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HQ 223354

January 27, 1992

CO:R:C:E 223354 DHS


District Director of Customs
Wilmington, NC 28401

RE: Internal Advice; File - ENF 4-DD:FPF ah, x 91-1512-20150; Formal Receipt of Cargo

Dear Sir:

This is in reference to your memorandum dated July 26, 1991, inquiring about the procedure for satisfying the "formal receipt" requirement under 19 CFR 19.44(a).


On March 4, 1991, upon arrival at JFK Airport the merchandise in question, consolidated in an airfreight container, was transported under a Transportation Entry Bond, by Transcontinental Freight Systems (TFS), to the District Director of Customs in Charlotte, North Carolina. Four airfreight containers including the one in question were delivered by TFS to a container freight station (CFS) operated by American EMO Trans, Inc. (EMO). The warehouse manager for EMO, acknowledged the receipt of the merchandise by signing the bill of lading. No other documentary evidence of the receipt of the merchandise is maintained by the CFS. On March 7, 1991, the merchandise was released from the CFS operator, by one of its agents, for delivery to the consignee, prior to obtaining a proper release from the district director of Customs.

A Notice of Redelivery (CF 4647) was sent to the consignee on March 22, 1991. The consignee failed to redeliver the merchandise.

A liquidated damages case was issued by your office to EMO for violation of 19 CFR 19.44 and 19 CFR 113.63 for improper release to the consignee.

The protestant, CFS operator, contends that the bonded carrier remains liable under its bond for the improper delivery of the merchandise to the consignee since EMO, the CFS operator, never formally receipted for the merchandise by placing its signature on the application to transfer.

Your office asserts that the signature of the employee, as an authorized agent of the CFS, on the bill of lading is sufficient to satisfy the "formal receipt" requirement.


Is a signature of an authorized agent of a container freight station on a bill of lading sufficient to satisfy the "formal receipt" requirement under 19 CFR 19.44(a)?


A container station is a secured area within the United States into which containers of merchandise may be moved for the purpose of opening the containers and delivering the contents before any entry is filed with Customs or duty is paid. A container station is important because it serves as a central location for processing containerized merchandise which otherwise may not be handled timely at the dock, wharf, pier or bonded carrier's terminal.

Over the years, Customs has revised procedures to accommodate the changing environment and demands resulting from an increased flow of merchandise and pressures to facilitate movement at the port of entry. For example, T.D. 71-39, prescribed security measures for the protection of cargo in unlading areas. Proof of compliance with these measures was a prerequisite for a carrier to obtain a permit to unlade. T.D. 72-68 made these security provisions applicable to independent container station operators. Finally, T.D. 82-135 amended sections 19.40 through 19.49 of the Customs Regulations (19 CFR 19.40 - 19.49) relating to container stations, to provide that bonded carriers may transport containerized cargo in-bond to container stations at ports of destination. Prior to this T.D., the use of container stations was restricted to facilities within the port of arrival.

Along with this progression, a carrier's liability has become more finite. Under the prior regulations the importing carrier remained jointly and severally liable with the container station operator for the proper delivery of the merchandise until Customs authorized the carrier to make delivery to the consignee or the next carrier in accordance with Subpart A of Part 158, Customs Regulations (19 CFR Part 158). Upon the enactment of T.D. 82-135, the carrier's obligations terminate upon the formal receipt by the container station operator.

The specific language establishing this transfer of responsibility can be found in 19 CFR 19.44(a). This section provides that an importing carrier shall remain liable under the terms of its bond for the proper safekeeping and delivery of the merchandise until it is formally receipted for by the container station operator, if the merchandise is transferred directly to a container station from an importing carrier. (emphasis added)

The basic custodial bond conditions required of a container freight station and a carrier transporting unentered merchandise from port to port are provided for under 19 CFR 113.63. Under 19 CFR 113.63(a)(4) a container station authorized under the Customs Regulations is to comply with all regulations regarding the receipt, carriage, safekeeping, and disposition of the merchandise. Additionally, the CFS is to report promptly to Customs each arrival of a container and its merchandise by delivery of the manifest and the application for transfer, or by other approved notice. By 19 CFR 113.63(b), the responsibility of the carrier is established to receive, keep safe, report the arrival of the merchandise by delivering the manifest or other approved notice, and dispose of the merchandise in compliance with the Customs Regulations. General provisions applicable to carriers are imposed in 19 CFR 18.1(a)(1) and 18.2.

An application for the transfer of merchandise, as displayed in 19 CFR 19.42, may be utilized by a container station operator to transfer the container intact to the station. This application lists the carrier's name, the date of arrival at the pier and at the container station, an abstract of the carrier's manifest covering the containers by bill of lading number, marks, numbers, contents, consignee and the signatures of the agent of the importing carrier and the authorized agent of the container station.

A bill of lading is an instrument in writing, signed by a carrier or his agent, describing the freight, stating the name of the consignor, the terms of the contract for the carriage, and stipulating that the freight will be delivered to a specified person at a specified place. Black's Law Dictionary (rev. 4th ed. 1968). It functions as a receipt acknowledging the possession of specified property, and a contract to carry and deliver. Pollard v. Rinton, 105 U.S. 7, 26 L.Ed. 998; Cobb v. Brown, 193 F. 958, 113 C.C.A. 586; Arman v. Dover and Southbound R. Co., 179 N.C. 310, 102 S.E. 392. Liability for goods commences upon receipt by the carrier and is discharged by delivery and acceptance of the succeeding carrier (Inland Waterways Corporation v. Standard Commercial Tobacco Co., 65 F.2d 715) or container freight station.

For the purpose of identifying the goods and establishing receipt by the CFS the bill of lading is adequate. Once the signature of the warehouse manager of EMO was applied to the bill of lading as an acknowledgement that the merchandise had arrived at the CFS and possession of the merchandise had been transferred, the "formal receipt" requirement in 19 CFR 19.44(a) was fulfilled. TFS, the bonded carrier, was absolved of its duty of safekeeping the merchandise from that point forward and EMO's responsibilities under its bond commenced.


Based upon the foregoing, the signature of an authorized agent of a container freight station placed upon a bill of lading after the merchandise has been delivered and transferred to the container freight station fulfills the "formal receipt" requirement in 19 CFR 19.44(a).


John Durant, Director,

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