HQ 223751: 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"

Native CBP ruling rendition. Applicability is fact-specific; modification/revocation relationships and original publisher date are retained. Publisher sentinel year0001 means unknown date, not a historical legal adoption.

                            HQ 223751

                         March 18, 1992

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

CATEGORY:  Entry

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.

FACTS:

     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.

ISSUE:

     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"?

LAW AND ANALYSIS:

     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.

HOLDING:

     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.

                                   Sincerely,




                                   John A. Durant, Director