00-12367. Location of Duty-Free Stores

AGENCY:

Customs Service, Treasury.

ACTION:

Final rule.

SUMMARY:

This document amends the Customs Regulations to conform with the provisions of the Miscellaneous Trade and Technical Corrections Act of 1999 regarding the permissible location of a duty-free store. In addition to the existing permissible locations, a duty-free store that is an airport store as defined in the law may also be located in, or within 25 statute miles of, any staffed port of entry, whether or not it is the same port through which a purchaser at the store will depart from the Customs territory of the United States.

EFFECTIVE DATE:

May 17, 2000.

FOR FURTHER INFORMATION CONTACT:

William G. Rosoff, Duty and Refund Determination Branch, (202-927-2077).

SUPPLEMENTARY INFORMATION:

Background

Duty-free sales enterprises, also known as duty-free stores, are Customs bonded class 9 warehouses that operate under special procedures that allow merchandise to be offered for sale to departing travelers without payment of Customs duties and taxes, on condition that the merchandise they purchase will be exported by and with them from the Customs territory of the United States. The statutory authority under which duty-free stores operate is found in 19 U.S.C. 1555(b). The regulations that implement procedures for the administration of these facilities are contained in §§ 19.35 through 19.39 of the Customs Regulations (19 CFR 19.35-19.39).

The Miscellaneous Trade and Technical Corrections Act of 1999, Pub. L. 106-36, 113 Stat. 127 (June 25, 1999) (MTTCA), amended a number of Customs laws, including the provision relating to duty-free stores (19 U.S.C. 1555(b)). Specifically, section 2417 of the MTTCA amended section 1555(b) to expand upon the places where a duty-free store could properly be located in the United States.

Location of a Duty-Free Store; Prior Law

Section 1555(b) previously required that a duty-free store be located within the port of entry from which a purchaser of duty-free store merchandise departs from the Customs territory of the United States, or within 25 statute miles of the exit point from which the purchaser departs from the Customs territory. Section 19.35(b) repeats this requirement regarding the permissible location of a duty-free store.

Location of a Duty-Free Store; Amended Law

Section 2417 of the MTTCA amended 19 U.S.C. 1555(b) to allow a duty-free store to be located anywhere within a staffed, Customs-defined port of entry, or within 25 statute miles of a staffed port of entry, whether or not it is the same port through which a purchaser of duty-free store merchandise will depart from the Customs territory of the United States, provided that the purchaser will depart through an international airport located in the Customs territory (19 U.S.C. 1555(b)(2)(C)). As such, the duty-free store that is the subject of the amendment must be an airport store as defined in 19 U.S.C. 1555(b)(8)(A).

As is already the case under the law, the Customs Service, before authorizing a duty-free store at such a location, must conclude that reasonable assurance has been provided that merchandise purchased at the store will be exported from the Customs territory. To this end, a duty-free store that is an airport store must establish procedures that provide reasonable assurance that merchandise sold by the store will be exported from the Customs territory through an international airport located within the Customs territory (19 U.S.C. 1555(b)(2)(C), (3)(A) and (8)(A); 19 CFR 19.36(b); see also 19 CFR 19.36(f) and 19.39(c)).

The statutory amendment was intended to create additional opportunities for duty-free stores to increase sales by increasing the locations where international travelers departing from the United States may make duty-free store purchases.

Accordingly, § 19.35(b), Customs Regulations, is amended to conform to the statutory amendment by providing that an airport store may also be located within any staffed port of entry, or within 25 statute miles of a staffed port.

Regulatory Flexibility Act, Executive Order 12866 and Inapplicability of Public Notice and Comment and Delayed Effective Date Requirements

Because the amendment in this final rule merely conforms the Customs Regulations to law, notice and public procedure are inapplicable and unnecessary pursuant to 5 U.S.C. 553(b)(B), and, pursuant to 5 U.S.C. 553(d)(3), a delayed effective date is not required. Because no notice of proposed rulemaking is required, it is not subject to the provisions of the Regulatory Flexibility Act (5 U.S.C. 601 et seq.). Nor does the amendment result in a “significant regulatory action” under E.O. 12866.

List of Subjects in 19 CFR Part 19

• Customs duties and inspection
• Exports
• Imports
• Reporting and recordkeeping requirements
• Warehouses

Amendment to the Regulations

Part 19, Customs Regulations (19 CFR part 19), is amended as set forth below.

PART 19—CUSTOMS WAREHOUSES, CONTAINER STATIONS, AND CONTROL OF MERCHANDISE THEREIN

1. The general authority citation for part 19 and the relevant sectional authority citation continue to read as follows:

Authority: 5 U.S.C. 301; 19 U.S.C. 66, 1202 (General Note 20, Harmonized Tariff Schedule of the United States), 1624.

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Sections 19.35-19.39 also issued under 19 U.S.C. 1555;

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2. Section 19.35 is amended by revising paragraph (b) to read as follows:

§ 19.35

Establishment of duty-free stores (Class 9 warehouses).

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(b) Location. A duty-free store (class 9 warehouse) may be established or located only:

(1) Within the same port of entry from which a purchaser of duty-free store merchandise departs the Customs territory;

(2) Within 25 statute miles from the exit point through which a purchaser of duty-free store merchandise departs the Customs territory; or

(3) In the case of an airport store, within any staffed port of entry, or within 25 statute miles from any staffed port of entry.

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Raymond W. Kelly,

Commissioner of Customs.

Approved: March 30, 2000.

John P. Simpson,

Deputy Assistant Secretary of the Treasury.