HQ 115390 - Express Consignments; 19 CFR Part 128 - United States International Trade Commision Rulings

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HQ 115390

June 25, 2001

MAI-1-01-RR:IT:EC 115390 GEV

CATEGORY: CARRIER

Joaquin Fiol
Vice President, Business Development
Virgin Atlantic Cargo
Virgin Atlantic Airways Ltd.
1983 Marcus Avenue
Suite 100
Lake Success, New York 11042

RE: Express Consignments; 19 CFR Part 128

Dear Mr. Fiol:

This is in response to your letter dated May 10, 2001, requesting a ruling that international mail sent pursuant to a contractual agreement between Virgin Atlantic Airways Ltd. (“Virgin Atlantic”) and the United States Postal Service (“USPS”) be treated by the U.S. Customs Service as express consignments pursuant to Part 128, Customs Regulations (19 CFR Part 128). Our ruling on this matter is set forth below.

FACTS:

Virgin Atlantic and the USPS are entering into a contractual relationship for an International Customized Mail service. This service will allow Virgin Atlantic to utilize the USPS Priority Mail delivery and IT tracking network for items originating outside the territory of the United States but intended for delivery within the territory of the United States.

In 1993, the U.S. Customs Service at the port of Los Angeles granted Virgin Atlantic approval to operate an Express Consignment Carrier Facility (ECCF) in Los Angeles International Airport. Virgin Atlantic will be applying to operate additional ECCFs in Orlando International

Airport and Newark International Airport. It is estimated that the expected volumes will require an inspector to average a minimum of four (4) hours per day. Due to flight arrivals at each of these cities, Virgin Atlantic will require an inspector to be available between the hours of 4:00 p.m. and 8:00 p.m., six (6) days per week, Monday through Saturday.

Virgin Atlantic and the USPS are committing resources in furtherance of a close coordination of their procedures to ensure that Customs requirements for the expedited release of the mail are met and maintained. Virgin Atlantic will ensure the accuracy of information required from the point of origin through the use of the combined electronic capture and messaging of the Virgin Atlantic Tracking and Manifest System (Phoenix), the USPS Delivery Confirmation System and through the United States Customs Automated Manifest System (AMS). Information required shall be made available to the U.S. Customs Service in advance of a flight’s arrival.

Documentation required to allow the carrier/operator to make entry shall be provided from the point of origin and all procedures shall comply with the requirements of the Automated Commercial System (ACS). These requirements include those under AMS, Cargo Selectivity, Statement Processing, and the Automated Brokers Interface (ABI).

Virgin Atlantic and the USPS have jointly developed a process to provide sufficient administrative controls over the consignments tendered. The process they have jointly developed to provide sufficient administrative controls is as follows.

An item is delivered to or picked up by Virgin Atlantic. An airwaybill (AWB) is issued, completed and signed by the shipper. The information on the AWB will be required to meet all United Kingdom export regulatory requirements in addition to U.S. Customs Service requirements for clearance. Through the use of Windowbooks software (developed on behalf of the USPS), a barcode containing all the information associated to the consignment is issued and scanned into the Virgin Atlantic Tracking and Manifesting System called Phoenix. The USPS-provided Windowbooks software will allow the control number to be a transparent control number whether on Phoenix, on AMS or on the USPS Delivery Confirmation System. The barcode-associated control number shall be the uniform tracking
number throughout the history of the consignment. The consignments are loaded and manifested separately from cargo on board a Virgin Atlantic aircraft destined to the United States.

Upon “wheels up”, the required captured clearance and delivery data will be transmitted electronically via Phoenix to AMS. At this point Customs can access the information transmitted through AMS or have a hard copy of the manifest printed from Phoenix.

Upon arrival into the United States all such consignments will be scanned by Virgin Atlantic staff maintaining the integrity of the consignments against the flight manifest, and segregating for inspection in accordance with Customs regulatory requirements. A Virgin Atlantic employee will be available to assist an inspector at each ECCF in the inspection of packages.

Upon clearance, Virgin Atlantic will present the items to the USPS for final delivery to the ultimate consignee. The USPS has a Delivery Confirmation IT system which will provide delivery confirmation to the shipper transparently through Phoenix, in addition to the ability of withholding deliveries during a reasonable period of time in case Customs requires retrieval.

In the event Customs requires the item(s) to be returned, the USPS has capabilities for interrupting the delivery and returning the item(s) to the appropriate port of entry. Virgin Atlantic will take the responsibility locally to assist Customs in coordinating retrieval if required.

ISSUE:

Whether international mail originating outside the territory of the United States destined for delivery within the territory of the United States that is shipped pursuant to the contractual relationship between Virgin Atlantic and the USPS described herein is entitled to treatment by the U.S. Customs Service as express consignments to be handled pursuant to the procedures set forth in 19 CFR Part 128.

LAW AND ANALYSIS:

The U.S. Customs Service Regulations governing the special procedures for the clearance of imported merchandise carried by
express consignment operators and carriers, including couriers, are found in title 19, Code of Federal Regulations, Part 128 (19 CFR Part 128).

Pursuant to § 128.1(a), Customs Regulations (19 CFR § 128.1(a)), an express consignment operator or carrier is defined, in pertinent part, as follows:
an entity operating in any mode or intermodally moving cargo by special express commercial service under closely integrated administrative control.” (Emphasis added)

Section 128.1(f), Customs Regulations (19 CFR § 128.1(f)) defines the term “closely integrated administrative control” as meaning:
operations must be sufficiently integrated at both ends of the service (i.e., pick-up and delivery) so that the express consignment company can exercise a high degree of control over the shipments, particularly in regard to the reliability of information supplied for Customs purposes. Such control would be indicated by substantial common ownership between the local company and the foreign affiliate and/or by a very close contractual relationship between the local company and its foreign affiliate(s)

The information provided herein with respect to the processing of the mail in question meets the requirements set forth in 19 CFR §§ 128.11(b)(7)(I) and 128.23(b)(1)). If set forth in the terms of the contract between Virgin Atlantic and the USPS referenced above, it would be indicative of a “close contractual relationship” and would therefore evidence a “closely integrated administrative control” as those terms are used in 19 CFR §§ 128.1(a) and (f).

Accordingly, the contractual relationship between Virgin Atlantic and the USPS reflects the existence of an “express consignment operator or carrier” as that term is defined in § 128.1(a), Customs Regulations (19 CFR § 128.1(a)). We note that Virgin Atlantic has already been approved to operate as an ECCF in the port of Los Angeles. Consequently, upon submission of the subject contract to the Los Angeles Port Director, these operations may commence. However,
such operations in the ports of Orlando and Newark are not only contingent upon submission of the contract to the respective port directors of Orlando and Newark, but also upon their approval of an application from Virgin Atlantic to operate as an express consignment carrier in these ports (see 19 CFR §§ 128.11-128.13).

HOLDING:

International mail originating outside the territory of the United States destined for delivery within the territory of the United States that is shipped pursuant to the contractual relationship between Virgin Atlantic and the USPS described herein is entitled to treatment by the U.S. Customs Service at the port of Los Angeles as express consignments to be handled pursuant to the procedures set forth in 19 CFR Part 128 upon the submission of the contract to the port director. Such treatment is also extended to the ports of Orlando and Newark contingent not only upon the submission of the aforementioned contract to the respective port directors of these ports, but also upon their approval of an application from Virgin Atlantic to operate as an express consignment carrier at these ports (see 19 CFR §§ 128.11-128.13).

Sincerely,

Larry L. Burton

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