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[Congressional Record Volume 141, Number 71 (Tuesday, May 2, 1995)]
[Extensions of Remarks]
[Page E928]
From the Congressional Record Online through the Government Publishing Office [www.gpo.gov]

               REGARDING MISCELLANEOUS TRADE LEGISLATION

                                 ______

                           HON. HOWARD COBLE

                           of north carolina

                    in the house of representatives

                          Tuesday, May 2, 1995
  Mr. COBLE. Mr. Speaker, today I am reintroducing legislation to 
benefit a small business located in Burlington, North Carolina, which 
is part of my congressional district. The company is called D&S 
International, and it actively engages in overseas trade. My bill is 
virtually identical to other legislation I have sponsored during the 
previous two terms at the behest of D&S. In fact, last year's bill, 
H.R. 1318, was included in the House version of the GATT-implementing 
language.
  By way of background, D&S imported four German-made warp knitting 
machines in the fall of 1988. ``Warp knitting machines'' are classified 
under HTS 8447.20.40 and are not dutiable. D&S subsequently sold the 
machines to a Venezuelan company, which reserved the right to return 
them to D&S if certain conditions were not met. This, in fact, did 
occur, and the buyer shipped the machines back to D&S. The Customs 
``Entry Summary'' lists an entry date for this transaction of July 12, 
1989, at the port of Charleston.
  Here is where the problem arose. The entry documentation classified 
the machinery as a reentry of goods of U.S. origin. This 
misclassification was then changed to a second misclassification in 
which the goods were listed as ``knitting machines'' under HTS 
8447.90.90--dutiable at 4.4 percent.
  Upon discovery of the additional duties, D&S contacted its freight 
forwarder and the U.S. Customs Service. This was done at the customs 
level by letter and office memorandum. Instead of correcting the 
classification at this point, however, Customs engaged D&S and the 
freight forwarder in a series of discussions and exchanges of 
information.
  Pursuant to 19 U.S.C. 1514, such duty protests must be filed within 
90 days of liquidation (i.e., the time at which Customs classifies an 
imported good and gives notice to the importer). While D&S conveyed the 
necessary information in a timely manner to Customs, the company did 
not do so by using the technical agency method of documentation, called 
``Form 19.'' Since D&S did not use Form 19 within this 90-day period, 
Customs did not and will not recognize the company protest. The 
inequity of the situation is therefore manifest: the other 
correspondence, while accomplishing the same goal as Form 19, is 
considered worthless for the purposes of protesting a 
misclassification.
  The bottom line is that D&S owes approximately $28,000 in duty with 
interest accruing daily, effectively inhibiting the ability of the 
company to do business. Litigation is not a viable alternative, as it 
will only add to these costs. Accordingly, I urge my colleagues to 
support this legislation, which simply instructs the Secretary of the 
Treasury to treat the reentry of the four machines from Venezuela as a 
duty-free occurrence; and to refund any duties and interest which D&S 
has paid as a result of the misclassification.
  In closing, I should note that the Department of Treasury informed 
the Ways and Means Committee last year of its support for H.R. 1318. I 
am also inserting in the Record a copy of a March 15, 1994, 
correspondence from the General Counsel's office at Treasury which 
states that failure ``* * * to grant relief would cause the importer--
D&S--an justice.''
  I thank the Speaker.

                                   Department of the Treasury,

                                       Washington, March 15, 1994.
     Hon. Dan Rostenkowski,
     Chairman, Committee on Ways and Means, U.S. House of 
         Representatives, Washington DC.
       Dear Mr. Chairman: This letter expresses the views of the 
     Department of the Treasury on H.R. 1318, ``To provide for the 
     liquidation or reliquidation of a certain entry of warp 
     knitting machines as free of certain duties.'' The bill would 
     authorize the refund of duties mistakenly imposed.
       Although the Department generally opposes the enactment of 
     private relief bills where the importer failed to make a 
     timely claim for refund under applicable Customs regulations, 
     the Department does not object to the enactment of H.R. 1318 
     because not to grant relief would cause the importer an 
     injustice.
       D&S International of North Carolina (D&S) imported four 
     warp knitting machines from Germany duty free and sold them 
     to a Venezuelan company. The Venezuelan company then returned 
     the machines to D&S. Upon reentry, Customs mistakenly 
     classified the machines as a reentry of U.S. goods and 
     applied a rate of duty of 4.4 percent. Although D&S timely 
     protested the duty, Customs ruled that the protest was not 
     properly made. As a result, D&S now owes approximately 
     $25,000 in duties on goods which should have been re-entered 
     duty free.
       The Senate companion legislation to this bill is S. 1009. A 
     similar letter has been transmitted to the Senate Committee 
     on Finance.
       The Office of Management and Budget has advised that there 
     is no objection from the standpoint of the Administration's 
     program to the transmittal of this report to your Committee.
           Sincerely,
                                                   Jean E. Hanson.
     

                          ____________________
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