ENT-4-02-RR:IT:EC 113994 GG
Port Director
U.S. Customs Service
Highgate Springs, VT 05488
RE: Importations of Farm Equipment and Animals; Use of Baggage
Declaration vs. Formal or Informal Entry; Personal Exemptions; 19
CFR Part 148.
Dear Sir:
This is in response to a letter sent to us by Mr. James
Kennedy of your office on June 4, 1997, requesting internal
advice on importations of farm animals and equipment. Our
response follows.
At your port, located on the U.S.-Canadian border, American
farmers regularly import farm equipment and animals for use on
their own farms. Due to a facilities expansion which includes a
new Veterinary Services building, you anticipate an increase in
the volume of such shipments. The issue on which you seek
clarification is whether farm equipment and animals imported by
U.S. farmers may be regarded as personal importations and entered
on baggage declarations, or alternatively whether a commercial
formal or informal entry is required. You pose several
hypothetical situations to illustrate the nature of typical
transactions. We will discuss each in turn.
Scenario #1
An American farmer goes to Canada and buys a $50,000 tractor
for use on his own farm. Can this be entered on a baggage
declaration or is a commercial formal entry required? Does it
make a difference if the farmer went to Canada with the intention
of buying the tractor or if he purchased it incidental to the
trip? Does it make a difference if the farm is incorporated?
Your questions raise two separate issues: which manner of
entry is appropriate for this type of importation, and whether
the $400 personal exemption available to returning residents may
be applied to the tractor.
The statutes governing the entry of accompanying articles
are Sections 1484, 1485, and 1498 of the Tariff Act of 1930, as
amended (19 U.S.C. 1484, 1485, and 1498). Section 1498
provides that the Secretary of the Treasury is authorized to
prescribe rules and regulations for the declaration and entry of
articles carried on the person or contained in the baggage of a
person arriving in the United States. Subsection (b) further
adds that such rules and regulations may include any of the
provisions of sections 1484 or 1485 relating to entry and
declaration of merchandise generally. Part 148 of Title 19 of
the Code of Federal Regulations contains the regulations on
personal declarations and exemptions. Subject to certain
exceptions, articles accompanying a person arriving in the United
States may be declared on a baggage declaration (Customs Form
6059-B). This applies both to items that are intended for
personal and household use as well as to merchandise imported for
commercial purposes. Articles entered on a baggage declaration
that are personal in character, or commercial but valued under
$1250, may be examined and cleared by the inspector upon payment
of duty. Accompanying commercial items valued in excess of $1250
may be entered on a CF 6059-B upon presentation of an invoice,
provided appraisement is practicable at the place of arrival. 19
CFR 148.11, 148.13, 148.15 and 148.23(b) and (c). An article
is considered to be accompanying a person if the article arrives
on the same vessel, vehicle, or aircraft on the same date as that
of his arrival in the United States. 19 CFR 148.4(a).
Although Part 148 of the Customs Regulations allows both
commercial and non-commercial importations to be entered by
arriving persons on a baggage declaration, there may be
situations which warrant the filing of a formal entry. Baggage
declarations are considered to be a type of informal entry. 19
CFR 143.23(a). The port director has authority under 19 CFR
143.22 to require formal entry in place of informal entry for
import admissibility enforcement purposes, revenue protection, or
the efficient conduct of Customs business. For example, it may
be advisable to require the formal entry of farm equipment
subject to an actual use provision. This would ensure maximum
control over an entry to which conditions attach well beyond the
time of release. However, as a general rule, farm equipment
accompanying a farmer may be entered on a baggage declaration.
The other issues which you raise, namely, the purpose behind
the trip and the business structure of the farm, have little or
no bearing on the type of entry made. Their significance relates
primarily to whether the farmer may take advantage of the
personal, or tourist, exemption accorded to returning residents.
The business structure of the farm is a factor in the form of
entry made only to the extent that it may help determine whether
the article is for business rather than personal use, thus
potentially triggering the invoice requirement of 19 CFR
148.23(c).
Subheading 9804.00.65 of the Harmonized Tariff Schedule of
the United States ("HTSUS") provides a $400 personal exemption
for articles accompanying a returning resident, which were
acquired abroad as an incident of the journey from which the
person is returning and are for his personal or household use.
The exemption may be used once every 30 days, and in the case of
residents returning from Canada is allowed only if the person
claiming the exemption has remained there for a period of not
less than 48 hours. The applicable regulations are found in
sections 148.33 through 148.38 of the Customs Regulations (19 CFR
148.33 - 148.38).
The $400 exemption is "personal", and thus precludes
application where the purchase was made by or for a corporate or
business organization. See HQ memorandum ENT-1-CO:R:E:E 729542,
dated May 27, 1986. It is also not allowed where the journey was
made for the specific purpose of making a purchase in a foreign
country, or where the order for the merchandise was placed prior
to the journey abroad. See ENT-1-CO:R:E:E 729542, supra; R.F.
Schaffer v. United States, 26 Cust. Ct. 39, C.D. 1295 (1951);
E.S. Saterlie v. United States, 39 Cust. Ct. 214, C.D. 1931
(1957); and Leland Powers v. United States, 73 Treas. Dec. 788,
T.D. 49554 (1938). Applied here, the $400 personal exemption
could only be used if: 1) the farmer remained outside the United
States for more than 48 hours; and 2) he had not claimed the
exemption during the past 30 days; and 3) the tractor was
purchased merely as an incident of the farmer's journey into
Canada, and was not ordered ahead or the object of the trip; and
4) the purchase was made in the farmer's, not the business's,
name.
Finally, the use of a baggage declaration is not contingent
upon the importer being eligible and making a claim for the
tourist exemption. Rather, the determining factor is whether the
article is in the baggage or is otherwise accompanying the
importer of record. 19 CFR 148.15 and 19 CFR 148.23.
Headquarters policy memorandum ENT-1-CO:R:E:E 729542, supra, is
modified to the extent that it conflicts with this conclusion.
Scenario #2
An American farmer takes his $50,000 tractor to Canada to have
$2,000 of repairs done. Can this be entered on a baggage
declaration or is commercial formal entry required? If it were
discovered that this farmer had incorporated his farm, would this
fact affect this situation?
Assuming the tractor accompanies the farmer on his return to
the United States pursuant to 19 CFR 148.4, and provided all of
the requirements of 19 CFR 10.8 are met concerning the entry of
articles returned after having been exported for repairs under
subheading 9802.00.40 or 9802.00.50, HTSUS, the tractor may be
entered under a baggage declaration. The fact that the farm may
or may not be incorporated will have a bearing on this situation
only to the extent that it may be a factor in determining whether
an invoice is required under 19 CFR 148.23(c).
Scenario #3
An American farmer goes to Canada and buys $5,000 worth of cows
for use on his own farm. Can these be entered on a baggage
declaration or is a commercial formal entry required? Does it
make a difference if the farmer went to Canada with the intention
of
buying the cows or if he purchased them incidental to the trip?
Does it make a difference to the outcome if the farm is
incorporated?
See response to Scenario #1.
Scenario #4
An American who maintains a horse farm goes to Canada to buy a
new horse. Can this horse be entered on a baggage declaration or
is a commercial formal entry required? Does it affect this
situation if the horse farmer uses these horses in competitive
jumping, or in polo matches, or rents them for pleasure, or if
they are race horses?
The horse may be entered on a baggage declaration, provided
all the requirements of Part 148 are met. The use to which the
farmer puts the horse after the animal has been imported will
have a bearing on whether he may claim a personal exemption upon
importation, and on whether an invoice is required under 19 CFR
148.23(c). Horses entered for a commercial purpose, such as
being rented for pleasure or for participation in races, are not
purchased for personal or household use. Therefore, making a
claim for the tourist exemption in those situations would be
improper. More information would be needed before a
determination could be made as to whether horses imported for
competitive jumping and polo match purposes could be claimed
under the personal exemption. This is because it is conceivable
that such uses could be either for personal or for commercial
purposes, depending on the circumstances.
Scenario #5
An American who maintains a horse farm takes a horse to Canada to
be bred, or for training. Can this horse be entered on a baggage
declaration or is commercial formal entry required?
The horse may be entered on a baggage declaration provided
all of the requirements of Part 148 of the Customs Regulations
are met.
Please do not hesitate to contact Ms. Gina Grier of this
office at (202) 927-2397 should you have further questions.
Sincerely,
Jerry Laderberg
Chief
Entry Procedures and Carriers
Branch