Colin Hall Clothes, Ltd. v. United States

Johnson, Judge:

The merchandise involved in this case consists of woven wool fabrics, imported from England and entered for consumption on July 25, 1957. It was assessed with duty at 37% cents per pound and 45 per centum ad valorem under paragraph 1109(a) of the Tariff Act of 1930, at the nonquota rate established by the Presidential proclamation of September 28, 1956, T.D. 54212, pursuant to the proviso attached to the modification of the rates provided for in the General Agreement on Tariffs and Trade, T.D. 51802. It is claimed that the merchandise is properly subject to duty at the quota rate of 37% cents per pound and 25 per centum ad valorem. Paragraph 1109 (a), as modified, provides:

[1109(a)] 'Woven fabrics, weighing more than four ounces per square yard, wholly or in chief value of wool, regardless of value_37%$ per lb. and 25% ad val.

Said paragraph is subject to the proviso following paragraph 1108 which reads:

NOTE: The United States reserves the right to increase the ad valorem part of the rate applicable to any of the fabrics provided for in item 1108 or 1109(a) of this Part to 45 per centum ad valorem on any of such fabrics which are entered in any calendar year in excess of an aggregate quantity by weight of 5 per centum of the average annual production of similar fabrics in the United States during the 3 immediately preceding calendar years.

Pursuant to this proviso, the President proclaimed, in T.D. 54212, that—

* * * the ad valorem part of the rate which shall be applied to the said fabrics described in the seventh recital of this proclamation, entered, or withdrawn from warehouse, for consumption m excess of the quantity specified in clause (a) of that recital, or in excess of a quantity notified to the Secretary of the Treasury pursuant to clause (b) of that recital, shall be 45 per centum ad valorem. [Italics supplied.)

Thereafter, on May 24,1957, the President notified the Secretary of the Treasury that for the calendar year of 1957 the quantity in excess of which the ad valorem rate would be 45 per centum ad valorem was 14,000,000 pounds. (T.D. 54370.)

*57In the instant case, counsel have stipulated that customs officials determined that the quota was filled at 4:07 p.m. on July 25. The collector’s memorandum states:

Note: B/L 3433 dated 12/3/57 states that instant entry was filed after quota was filled.

This memorandum was not offered in evidence by either party. Presumably, however, customs officials determined that 14,000,000 pounds had been entered, or withdrawn from warehouse, for consumption by-the stipulated time, 4:07 p.m.

At the trial, two witnesses testified for the plaintiff: George Francis Kehm and Robert E. Martin, employees of H. W. Robinson Freight Corp., customs broker, and two witnesses testified for the defendant: Harry W. Weiner, supervisory entry officer in the United States Customs Service at International Airport, and Charles Gaz-zaniga, supervisor in the cashier’s office there.

According to the testimony of these witnesses, entry papers submitted at International Airport are placed in a metal box in the collector’s office there. They are then picked up by entry clerks who check them for errors, omissions, and proper rates of duty. They see that the entry is made by the proper party and that the proper form is used. In the case of more than one package, they have to designate which package is to be held for examination by the appraiser. They see that the check is in order, the carrier certificate properly indorsed, and the invoice properly made out. If the entries are correct, they are placed in one basket on an entry clerk’s desk and, if there is an error, they are placed in another to be returned to the broker. The correct entries are gathered up by stamping clerks who stamp them in consecutive order. They are then submitted to the cashier with the proper check. He examines the check to see that it is made out properly, perforates the permit “Paid,” signs the permit and the receipt copy for the broker, and time-stamps the quota copy.

The witnesses estimated that on a busy day it might take from 15 minutes to two hours for an entry to be completely processed and timestamped.

The entry papers in the instant case were prepared by the customs broker and were deposited, together with the required documents and the check, in the metal box in the collector’s office prior to 4:07 p.m. on July 25,1957. After the regular course of procedure had been followed, the cashier perforated the permit “Paid” and time-stamped the quota copy 4:20 p.m. (defendant’s exhibit A). The quota copy was eventually given to the quota section of the Bureau of Customs.

It is plaintiff’s claim that the merchandise was entered at the time the documents were presented to the collector, which was prior to 4:07 p.m., and that, therefore, it is subject to duty at the quota rate. Defendant contends that goods cannot be considered entered for the *58purpose of quota priority until the collector has had an opportunity to examine the papers and accept or reject them and that, in the instant case, the merchandise was not entered for quota purposes until after official acceptance of the papers and the deposit of duties, which did not occur until 4:20 p.m., by which time the quota had been filled.

It is to be noted first of all that this is not a seasonal-rate quota but a quantitative quota and that the quota is exhausted as soon as 14,000,000 pounds have been entered, or withdrawn from warehouse, for consumption. Therefore, quantity is controlling, and time is pertinent only insofar as it is determined that the quota quantity has been entered by a certain time.

The courts have held that merchandise is not considered entered, or withdrawn, for consumption until the transaction is completed by the payment of estimated duties and the issuance of a delivery permit. Sucrest Corporation v. United States, 31 C.C.P.A. (Customs) 220, C.A.D. 275; United States v. Mussman Shafer, Inc., 40 C.C.P.A. (Customs) 109, C.A.D. 506; F. J. Benkart & Co., Inc. v. United States, 2 Cust. Ct. 466, C.D. 177; Dorf International, Ltd. v. United States, 37 Cust. Ct. 436, Abstract 60406; Cities Service Oil Co. v. United States, 40 Cust. Ct. 558, Abstract 61956.

Section 315 (a) of the Tariff Act of 1930, as amended by the Customs Simplification Act of 1953, provides:

(a) Except as otherwise specially provided for, the rate or rates of duty imposed by or pursuant to this Act or any other law on any article entered for consumption or withdrawn from warehouse for consumption shall be the rate or rates in effect when the documents comprising the entry for consumption or withdrawal from warehouse for consumption and any estimated or liquidated duties then required to he paid have been deposited with the appropriate customs officer in .the form and manner prescribed by regulations of the Secretary of the Treasury, * * *.

In Senate Report No. 632, made in connection with the said amendment to the tariff act (U.S. Code, Congressional and Administrative News, 83d Congress, 1st session, vol. 2, pp. 2283, 2287), it is noted that the tariff act has been amended many times as a result of trade agreements, congressional action, and court decisions, but no specific time during the importing process has been established for the application of duty and court decisions have not been completely uniform. Therefore, it was proposed that subsection (a) of section 315 be amended to—

* * * make clear that merchandise is entered for consumption or withdrawn from warehouse for consumption, as the ease may be, within the meaning of the various customs laws, proclamations, and regulations thereunder, when the documents comprising the entry for consumption or withdrawal from warehouse for consumption and any estimated or liquidated duties then required to be paid have been deposited with the appropriate customs officer in the form and manner prescribed by regulations of the Secretary of the Treasury. Under the amendment, the applicable rate of duty will be that in effect when the entry or with*59drawal lias taken place by the performance of the acts referred to in the preceding sentence [with certain exceptions as to informal mail entries and merchandise entered for transportation in bond].

Pursuant to the amendment of section 315, supra, the Customs Regulations were amended to read as follows:

8.4 Preliminary examination of entry paper; making entry or withdrawal; applicable rate of duty; date of importation. * * * sj«
sj«
(d) Entry is made under * * * a formal consumption entry * * * when the specified form is properly executed and deposited, together with any related documents required by any provision of these regulations to be filed with such form at the time of entry, at the port or station with the customs officer designated to receive such entry papers and any duties or taxes required to be paid at the time of making such entry have been deposited with the customs officer designated to receive such monies. The rate or rates of duty applicable to merchandise entered under any such entry shall be the rate or rates in effect when the making of the entry as stated above is completed, except as provided for in section 315(a) (2), Tariff Act of 1930, as amended. [Italics supplied.]

From the record in the instant case, it is apparent that the cashier was the officer designated to receive monies and that he did not actually receive payment until 4:20 p.m. Therefore, the rate in effect at that time is the applicable one.

Even though in certain situations a time lapse between the presentation of the entry papers and the payment of duties to the designated official might work a hardship, it has been held that merchandise is not “entered” until such payment has been made. F. J. Benkart & Co., Inc. v. United States, supra. In that case, the entry was filed at about 1 o’clock on November 30, but it was not accepted and released until too late for the importer to pay the duties before the official closing hour of the customhouse. The court held that since the entry had not been completed by the payment of duties and issuance of a delivery permit, the goods were not “entered for consumption” on November 30 and were, therefore, not entitled to the lower rate in effect on that day.

Plaintiff contends, however, that, under section 12.50(a) of the Customs Regulations, an entry is filed when it is delivered to the collector in proper form together with a check for estimated duties and that the term “official acceptance” in section 12.50(e) refers to the time of receipt of such entry.

Section 12.50 of the Customs Regulations provides:

12.50 Quota Priority.— (a) Merchandise shall not be regarded as entered for purposes of quota priority until an entry therefor has been filed in proper form. Consumption entries and withdrawals for consumption covering quota commodities shall be accepted only during the official office hours when the customhouse is fully staffed and open for the transaction of all customs business.
*60(b) Merchandise covered by a mail entry or other informal entry shall be regarded as presented for purposes of quota priority when all requirements have been met for the preparation of such an entry.
(c) Merchandise entered for warehouse for which a withdrawal for consumption has been made in the manner stated in section 8.4(g) prior to the opening of any quota period may not be accorded any quota benefit which may become effective after the time of such withdrawal, even though the permit of delivery for the withdrawn merchandise is not delivered to the customs warehouse officer until after the effective date of the quota benefit.
(d) When it is anticipated that entries or withdrawals, or both, covering quantities sufficient to fill a quota will be presented at the opening of the quota period, no entry for consumption or withdrawal for consumption shall be accepted before 12 noon Eastern Standard Time at any port in the Eastern Standard Time belt, 11 a.m. Central Standard Time in the Central Standard Time belt, 10 a.m. Mountain Standard Time in the Mountain Standard Time belt, or 9 a.m. Pacific Standard Time in the Pacific Standard Time belt. All importers who are present to file entries or withdrawals when the quota opens shall be given equal opportunity to do so and, if necessary, special arrangements shall be made so that all such entries may be presented at the exact moment of the opening of the quota. No importer shall be permitted to present entries or withdrawals for a quantity in excess of the quota quantity. All entries and withdrawals so presented in proper form shall be considered to have been presented simultaneously, even though some time may be required for checking purposes.
(e) When any tariff-rate quota is nearing fulfillment, the exact date, hour, and minute of official acceptance shall be noted on each entry and withdrawal and reported to the Bureau. When any absolute quota is nearing fulfillment and it is necessary to secure Bureau approval before accepting entries or withdrawals thereunder, the time of presentation of each entry or withdrawal shall be reported to the Bureau.
(f) If quota-class merchandise is the subject of an application for release under an immediate delivery permit, the time of presentation of entry shall not precede the time when the importing carrier reaches the limits of the port where entry is to be made. See sections 8.4 and 8.59 of these regulations.

A reading of this section in its entirety shows that several different terms have been used, namely, “filed,” “accepted,” “presented,” “official acceptance,” and “presentation.” In our opinion, they were not intended to be synonymous. Different procedures were provided to cover different situations. Subdivision (a) provides that no merchandise shall be considered for purposes of quota priority until an entry has been filed in proper form and that entries shall be accepted only during office hours. Subdivision (b) provides for mail and informal entries in accordance with the special provisions of section 315(a)(1) of the tariff act, as amended. Subdivision (c) provides that merchandise withdrawn from warehouse prior to the opening of a quota may not be accorded any quota benefit even though the permit of delivery is not delivered until after the effective date of the benefit. Subdivision (d) is concerned with the situation where it is anticipated that the quota will be filled at the opening of the quota period and, in such case, provides that all importers who are present when the *61quota opens shall be given equal opportunity to present entries at the exact moment of opening. All such entries are considered as presented simultaneously, even though they must be checked later. Subdivision (e) provides for cases where a tariff-rate quota is nearing fulfillment.' Where the quota is not an absolute one, the exact date, hour, and minute of oficial acceptance of the entry is to be noted and reported to the Bureau. In the case of absolute quotas, the time of presentation of each entry is to be reported. Subdivision (f) provides that the time of presentation of an entry shall not precede the time when the carrier reaches the port.

Plaintiff relies particularly upon subsection (a) and claims that, for quota priority purposes, it requires only that an entry in proper form be tendered to the collector. When this subsection is read with subsection (e), however, it becomes clear that tender of an entry in proper form is a first and general requirement applicable to all quota situations and that, where a quantitative quota is nearing fulfillment, priorities will be determined as of the exact time of official acceptance of the entry.

The term “official acceptance” is one that has been used from time to time by customs officials and has a meaning different from that of filing or presentation of an entry. For instance, section 8.4(5) of the Customs Regulations of 1943, as amended, provided:

(6) The date of entry is the date on which an entry is officially accepted by a collector of customs. A formal consumption entry or a warehouse entry shall be officially accepted on the date that the importer has completed the performance of all acts required of him which are necessary to secure the issuance of a consumption entry permit or a permit for the transfer of the merchandise to a bonded warehouse. The date of official numbering, which shall be noted on each entry, shall in each case correspond with the date of acceptance, thus establishing the date of entry. * * *

The corresponding provision in the present regulations is section 8.4(d), supra, which provides, in accordance with section 315 of the tariff act, as amended, that an entry transaction is completed by filing the proper documents and depositing the required duties and taxes with the designated customs officials.

It seems evident that the term “official acceptance,” as used in section 12.50(e) of the present regulations, was intended to mean final acceptance by customs officials after completion of the entry transaction by filing the proper documents and depositing estimated duties with the designated officials. One method of procedure was set up where a quota was expected to be filled at the opening thereof and another where a quota was nearing fulfillment. In the former case, the entries were considered to have been made simultaneously. Presumably, any that were not in proper form or unaccompanied by payment would be rejected later and would not participate in the quota. In the case of quotas nearing fulfillment, however, only the entries *62which were accepted were reported to the Bureau with the exact time of acceptance. From the reports it receives from the various ports, the Bureau ascertains the priorities and determines which merchandise is dutiable at the quota rate. Any entries not in proper form or rejected for any reason are eliminated from consideration in the collector’s office and are not listed in the report to the Bureau. If this procedure is followed in all ports, as is to be presumed, in view of the regulations, the priorities would be the same whether proper entries are noted in order of presentation or in order of acceptance, unless the time lapse is much greater in some ports than in others. Plaintiff claims, in its brief, that this might occur, but no facts are in the record to show that there actually was any difference in time lapse among the ports or that such variance, if any, resulted in a difference in priorities to the detriment of the plaintiff. The cutoff time might have been earlier if all entries had been stamped with the time of presentation rather than the time of acceptance, but the same merchandise would have been included in the same order. There is nothing before us from which we can determine that, even if another procedure had been followed, plaintiff’s merchandise would have fallen within the quota.

In view of section 315 (a) of the Tariff Act of 1930, as amended, and the regulations issued thereunder, merchandise is not entered, or withdrawn from warehouse, for consumption until the documents have been deposited with the customs official designated to receive them and the duties have been paid to the official designated to receive the money. This was what was comprehended by the term “official acceptance” in section 12.50 (e) of the regulations. Since the applicable rate of duty is the one in effect at the time when an entry has been completed, whether or not particular merchandise falls within a quota must also be determined as of that time. Thus, determination of quota priorities on the basis of the time of acceptance and completion of the entries is reasonable and proper and in accordance with the statute.

For the reasons stated, the instant merchandise does not fall within the quota for woven fabrics and is not entitled to the lower rate of duty. The protest is overruled and judgment will be rendered for the defendant.