to be reentered into the commerce of this country without payment of U.S. customs duties and taxes. The result is a substantial loss of revenue to the United States. To prevent this loss of revenue, Customs proposed to require that landing certificates be presented to confirm that certain purchases from duty-free shops are actually exported to Mexico. Interested parties were given until October 11, 1977, to submit written comments. After consideration of all comments, as well as comments received in response to a Bureau of Alcohol, Tobacco and Firearms notice published September 27, 1977, in the Federal Register (42 F.R. 49471) proposing regulations clarifying the authority of U.S. Customs officials to require landing certificates as evidence that domestically produced tobacco products have actually been exported, it has been determined to adopt the new policy with several changes as discussed below. DISCUSSION OF COMMENTS AND CHANGES MONETARY OR QUANTITATIVE LIMITS Several commenters noted that the $250 value limit which would continue to be permitted on exportation of alcoholic beverages without presentation of a landing certificate was unrealistically high. They contended that value limit might represent as many as six cases of alcoholic beverages, a quantity in excess of that considered appropriate for normal personal use. Because Customs agrees with this contention, the quantity of alcoholic beverages that will be permitted exportation without presentation of a landing certificate is being reduced to 12 quarts. Customs also has determined that five (rather than two) cartons represent a quantity of cigarettes appropriate for normal personal use. This requirement applies to both domestic and imported cigarettes. The Bureau of Alcohol, Tobacco and Firearms concurs with this limitation as well as with the necessity for the landing certificate requirement. ENFORCEMENT OF MEXICAN LAWS Several commenters stated that the principal purpose and effect of the proposed change are to assist Mexico in enforcing its customs laws. It is U.S. Customs policy to cooperate with Mexico in preventing violations of its customs laws. This policy is manifested by the Mexican-American Mutual Customs Assistance Agreement signed September 30, 1976, effective January 26, 1977. The relationship between the Governments of the United States and Mexico historically has been one of mutual cooperation and assistance. The particular concern of Customs, in this instance, is to prevent the illegal reentry into the United States of duty and/or tax-free merchandise. This reentry adversely affects the legitimate interests of United States-Mexico border communities as well as the revenues of the United States and various governmental bodies. This policy change has been designed to remove the financial rewards now available to those who would smuggle this merchandise back into the United States. To do this, Customs must ensure that the affected exports are presented to Mexican customs and that presentation is acknowledged by having the landing certificate signed by the appropriate Mexican official. Presentation of the exported merchandise to Mexican customs greatly reduces the likelihood that the merchandise will be reentered into the United States illegally. The benefit resulting to the Mexican Government from this change is corollary to the pressing need to eliminate the illegal reentry of the merchandise into the United States. While enforcing Mexican customs laws thus is not the principal purpose of the landing certificate requirement, once it was established that landing certificates were necessary for protection of the U.S. revenue, support of the antismuggling activities of Mexican customs is fully intended. PURPOSE OF DUTY-FREE SHOPS Several commenters indicated some confusion concerning the purpose of duty-free shops. Duty-free shops, as they are known today, began to appear in many countries in the late 1940's, principally at international airports. By the time duty-free shops made their appearance in the United States in the early 1960's, their purpose and scope were well known to international travelers. Extensive publicity and tremendous increases in international travel have made travelers aware of the purpose of duty-free shops-to facilitate small purchases, free of duty, for personal use abroad. With this purpose in mind, Customs in 1965 established administrative procedures under which merchandise may be withdrawn from bonded warehouses in small quantities and "sold to persons departing from the United States." Procedures for the withdrawal of merchandise in larger quantities from bonded warehouses for export were established many years before. The new procedures were designed to separate the relatively new concept of small, personaluse quantity exportations, typical of duty-free shops, from the regular bonded warehouse program. Duty-free shops, therefore, are subject to the same laws and regulations as are all bonded warehouses. The procedures developed for the bonded warehouse operating as a dutyfree shop are designed merely to facilitate personal-use quantity exportations, and are not intended for use in commercial quantity exportations. Customs intends, by this change of policy, to correct an anomaly which has existed since landing certificates were first required in 1973 by section 113.55 (d) of the Customs Regulations (19 CFR 113.55(d)). border crossings and totally inadequate in any event. Customs experience has demonstrated that the mere fact that a person or vehicle reports to Customs officers in any country does not insure that the merchandise carried is declared and duty or tax paid. However, a landing certificate signed by a Mexican official insures that the merchandise exported was presented to Mexican customs. Another commenter complained of the burden allegedly placed on the purchaser of merchandise from a duty-free shop to provide Customs with a landing certificate for the merchandise exported. Because it is the proprietor of the duty-free shop, not the purchaser, who has the duty to present a landing certificate to Customs, there is no inconvenience to the purchaser. Customs also believes that the burden placed on the proprietor to obtain the landing certificate is minimal. Most commercial exporters have a representative at the Mexican customhouse for this purpose. Whatever method is used to obtain the certificate, the distance from the point of export to the point at which the certificate is available is seldom more than 200 yards. Possible delay in the issuance of landing certificates by Mexican officials also was mentioned as a disadvantage. Section 113.55(d) of the Customs Regulations provides that a foreign landing certificate must be produced within 6 months from the date the merchandise has been exported from the United States. Moreover, Customs experience has shown that landing certificates can and have been acquired from Mexican officials and timely presented for thousands of shipments made during the past 4 years from other bonded warehouses subject to the requirement. In addition, Customs intends to work with operators of duty-free shops and Mexican authority to assure that landing certificates are made available on a timely and efficient basis. One commenter requested that airport duty-free shop operations be exempted from the landing certificate requirement. Customs experience indicates that the difficulties found along the United StatesMexican land border seldom occur at duty-free shops operated at public airports. Accordingly, Customs will exempt exportations of duty-free shop merchandise which accompany airline passengers departing the United States by scheduled airline. One duty-free shop proprietor claimed that the landing certificate requirement could cause changes in sales patterns that would require adjustments to his inventories of the affected commodities which could not be accomplished by the effective date of the new policy. To alleviate this problem, Customs will grant temporary waivers of the landing certificate requirement to permit adjustment, on an individual basis and at the request of the proprietor, provided he satisfies Customs that his request is bona fide. CHANGE IN POLICY Effective January 31, 1979, a landing certificate will be required for each exportation to Mexico of the following commodities, regardless of value, whenever the quantity exported exceeds the amount indicated: Alcoholic beverages-12 quarts. Cigarettes-5 cartons. Watches-2 each. Effective February 15, 1979, a landing certificate will be required whenever a purchase of the commodities listed below for exportation to Mexico exceeds $250. However, a landing certificate will not be required for the exportation of a single item with a purchase price over $250. (For these purposes, bulk-type commodities such as powdered milk and suit material will not be considered as "single items.") Chocolates Costume jewelry Porcelain Effective March 15, 1979, a landing certificate will be required whenever a purchase of the commodities listed below for exportation to Mexico exceeds $250. However, a landing certificate will not be required for the exportation of a single item with a purchase price over $250. Christmas ornaments Cosmetics Crystal Radios Tape recorder players A temporary waiver from this change of policy may be granted by Customs on an individual basis at the request of a duty-free shop proprietor who has satisfied Customs that this request is bona fide. The purpose of the waiver would be to allow a duty-free shop proprietor to adjust inventories of the foregoing commodities to respond to changed sales patterns. However, no waiver will be granted after 6 months from the effective date of a landing certificate requirement without permission from the Director, Inspection and Control Division Headquarters, U.S. Customs Service. Once inventories have been. adjusted, temporary waivers no longer will be granted. The foregoing requirements for presentation of landing certificates will not apply to exportations of duty-free shop merchandise which accompany airline passengers departing the United States by scheduled airline. Customs emphasizes that this change of policy is not intended to and will not hinder purchases by individuals from duty-free shops of merchandise for export in personal-use quantities. Those sales will continue to be accommodated for the convenience of the individual traveler. G. R. DICKERSON, Acting Commissioner of Customs. Approved: October 26, 1978 RICHARD J. DAVIS, Assistant Secretary of the Treasury. [Published in the Federal Register, Dec. 19, 1978 (43 F.R. 59196)] (T.D. 79-2) Synopses of drawback decisions The following are synopses of drawback rates and amendments issued October 28, 1977, to October 2, 1978, inclusive, pursuant to section 22.1 and 22.5, inclusive, Customs Regulations. In the synopses below are listed, for each drawback rate or amendment approved under section 1313(a), the name of the company, the specified articles on which drawback is authorized, the merchandise which will be used to manufacture or produce these articles, the factories where the work will be accomplished, the date the statement was signed, the basis for determining payment, the effective dates of exportation, the Regional Commissioner who issued the rate, and the date on which it was issued. (DRA-1-09) Dated: December 11, 1978. DONALD W. LEWIS (For Leonard Lehman, Assistant Commissioner, Regulations and Rulings.) (A) Company: ATF Davidson Co. Articles: Offset printing presses. Merchandise: Imported printing press paper feeder. Factory: Whitinsville, Mass. Statement signed: June 22, 1978. Basis of claim: Appearing in. Effective date: July 1, 1978. Rate issued by Regional Commissioner of Customs: Boston, July 7. 1978. (B) Company: All-Power Supply Co. Articles: Diesel-driven electric generator sets. |