Request for Internal Advice; Duty-Free Informal Entry of Shipments for Consignment and Resale, under 19 U.S.C. §1321(a)(2)(C).

90 K Street N.E., Washington, DC 20229 U.S. Customs and Border Protection HQ H290219 July 28, 2020 ENT 6-01 H290219 SMS OT:RR:CTF:ER Mr. James Swanson Director, Cargo Security and Controls Cargo and Conveyance Security U.S. Customs and Border Protection Office of Field Operations Washington D.C. 20229 RE: Request for Internal Advice; Duty-Free Informal Entry of Shipments for Consignment and Resale, under 19 U.S.C. §1321(a)(2)(C). Dear Mr. Swanson: This is in response to your internal advice request, dated September 14, 2017, on behalf of Global Trade Solutions (“GTS”), regarding shipments made under Section 321, listing a nonresident ultimate consignee, and shipped to an Amazon Fulfillment Distribution Center (“AFDC”), for resale. We have also taken into account a ruling request submitted by GTS, dated September 11, 2017, and follow-up correspondence. FACTS: GTS is a customhouse broker which, among other things, files informal entries under 19 U.S.C. § 1321 for its clients. GTS explains that some clients import merchandise under the Section 321 administrative exemption and store the merchandise at a warehouse operated by an online fulfillment service provider, such as Amazon, eBay, or Shopify. Eventually, the merchandise is sold to a consumer in the United States, who purchases the merchandise via the online fulfillment provider website. On August 16, 2017, U.S. Customs and Border Protection (“CBP”) Port Officials at Chicago O’Hare International Airport (“ORD”), denied release of such an air cargo shipment of merchandise, consolidated under a Master Air Waybill (“MAWB”). The Port refused release of the goods because, it asserts that: 1) all consignee addresses are invalid, as individual addresses are required; and 2) the foreign shipper and the ultimate consignee cannot be the same, as the ultimate consignee is required to reside in the United States. GTS asserts that all of the House Air Waybills (“HAWB”), consolidated under the MAWBs, and used to identify the de minimis shipments, are valued less than $800, are not covered by a single order or contract being forwarded in separate lots, and are therefore, eligible for Section 321 cargo release. GTS explains that the foreign shippers are nonresident importers who send the merchandise to themselves, in care of Amazon Fulfillment, to stock the merchandise at the warehouse for eventual sale via Amazon’s website. There is no sale in the United States upon importation. GTS further explains that the online fulfillment service provider acts as an online consignment store and does not take title to the merchandise. Additionally, on November 7, 2017, in support of its ruling request, GTS provided spreadsheets of all of the informal entries consolidated under HAWBs that arrived at the Los Angeles International Airport (“LAX”) in 2017. While GTS submitted numerous entries, all of the HAWBs used to identify each shipment consistently used a nonresident name consigned to the care of Amazon; therefore, we will only focus on the following MAWBs in our analysis: MAWB numbers xxx-xxx87641 and xxx-xxx16580, which arrived in LAX on June 29, 2017, contained 222 shipments. Each individual HAWB was “shipped to” an entity having a different foreign name and address, in the care of several different Amazon locations. There were several repeat consignee names, which received multiple shipments, none of which totaled in excess of $800. However, there was the inclusion of merchandise, such as heat sinks, that are potentially subject to antidumping and countervailing duties, and are precluded from duty-free, informal entry. MAWB number xxxxxx56144, entered on August 16, 2017, comprised of 155 HAWBs. A review of the MAWB, which arrived into ORD, demonstrates that all 155 shipments were ultimately consigned to the care of Amazon in Illinois, under different nonresident shipper names. Each individual shipment was shipped by and consigned to a nonresident, under the same name. There were several repeat consignees who made multiple shipments in excess of $800 on the same day: Shipment Arrival Date Foreign Shipper Name Consignee Name c/o Amazon Listed Value of Merchandise  August 12, 2017 HJK HJK $799  August 12, 2017 HJK HJK $204     $1003  August 12, 2017 IHP IHP $780  August 12, 2017 IHP IHP $329     $1109  August 12, 2017 JMG JMG $780  August 12, 2017 JMG JMG $441     $ 1221  August 12, 2017 JHL JHL $780  August 12, 2017 JHL JHL $438     $ 1218  August 12, 2017 JHY JHY $780  August 12, 2017 JHY JHY $590     $1370  ISSUE: Whether importations made by a nonresident importer, in one day, and sent to a U.S. fulfillment facility, may qualify for informal duty-free entry, under 19 U.S.C. § 1321(a)(2)(c). LAW AND ANALYSIS: Section 321(a)(2)(C) of the Tariff Act of 1930, as amended, (19 U.S.C. § 1321(a)(2)(C)), provides for the duty-free entry of articles valued at $800 or less that are imported by one person on one day. The purpose of this provision is to minimize expense and inconvenience to the government disproportionate to the revenue that is collected. However, Section 321’s benefit does not represent an absolute right for the trade community. Specifically, 19 U.S.C. § 1321 provides for the admission: free of duty and of any tax imposed on or by reason of importation, but the aggregate fair retail value in the country of shipment of articles imported by one person on one day and exempted from the payment of duty shall not exceed an amount specified by the Secretary by regulation . . . (C) $ 800 in any other case. 19 U.S.C. § 1321(a)(2)(C). As discussed below, analysis of the issue presented requires CBP to determine: a) what constitutes a “shipment” for purposes of Section 321, and b) which entity’s values should be aggregated to decide whether the $800 cap has been exceeded. We address each element below. We further note that, our decision for purposes of Section 321, is informed by the question of who has the right to make entry, which can be a different question from what data elements CBP needs for import security purposes. In discussing Section 321 shipments, Customs in its Interim Rule, Treasury Decision (“T.D.”) 94-51, dated June 13, 1994, states in pertinent part, that: If the document used to file or support entry is an individual bill of lading to the ultimate consignee in the United States, the monetary limitation is applied on the basis of the value of the shipment on the individual bill of lading. . . On the other hand, if the document used to file or support entry is a master bill of lading (as opposed to each individual bill of lading), the monetary limitation is applied on the basis of the total value of the shipments on the master bill of lading. The same is true of the application of the monetary limitation in § 321(a)(2) for other importations (i.e., those not involving an express consignment entity). This is so because the definition of “shipment” is for general purposes in chapter I of title 19 of the CFR, unless the context of the term requires a different meaning (see 19 CFR 101.1). 59 Fed. Reg. 30,289 at 30,291 (June 13, 1994). The regulation issued pursuant to 19 U.S.C. § 1321(a)(2)(C) is 19 C.F.R. § 10.151, which provides, Subject to the conditions in § 10.153 of this part, the port director shall pass free of duty and tax any shipment of merchandise, as defined in § 101.1 of this chapter, imported by one person on one day having a fair retail value, as evidenced by, an oral declaration, or the bill of lading (or other document filed as the entry) or manifest listing each bill of lading, in the country of shipment not exceeding $ 800, unless he has reason to believe that the shipment is one of several lots covered by a single order or contract and that it was sent separately for the express purpose of securing free entry therefor or of avoiding compliance with any pertinent law or regulation. Merchandise subject to this exemption shall be entered under the informal entry procedures (see subpart C, part 143, and §§ 128.24, 145.31, 148.12, and 148.62, of this chapter). 19 C.F.R. § 10.151. We also note that per 19 C.F.R. § 10.153(d), “[c]onsolidated shipments addressed to one consignee shall be treated for purposes of §§ 10.151 and 10.152 as one importation.” See, e.g., Headquarters Ruling (“HQ”) 114113 (Oct. 26, 1998). “‘Shipment’ in the Section 321 context means the merchandise described on the bill of lading or other document used to file or support entry . . . .” 19 C.F.R § 101.1. Airway bills are considered bills of ladings for customs purposes. See T.D. 78-394 (Nov. 8. 1978). See also, HQ 114113. Subpart C of Part 143 of the CBP Regulations further provides procedural guidance for the informal entry of merchandise when the value is less than $800. Pursuant to 19 C.F.R. § 143.23, [e]xcept for mail importations . . . a shipment of merchandise that qualifies for informal entry under 19 U.S.C. § 1498 may be entered, including the information listed in paragraph (k) of this section, by presenting the bill of lading or a manifest listing each bill of lading when . . . (3) The value of the shipment does not exceed $800 and the shipment satisfies the requirements in § 10.151. 19 C.F.R. § 143.23(j). Specifically, section 143.23(k) provides that the following information is required as a part of an informal entry, made under section (j), outlined above: Country of origin of the merchandise; Shipper name, address and country; Ultimate consignee name and address; Specific description of the merchandise; Quantity; Shipping weight; and Value. 19 C.F.R. § 143.23(k). See also, 19 C.F.R. §§ 128.21 and 128.24 (Express Consignments Manifest Requirements). Additionally, pursuant to 19 C.F.R. § 143.26(b), a shipment of merchandise that meets the requirements in 19 U.S.C. § 1321(a)(2) “may be entered, using reasonable care, by the owner, purchaser, or consignee of the shipment.” As such, a determination as to which party, in this instance, is the owner, purchaser, consignee, and ultimate consignee is important in determining eligibility to make entry under Section 321. CBP regulations regarding the information required to be provided in advance of air and ocean cargo manifests, mandate the submission of over 15 data points prior to the arrival of the cargo in the United States. The regulations also elaborate on the definition of the term consignee for the modes of transportation. Specifically, in regards to air cargo, 19 C.F.R. § 122.48a states: (xi) Consignee name and address . . . for consolidated shipments, the identity of the container station (see 19 CFR 19.40-19.49), express consignment or other carrier is sufficient for the master air waybill record; for non-consolidated shipments, the name and address of the party to whom the cargo will be delivered is required regardless of the location of the party; this party need not be located at the arrival or destination port. 19 C.F.R. § 122.48a(d)(1)(xi). Similarly, in regards to all inward foreign vessel cargo, rail cargo, and truck cargo, the same consignee information is required. See 19 C.F.R. § 4.7a (c)(4)(ix)(vessel) and 19 C.F.R. § 123.91(d)(7)(rail); (for each house bill in a consolidated shipment, the consignee is the party to whom the cargo will be delivered in the United States . . . However, in the case of cargo shipped “to order of [a named party],” the carrier must report this named “to order” party as the consignee; and, if there is any other commercial party listed in the bill of lading for delivery or contact purposes, the carrier must also report this other commercial party’s identity and contact information). See also 19 C.F.R. § 123.92(d)(12)(truck cargo). Additionally, regarding importer security filings (“ISF”), the consignee name, address and number are required to be submitted within 24 hours of the arrival of a shipment to the United States. See 19 C.F.R. Part 149. Included in the ISF Final Rule, dated November 25, 2008, one commenter indicated that there will be instances where consignee information may be unknown, such as when “a foreign party without one of the required unique identification numbers is importing their own goods.” CBP responded with the below guidance: CBP understands that business practices may need to change in order for the ISF Importer to determine who the consignee in the United States is for a shipment 24 hours prior to lading. For example, for shipments that are consigned to the importer, a factory, or vendor’s negotiating bank, where those parties will not be the actual consignee if the goods are not consigned before arrival in the United States, the ISF Importer may need to designate a warehouse in the United States to receive the goods and, therefore, to be listed as the consignee. 73 Fed. Reg. 71,730 at 71,749 (Nov. 25, 2008). Accordingly, CBP regulations allow informal entry to be made by an owner, or consignee of the shipment, and require both consignee and ultimate consignee information as described above. Based on the above outlined regulations, CBP, when determining the applicability of Section 321, will first identify the shipment of merchandise, which is described by a bill of lading or other document used to file or support entry. See T.D. 94-51. To illustrate, if the document submitted is an individual bill of lading, the de minimis monetary limitation is applied on the basis of the value of the shipment on the individual bill of lading. Id. Alternatively, if the document used to file or support entry is a master bill of lading, then the de minimis monetary limitation is applied on the basis of the total value of the shipments on the master bill of lading. Id. Once the shipments are identified, CBP will ensure that any consolidated shipments are treated as one importation for determining value. In HQ 114113, dated October 26, 1998, a HAWB was used to make informal entry and it listed the individual purchasers to whom the merchandise was shipped as the consignees. CBP held that Section 10.153(d) would apply if two or more of the shipments listed on the HAWB breakdown were addressed to the same consignee. Id. In that case, the value of those shipments would be added together to determine the eligibility for de minimis entry procedures. Id. Any consolidated shipments in excess of the de minimis value would require entry under “regular informal or formal entry procedures.” Id. Finally, for shipments or consolidated shipments that qualify for de minimis entry procedures, CBP will ensure that the information required under 19 C.F.R. § 143.23(j) is filed as a part of the informal entry. Id. Additionally, in HQ 114562, dated January 7, 1999, sales agents conducted home parties in the United States and took cosmetic catalog orders, which were later shipped from Montreal, Canada directly to the sales agent, who then distributed the merchandise to the ultimate purchaser. CBP found that because the packages would be addressed to the sales agent, who would take care of the CBP entry formalities before delivering the individual orders to the purchasers, the “$200” per day limit would apply to the sales agent and not the individual purchasers. See HQ 114562. In this instance, similar to HQ 114113, GTS is making many de minimis informal entries of consolidated air cargo, by using HAWBs and listing the foreign shippers’ names and addresses. However, unlike in HQ 114113, GTS is listing the foreign shipper information as the ultimate consignee. Under CBP entry regulations, the ultimate consignee is a data element that must be provided to CBP, distinct from the consignee. See 19 C.F.R. § 143.23(k). Moreover, guidance on which party is the ultimate consignee may be found in Customs Directive No. (“C.D.”) 3550-079A, dated June 27, 2001, in which CBP outlined ultimate consignee requirements at the time of entry or release. Section 6.3 of C.D. 3550-079A, defines the ultimate consignee as follows: The ultimate consignee at the time of entry or release is defined as the party in the United States to whom the overseas shipper sold the imported merchandise. If at the time of entry or release the imported merchandise has not been sold, then the ultimate consignee at the time of entry or release is defined as the party in the United States to whom the overseas shipper consigned the imported merchandise. If the merchandise has not been sold or consigned to a U.S. party at the time of entry or release, then the ultimate consignee at the time of entry or release is defined as the proprietor of the U.S. premises to which the merchandise is to be delivered. Id. See also HQ 116004 (Sept. 29, 2003) (A primary purpose of the ultimate consignee requirement is to enable CBP to have knowledge of both the person to whom, and the place where, the imported merchandise is going in the United States. “Thus, with several limited exceptions involving merchandise temporarily imported under bond [(“TIB”)], foreign entities are precluded from assuming the role of ultimate consignee.”). Id.; C.D. No. 3550-079A. Depending on the facts of a transaction, the ultimate consignee may or may not be different from the consignee; however, generally, the ultimate consignee cannot be a foreign entity. In HQ H048943, dated April 29, 2009, CBP explained which entity is the ultimate consignee, when there is no known purchaser located in the United States. In HQ H048943, Geodis, a U.S. licensed customs broker, entered into a transaction with a nonresident importer that purchased goods from producers in the United States, some of which would be returned to the U.S. producers for repair. The foreign company proposed that it ship the goods to the United States, and for Geodis to arrange customs clearance on behalf of the foreign company. The goods would be delivered to Geodis’s warehouse and Geodis would then arrange delivery of the goods to a repair facility. The foreign company would retain title to the goods and the goods were not consigned to the repair facilities or to Geodis. The only location where the foreign company and Geodis knew that the goods would be delivered into the United States, at the time of entry, was Geodis’s warehouse. As neither the foreign company nor Geodis knew to whom the goods would be sent for repair, and the documents accompanying the goods indicated that they would be delivered to Geodis’s warehouse, CBP held that Geodis should be listed as the ultimate consignee. In the instance here at issue, GTS should not identify the foreign shipper as the ultimate consignee. First, as noted in C.D. No. 3550-079A and HQ 116004, a foreign-based ultimate consignee is generally impermissible for both formal and informal entries. Pursuant to 19 C.F.R. § 122.48a, GTS was required to provide air cargo manifest and ISF information, prior to the arrival of the shipment, including the consignee name and address. Specifically, for GTS’s consolidated shipments, the identity of the container station, express consignment, or other carrier is sufficient for the consignee of the master air waybill record; however, for the individual shipments, the consignee name and address are required, for the party to whom the cargo will be delivered, regardless of the location of the party. See 19 C.F.R. § 122.48a(d)(1)(xi). Accordingly, in this instance, for advance manifest and security purposes, the warehouse, i.e., the AFDC, is both the ultimate consignee and the consignee, as the name and address of the party to whom the cargo will be delivered is that of Amazon. In the earlier rulings described above, the entity listed on the informal entry documents was not the ultimate purchaser of the merchandise, but was the U.S. premises that housed the merchandise until ultimately t