HQ 0223904 - Request for comments concerning who has right to make entry; 19 U.S.C. 1484; 19 CFR 142.3; T.D. 90-42; HQ 223016; Customs Directive 3530-02. - United States International Trade Commision Rulings

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HQ 223904

November 4, 1992

ENT-1-09 CO:R:C:E 223904 TLS

CATEGORY: ENTRY

District Director
U.S. Customs Service
800 Front Street
San Diego, California 92188

RE: Request for comments concerning who has right to make entry; 19 U.S.C. 1484; 19 CFR 142.3; T.D. 90-42; HQ 223016; Customs Directive 3530-02.

Dear Sir:

The above-referenced request has been forwarded to this office for consideration. We have considered the points raised by your office and our decision follows.

FACTS:

The case involves a contract between a U.S. corporation (hereafter "company") and a Mexican assembler (hereafter "shelter operation" or "operation") on the U.S./Mexican border. The company imports merchandise assembled in a plant leased by the shelter operation. The contract calls for the following:

1) The company is to assume legal responsibility for the payment of employees its provides to the shelter operation for assistance and training [clause 9]; 2) The company will determine the number and types of employees needed to perform the various functions required [clause 9];
3) The employees retained by the operation will receive their benefits from the company exclusively [clauses 9 4) The company agrees to pay the operation for expenses incurred while meeting its obligations to the company, which are not to be limited to "costs of labor, rent, electrical services, purchase of materials, insurance and other operational and administrative expenses" 5) All parts and materials utilized by the operation for the benefit of the company will be delivered to the shelter operation by the company and will remain the property of the company [clause 2];
6) The company is responsible for labor costs, as noted in 1), 3), and 4) above;
7) The company provides on-site personnel, as noted in 1) above;
8) The company will cover expenses incurred in the delivery, loading, and unloading of the product imported into the United States [clause 2].

The company's wholly-owned subsidiary is the contractor under the contract.

ISSUE:

Whether the company is a buying agent for the imported goods and can make entry of the merchandise manufactured by the contractor.

LAW AND ANALYSIS:

Under 19 U.S.C. 1484 only an "importer of record" has the right to make entry. "Importer of record" is defined as the owner or purchaser of the goods, or when designated by the owner, purchaser, or consignee, a licensed customhouse broker. A nominal consignee may designate a customhouse broker to make entry on its behalf but may not make entry on its own behalf. If a customhouse broker makes entry for a nominal consignee, the broker must appear as importer of record. The Act of January 12, 1983 (Pub. L. No. 97-446, 96 Stat. 2349) which repealed former section 483 of the Tariff Act of 1930, as amended, and required entries to be made by the owner, purchaser, or a duly appointed customhouse broker is an example of a constriction of the right to make entry. It would be contrary to that congressional purpose to interpret the term beyond the express language in 19 U.S.C. 1484 or Customs Directive 3530-02 of November 6, 1984.

Customs Directive No. 3530-02, entitled "Right to Make Entry" provides, in part:

An "owner" or "purchaser" is defined as 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....

Subsequently, entry issues relating to 807/9802 "shelter" operations were specifically the subject of T.D. 90-42, which held in part:

U.S. shelter corporations have the right to make entry if they are the owner or purchaser of the finished articles, or if they are a licensed customhouse broker duly appointed by the owner, purchaser, or consignee of the merchandise. A shelter corporation not licensed as a customhouse broker would be precluded from acting as importer of record, where it was engaged by the third- party U.S. client for the purpose of arranging the transportation and assembly of the articles in Mexico, and where it had no ownership interest in the finished goods.

The company contends that it has sufficient ownership interest in the subject transactions to make entry on the merchandise. It cites to HQ 223016 (June 27, 1991) to support its claim that the company's involvement is within the parameters set in HQ 223016. In that case, the shelter operation had met all of the eight criteria listed in the "FACTS" section above. The ruling found that "[a]lthough [the shelter operation] does not fall squarely within the agency criteria, there are sufficient factors present to fall within the general scope of a buying agency.... Under Customs Directive 3530-02, the Customs Service has held that buying agents meet the ownership criteria of 19 U.S.C. 1484 so as to be eligible to enter their goods.

As noted with the listing of each of the criteria above, the subject contract covers each of the criteria in one or more of the contract clauses. The contract's explicit language makes it clear that the company is to maintain sufficient control over the activities covered by the criteria. Therefore, consistent with the ruling of 223016, we find that the company in this case has sufficiently shown that it would be considered to be a buying agent on the transactions and under Customs Directive 3530-02 it has a right to make entry. It is fitting to note that as the importer of record, the company it obligated to provide information necessary for proper classification and appraisement of the imported goods. Under 19 U.S.C. 1508, importers of record are required to maintain import records.

HOLDING:

The company has shown through sufficient evidence that the extent and terms of the financial interest it has in the subject transaction qualifies it to make entry in this case. As the importer of record, it is obligated to provide information needed for proper classification and appraisement. It is appropriate to request from the importer what provisions it has made to comply with 19 U.S.C. 1509 so as to supply any information needed for a proper appraisement and classification of the goods it enters.

Sincerely,

John Durant, Director

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