44 U.S.C. 3507)
and assigned OMB Control Numbers 1515-0121 (Information to be supplied
by owner or lessee in support of application to establish a bonded
warehouse facility); and 1515-0220 (Notification regarding imported
merchandise or baggage for which entry has not been made). This
document restates these collections of information without material
change.
The remaining collection of information in this final rule document
was submitted for review and has been approved by the Office of
Management and Budget (OMB) in accordance with the requirements of the
Paperwork Reduction Act of 1995 (44 U.S.C. 3507(d)) under control
number 1515-0224. 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.
This latter collection of information is contained in Sec. Sec.
4.37(c), 19.9(a), 122.50(c), and 123.10(c). This information is
necessary to: Expedite the handling and disposition of general order
merchandise; ensure that merchandise and baggage imported into the
United States has been properly accounted for in accordance with the
requirements of the statutory law; and facilitate consistent and
uniform treatment in the administration of general order warehouses.
The likely respondents and/or recordkeepers are business organizations,
including importers and carriers. The estimated average annual burden
associated with this information collection is 33 hours per respondent
or recordkeeper.
Comments on the accuracy of this burden estimate and suggestions
for reducing this burden should be sent to the Office of Management and
Budget, Attention: Desk Officer for 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, 1300 Pennsylvania
Avenue, NW., 3rd Floor, Washington, DC 20229.
Part 178, Customs Regulations (19 CFR part 178), containing the
list of approved information collections, is appropriately revised to
reflect this additional information collection.
List of Subjects
19 CFR Part 4
Cargo vessels, Common carriers, Customs duties and inspection,
Entry, Exports, Imports, Maritime carriers, Passenger vessels,
Reporting and recordkeeping requirements, Shipping, Vessels.
19 CFR Part 19
Bonds, Customs duties and inspection, Freight, Imports, Licensing,
Reporting and recordkeeping requirements, Warehouses.
19 CFR Part 122
Air carriers, Aircraft, Airports, Air transportation, Baggage,
Bonds, Customs duties and inspection, Foreign commerce and trade
statistics, Freight, Imports, Reporting and recordkeeping requirements.
19 CFR Part 123
Aircraft, Canada, Customs duties and inspection, Imports,
International boundaries, International traffic, Mexico, Motor
carriers, Railroads, Reporting and recordkeeping requirements, Trade
agreements, Vehicles, Vessels.
19 CFR Part 127
Customs duties and inspection, Exports, Freight, Reporting and
recordkeeping requirements.
19 CFR Part 141
Customs duties and inspection, Entry of merchandise, Release of
merchandise, Reporting and recordkeeping requirements.
19 CFR Part 142
Administrative practice and procedure, Common carriers (Carrier
initiative program), Customs duties and inspection, Entry of
merchandise (Line release), Reporting and recordkeeping requirements.
19 CFR Part 178
Administrative practice and procedure, Collections of information,
Imports, Paperwork requirements, Reporting and recordkeeping
requirements.
Amendments to the Regulations
Parts 4, 19, 122, 123, 127, 141, 142 and 178, Customs Regulations
(19 CFR parts 4, 19, 122, 123, 127, 141, 142 and 178), are amended as
set forth below.
[[Page 68032]]
PART 4--VESSELS IN FOREIGN AND DOMESTIC TRADES
1. The general authority citation for part 4 and the relevant
specific authority citation continue to read as follows:
Authority: 5 U.S.C. 301; 19 U.S.C. 66, 1431, 1433, 1434, 1624;
46 U.S.C. App. 3, 91.
* * * * *
Section 4.37 also issued under 19 U.S.C. 1448, 1457, 1490;
* * * * *
2. Section 4.37 is amended as follows:
a. By adding a sentence after the third sentence in paragraph (c),
b. By redesignating paragraphs (d), (e), (f), and (g),
respectively, as paragraphs (e), (f), (g), and (h), and adding a new
paragraph (d), and
c. By adding two sentences at the end of redesignated paragraph
(e).
The additions and revisions read as follows:
Sec. 4.37 General order.
* * * * *
(c) * * * The arriving carrier (or other party to whom custody of
the merchandise was transferred by the arriving carrier under a
Customs-authorized permit to transfer or in-bond entry) is responsible
for preparing a Customs Form (CF) 6043 (Delivery Ticket), or other
similar Customs document designated by the port director or an
electronic equivalent as authorized by Customs, to cover the
proprietor's receiptof the merchandise and its transport to the
warehouse from the custody of the arriving carrier (or other party to
whom custody of the merchandise was transferred by the carrier under a
Customs-authorized permit to transfer or in-bond entry) (see Sec. 19.9
of this chapter). * * *
(d) If a carrier or any other party to whom custody of the
unentered merchandise has been transferred by means of a Customs-
authorized permit to transfer or in-bond entry fails to timely
relinquish custody of the merchandise to a Customs-approved bonded
General Order warehouse, the carrier or other party may be liable for
liquidated damages equal to the value of that merchandise under the
terms and conditions of his international carrier or custodial bond, as
applicable.
(e) * * * If the port director finds that the warehouse operator
cannot accept the goods because they are required by law to be exported
or destroyed (see Sec. 127.28 of this chapter), or for other good
cause, the goods will remain in the custody of the arriving carrier or
other party to whom the goods have been transferred under a Customs-
authorized permit to transfer or in-bond entry. In this event, the
carrier or other party will be responsible under bond for exporting or
destroying the goods, as necessary (see Sec. Sec. 113.63(c)(3) and
113.64(b) of this chapter).
* * * * *
PART 19--CUSTOMS WAREHOUSES, CONTAINER STATIONS, AND CONTROL OF
MERCHANDISE THEREIN
1. The general and relevant specific authority citations for part
19 continue to read as follows:
Authority: 5 U.S.C. 301; 19 U.S.C. 66, 1202 (General Note 23,
Harmonized Tariff Schedule of the United States), 1624;
Section 19.1 also issued under 19 U.S.C. 1311, 1312, 1555, 1556,
1557, 1560, 1561, 1562;
* * * * *
2. Section 19.1 is amended as follows:
a. By adding a heading to paragraph (a),
b. By revising paragraph (a)(1),
c. By reserving paragraph (a)(10) and adding a new paragraph
(a)(11),
d. By revising paragraph (b), and
e. By adding a new paragraph (c).
The additions and revisions read as follows:
Sec. 19.1 Classes of customs warehouses.
(a) Classifications. * * *
(1) Class 1. Premises that may be owned or leased by the
Government, when the exigencies of the service as determined by the
port director so require, and used for the storage of merchandise
undergoing examination by Customs, under seizure, or pending final
release from Customs custody. Merchandise will be stored in such
premises only at Customs direction and will be held under ``general
order.''
* * * * *
(11) Class 11. Bonded warehouses, known as ``general order
warehouses,'' established for the storage and disposition exclusively
of general order merchandise as described in Sec. 127.1 of this
chapter.
(b) Manipulation. The whole or a part of any warehouse of class 1,
2, 3, 4, 5, 6, 7, or 11 may be designated a constructive manipulation
(class 8) warehouse when the exigencies of the service so require.
(c) General order. General order merchandise as described in Sec.
127.1 of this chapter may be stored and disposed of in a class 11
warehouse or a warehouse of class 3, 4, or 5, provided the class 3, 4,
or 5 warehouse has also been certified by the port director as meeting
the criteria for a class 11 warehouse, following an application under
Sec. 19.2. So far as such warehouses are used for the purpose of
handling general order goods, they will also be considered general
order (class 11) warehouses. If there is no space at a warehouse of any
of these classes available, the proprietor of such a warehouse, with
the approval of the port director of the port nearest to where the
warehouse is located, may rent or lease additional suitable premises
for the storage of general order merchandise.
3. Section 19.2 is amended by adding a new paragraph (d) and by
revising the second sentence of paragraph (f) to read as follows:
Sec. 19.2 Applications to bond.
* * * * *
(d) An applicant desiring to establish a general order warehouse
may need to establish, as a condition of approval of the application,
that the warehouse will meet minimum space requirements imposed by the
port director to accommodate the storage of general order merchandise.
Any space requirements will be posted by written notice at the
customhouse and on the appropriate Customs-authorized electronic data
interchange system. An applicant will not be subject to any minimum
space requirements that are posted after the filing of his application.
* * * * *
(f) * * * The port director may require an individual applicant to
submit fingerprints on form FD 258 or electronically at the time of
filing the application, or in the case of applications from a business
entity, may require the fingerprints, on form FD 258 or electronically,
of all employees of the business entity.
* * * * *
4. Section 19.9 is amended by revising paragraph (a) to read as
follows:
Sec. 19.9 General order, abandoned, and seized merchandise.
(a) Acceptance of merchandise. The arriving carrier (or other party
to whom custody of the merchandise was transferred by the carrier under
a Customs-authorized permit to transfer or in-bond entry) is
responsible for preparing a Customs Form (CF) 6043 (Delivery Ticket),
or other similar Customs document as designated by the port director or
an electronic equivalent as authorized by Customs, to cover the
proprietor's receipt of the merchandise and its transport to the
warehouse from the custody of the arriving carrier (or other party to
whom custody of the merchandise was transferred by the carrier under a
Customs-authorized permit to transfer or in-bond entry). A
[[Page 68033]]
joint determination will be made by the warehouse proprietor and the
bonded carrier of the quantity and condition of the goods or articles
so delivered to the warehouse. Within two working days of the joint
determination, the warehouse proprietor will report to the port
director any discrepancy between the quantity and condition of the
goods and that reported on CF 6043, or other similar Customs document
as designated by the port director or an electronic equivalent as
authorized by Customs.
* * * * *
5. Section 19.12 is amended by revising the introductory text of
paragraph (a) to read as follows:
Sec. 19.12 Inventory control and recordkeeping system.
(a) Systems capability. The proprietor of a class 11 general order
warehouse as described in Sec. 19.1 must have an automated inventory
control and recordkeeping system. Proprietors of existing class 3, 4,
or 5 warehouses as described in Sec. 19.1 certified before December 9,
2002, to receive general order merchandise must have automated
inventory control and recordkeeping systems in place with respect to
general order merchandise after a period of 2 years from December 9,
2002. All other warehouse proprietors have a choice of maintaining
manual or automated inventory control and recordkeeping systems or a
combination of manual and automated systems. All inventory control and
recordkeeping systems must be capable of:
* * * * *
PART 122--AIR COMMERCE REGULATIONS
1. The authority citation for part 122 continues to read as
follows:
Authority: 5 U.S.C. 301; 19 U.S.C. 58b, 66, 1433, 1436, 1448,
1459, 1590, 1594, 1623, 1624, 1644, 1644a.
2. Section 122.50 is amended as follows:
a. By revising the heading,
b. By adding a sentence after the third sentence in paragraph (c),
c. By redesignating paragraphs (d), (e) and (f), respectively, as
paragraphs (e), (f) and (g), and adding a new paragraph (d), and
d. By adding two sentences at the end of redesignated paragraph
(e).
The revisions and additions read as follows:
Sec. 122.50 General order merchandise.
* * * * *
(c) * * * The arriving carrier (or other party to whom custody of
the merchandise was transferred by the carrier under a Customs-
authorized permit to transfer or in-bond entry) is responsible for
preparing a Customs Form (CF) 6043 (Delivery Ticket), or other similar
Customs document as designated by the port director or an electronic
equivalent as authorized by Customs, to cover the proprietor's receipt
of the merchandise and its transport to the warehouse from the custody
of the arriving carrier (or other party to whom custody of the
merchandise was transferred by the carrier under a Customs-authorized
permit to transfer or in-bond entry) (see Sec. 19.9 of this chapter).
* * *
(d) If the carrier or any other party to whom custody of the
unentered merchandise has been transferred by a Customs-authorized
permit to transfer or in-bond entry fails to timely relinquish custody
of the merchandise to a Customs-approved bonded General Order
warehouse, the carrier or other party may be liable for liquidated
damages equal to the value of that merchandise under the terms and
conditions of his international carrier or custodial bond, as
applicable.
(e) * * * If the port director finds that the warehouse proprietor
cannot accept the goods because they are required by law to be exported
or destroyed (see Sec. 127.28 of this chapter), or for other good
cause, the goods will remain in the custody of the arriving carrier or
other party to whom the goods have been transferred under a Customs-
authorized permit to transfer or in-bond entry. In this event, the
carrier or other party will be responsible under bond for exporting or
destroying the goods, as necessary (see Sec. Sec. 113.63(c)(3) and
113.64(b) of this chapter).
* * * * *
PART 123--CUSTOMS RELATIONS WITH CANADA AND MEXICO
1. The general authority citation for part 123 continues to read as
follows:
Authority: 19 U.S.C. 66, 1202 (General Note 23, Harmonized
Tariff Schedule of the United States (HTSUS)), 1431, 1433, 1436,
1448, 1624.
* * * * *
2. Section 123.10 is amended as follows:
a. By revising the heading,
b. By adding a sentence after the third sentence in paragraph (c),
c. By redesignating paragraphs (d), (e) and (f), respectively, as
paragraphs (e), (f) and (g), and adding a new paragraph (d), and
d. By adding two sentences at the end of redesignated paragraph
(e).
The revisions and additions read as follows:
Sec. 123.10 General order merchandise.
* * * * *
(c) * * * The arriving carrier (or other party to whom custody of
the merchandise was transferred by the carrier under a Customs-
authorized permit to transfer or in-bond entry) is responsible for
preparing a Customs Form (CF) 6043 (Delivery Ticket), or other similar
Customs document as designated by the port director or an electronic
equivalent as authorized by Customs, to cover the proprietor's receipt
of the merchandise and its transport to the warehouse from the custody
of the arriving carrier (or other party to whom custody of the
merchandise was transferred by the carrier under a Customs-authorized
permit to transfer or in-bond entry) (see Sec. 19.9 of this chapter).
* * *
(d) If the carrier or any other party to whom custody of the
unentered merchandise has been transferred by a Customs-authorized
permit to transfer or in-bond entry fails to timely relinquish custody
of the merchandise to a Customs-approved bonded General Order
warehouse, the carrier or other party may be liable for liquidated
damages equal to the value of that merchandise under the terms and
conditions of his international carrier or custodial bond, as
applicable.
(e) * * * If the port director finds that the warehouse proprietor
cannot accept the goods because they are required by law to be exported
or destroyed (see Sec. 127.28 of this chapter), or for other good
cause, the goods will remain in the custody of the arriving carrier or
other party to whom the goods have been transferred under a Customs-
authorized permit to transfer or in-bond entry. In this event, the
carrier or other party will be responsible under bond for exporting or
destroying the goods, as necessary (see Sec. Sec. 113.63(c)(3) and
113.64(b) of this chapter).
* * * * *
PART 127--GENERAL ORDER, UNCLAIMED AND ABANDONED MERCHANDISE
1. The general authority citation for part 127 is revised, and
specific sectional authority citations are added, to read as follows:
Authority: 19 U.S.C. 66, 1311, 1312, 1484, 1485, 1490, 1491,
1492, 1493, 1506, 1559, 1563, 1623, 1624, 1646a; 26 U.S.C. 5753.
Section 127.12 also issued under 19 U.S.C. 1753;
Section 127.14 also issued under 19 U.S.C. 1555, 1556, 1557;
[[Page 68034]]
Section 127.21 also issued under 19 U.S.C. 1753;
Section 127.28 also issued under 15 U.S.C. 2612, 26 U.S.C. 5688;
Sections 127.31, 127.36, 127.37 also issued under 19 U.S.C.
1753.
2. Part 127 is amended by removing the statutory authority
citations that appear in parentheses immediately below the texts of
Sec. Sec. 127.1, 127.2, 127.11 through 127.14, 127.21, 127.23 through
127.29, and 127.31 through 127.37.
3. Section 127.13 is amended by revising paragraph (a) to read as
follows:
Sec. 127.13 Storage of unclaimed and abandoned merchandise.
(a) Place of storage. A class 11 bonded warehouse or warehouse of
class 3, 4, or 5, certified by the port director as qualified to
receive general order merchandise, will be responsible for the
transportation and storage of unclaimed and abandoned merchandise, upon
due notification to the proprietor of the warehouse by the arriving
carrier (or other party to whom the carrier has transferred the
merchandise under a Customs-authorized permit to transfer or in-bond
entry), as provided in Sec. Sec. 4.37(c), 122.50(c), and 123.10(c) of
this chapter. If no warehouse of these classes is available to receive
general order merchandise, or if the merchandise requires specialized
storage facilities which are unavailable in a bonded facility, the port
director, after having received notice of the presence of unentered
merchandise or baggage in accordance with the provisions of this
section, will direct the storage of the merchandise by the carrier or
by any other appropriate means.
* * * * *
4. Section 127.14 is amended by revising paragraph (a) to read as
follows:
Sec. 127.14 Disposition of merchandise in Customs custody beyond time
fixed by law.
(a) Merchandise subject to sale or other disposition.--(1) General.
If storage or other charges due the United States have not been paid on
merchandise remaining in Customs custody after the expiration of the
bond period in the case of merchandise entered for warehouse, or after
the expiration of the general order period, as defined in Sec. 127.4,
in any other case, even though any duties due have been paid, such
merchandise will be sold as provided in subpart C of this part,
retained for official use as provided in subpart E of this part,
destroyed, or otherwise disposed of as authorized by the Commissioner
of Customs under the law, unless the merchandise is entered or
withdrawn for consumption in accordance with paragraph (b) of this
section.
(2) Destruction of merchandise.--(i) Proprietor responsibility. If
the port director concludes that merchandise in general order has no
commercial value or is otherwise unsalable and cannot be disposed of at
public auction (see Sec. 127.29), and that its destruction is
warranted, the warehouse proprietor must assume responsibility under
bond, including the expense, for destroying the merchandise (see Sec.
113.63(c)(3) of this chapter). The port director will authorize such
destruction on Customs Form (CF) 3499, or on a similar Customs document
as designated by the port director or an electronic equivalent as
authorized by Customs.
(ii) Notice of destruction. Before destroying the merchandise, the
warehouse proprietor must first make a reasonable effort under bond
(see Sec. 113.63(b) and (c) of this chapter), to identify and inform
the importer (owner) or consignee regarding the intended destruction of
the merchandise. When the appropriate party is identified, notice of
destruction will be provided to the party on Customs Form (CF) 5251,
appropriately modified, or other similar Customs document as designated
by the port director or an electronic equivalent as authorized by
Customs, at least 30 calendar days prior to the date of intended
destruction.
* * * * *
5. Section 127.21 is amended by revising its first sentence to read
as follows:
Sec. 127.21 Time of sale.
All unclaimed and abandoned merchandise will be sold at the first
regular sale held after the merchandise becomes subject to sale, unless
a deferment of its sale is authorized by the port director. * * *
6. Section 127.28 is amended by revising the first sentence of
paragraph (a) to read as follows:
Sec. 127.28 Special merchandise.
(a) Drugs, seeds, plants, nursery stock, and other articles
required to be inspected by the Department of Agriculture. Drugs,
seeds, plants, nursery stock, and other articles required to be
inspected by the Department of Agriculture must be inspected by a
representative of the Department of Agriculture to ascertain whether
they comply with the requirements of the law and regulations of that
Department. * * *
* * * * *
7. Part 127 is amended by adding a new subpart E to read as
follows:
Subpart E--Title to Unclaimed and Abandoned Merchandise Vesting in
Government
Sec.
127.41 Government title to unclaimed and abandoned merchandise.
127.42 Disposition of merchandise owned by Government.
127.43 Petition of party for surplus proceeds had merchandise been
sold.
Subpart E--Title to Unclaimed and Abandoned Merchandise Vesting in
Government
Sec. 127.41 Government title to unclaimed and abandoned merchandise.
(a) Vesting of title in Government. At the end of the 6-month
period noted in Sec. 127.11 of this part, at which time merchandise
having thus remained in Customs custody is considered as unclaimed and
abandoned, the port director, with the concurrence of the Assistant
Commissioner, Office of Field Operations, may, in lieu of sale of the
merchandise as provided in subpart C of this part, provide notice to
all known interested parties under paragraph (b) of this section that
the title to such merchandise will be considered as vesting in the
United States, free and clear of any liens or encumbrances, as of the
30th day after the date of the notice unless, before the 30th day, the
merchandise is entered or withdrawn for consumption and all duties,
taxes, fees, transfer and storage charges, and any other expenses that
may have accrued on the merchandise are paid.
(b) Notice to known interested parties. Notice that the title to
unclaimed and abandoned merchandise will vest in the United States, as
described in paragraph (a) of this section, will be sent to the
following parties on Customs Form (CF) 5251, appropriately modified, or
other similar Customs document as designated by the port director or an
electronic equivalent as authorized by Customs:
(1) Importer, if known;
(2) Consignee, if name and address can be ascertained;
(3) Shipper, or the shipper's representative or agent, if
merchandise is consigned to order or the consignee cannot be
ascertained; and
(4) Any other known interested parties.
(c) Appraisement of merchandise. Before title to unclaimed and
abandoned merchandise is vested in the United States, the merchandise
will be appraised in accordance with section 402, Tariff Act of 1930,
as amended (19 U.S.C. 1401a).
[[Page 68035]]
Sec. 127.42 Disposition of merchandise owned by Government.
(a) Disposition. If title to any unclaimed and abandoned
merchandise vests in the United States under Sec. 127.41, the
merchandise may be retained by Customs for its official use, or in
Customs discretion, the merchandise may be transferred to any other
Federal, state or local agency, destroyed or disposed of otherwise.
(b) Payment of charges and expenses. All transfer and storage
charges or expenses accruing on retained or transferred merchandise
will be paid by the receiving agency. Such transfer and storage charges
or expenses will include those accruing with respect to the merchandise
while subject to general order.
Sec. 127.43 Petition of party for surplus proceeds had merchandise
been sold.
(a) Filing of petition. Under section 491(d), Tariff Act of 1930,
as amended (19 U.S.C. 1491(d)), any party who can satisfactorily
establish title to or a substantial interest in unclaimed and abandoned
merchandise, the title to which has vested in the United States, may
file a petition for the amount that would have been payable to the
party had the merchandise been sold and a proper claim made under
section 493, Tariff Act of 1930, as amended (19 U.S.C. 1493).
(b) When and with whom filed. The petition may be filed with the
port director at whose direction the title to the merchandise was
vested in the United States. If the party received notice under Sec.
127.41(b), the petition must be filed within 30 calendar days after the
day on which title vested in the United States. If the party can
satisfactorily establish that such notice was not received, the party
must file the petition within 30 calendar days of learning of the
vesting but not later than 90 calendar days from the vesting.
(c) Evidence required. The petition must show the party's title to
or interest in the merchandise, and be supported, as appropriate, with
the original bill of lading, bill of sale, contract, mortgage, or other
satisfactory documentary evidence, or a certified copy of the
foregoing. Also, if applicable, the petition must be supported by
satisfactoryproof that the petitioner did not receive notice that title
to the merchandise would vest in the United States and was in such
circumstances as prevented the receipt of notice.
(d) Payment of claim. If the claim of the owner, consignee, or
other party having title to or a substantial interest in the
merchandise, is properly established as provided in this section, the
party may be paid out of the Treasury of the United States the amount
that it is believed the party would have received under 19 U.S.C. 1493
had the merchandise been sold and a proper claim for the surplus of the
proceeds of sale been made under that provision (see Sec. 127.36 of
this part). In determining the amount that may have been payable under
19 U.S.C. 1493, given that the merchandise was not in fact sold at
public auction under 19 U.S.C. 1491(a), the appraisement of the
merchandise, as provided in Sec. 127.41(c), will be taken into
consideration. By virtue of the authority delegated to the port
director in this matter, any payment made as provided under this
paragraph in connection with the filing of a petition under paragraph
(b) of this section will be final and conclusive on all parties.
(e) Doubtful claim. Any doubtful claim for payment along with all
pertinent documents and information available to the port director will
be forwarded to the Assistant Commissioner, Office of Finance, for
instructions. The decision of the Assistant Commissioner, Office of
Finance, with respect to any petition filed under this section will be
final and conclusive on all parties.
PART 141--ENTRY OF MERCHANDISE
1. The general authority citation for part 141 continues to read as
follows:
Authority: 19 U.S.C. 66, 1448, 1484, 1624.
2. Section 141.5 is revised to read as follows:
Sec. 141.5 Time limit for entry.
Merchandise for which entry is required will be entered within 15
calendar days after landing from a vessel, aircraft or vehicle, or
after arrival at the port of destination in the case of merchandise
transported in bond. Merchandise for which timely entry is not made
will be treated in accordance with Sec. 4.37 or Sec. 122.50 or Sec.
123.10 of this chapter.
PART 142--ENTRY PROCESS
1. The authority citation for part 142 continues to read as
follows:
Authority: 19 U.S.C. 66, 1448, 1484, 1624.
2. Section 142.2 is amended by revising paragraph (a) to read as
follows:
Sec. 142.2 Time for filing entry.
(a) General rule: After arrival of merchandise. Merchandise for
which entry is required will be entered within 15 calendar days after
landing from a vessel, aircraft or vehicle, or after arrival at the
port of destination in the case of merchandise transported in bond.
* * * * *
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 new listings in the table in
appropriate numerical order to read as follows:
Sec. 178.2 Listing of OMB numbers.
------------------------------------------------------------------------
OMB control
19 CFR section Description No.
------------------------------------------------------------------------
* * * * * * *
Sec. 4.37(c)................... Preparation of delivery 1515-0224
ticket for transfer of
merchandise to general
order.
* * * * * * *
Sec. 19.9(a)................... Preparation of delivery 1515-0224
ticket for transfer of
merchandise to general
order.
* * * * * * *
Sec. 122.50(c)................. Preparation of delivery 1515-0224
ticket for transfer of
merchandise to general
order.
* * * * * * *
Sec. 123.10(c)................. Preparation of delivery 1515-0224
ticket for transfer of
merchandise to general
order.
* * * * * * *
------------------------------------------------------------------------
[[Page 68036]]
Approved: November 4, 2002.
Robert C. Bonner,
Commissioner of Customs.
Timothy E. Skud,
Deputy Assistant Secretary of the Treasury.
[FR Doc. 02-28346 Filed 11-7-02; 8:45 am]
BILLING CODE 4820-02-P