H. Z. Bernstein Co., Inc. v. United States

Decision Date10 December 1958
Docket NumberC. D. 2053.
Citation41 Cust. Ct. 282
PartiesH. Z. BERNSTEIN CO., INC. <I>v.</I> UNITED STATES.
CourtU.S. Court of Customs and Patent Appeals (CCPA)

Bailey & Muller (George J. McCormack and William Whyman of counsel) for the plaintiff.

George Cochran Doub, Assistant Attorney General (Sheila N. Ziff, trial attorney), for the defendant.

Before JOHNSON, DONLON, and RICHARDSON, Judges

JOHNSON, Judge:

This is a protest against the collector's liquidation of an entry covering two cases of watch movements, cases, and parts, without any allowance for one case which was not found for delivery to the consignee.

The merchandise was imported from Switzerland via Seaboard and Western Airlines and arrived at New York International Airport (Idlewild) on or about June 18, 1955. It was entered for warehouse on June 23, 1955, and one case was withdrawn the next day. The other case was designated for examination and was examined on June 24, 1955, at the airport. During the ensuing weekend, it was stolen and could not be found for delivery on Monday, June 27, 1955.

Thereafter, an application was made by plaintiff on customs Form 4315 for an abatement or refund of duty on the missing merchandise. The claim was rejected by B. H. Flinn, Chief, Division of Entry, Value, and Penalties, Bureau of Customs, on May 8, 1956, in a letter admitting that the case had been stolen, but stating:

Consideration has been given to the provision in section 563 (a), Tariff Act of 1930, for an allowance in duties because of the loss by theft of any merchandise while in the appraiser's stores. This provision is not applicable to the circumstances of this case.

Said section 563 (a) of the Tariff Act of 1930, as amended by the Customs Administrative Act of 1938, provides:

(a) ALLOWANCE. — In no case shall there be any abatement or allowance made in the duties for any injury, deterioration, loss, or damage sustained by any merchandise while remaining in customs custody, except that the Secretary of the Treasury is authorized, upon production of proof satisfactory to him of the loss or theft of any merchandise while in the appraiser's stores, or of the actual injury or destruction, in whole or in part, of any merchandise by accidental fire or other casualty, while in bonded warehouse, or in the appraiser's stores, or while in transportation under bond, or while in the custody of the officers of the customs, although not in bond, or while within the limits of any port of entry and before having been landed under the supervision of the officers of the customs, to abate or refund, as the case may be, the duties upon such merchandise, in whole or in part, and to pay any such refund out of any moneys in the Treasury not otherwise appropriated, and to cancel any warehouse bond or bonds, or enter satisfaction thereon in whole or in part, as the case may be, but no abatement or refund shall be made in respect of injury or destruction of any merchandise in bonded warehouse occurring after the expiration of three years from the date of importation. The decision of the Secretary of the Treasury as to the abatement or refund of the duties on any such merchandise shall be final and conclusive upon all persons.

The Secretary of the Treasury is authorized to prescribe such regulations as he may deem necessary to carry out the provisions of this subdivision and he may by such regulations limit the time within which proof of loss, theft, injury, or destruction shall be submitted, and may provide for the abatement or refund of duties, as authorized herein, by collectors of customs in cases in which the amount of the abatement or refund claimed is less than $25 and in which the importer has agreed to abide by the decision of the collector. The decision of the collector in any such case shall be final and conclusive upon all persons.

Any case pending before the United States Customs Court upon the effective date of this Act, under the provisions of section 563 of the Tariff Act of 1922, may, with the consent of the parties and the permission [sic] of the court, be transferred to the Secretary of the Treasury, or to the collector, for consideration and final determination in accordance with the provisions of this subdivision.

By virtue of Reorganization Plan No. 26 of 1950 (64 Stat. 1280), the Secretary's authority under this section was delegated to the Commissioner of Customs (Treasury Department Order No. 165, Revised, T. D. 53654) and by the latter to the Chief of the Division of Entry, Value, and Penalties (Customs Delegation Order No. 1, revised, T. D. 53694). The term "Secretary of the Treasury," as used in this decision, includes the persons to whom his authority has been delegated.

At the trial, three witnesses testified as to the procedure followed when cargo is landed at Idlewild Airport: Michael Z. Berger, who has been importing watches under his own firm name since 1948; Daniel F. Cromack, deputy collector and administrative officer in the Air Transportation Division at Idlewild Airport; and Harry Frumess, presently assistant appraiser in charge of the airport and, in June 1955, a customs examiner and assistant to the assistant appraiser in charge of the airport.

Mr. Berger testified that, under the usual procedure at Idlewild Airport, upon payment of duty at the entry division, he would be given a release which he would present first to the airline official, who checked it with the bill of lading, and then to the customs man at the airline office, who would tell him if the merchandise had already been examined. If it had been, he would go to the other end of the shed to pick it up. He stated that he could not prevent customs officials from inspecting his goods or from taking merchandise out of packages for closer examination.

According to the testimony of Mr. Cromack, cargo is removed from planes landing at Idlewild Airport by the personnel of the air carrier and is placed in the carrier's cargo room. The witness stated:

We have some thirty inspectors assigned to some twenty various cargo rooms at the airport. Upon receipt of a manifest from the carrier they are charged or responsible for the accounting of every piece of cargo on board an aircraft that arrives at the airport within that cargo room. Upon receipt of a permit, and after all Customs formalities have been complied with, they then release the cargo to the carrier for delivery to the ultimate consignee.

According to this witness, it has been the practice at Idlewild Airport for the carriers to provide adequate facilities for the examination of merchandise, so that customs officials could perform their necessary functions and in order to expedite the delivery of goods to the importers. The Government does not own, lease, or pay any rent for such premises, but customs examiners and verifiers are assigned to the various airlines twice a day. Mr. Frumess testified that, when Idlewild was set up, the airlines came to him with blueprints to find out if the space set aside for examination would be adequate for his needs; that the airlines wanted the cargo examined at the airport, because it expedited delivery by 2 days by not having it sent down to the building at 201 Varick Street.

Mr. Cromack testified that he was familiar with the Seaboard and Western office which existed in 1955 at Idlewild. He said that an inspector was assigned to that office and that he sat in a room provided by the airline adjacent to the entrance to the cargo room. Neither the inspector nor anyone under the witness' supervision had a key to the cargo room. The Government did not own or operate it, and, according to the witness, the inspector was not responsible for the safeguarding of any packages within the area.

Seaboard and Western also provided an area for the examiners to work in, to which the public was not admitted. According to Mr. Frumess, this area was sectioned off, but was not kept under lock and key. He said that when merchandise is to be inspected, the examiners ask for the cases designated by the collector for examination and personnel from the airline bring them in. A Government verifier opens the cases and the examiner inspects them. After examination, the merchandise is removed from the examination room by the personnel of the air carrier. It remains in the cargo area until it is released by customs officials for delivery to the ultimate consignee. The physical transfer is accomplished by the airlines personnel.

Mr. Frumess also testified that the personnel who work for the appraiser at the airport are not responsible for the safety of the merchandise. He said that, in his opinion, an airport examination is similar to a pier or wharf examination.

The protest herein was brought "under Section 514 of the Tariff Act against the Collector's decision disallowing abatement or allowance for loss and against the liquidation of the duty on said lost case." Since the merchandise did in fact arrive in this country, the right of the Government to duties thereon had accrued, and no allowance could have been made for the loss, except pursuant to section 563 (a), supra. Silberman-Becker Corp. v. United States, 27 C. C. P. A. (Customs) 79, C. A. D. 65; H. S. Dorf & Co., Inc. v. United States, 35 Cust. Ct. 43, C. D. 1719. In view of the fact that the amount involved here is more than $25, the collector had no authority to make such an allowance in the first instance.

Subsequent to the liquidation, an application was made to the Secretary of the Treasury for such an allowance, but the same was denied. Under the pertinent regulations (Customs Regulations, section 15.1 (f)), when such a decision has been made, the collector is required to proceed in conformity therewith. Accordingly, the collector made no change in his liquidation and forwarded the protest and all official papers to this court.

Both parties have considered this case as one involving the Secretary's denial of the application made under section...

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  • Suwannee Steamship Company v. United States
    • United States
    • U.S. Court of Customs and Patent Appeals (CCPA)
    • February 8, 1973
    ...421, T.D. 42058 (1927); Corpus Company et al. v. United States, 69 Cust.Ct. ___, C.D. 4390 (1972), appeal pending; H. Z. Bernstein Co., Inc. v. United States, 41 Cust.Ct. 282, C.D. 2053 (1958); Elof Hansson, Inc. v. United States, 41 Cust.Ct. 519, R.D. 9212 (1958), rev'd on other grounds, 4......

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