HQ 114113 - Request for Internal Advice; 19 U.S.C. ?1321; Consolidated Informal Entries; Bills of Lading; House Airway Bills; 19 CFR - United States International Trade Commision Rulings

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HQ 114113

October 26, 1998

CON-1-RR:IT:EC 114113 GG

Area Director
U.S. Customs Service
JFK Airport
Building 77
Jamaica, NY 11430

RE: Request for Internal Advice; 19 U.S.C. ?1321; Consolidated Informal Entries; Bills of Lading; House Airway Bills; 19 CFR

Dear Sir:

This is in response to your memorandum CLA-1 K:TC:D PD, dated September 23, 1997, requesting clarification of the requirements listed in the Customs Regulations for duty free treatment of merchandise valued under $200.

FACTS:

The internal advice request presents two situations. They are as follows:

Situation #1: Tourists purchase crystalware at various stores in Ireland. The stores label each individual package with the names and addresses of the ultimate purchaser, and the forwarder in Ireland affixes a United Parcel Service ("UPS") bar-coded label to each package. The packages are consolidated into containers for shipment. The bar-code number is a unique identifier for UPS use in domestic delivery to the ultimate consignee. The container is manifested under a master air waybill by Aer Lingus, with a house airway bill ("HAWB") breakdown attached. This HAWB lists shipper, nominal consignee and ultimate consignee name and address, quantity, weight, product description, value, and country of origin on a line item basis. American Cargo Express ("ACE"), a freight forwarder, broker and container freight station ("CFS") operator in New York, is identified as the consignee on the master air waybills. ACE prepares a consolidated informal entry using a CF 7523, Entry and Manifest of Merchandise Free of Duty, citing Section 321 of the Tariff Act of 1930, as amended. ACE attaches a copy of the house airway bill breakdown and several invoices. The house airway bill number is the last four digits of the UPS label. This is the number used to identify merchandise selected by Customs for examination.

Situation #2: Cashes of Ireland ("Cashes") is a catalogue company that solicits orders in the United States for crystalware and other articles from Ireland. The orders are consolidated and shipped to Newark Airport on UPS. Consolidated Distributor Systems (CDS), a freight forwarder, is listed as the consignee. The freight is transferred to Cargo City CFS at JFK. The CFS transmits a consolidated manifest to Customs electronically via AMS. This contains Cashes' P.O. box number in Ireland, ultimate consignee name and address, product description, quantity, price and country of origin information on a line item basis. Each individual shipment is assigned a house airway bill number, which is the same as Cashes' customer order number. Each box is labeled with the number and the name and address of the customer. A UPS label is also attached to each package at the CFS for domestic distribution purposes only. Barthco, a broker, files a consolidated informal entry, with a hard copy printout of the house airway bill breakdown as transmitted by the CFS through AMS. No invoices are attached.

ISSUE:

Whether these shipments qualify for duty-free entry under Section 321 of the Tariff Act of 1930, as amended.

LAW AND ANALYSIS:

Section 321(a)(2)(C) of the Tariff Act of 1930, as amended, (19 U.S.C. ?321(a)(2)(C)), provides for the duty free entry of articles valued at $200 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. The applicable regulations, which are enacted under authority of 19 U.S.C. ?1498, are found in Sections 10.151, 10.153, and 143.23(j) of the Customs Regulations (19 CFR found in 19 CFR Part 128 are aimed specifically at express consignment operators and have no application here.)

Section 10.151 provides that shipments valued at not over $200 may be entered free of duty and tax, unless there is 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 or of avoiding compliance with any pertinent law or regulation. The regulation also provides that eligible entries shall be entered under informal entry procedures. Consolidated shipments addressed to one consignee shall be treated for purposes of Section 10.151 as one importation (19 CFR ?10.153(d)). A "shipment" in the Section 321 context means the merchandise described on the bill of lading or other document used to file or support entry, or in the oral declaration when applicable (19 CFR ?101.1; T.D. 94-51).

Section 143.23(j) of the Customs Regulations elaborates on the format and the type of information Customs requires in a Section 321 informal entry. Specifically, it provides that --

... a shipment of merchandise not exceeding $200 in value which qualifies for informal entry under 19 U.S.C. ?1498 and meets the requirements in ?10.151 ... may be entered by presenting the bill of lading or a manifest listing each bill of lading ... The following information is required to be filed as a part of such entry:

(1) Country of origin of the merchandise; (2) Shipper name, address and country;
(3) Ultimate consignee name and address;
(4) Specific description of the merchandise; (5) Quantity;
(6) Shipping weight; and
(7) Value.

The HAWB's that are submitted by both ACE and Barthco contain this information. Airway bills are considered to be bills of lading for Customs purposes (T.D. 78-394). Section 321 importations are entered by presentation of a bill of lading or a manifest listing each bill of lading. Therefore, ACE and Barthco would appear to be following the correct procedures. The only question remains whether the consolidation limitation of Section 10.153(d) of the Customs Regulations would serve as a bar to entry under this provision.

To reiterate, Section 10.153(d) states that consolidated shipments addressed to one consignee shall be treated for purposes of Section 10.151 as one importation. This provision is designed to prevent any one purchaser from circumventing the $200 per day value limitation placed on Section 321 importations. Guidance on this issue is found in T.D. 94-51. In discussing Section 321 shipments entered both by express consignment operators and by regular importers, the T.D. 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).

In the two situations before us the brokers used the individual HAWB's to support entry. The HAWB's list the individual purchasers to whom the merchandise is being shipped as the consignees. The value of each of these individual shipments is under $200. In our opinion, Section 10.153(d) would only become a factor if two or more of the shipments listed on the HAWB breakdown were addressed to the same consignee. In that case, the value of those shipments would be added together to determine the shipment amount. Any amounts in excess of $200 would require entry under regular informal or formal entry procedures.

There is one final issue for discussion. The internal advice request questions whether the lists presented as HAWB's are bona fide bills of lading. A bill of lading (or air waybill, as the case may be) means a document evidencing the receipt of goods for shipment issued by a person engaged in the business of transporting or forwarding merchandise. Section 1-201(6), Uniform Commercial Code. It is typical in situations where a carrier receives a shipment from a consolidator for the carrier to issue both a master bill of lading and house bills of lading providing information on the individual packages. Since as a general rule the freight consolidator makes all the arrangements with the shipper, usually there is no real contact or communication between the shipper and the ultimate recipients of the packages. The house bills reflect this indirect relationship by being less formal than master bills of lading and serve mainly as a breakdown of data. The documents presented by ACE and Cargo City would appear to fit into this mold. We see no reason why they cannot be presented as entry documents under Section 321.

HOLDING:

The shipments qualify for duty-free entry under Section 321 of the Tariff Act of 1930, as amended.

Sincerely,

Jerry Laderberg
Chief,
Carrier Rulings Branch

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