United States International Trade Commision Rulings And Harmonized Tariff Schedule
faqs.org  Rulings By Number  Rulings By Category  Tariff Numbers
faqs.org > Rulings and Tariffs Home > Rulings By Number > 1993 HQ Rulings > HQ 0223541 - HQ 0223772 > HQ 0223751

Previous Ruling Next Ruling

HQ 223751

March 18, 1992

WAR-5/ENT-7-07-CO:R:C:E 223751 CB


District Director
U.S. Customs Service
127 North Water Street
Ogdensburg, NY 13669

RE: Request for Internal Advice; 19 U.S.C. 1555(b); P.L. 100- 418; duty-free stores; definition of "at or beyond the exit point"

Dear Sir:

This is in reply to your internal advice request dated January 21, 1992 (your file WAR-1 92-053) on behalf of Git-N-Go (GNG) concerning the operation of a duty free bonded warehouse in the Port of Champlain, New York. Our response follows.


The proposal subject to this request was submitted by Trans- Border Customs Services, Inc. on behalf of GNG and modifies an earlier proposal approved by your office. In the proposal under consideration, duty-free merchandise would be delivered to the purchaser's vehicle in the parking lot of the sales location. The sales location is on the East Service Road approximately 1.4 miles south of the U.S./Canadian border, and, .4 miles south of Exit 43, an exit and entrance ramp on Interstate Route 87. Exit 43 is the last exit ramp allowing northbound traffic egress from I-87 onto the East Service Road. It is also the last entrance ramp allowing traffic on the East Service Road access to the northbound lanes of I-87. Exit 43 is approximately one mile south of the U.S./Canadian border. The site of GNG's sales location is not within view of Exit 43. You have determined that the entrance ramp to I-87 meets the requirements of the definition set in 19 U.S.C. 1555(b)(8)(F).

After delivering the duty-free merchandise to the vehicle in the parking lot, GNG's proposed procedure is for their vehicles to then follow the purchaser's vehicle to the entrance ramp and observe the vehicle until it has proceeded onto the ramp. GNG has indicated that their vehicle would follow groups of 3-4 purchasers' vehicles during busy periods. Further, GNG stated they would employ as many as three vehicles which would be equipped with two way radios to alert other sales location employees of purchasers who did not proceed directly to the entrance ramp or who diverted into domestic traffic.

On May 20, 1991, you approved GNG's duty-free bonded warehouse application contingent on their adherence to the delivery procedure which they had described in their application. In the approved procedure the cartman would maintain physical control of the bonded merchandise until he was in proximity of Exit 43. The cartman would deliver the merchandise to the purchaser's vehicle at this roadside location, within view of Exit 43, and observe the purchaser's vehicle until it proceeded onto the northbound entrance ramp. You state that it is your understanding that GNG has been unable to obtain the necessary N.Y. State Department of Transportation approval to deliver merchandise on the roadside and therefore GNG has proposed this alternative delivery procedure. You have determined, and it is not disputed by GNG, that persons who receive merchandise in the GNG parking lot have the ability not to depart the United States.


Whether GNG's proposal, whereby it would deliver duty-free merchandise to vehicles at its parking lot would constitute delivery "at or beyond the exit point"?


This ruling is on the issue presented. That is, whether the proposed escort procedure is legally enforceable under the relevant statute, 19 U.S.C. 1555, and Customs bond, 19 CFR 113.63. This ruling is not to be considered as a ratification of the approval given to deliver duty-free goods to persons at the entrance to I-87. That approval would appear to come within the express language of 19 U.S.C. 1555(b)(3)(F)(ii)(II) and is not considered here.

The Omnibus Trade and Competitiveness Act of 1988, P.L. 100- 418, which amended 19 U.S.C. 1555 specifically provides for the statutory and regulatory control of duty-free stores. Section 1908 amended 555(b) of the Tariff Act of 1930 (19 U.S.C. 1555(b)) to authorize the establishment and operation of duty-free stores in accordance with the provisions of that law and such regulations as the Secretary of the Treasury may prescribe. Section 1555(b)(2)(B) provides that a duty-free sales enterprise may be located anywhere within "25 statute miles from the exit point through which the purchaser...will depart the customs territory." The "exit point" is defined as the area in close proximity to an actual exit for departing from the customs territory. 19 U.S.C. 1555(b)(8)(F).

In the instant case, GNG proposes to deliver duty-free merchandise to vehicles at its parking lot and then escort the vehicles to the exit point. It is our opinion that the proposed method of delivery does not fall within the scope of the statute. The location of the duty-free store is left to the discretion of the operator as long as it is within 25 statute miles from the exit point. However, the merchandise must actually be delivered at or beyond the exit point. Specifically, under 19 U.S.C. 1555(b)(3)(F)(ii)(I), each duty free border store shall deliver duty-free merchandise at a merchandise storage location at or beyond the exit point. The wording of the statute indicates that delivery "at or beyond the exit point" is mandatory and not simply directory. It has been recognized that the use of the word "shall" normally connotes a command. Canadian Fur Trappers Corp. v United States, 691 F. Supp. 364, 367 (CIT 1988) citing Escoe v. Zerbst, 295 U.S. 490, 493 (1935). Delivery is required at or beyond the exit point. GNG's parking lot does not constitute a storage location "at or beyond the exit point".

Furthermore, it must be pointed out that Customs does not have any statutory authority to enforce GNG's monitoring of the delivery process. In other words, if GNG were to stop escorting the purchaser's vehicle to the entrance ramp of Exit 43, Customs would have no legal recourse against GNG either under the statute or under the bond. As a bonded warehouse operator, GNG is only required to comply with all regulations regarding the receipt and safekeeping of the bonded merchandise. Therefore, Customs would have to rely on GNG's voluntary compliance with this procedure. GNG is also required to maintain records relating to the exportation of the bonded merchandise. GNG does not explain how it would document that it did, in fact, escort the purchaser's vehicle to the entrance ramp and thereby insure exportation of the duty-free merchandise. Also, GNG does not have a financial incentive to report persons who fail to depart the U.S. since GNG, as the importer, would then become liable for duties.


A border store duty-free sales enterprise must deliver the merchandise at any area in close proximity to an actual exit for departure from the Customs territory. Delivery at other than the exit point does not meet the terms of the statute. The existence of an escort procedure where the escort has no legal authority to compel the customer to exit the U.S. and the Customs Service has no authority to enforce the terms of the escort procedure does not comply with the statute.


John A. Durant, Director

Previous Ruling Next Ruling