HQ 225332 - Importer of record; 19 U.S.C. 1484; owner or purchaser; buying agent; C.D. 3530-02. - United States International Trade Commision Rulings

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HQ 225332

October 12, 1994

ENT-1-01-CO:R:C:E 225332 AJS

CATEGORY: ENTRY

Mr. John A. Bessich
Gibney, Anthony & Flaherty
665 Fifth Avenue
New York, NY 10022-5305

RE: Importer of record; 19 U.S.C. 1484; owner or purchaser; buying agent; C.D. 3530-02.

Dear Mr. Bessich:

This is in reply to your letter of April 11, 1994, concerning Mats Marketing Corp. (MMC) and the right to make entry.

FACTS:

MMC is a corporation which has been formed for the purpose of acting as an intermediary between U.S.-based wholesale purchasers of various kinds of fresh-cut flowers and the foreign based farms which supply such flowers. Specifically, MMC will enter into written buying agreements with various U.S. flower wholesalers, wherein MMC will act as their agent for the purchase, shipment, clearance and delivery in the U.S. of fresh cut-cut flowers from foreign suppliers. In all cases, MMC will act solely as agent for each U.S. purchaser, will not act as a reseller, and will not be related to or execute agreements with any of the foreign suppliers to which it transmits orders. Pursuant to these agreements, U.S. wholesalers will place their orders for fresh-cut flowers with foreign suppliers through MMC. Following the receipt of a number of these orders, MMC will transmit orders to the foreign suppliers on behalf of, and as agent for, each U.S. wholesaler. In this regard, MMC will be subject expressly to the direction of the U.S.- based wholesalers and will transmit orders only in accordance with their instructions. Approval as to pricing, delivery and any other terms will rest with U.S. wholesalers, as principals.

Upon receipt of orders from MMC, foreign suppliers will prepare individual invoices to the various U.S. wholesalers, in care of MMC. In accordance with what you claim is customary practice followed in the flower trade, the supplier invoices will not specify prices, but will clearly indicate that the transactions are consignment sales. (Upon sale by each wholesaler in the U.S.,
a portion of the sales price is returned to the foreign supplier). MMC will arrange to consolidate the various shipments under one air waybill. At time of arrival in the U.S., MMC will file entry in its own name as importer of record for the consolidated shipment, as agent for the U.S. wholesaler, using the services of a licensed customs broker. (You claim that for purposes of entering fresh-cut flowers shipped under consignment, market prices are generally shown on entry papers and, if required by the responsible import specialists, consignment reports are subsequently furnished which disclose the prices at which the flowers were sold in the U.S.).

ISSUE:

Whether MMC has the right to make entry in its own name as the importer of record.

LAW AND ANALYSIS:

Section 484, Tariff Act of 1930, as amended, (19 U.S.C. 1484) provides that the "importer of record" has the right to make entry. The "importer of record" is defined in section 1484(a)(2)(B), as the owner or purchaser of the goods, or when designated by the owner, purchaser, or consignee, a licensed customhouse broker. Customs Directive 3530-02, dated November 6, 1984, clarifies and explains the right to make entry. In this directive, "owner or purchaser" is defined to be "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 . . ."

The existence of a bona fide buying agency depends upon the relevant factors of the individual case. J.C. Penney Purchasing Corp. v. United States, 451 F. Supp. 973, 983 (Cust. Ct. 1978). The importer has the burden of proving the existence of a bona fide agency relationship. Rosenthal-Netter, Inc. v. United States, 679 F. Supp. 21, 23, 12 CIT 77, 78 (1988); New Trends, Inc. v. United States, 65 F. Supp. 957, 960, 10 CIT 637 (1986).

In determining whether an agency relationship exists, the primary consideration is the right of the principal to control the agent's conduct with respect to those matters entrusted to the agent. J.C. Penney, 451 F. Supp. 973, 983. The existence of a buying agency agreement has been viewed as supporting the existence of a buying agency relationship. Dorco Imports v. United States, 67 Cust. Ct. 503, 512, R.D. 11753 (1971). In addition, the courts have examined such factors as: whether the purported agent's actions were primarily for the benefit of the principal; whether the principal or the agent was responsible for the shipping and handling and the costs thereof; whether the importer could have purchased directly from the manufacturers without employing an agent; whether the intermediary was operating an independent
business, primarily for its own benefit; and whether the purported agent was financially detached from the manufacturer of the merchandise. Rosenthal-Netter, 679 F. Supp. 21, 23 (1988); New trends, 645 F. Supp. 957, 960-62.

In the instant case, MMC will enter into agreements with U.S. flower wholesalers for whom they will act as agent in the purchase, shipment, clearance and delivery of fresh-cut flowers to be sold on consignment. The wholesalers will order merchandise through MMC which will then place the orders with foreign suppliers. MMC will be subject to the express direction of the wholesalers and will place orders only upon their instructions. Approval of pricing, delivery and any other terms will rest with the wholesalers who will also bear all shipping costs. MMC will act solely as agent for each U.S. wholesaler and will not act as a seller of the imported merchandise, nor will it be related to any of the foreign sellers. MMC intends to enter into written buying agency agreements with each U.S. wholesaler; however, the agreements have not yet been negotiated.

In return for its services MMC will receive a one percent commission based on the amounts returned to the foreign suppliers by the wholesalers. MMC will issue its own invoice for commissions to each U.S. wholesaler it represents. Finally, MMC will not receive compensation from any foreign suppliers.

In light of the information presented we consider MMC to be a bona fide buying agent. As such, MMC possesses a sufficient financial interest in the subject transactions to entitle it to file entry as the importer of record. For appraisement purposes, however, please note that the existence of a buying agency relationship is factually specific. Moreover, the actual determination as to the existence of a buying agency will be made by the appraising officer at the applicable port of entry and will be based on the entry documentation submitted. The totality of the evidence must therefore demonstrate that the purported agent is in fact a bona fide buying agent and not a selling agent nor an independent seller. See 23 Cust. B. & Dec., No. 11, General Notice dated march 15, 1989 at 9; HRL 542141.

HOLDING:

MMC is a buying agent and, therefore, it has sufficient financial interest in the subject transactions to entitle it to file entry as the importer of record.

Sincerely,

John Durant, Director
Commercial Rulings Division

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