BRO-3-05-RR:IT:EC 114166 CC
Carl D. Cammarata, Esq.
Law Offices of George R. Tuttle
Three Embarcadero Center, Suite 1160
San Francisco, CA 94111
RE: Right to Make Entry; 19 U.S.C. 1484; 19 U.S.C. 1641;
Related companies
Dear Mr. Cammarata:
This is in response to your request of November 11, 1997, on
behalf of your client, that we rule that an employee of a
company, who holds a Customs broker license, may make entry for
another related company.
FACTS:
You have presented the facts as follows:
Company B is a wholly-owned subsidiary of Company A.
Company A is contemplating forming a new wholly-owned subsidiary,
Company C. Company B currently imports goods and will retain its
own importer identification number. The newly-formed company,
Company C, also will import goods and will apply for its own
importer identification number.
Company B has a full-time employee, who has a Customs broker
license (hereinafter the employee), who files entries on behalf
of his employer. The employee has four additional employees on
his staff who assist him in preparing and filing entries for
Company B. You represent the employee and his employer, Company
B, in this matter.
Under the proposal, the employee and his staff of Company B
will continue to make entry for the company and will remain as
full-time employees and receive their total compensation and
benefits from Company B. However, the employee and his staff
will also file entries for the new company, Company C. They will
receive a valid power of attorney from Company C prior to making
entry for it.
Company B and Company C will enter into an agreement that
the employee and his staff will continue to be employed by
Company B and receive their total compensation from Company B.
Separate files and records for each company will be maintained by
the employee and his staff. The employee will be accountable to
Company B for the work he does for that company, and he will be
accountable to Company C for the work he does for that company.
Accounting and billing procedures will be established by the
employee, Company B, and Company C to bill Company B for services
performed by the employee and his staff on behalf of Company C.
ISSUE:
Whether employees of a company may make entry for a related
company.
LAW AND ANALYSIS:
Section 484 of the Tariff Act of 1930, as amended, (19
U.S.C. 1484) provides that only parties qualified as the
"importer of record" may make entry. 19 U.S.C. 1484(a)(2)(B)
provides that parties qualified as an importer of record are the
owner or purchaser of the merchandise, or when appropriately
designated by the owner, purchaser or consignee of the
merchandise, a person holding a valid license under section 1641
(a licensed customs broker).
Owner or purchaser is defined in Customs Directive 3530-02,
dated November 6, 1984, entitled "Right to Make Entry" as the
following:
... 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 customhouse 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.
As provided for in 19 U.S.C. 1484, Customs Directive 3530-02, and 19 CFR
111.3(a), an owner or purchaser may make entry on its own
behalf, and, therefore, would not be required to have a Customs
broker license. In the factual situation presented, the employee
is making entry for Company B, which is tantamount to Company B
making entry on its own behalf. Thus, even though the employee
holds a Customs broker license, he is acting as an employee of
Company B and not as its broker. Consequently, the employee
would not need a Customs broker license to make entry for Company
B.
We have previously ruled on the issue of whether an employee
of one corporation may make entry for a related corporation.
Specifically, in Headquarters Ruling (HQ) 223804, dated June 29,
1994, we ruled on whether an employee of a parent corporation is
considered an owner or purchaser and may therefore make entry on
behalf of its subsidiary. We found in that ruling that because a
parent corporation and a subsidiary are in law separate and
distinct entities, a parent corporation could not make entry for
its subsidiary. We did find in that ruling that based on agency
principles, a person who was employed by both a parent
corporation and its subsidiary could file an entry on behalf of
the subsidiary, provided that there was a power of attorney that
stated that the employee was an employee of the subsidiary and
had the authority to file entries on behalf of the subsidiary.
Although in the present factual situation the companies are
sister companies (both are subsidiaries of the same corporation)
rather than a parent-subsidiary, the principles of HQ 223804 are
applicable. The companies are considered separate and distinct
entities, and, therefore, an employee of one corporation could
not make entry for the other corporation. HQ 223804 indicates
that if an employee were a bona fide employee of both
corporations, he could make entry for each company in his
capacity as an employee of each corporation. In the present
factual situation, the employee is not employed by both
corporations, but is only employed by Corporation B, since that
is the company that is paying his wages. (For a more detailed
discussion of the definition of an employee and the
considerations in determining who has the status of an employee,
see 54 FR 13136, dated March 30, 1989.) Consequently, the
employee is not considered an employee of Company C and could not
make entry for that company.
Finally, you contend that the employee may make entry on
behalf of both Company B and Company C because he holds a valid
Customs broker license pursuant to 19 U.S.C. 1641. As stated
above, the employee is receiving his total compensation from
Company B and is acting as its employee when making entry for
Company B. The employee is not acting as a Customs broker by
receiving compensation for doing Customs business on behalf of
various parties for compensation; instead, he is an employee of
Company B. Thus, based on the evidence before us, the employee
may not make entry for Company C as a Customs broker.
HOLDING:
An employee of one company may not make entry for a related
company.
Sincerely,
Jerry Laderberg
Chief
Entry Procedures and Carriers
Branch