[Federal Register Volume 60, Number 72 (Friday, April 14, 1995)]
[Rules and Regulations]
[Pages 18983-18991]
From the Federal Register Online via the Government Publishing Office [www.gpo.gov]
[FR Doc No: 95-9192]



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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