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HQ 115805

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January 7, 2003

ENT-1-RR:IT:EC 115805 GG

CATEGORY: ENTRY

David R. Stepp, Esq.
KMZ Rosenman
2029 Century Park East, Suite 2600
Los Angeles, CA 90067-3012

RE: Right to Make Entry; 19 U.S.C. 1484;

Dear Mr. Stepp:

This is in response to your ruling request, dated September 16, 2002, made on behalf of your client, [xxxxxx]. The subject is [xxxxxx’x] right to enter merchandise currently being entered by [xxx xxxxxx]. Pursuant to 19 CFR § 177.2(b)(7), you have also asked that confidential treatment be accorded to the ruling request, accompanying exhibits and attachments, and the ruling itself. Your request is granted.

FACTS:

[xxxxxx] is a wholly-owned subsidiary of [xxx xxxxxx xxxxxxx]. In 1995, [xxxxxx] joined with three partners to form [xxx xxxxxx], a company established to provide satellite launch services to commercial enterprises located around the world. The division of ownership between the joint venture partners is as follows: [xxxxxx] (xx%); [xxx] (xx%); [xxxx] (xx%); and [xxxxxxx] (xx%). In addition to [xxxxxx’x] xx% ownership interest in [xxx xxxxxx], [xxxxxx] is the guarantor of a significant loan obtained by [xxx xxxxxx], and, as a result, retains a lien against all of the assets of [xxx xxxxxx].

[xxx xxxxxx’x] headquarters and [xxxx xxxx] facilities are located in [xxxxxxxxxx]. [xxxx xxxx], which is the heart of the [xxx xxxxxx]
operations, includes the Payload Processing Facility (“PPF”), the Assembly and Command Ship (“ACS”), and the Launch Platform (“LP”).

The PPF is the facility in which [xxxxxx] prepares the customer payload for eventual joining with the launch vehicle on the ACS. The payload is typically a large telecommunications satellite bound for geostationary orbit. In the PPF, [xxxxxx] encapsulates the payload in a fairing – manufactured by [xxxxxx] in [xxxxxx] – which protects the payload from the intense heat present as the spacecraft travels through the Earth’s atmosphere.

The ACS is a specially designed sea-going vessel which serves as a floating assembly and launch control facility. Here [xxxxxx] joins the payload with the integrated rocket sections before transferring the integrated launch vehicle to the LP.

The LP is a former North Sea drilling platform and is one of the largest semi-submersible, self-propelled vessels in the world. It accommodates 68 crew and launch system personnel, has a hangar for storage of the launch vehicle during transit, and has mobile transporter/erector equipment that is used to roll out and position the launch vehicle prior to fueling and launch. The LP also has special storage facilities for the specialized rocket fuels required for each mission.

[xxxxxx] operates and maintains many of the launch systems on the ACS and LP. These include the communications, telemetry, mission information displays, and spacecraft air conditioning systems.

[xxx xxxxxx] purchases the imported merchandise from its joint venture partners and other overseas suppliers. The first and second stages of the launch vehicle are manufactured in [x], and the third or “upper” stage rocket is manufactured in [xx]. Spare parts and accessories consumed in the integration process are also sourced from foreign suppliers. The ground support equipment for the launch vehicles originates in [x]. [xxx xxxxxx] currently serves as the importer of record of the subject merchandise.

After importation, the three sections of the launch vehicle are assembled onboard the ACS. The payload is then transferred from the PPF and joined with the assembled launch vehicle. The [xxx and xxxx] joint venture partners are responsible for the physical integration of the launch vehicle stages and [xxxxxx], working with the [xxx and xxxx] partners, joins the encapsulated payload to the integrated launch vehicle.

[xxxxxx] has a significant number of personnel assigned to the [xxx xxxxxx] launch vehicle integration and mission activities. Currently, 160 employees in [xxxxxx] and 96 in [xxxx xxxx] work on this project. In comparison, [xxx xxxxxx] has only 25 employees, 24 of whom are at [xxxx xxxx] and one in [xxxxxxx].

In addition to providing personnel, [xxxxxx’x] involvement in [xxx xxxxxx] extends to the entire range of the joint venture’s activities. Its general responsibilities include planning, integrating, and performing the pre-launch, launch and post launch activities required to assemble, test, transport and launch satellites on a rocket.

Notwithstanding [xxx xxxxxx’x] role as importer of record, Article 1.10 of a Technical Services Agreement, which defines [xxxxxx’x] responsibilities for the [xxx xxxxxx] operations, states that “[xxxxxx] will import (serve as consignee) for rocket components, propellants and spares delivered to [xxxx xxxx].” In addition, [xxxxxx] holds all Department of State licenses (issued by the Office of Defense Trade Controls – “ODTC”) pertaining to the import and export of the items involved in the [xxx xxxxxx] operations. [xxxxxx] remains responsible for the control of, access to, and storage of all munitions list items. This responsibility stems not only from [xxxxxx’x] role as the licensee, but also from ODTC’s demand that [xxxxxx] be ultimately responsible for the goods.

ISSUE:

Whether [xxxxxx] has the right to make entry under 19 U.S.C. § 1484?

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 qualified as the “importer of record” may make entry. Those qualified parties are identified in § 484(b)(2)(B) as the owner or purchaser of the merchandise, or, when appropriately designated by the owner, purchaser, or consignee of the merchandise, a licensed customs broker.

[xxx xxxxxx], as the actual purchaser of the imported items, clearly has the right to enter them. However, § 484 makes provision for the existence of more than one possible importer of record in any given transaction. Therefore, the fact that [xxx xxxxxx] is qualified to make entry does not necessarily preclude [xxxxxx] from also being so qualified. Since [xxxxxx] is not a licensed broker, it must, however, fall within the definition of an owner or purchaser.

Counsel for [xxxxxx] correctly points out that mere stock ownership in a company that imports does not confer the status of an owner of the imported merchandise for purposes of 19 U.S.C. § 1484. See Headquarters Ruling (HQ) 225357, dated December 22, 1994. Thus, [xxxxxx] would be precluded from claiming it was an owner of the imported items by reason of its xx% ownership interest in [xxx xxxxxx] alone. However, Customs through the issuance of rulings and directives has also indicated that an owner for purposes of 19 U.S.C. § 1484 can extend beyond a person who is an owner in the traditional sense in that they hold title to the imported goods.

The terms “owner” and “purchaser” for right-to-make-entry purposes are defined in Customs Directive 3530-002A, dated June 27, 2001. Sections 5.2.1 and 5.2.2 of the directive provide:

5.2.1 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.

In support of its position that [xxxxxx] has the right to enter the items imported for the [xxx xxxxxx] project, counsel for [xxxxxx] cites to internal advice memorandum HQ 220996, dated July 11, 1989. That memorandum discussed a company’s right to enter various nuclear materials, when its role was restricted to arranging for the transportation of the materials to various processing contractors and to obtaining the necessary licenses and permits for the transportation. Customs determined that the company’s role was that of a mere nominal consignee, and as such, was precluded from being the importer of record. It also concluded that the processing contractors, as well as the utilities which had hired them, had a sufficient financial interest in the nuclear materials to make entry. [xxxxxx] argues that its situation is analogous to that of the processing contractors in HQ 220996.

[xxxxxx] also points to HQ 222140, dated May 14, 1990, another internal advice memorandum in which Customs determined that satellite equipment owned by one organization but imported temporarily under bond for testing at another company’s facility could be entered by the testing company. The decision was influenced by the fact that the testing company had been named as the exclusive representative in the United States in matters relating to the satellite equipment, including those pertaining to importation.

Both HQ 220996 and HQ 222140 conferred the right to make entry on entities which, although not holding title to the imported items, performed substantive post-entry procedures on the items. The procedures in question, i.e., processing nuclear materials and testing satellite equipment, went beyond the work usually attributed to a nominal consignee, i.e., a freight forwarder, consolidator, or warehouse operator. As mentioned earlier, a consignee of merchandise has the power to appoint a broker to make entry but does not have the right to enter merchandise itself, unless it is also the owner or purchaser. The testers’ and processors’ more extensive involvement gave them a sufficient financial interest in the merchandise to make them owners or purchasers for purposes of 19 U.S.C. § 1484.

Similarly, Customs has ruled that a company which was hired by the owner to install imported television equipment into a news van had the right to enter the equipment (HQ 228151, dated January 22, 1999). That particular ruling cited as precedence HQ 222020, dated August 1, 1990, which concluded that a sugar refiner hired by the owner of imported raw sugar to refine the sugar under a “tolling” contract had the right to enter the sugar. In that ruling, the refiner’s financial interest in the sugar was demonstrated by such factors as the refiner’s possession of the right to enforce a mechanic’s lien, its receipt of an advance of monies to refine the sugar, its payment of stevedoring charges for off-loading the raw sugar and loading the refined sugar, and its assumption of the risk of loss while the sugar was in its possession.

The varied tasks that [xxxxxx] performs include “planning, integrating, and performing the pre-launch, launch and post launch activities required to assemble, test, transport and launch satellites on a rocket.” These activities are similar to the processing, testing, and installation procedures described in the rulings and internal advice responses referenced above, for which the right to make entry was confirmed with respect to those performing the tasks. Accordingly, [xxxxxx] has the right to enter the imported items destined for the [xxx xxxxxx] program.

HOLDING:

[xxxxxx] has the right to make entry under 19 U.S.C. § 1484.

Sincerely,

Glen E. Vereb
Acting Chief

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