ENT-1-03:RR:IT:EC 116344 rb
George R. Tuttle, III
Law Offices of
George R. Tuttle
Three Embarcadero Center, Suite 1160
San Francisco, CA 94111
RE: Right to make entry; importer of record; 19 U.S.C. 1484
Dear Mr. Tuttle:
In your letter of October 22, 2004, you request a ruling that would permit your client, VeriFone, Inc. (VF), of San Jose, California, to make entry as the importer of record for point-of-sale transaction systems and related products from the Far East that are manufactured there under contract pursuant to VF’s specifications and owned by VF at the time of their production. Our ruling in this matter follows.
FACTS:
VF’s products - point-of-sale transaction systems and related products - are manufactured under contract pursuant to VF’s specifications by a third party in the Far East. The products are owned by VF at the time of their production, and the third-party manufacturer builds and ships the products only to those locations and customers specified by VF.
Under the terms of VF’s standard sales agreement, title, ownership and risk of loss pass to the customer upon VF’s delivery of the products to the foreign carrier for shipment to the customer in the United States, with VF invoicing the customer for payment at the time of each shipment; and, although generally determining the means of carriage of the products, VF likewise invoices the customer for any and all costs related to the shipment of the goods (shipping, handling, customs, insurance and similar charges), with payment for all invoiced amounts being due 30 days from the date of the invoice.
Most significantly, however, notwithstanding that title and ownership of the products pass to the customer upon their delivery to the foreign port of lading for shipment, VF, under its sales agreement, retains a “security interest” in all such products delivered to the customer “as security for the performance by Customer of all of Customer’s obligations arising under this Agreement” (VF’s standard sales contract, section 6.A.).
VF seeks to make entry for those products it ships to its customers mainly because VF is an experienced importer (and many of its customers may not be); and VF will thereby be able to consolidate its shipments to multiple customers, which will save time as well as shipping and clearance costs.
ISSUE:
Whether VF may make entry in this case as the importer of record under 19 U.S.C. 1484 for those products that it ships to its customers.
LAW AND ANALYSIS:
Under 19 U.S.C. 1484(a)(1), a party that qualifies as an “importer of record” may make entry for imported merchandise; and under 19 U.S.C. 1484(a)(2)(B), in pertinent part, the importer of record may be either the owner or purchaser of the merchandise. Customs Directive 3530-002A, dated June 27, 2001, is instructive in interpreting the meaning of owner or purchaser for purposes of section 1484(a)(2)(B):
The terms “owner” and “purchaser” include any party with a financial interest in the 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.
Customs Directive 3530-002A, at section 5.3.1 (emphasis added). Notably, the principal purpose of current section 1484 is to prevent mere nominal consignees, other than licensed customs brokers, from filing entries and engaging in the transaction of customs business without a license (ibid., at section 5.1.4).
Although the actual ownership of the products and risk of loss pass to VF’s customer prior to exportation of the products to the United States, as described, the operative fact in this context is that VF retains a security interest in the goods the subject of the import transaction; and this security interest retained by VF is reflective of its financial stake in securing its customer’s compliance with all obligations arising under the standard agreement for the sale of its products to the customer (e.g., VF’s receipt of payment for the full invoiced price of the products as well as all invoiced charges incurred for their shipment, which are due 30 days from the date of the invoice (shipment)). As such, the prevailing security interest possessed by VF in the present case would manifestly exceed any interest in the goods by a mere freight forwarder (shipper) or nominal consignee.
Moreover, it is fairly axiomatic that the underlying “security interest” retained by VF to ensure its right to payment for products sold and shipped to the United States constitutes a continuing “financial interest” in the goods, that plainly falls squarely within the broad scope of Customs Directive 3530-002A, supra, so as to enable VF to be considered an importer of record with the right to make entry for the merchandise upon importation (compare, e.g., Headquarters ruling (HQ) 224015, of November 18, 1992 (a domestic subsidiary of a foreign corporation entitled to make entry for certain imported publications actually owned by the foreign corporation where the domestic subsidiary had a financial interest in the publications simply by virtue of its commission earned in soliciting their sale in the United States)).
HOLDING:
VF in this case possesses an underlying and continuing financial interest in the imported products that it ships to its customers in the United States, so as to be entitled to make entry for such products as the importer of record under 19 U.S.C. 1484.
Sincerely,
Glen E. Vereb
Chief
Entry Procedures and Carriers Branch