CSMS Message: 94-001120

TO : ALL ABI BROKERS.

FROM : DALE SNELL

SUBJECT : SEIZURE OF MDSE. - DRAFT REGS.

DATE : 11/09/94

NOTICE: THE FOLLOWING DOCUMENT IS A "DRAFT" NOTICE OF PROPOSED
RULEMAKING. THIS "DRAFT" DOCUMENT IS ISSUED PURSUANT TO A NOTICE
POSTED ON THE CUSTOMS ELECTRONIC BULLETIN BOARD ON SEPTEMBER 20,
1994 (FILE: MA-INFO1.TXT), AND PUBLISHED ON PAGE 39 OF "CUSTOMS
BULLETIN AND DECISIONS" OF OCTOBER 5, 1994. ALL COMMENTS
REGARDING THIS "DRAFT" SHOULD BE FORWARDED TO: MR. CHARLES
RESSIN, CHIEF, PENALTIES BRANCH, U.S. CUSTOMS SERVICE, FRANKLIN
COURT, 1301 CONSTITUTION AVENUE, N.W., WASHINGTON, D.C. 20229.
COMMENTS ARE REQUESTED BY DECEMBER 9, 1994.

DEPARTMENT OF THE TREASURY
UNITED STATES CUSTOMS SERVICE

19 CFR PART 162

RIN 1515-AB62

SEIZURE OF MERCHANDISE

AGENCY: U.S. CUSTOMS SERVICE, DEPARTMENT OF THE TREASURY.

ACTION: NOTICE OF PROPOSED RULEMAKING.

SUMMARY: IN THIS DOCUMENT, CUSTOMS IS PROPOSING TO AMEND ITS
REGULATIONS IN RESPONSE TO ENACTMENT OF THE CUSTOMS MODERNIZATION
ACT ("THE MOD ACT"). AMONG ITS OTHER PROVISIONS, THE MOD ACT
AMENDED SECTION 596(C) OF THE TARIFF ACT OF 1930 (19 U.S.C.
1595A(C)) TO CLARIFY AND CODIFY CUSTOMS AUTHORITY TO SEIZE AND
FORFEIT MERCHANDISE INTRODUCED OR ATTEMPTED TO BE INTRODUCED INTO
THE UNITED STATES CONTRARY TO LAW. THE MOD ACT DISTINGUISHES
BETWEEN CIRCUMSTANCES UNDER WHICH SEIZURE OF SUCH MERCHANDISE IS
MANDATORY AND THOSE IN WHICH IT IS PERMISSIVE. THE PROPOSED
AMENDMENT FOLLOWS THE LEGISLATION AND SPECIFIES THE CIRCUMSTANCES
UNDER WHICH THE MANDATORY AND PERMISSIVE SEIZURES MAY TAKE PLACE.
THE PROPOSED AMENDMENT ALSO CONTAINS PROVISIONS FOR THE DETENTION
OF MERCHANDISE AND THE REMISSION OF ARTICLES SUBJECT TO SEIZURE
AND FORFEITURE.

DATE: COMMENTS MUST BE RECEIVED ON OR BEFORE INSERT DATE 60
DAYS AFTER DATE OF PUBLICATION IN THE FEDERAL REGISTER.

ADDRESSES: COMMENTS (PREFERABLY IN TRIPLICATE) MAY BE SUBMITTED
TO THE REGULATIONS BRANCH, OFFICE OF REGULATIONS AND RULINGS,
U.S. CUSTOMS SERVICE, FRANKLIN COURT, 1301 CONSTITUTION AVENUE,
NW, WASHINGTON, DC 20229, AND MAY BE INSPECTED AT FRANKLIN COURT,
1099 14TH STREET, NW., WASHINGTON, DC.

FOR FURTHER INFORMATION CONTACT: TODD SCHNEIDER, PENALTIES
BRANCH (202) 482-6950.

SUPPLEMENTARY INFORMATION:
BACKGROUND
ON DECEMBER 8, 1993, THE PRESIDENT SIGNED THE NORTH AMERICAN
FREE TRADE AGREEMENT IMPLEMENTATION ACT (PUBLIC LAW 103-182).
THE CUSTOMS MODERNIZATION PORTION OF THIS ACT (TITLE VI),
POPULARLY KNOWN AS THE CUSTOMS MODERNIZATION ACT, OR "THE MOD
ACT" BECAME EFFECTIVE WHEN IT WAS SIGNED. SECTION 624 OF TITLE
VI AMENDED 596(C) OF THE TARIFF ACT OF 1930 (19 U.S.C.
1595A(C)) TO CODIFY AND CLARIFY THE CIRCUMSTANCES UNDER WHICH
MERCHANDISE MAY BE SEIZED AND FORFEITED BY CUSTOMS. CUSTOMSIS
NOW PROPOSING TO AMEND ITS REGULATIONS SO THAT THEY WILL CONFORM
TO THE AMENDED STATUTE.
THE MOD ACT AMENDMENTS TO 1595A(C) PROVIDE THAT
MERCHANDISE WHICH IS INTRODUCED OR ATTEMPTED TO BE INTRODUCED
INTO THE UNITED STATES CONTRARY TO LAW SHALL BE TREATED IN TWO
DIFFERENT MANNERS DEPENDING UPON THE CIRCUMSTANCES OF THE
INTRODUCTION OR ATTEMPTED INTRODUCTION. IN INSTANCES WHERE THE
MERCHANDISE IS STOLEN, SMUGGLED, OR CLANDESTINELY IMPORTED OR
INTRODUCED OR IS A CONTROLLED SUBSTANCE OR CONTRABAND ARTICLE,
SEIZURE IS MANDATORY.
PARAGRAPH (A) OF THE PROPOSED AMENDMENT ADDRESSES CONDITIONS
WHERE SEIZURE IS MANDATORY.
PARAGRAPH (B) OF THE PROPOSED AMENDMENT COVERS THOSE
SITUATIONS IN WHICH SEIZURE IS PERMISSIVE. SEIZURE IS PERMISSIVE
IN INSTANCES WHERE THE MERCHANDISE IS SUBJECT TO HEALTH, SAFETY
OR CONSERVATION RESTRICTIONS WHICH HAVE NOT BEEN COMPLIED WITH;
WHEN LICENSES, PERMITS OR OTHER AUTHORIZATIONS OF A U.S.
GOVERNMENT AGENCY ARE REQUIRED BUT DO NOT ACCOMPANY THE
MERCHANDISE; WHEN COPYRIGHT, TRADEMARK, OR TRADE NAME VIOLATIONS
ARE INVOLVED; WHEN TRADE DRESS MERCHANDISE INVOLVED IS IN
VIOLATION OF A COURT ORDER CITING 43 OF THE ACT OF JULY 5, 1946
(19 U.S.C. 1125); AND WHEN THE MERCHANDISE IS MARKED
INTENTIONALLY IN VIOLATION OF 304, TARIFF ACT OF 1930 (19
U.S.C. 1304). THE LEGISLATION ALSO PROVIDES THAT MERCHANDISE MAY
BE SEIZED IF IT IS MERCHANDISE FOR WHICH THE IMPORTER HAS
RECEIVED WRITTEN NOTICES THAT PREVIOUS IMPORTATIONS OF IDENTICAL
MERCHANDISE FROM THE SAME SUPPLIER WERE FOUND TO HAVE BEEN MARKED
IN VIOLATION OF 304, TARIFF ACT OF 1930 (19 U.S.C. 1304).
PARAGRAPH (C) OF THE PROPOSED AMENDMENT PROVIDES
INSTRUCTIONS ON PROCEDURES WHICH CUSTOMS WILL FOLLOW IN RESOLVING
QUESTIONS WHICH RESULT FROM SEIZURES WHICH HAVE BEEN MADE UNDER
1595A(C).
PARAGRAPH (D) OF THE PROPOSED AMENDMENT CONTAINS LANGUAGE
SPECIFYING THAT MERCHANDISE WHICH IS MISCLASSIFIED OR INCORRECTLY
VALUED, WHERE THERE IS NO ISSUE OF ADMISSIBILITY, WILL BE SUBJECT
TO SEIZURE ONLY UNDER 1592.
THE MOD ACT ALSO PROVIDES THAT MERCHANDISE WHICH IS SUBJECT
TO QUANTITATIVE RESTRICTIONS REQUIRING A VISA, PERMIT, LICENSE OR
OTHER SIMILAR DOCUMENT FROM THE UNITED STATES GOVERNMENT OR A
FOREIGN GOVERNMENT OR ISSUING AUTHORITY PURSUANT TO A BILATERAL
OR MULTILATERAL AGREEMENT SHALL BE SUBJECT TO DETENTION UNTIL THE
APPROPRIATE VISA, LICENSE, PERMIT OR SIMILAR DOCUMENT OR STAMP IS
PRESENTED TO CUSTOMS. HOWEVER, IF THE VISA, LICENSE, PERMIT, OR
SIMILAR DOCUMENT OR STAMP IS COUNTERFEIT AS PRESENTED, THE
MERCHANDISE MAY BE SEIZED. THIS PROVISION IS CONTAINED IN
PARAGRAPH (E) OF THE PROPOSED AMENDMENT.

COMMENTS
BEFORE ADOPTING THE PROPOSED AMENDMENT, CONSIDERATION WILL
BE GIVEN TO ANY WRITTEN COMMENTS TIMELY SUBMITTED TO CUSTOMS.
COMMENTS SUBMITTED WILL BE AVAILABLE FOR PUBLIC INSPECTION IN
ACCORDANCE WITH THE FREEDOM OF INFORMATION ACT (5 U.S.C. 552),
1.4, TREASURY REGULATIONS (31 CFR 1.4), AND 103.11(B),
CUSTOMS REGULATIONS (19 CFR 103.11(B)), ON REGULAR BUSINESS DAYS
BETWEEN THE HOURS OF 9:00 A.M. AND 4:30 P.M. AT THE REGULATIONS
BRANCH, 1099 14TH STREET, NW., SUITE 4000, WASHINGTON, D.C.

REGULATORY FLEXIBILITY ACT
INSOFAR AS THE PROPOSED REGULATIONS CLOSELY FOLLOW
LEGISLATIVE DIRECTION, PURSUANT TO THE PROVISIONS OF THE
REGULATORY FLEXIBILITY ACT (5 U.S.C. 601, ET SEQ.), IT IS
CERTIFIED THAT THE AMENDMENT, IF ADOPTED, WILL NOT HAVE A
SIGNIFICANT ECONOMIC IMPACT ON A SUBSTANTIAL NUMBER OF SMALL
ENTITIES. ACCORDINGLY, IT IS NOT SUBJECT TO THE REGULATORY
ANALYSIS OR OTHER REQUIREMENTS OF 5 U.S.C. 603 AND 604.

EXECUTIVE ORDER 12866
THIS AMENDMENT DOES NOT MEET THE CRITERIA FOR A "SIGNIFICANT
REGULATORY ACTION" AS SPECIFIED IN E.O. 12866.

DRAFTING INFORMATION
THE PRINCIPAL AUTHOR OF THIS DOCUMENT WAS PETER T. LYNCH,
REGULATIONS BRANCH, OFFICE OF REGULATIONS AND RULINGS, U.S.
CUSTOMS SERVICE. HOWEVER, PERSONNEL FROM OTHER OFFICES
PARTICIPATED IN ITS DEVELOPMENT.

LIST OF SUBJECTS
19 CFR PART 162
CUSTOMS DUTIES AND INSPECTION, LAW ENFORCEMENT, SEIZURES AND
FORFEITURES.

PROPOSED AMENDMENT
IT IS PROPOSED TO AMEND 162, CUSTOMS REGULATIONS (19 CFR
PART 162) AS SET FORTH BELOW:

PART 162 - RECORDKEEPING, INSPECTION, SEARCH, AND SEIZURE
1. THE AUTHORITY CITATION FOR PART 162 WOULD BE REVISED IN
PART TO READ AS FOLLOWS:
AUTHORITY: 5 U.S.C. 301; 19 U.S.C. 66, 1624.
* * * * *
SECTION 162.23ALSO ISSUED UNDER 19 U.S.C. 1595A(C).
* * * * *
2. IN PART 162, A NEW SECTION 162.23 IS ADDED TO READ AS
FOLLOWS:
162.23 SEIZURE UNDER 596(C), TARIFF ACT OF 1930, AS AMENDED
(19 U.S.C. 1595A(C)).
(A) MANDATORY SEIZURES. THE FOLLOWING, IF INTRODUCED OR
ATTEMPTED TO BE INTRODUCED INTO THE UNITED STATES CONTRARY TO
LAW, SHALL BE SEIZED PURSUANT TO 596(C), TARIFF ACT OF 1930, AS
AMENDED (19 U.S.C. 1595A(C)):
(1) MERCHANDISE THAT IS STOLEN, SMUGGLED, OR
CLANDESTINELY IMPORTED OR INTRODUCED;
(2) A CONTROLLED SUBSTANCE, AS DEFINED IN THE
CONTROLLED SUBSTANCE ACT (21 U.S.C. 801 ET SEQ.), NOT IMPORTED IN
ACCORDANCE WITH LAW; OR
(3) A CONTRABAND ARTICLE, AS DEFINED IN 1 OF THE ACT
OF AUGUST 9, 1939 (49 U.S.C. APP. 781).
(B) PERMISSIVE SEIZURES. THE FOLLOWING, IF INTRODUCED OR
ATTEMPTED TO BE INTRODUCED INTO THE UNITED STATES CONTRARY TO
LAW, MAY BE SEIZED PURSUANT TO 596(C), TARIFF ACT OF 1930, AS
AMENDED (19 U.S.C. 1595A(C)):
(1) MERCHANDISE THE IMPORTATION OR ENTRY OF WHICH IS
RESTRICTED OR PROHIBITED BY REASON OF LAW RELATING TO HEALTH,
SAFETY, OR CONSERVATION, AND WHICH IS NOT IN COMPLIANCE WITH THE
APPLICABLE RULE, REGULATION OR STATUTE;
(2) MERCHANDISE THE IMPORTATION OR ENTRY OF WHICH
REQUIRES A LICENSE, PERMIT OR OTHER AUTHORIZATION OF A UNITED
STATES GOVERNMENT AGENCY, AND WHICH IS NOT ACCOMPANIED BY SUCH
LICENSE, PERMIT OR AUTHORIZATION;
(3) MERCHANDISE OR PACKAGING IN WHICH COPYRIGHT,
TRADEMARK OR TRADE NAME PROTECTION VIOLATIONS ARE INVOLVED
(INCLUDING, BUT NOT LIMITED TO, A VIOLATION OF 42, 43 OR 45 OF
THE ACT OF JULY 5, 1946 (15 U.S.C. 1124, 1125 OR 1127), 506 OR
509 OF TITLE 17, UNITED STATES CODE, OR 2318 OR 2320 OF TITLE
18, UNITED STATES CODE);
(4) TRADE DRESS MERCHANDISE INVOLVED IN THE VIOLATION
OF A COURT ORDER CITING 43 OF THE ACT OF JULY 5, 1946 (15
U.S.C. 1125);
(5) MERCHANDISE MARKED INTENTIONALLY IN VIOLATION OF
19 U.S.C. 1304;
(6) MERCHANDISE FOR WHICH THE IMPORTER HAS RECEIVED
WRITTEN NOTICES THAT PREVIOUS IMPORTATIONS OF IDENTICAL
MERCHANDISE FROM THE SAME SUPPLIER WERE FOUND TO HAVE BEEN IN
VIOLATION OF 19 U.S.C. 1304; OR
(7) MERCHANDISE SUBJECT TO QUANTITATIVE RESTRICTIONS,
FOUND TO BEAR A COUNTERFEIT VISA, PERMIT, LICENSE, OR SIMILAR
DOCUMENT, OR STAMP FROM THE UNITED STATES OR FROM A FOREIGN
GOVERNMENT OR ISSUING AUTHORITY PURSUANT TO A MULTILATERAL OR
BILATERAL AGREEMENT (BUT SEE PARAGRAPH (E), BELOW).
(C) RESOLUTION OF SEIZURE UNDER 1595A(C). WHEN
MERCHANDISE IS EITHER REQUIRED OR AUTHORIZED TO BE SEIZED UNDER
THIS SECTION, THE FORFEITURE INCURRED MAY BE REMITTED IN ACCORD
WITH 19 U.S.C. 1618, TO INCLUDE AS A POSSIBLE OPTION THE
EXPORTATION OF THE MERCHANDISE UNDER SUCH CONDITIONS AS CUSTOMS
SHALL IMPOSE, UNLESS ITS RELEASE WOULD ADVERSELY AFFECT HEALTH,
SAFETY, OR CONSERVATION, OR BE IN CONTRAVENTION OF A BILATERAL OR
MULTILATERAL AGREEMENT OR TREATY.
(D) SEIZURE UNDER 19 U.S.C. 1592. IF MERCHANDISE IS
IMPORTED, INTRODUCED OR ATTEMPTED TO BE INTRODUCED CONTRARY TO A
PROVISION OF LAW GOVERNING ITS CLASSIFICATION OR VALUE, AND THERE
IS NO ISSUE OF ADMISSIBILITY, SUCH MERCHANDISE SHALL NOT BE
SEIZED PURSUANT TO 19 U.S.C. 1595A(C). ANY SEIZURE OF SUCH
MERCHANDISE SHALL BE IN ACCORDANCE WITH 1592 (SEE 162.75 OF
THIS CHAPTER).
(E) DETENTION ONLY. MERCHANDISE SUBJECT TO QUANTITATIVE
RESTRICTIONS REQUIRING A VISA, PERMIT, LICENSE, OR OTHER SIMILAR
DOCUMENT, OR STAMP FROM THE UNITED STATES GOVERNMENT OR FROM A
FOREIGN GOVERNMENT OR ISSUING AUTHORITY PURSUANT TO A BILATERAL
OR MULTILATERAL AGREEMENT, SHALL BE SUBJECT TO DETENTION IN
ACCORDANCE WITH 19 U.S.C. 1499, UNLESS THE APPROPRIATE VISA,
PERMIT, LICENSE, OR SIMILAR DOCUMENT, OR STAMP IS PRESENTED TO
CUSTOMS (BUT SEE PARAGRAPH (B)(7), ABOVE, FOR INSTANCES WHEN
SEIZURE MAY OCCUR).

COMMISSIONER OF CUSTOMS
APPROVED:

DEPUTY ASSISTANT SECRETARY OF THE TREASURY