Request for a determination of the right to act as importer of record by Quality Brand Imports, Inc.

90 K Street N.E., Washington, DC 20229 U.S. Customs and Border Protection H318453 June 30, 2021 ENT 1-03 OT:RR:CTF:ER H318453 SMS Mr. Thomas Simon Quality Brand Imports, Inc. 8900 Trone Circle, Unit C Austin, TX 78758 Re: Request for a determination of the right to act as importer of record by Quality Brand Imports, Inc. Dear Mr. Simon: This is in response to your request for a ruling, dated April 30, 2021, on behalf of Quality Brand Imports, Inc. Your request is regarding whether Quality Brand Imports meets the criteria of “Importer of Record” as defined in Customs Directive No. 3530-002A in connection with imported wine. FACTS: In your letter, you request confirmation that Quality Brand Imports may, as a selling agent, act as the importer of record for European Winery imports. Quality Brand Imports acts as an intermediary between European Wineries and licensed US wine wholesalers. You explain that as a selling agent, Quality Brand Imports, will not act as a buyer, or take ownership of the goods, but only facilitate the import and sale of the wine. Quality Brand Imports enters into sale/purchasing agreements with wineries and wholesalers and receives a financial benefit for these services. You further explain that the wineries decide all aspects of the products specifications, label, design, pricing, terms of sale, and mode of transportation. Thus, Quality Brand Imports asks whether it has sufficient financial interest in the imported wines to make entry as the importer of record under 19 U.S.C. §1484(a)(1). Quality Brand Imports provided a proposed, unsigned, “Contract for Services” agreement (“the Agreement”) between it and Winery ABC of Europe, for our consideration. The Agreement sets forth various obligations for which Quality Brand Imports is responsible. Under the terms of the Agreement, Quality Brand Imports, will act as a “selling agent” to facilitate the import and sale of the wine. It will obtain the necessary Alcohol and Tobacco Tax and Trade Bureau (“TTB”) Certificate of Label Approval/Exemption (“COLA”), licenses, bonds, certifications, and other approvals. Additionally, Quality Brand Imports will assist with obtaining state licenses, permits, and approvals prior to shipment of the wine to the United States. Quality Brand Imports agrees to assist with all the logistical needs in shipping the goods from Europe to the Unites States and within the United States. Additionally, under the terms of the Agreement, Quality Brand Imports is responsible for obtaining a licensed customs broker, to make entry. Quality Brand Imports will also provide an e-commerce platform to promote the wine to US based wholesalers and retails, as well as act as a sales representative for the Winery to retailers and wholesalers in the United States. Lastly, Quality Brand Imports, will accept purchase orders from the wholesalers on behalf of the Winery, and assist with TTB tax credits and tax reimbursements in Europe. The terms of the Agreement set forth compensation to be paid to Quality Brand Imports in consideration for its services. Specifically, the Winery will agree to pay: a flat fee per bottle imported; a flat fee per bottle for customs clearance and entry services provided by the licensed broker; a fee per TTB COLA, and reimbursement for label approvals paid by Quality Brand Imports; and deposit all duties, taxes, and fees applicable to the importations, to be provided to Quality Brands Imports prior to shipment into the Unites States, upon request. Additionally, the Agreement outlines Quality Brand Imports ability to retain third-party customs broker services to facilitate customs clearance, with the Winery’s written consent. ISSUE: Whether Quality Brand Imports has sufficient financial interest in the goods, to act as importer of record. LAW AND ANALYSIS: Section 484(a)(1) of the Tariff Act of 1930, as amended (19 U.S.C. § 1484(a)(1)) provides that only parties qualifying as the “importer of record” may make entry. Those qualified parties are identified as the “owner” or “purchaser” of the goods or a broker appointed on behalf of an owner, purchaser, or consignee under 19 U.S.C. §1484(a)(2)(B). Owner and purchaser are further defined in Customs Directive, (“C.D.”), 3530-002A, dated June 27, 2001. Section 5.3.1 of the directive provides: 5.3.1 The terms “owner” and “purchaser” include any party with a financial interest in a transaction, including, but not limited to, the actual owner of the goods, the actual purchaser of the goods, a buying or selling agent, a person or firm who imports on consignment, a person or firm who imports under loan or lease, a person or firm who imports for exhibition at a trade fair, a person or firm who imports goods for repair or alteration or further fabrication, etc. Any such owner or purchaser may make entry on his own behalf or may designate a licensed Customs broker to make entry on his behalf and may be shown as the importer of record on the CF 7501. The terms “owner” or “purchaser” would not include a “nominal consignee” who effectively possesses no other right, title, or interest in the goods except as he possessed under a bill of lading, air waybill, or other shipping document. C.D. 3530-002A. Accordingly, C.D. 3530-002A, explains that the terms owner and purchaser include any party with a financial interest in a transaction, including a selling agent. Owners or purchasers have more than custodial interest in the goods. Id. Owners or purchasers have a financial interest in the goods that goes beyond that of a bailee or nominal consignee. “Financial interest” is defined as a nexus between the financial welfare of the owner or purchaser and the imported goods. See H007168 (Aug. 2, 2007) (noting that past rulings have identified “a nexus between the financial welfare of the would-be importer and the imported goods when finding that the financial interest in the goods is sufficient to entitle the would-be importer to act as importer of record”). Therefore, if as a selling agent, Quality Brand Imports has a financial interest in the wine at the time of entry, sufficient to constitute a nexus between its financial welfare and the imported goods, it may serve as the importer of record. In Headquarters Ruling (“HQ”) H240983, dated June 23, 2014, CBP examined the right to make entry of an importer acting as an agent on behalf of the manufacturer. The importer’s responsibilities included negotiating supply contracts with the ultimate purchaser; establishing a shipping schedule to meet the purchaser’s delivery requirements; providing customer service; and acting as the importer of record and filing an entry for the manufacturer when clearing Customs. The importer never took ownership of the goods. CBP held that the responsibilities and tasks required of the importer, specifically the post-entry and selling agent procedures the importer performed and the compensation the importer received for the transactions, were adequate to make entry. See H240983 (June 13, 2014). In HQ 115914, dated April 7, 2003, we addressed a similar set of facts regarding the right to make entry as an importer of record, where the requester also rendered services in a selling agent capacity. In that case, the requester, a U.S. subsidiary, communicated U.S. customer needs to its foreign parent company; made product demonstrations to the foreign parent’s U.S. customers; and communicated product specifications and acceptance criteria between U.S. customers and the foreign parent company. In return, the foreign parent paid the U.S. subsidiary a commission based on a percentage of the sales price between the foreign parent and the U.S. customer. Each of these responsibilities was outlined in a Representative Agreement between the subsidiary and its foreign parent company. There, we held that the requester had a sufficient financial interest in the goods to make entry. The requester’s responsibilities as outlined in the Representative Agreement conferred on the requester the status of a selling agent and, we found it had sufficient interest to make entry under C.D. 3530-002A. See HQ 115914 (Apr. 7, 2003). Since you indicate, Quality Brand Imports enters an agency relationship to sell wine on behalf of the wineries, for a fee; similarly, to those activities found acceptable in HQ 115914 and HQ H240983, we would find Quality Brand Imports has the right to make entry under 19 U.S.C. § 1484. Because Quality Brand Imports receives a fee for its services performed in connection to the imported wine, we find that there is a sufficient financial nexus between Quality Brand Imports and the imported goods so that Quality Brand Imports may act as importer of record. Moreover, under 19 U.S.C. § 1484(a)(2)(B), Quality Brand Imports would have the right to designate a broker to make entry on its behalf. HOLDING: Based on the above, we find that Quality Brand Imports has a sufficient financial interest in the imported wine, to act as importer of record. This decision is limited to the specific facts set forth herein. If the terms of the import or export contracts vary from the facts stipulated to herein, this decision shall not be binding on Customs and Border Protection as provided in 19 C.F.R. § 177.2(b)(1), (2) and (4), and § 177.9(b)(1) and (2). Please note that 19 C.F.R. § 177.9(b)(1) provides that “[e]ach ruling letter is issued on the assumption that all the information furnished in connection with the ruling request and incorporated in the ruing letter, either directly, by reference, or by implication, is accurate and complete in every material respect. The application of a ruling letter by CBP to the transaction to which it is purported to relate is subject to the verification of the facts incorporated in the ruling letter, a comparison of the transaction described therein to the actual transaction, and the satisfaction of any conditions on which the ruling was based.” Sincerely, Gail K. Kan, Chief Entry Process and Duty Refunds Branch