ENT-1-01/ENT-1-07/BRO-3-05-CO:R:C:E 225357 SR
District Director
U.S. Customs Service
44845 Falcon Place
Sterling, Virginia 20166
RE: Request for Internal Advice Concerning Right to Make Entry
Between Related Companies; 19 U.S.C. 1484(a)(2)(C); Customs
Directive 3530-002.
Dear Sir:
This request for internal advice was initiated by an
anonymous complaint made to your office in February 1994.
FACTS:
On August 18, 1992, British Aerospace requested permission
to make entry on behalf of Heckler and Koch, Inc. Heckler and
Koch, a Virginia corporation, is a wholly-owned subsidiary of
Royal Ordinance, Inc., a Delaware corporation. Royal Ordinance,
Inc. is a wholly-owned subsidiary of British Aerospace, Inc.
British Aerospace is stated to own 20 percent of Airbus Service
Company's stock and all of the stock of Heckler and Koch.
On September 3, 1992, a letter from the Acting Assistant
District Director denied the request of British Aerospace to make
entry on behalf of Heckler and Koch, Inc., because the two
companies are separate entities. Firearms are imported for
Heckler and Koch and delivered to the Heckler and Koch street
address.
British Aerospace, Inc., has been entering merchandise on
behalf of another wholly owned subsidiary, Airbus Service
Company, Inc. In this case, British Aerospace receives and holds
the aircraft spare parts that are consigned to it by Airbus
Service Company after importation. British Aerospace received a
written ruling on October 17, 1990, stating that they were
authorized to make entry for Airbus Service Company, Inc.,
because they had a financial interest. Now an anonymous
complainant has questioned the legality of these transactions.
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ISSUE:
Whether a parent company may enter goods on behalf of a
subsidiary.
LAW AND ANALYSIS:
It is well established that even though one corporation is
wholly owned by another corporation, each of these corporations
is considered legally to be a separate entity. Based on the
information provided in this case, it appears as if British
Aerospace, Inc., Airbus Service Company, Inc., and Heckler and
Koch, Inc., are all separate legal entities.
However, British Aerospace is also acting under an
assignment agreement to import the aircraft spare parts for
British Aerospace by Airbus Service Company. Because of the
consignment agreement British Aerospace may have the right to
make entry under 19 U.S.C. 1484(a)(2)(C). The right to make
entry under this statute is limited to an owner or purchaser of
the entered merchandise or to a properly appointed customhouse
broker. By Customs Directive 3530-002 (formerly 3530-02) of
November 6, 1984, Customs defined owner or purchaser for the
purpose of implementing 19 U.S.C. 1484 as including a person who
imported goods under a consignment agreement other than
consignments based solely on shipping documents such as a bill of
lading or an air waybill. Owner or purchaser is defined in
section c of Customs Directive 3530-002 as follows:
The terms "owner" or "purchaser" would be 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. . .
Under the documents presented, it appears that British
Aerospace receives and holds the imported aircraft spare parts
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from the transportation company after importation as a result of
a consignment agreement between British Aerospace and Airbus
Service Company. The terms of the consignment agreement are not
disclosed. The transportation company delivers the parts to
British Aerospace's place of business. If British Aerospace has
a right to possess the spare parts after importation apart from a
transportation document such as a bill of lading or air waybill,
then British Aerospace appears to come within the definition of
owner or purchaser set forth in Customs Directive 3530-002 of
November 6, 1984 for the purpose of implementing 19 U.S.C.
1484(a)(2)(C).
Customs was correct in denying the request of British
Aerospace to enter merchandise on behalf of Heckler and Koch.
British Aerospace's corporate stock ownership of Heckler and Koch
does not give British Aerospace any ownership interest in the
firearms imported by Heckler and Koch. Stock ownership by one
corporation is not included within the definition set forth in
Customs Directive 3530-002 for the purpose of implementing 19
U.S.C. 1484(a)(2)(C). The documents show that Heckler and Koch
and not British Aerospace receives and holds the firearms after
importation.
HOLDING:
A parent company may not enter merchandise for a subsidiary
company based on the corporate relationship. Also, Ownership of
corporate stock does not make that person an owner of merchandise
imported by the owned corporation under Customs Directive 3530-
002 of November 6, 1984 for the purpose of the right to enter
that imported merchandise under 19 U.S.C. 1484(a)(2)(C).
A person who imports merchandise under a consignment
arrangement, other than that provided by a bill of lading, air
way bill, or other shipping document, comes within the definition
of an owner or purchaser under Customs Directive 3530-002.
Sincerely,
John Durant, Director
Commercial Rulings Division