H324098

HQ H324098 June 5, 2023 ENT 1-03 OT:RR:CTF:ER H324098 ND Patrick J. Caulfield, Esq. Grunfeld, Desiderio, Lebowitz, Silverman & Klestadt LLP 599 Lexington Avenue FL 36 New York, NY 10022 RE: Request for a determination of the right to act as importer of record by Your Special Delivery Services Specialty Logistics Dear Mr. Caulfield: This is in response to your letter dated March 16, 2022, requesting a ruling on whether Your Special Delivery Services Specialty Logistics (“YSDS”) meets the criteria to act as “importer of record” as defined in Customs Directive No. 3530-002A in connection with imported Wi-Fi components. We have considered the facts and issues raised, and our decision follows. FACTS: YSDS provides logistical consultation services to foreign and domestic shippers. According to YSDS, its client are predominantly Wi-Fi service providers who seek to import various Wi-Fi components such as wireless routers. YSDS notes that it is not a licensed customs broker but arranges for the transportation of merchandise from foreign sellers to U.S. buyers. YSDS’s logistical services include damage control, insurance, packing control and service, assisting with export permit applications, offering (brokering) freight insurances, tender to airline-carrier, and final mile delivery. According to counsel, YSDS’s services generally cease when the merchandise is released by U.S. Customs and Border Protection (“CBP”), but YSDS may assist in warehousing imported merchandise in some instances. In its ruling request, YSDS states that it provides additional services including product review for issues relating to country of origin, value, and classification, documentation preparation and “customs clearance.” We note that these services amount to “customs business” as defined by 19 U.S.C. § 1641 and must be performed by a licensed customs broker per 19 U.S.C. § 1641(b)(1), which YSDS is not. Upon request for clarification from CBP Headquarters (“HQ”), counsel stated that YSDS does not make specific determinations on country of origin, value, or classification, but recommends its clients to third-party customs brokers and relies on the third-party customs broker or the overseas seller for such determinations. YSDS similarly relies on a third-party customs broker or overseas seller to prepare, complete, and review documents that are submitted to CBP. Finally, YSDS provides “customs clearance” services by introducing the overseas seller to a licensed customs broker and, where necessary, providing the broker with the shipment information when requested by the overseas seller. YSDS requests a binding ruling to determine its eligibility to act as importer of record based on a security interest in the imported merchandise under two scenarios. First, YSDS proposes to retain a financial interest enumerated in the terms and conditions of the purchase order between the seller and purchaser that contains the following language: “Purchaser hereby grants the seller, as well as seller’s agent, [YSDS], an enforceable security interest in the subject merchandise so that either seller or YSDS can attach a lien on the merchandise in any jurisdiction allowable by law in the event that purchaser does not comply with the terms contained herein.” Second, YSDS proposes to retain a financial interest enumerated in the terms and conditions of the purchase order between the seller and YSDS that contains the following language: “Seller hereby assigns seller’s agent, [YSDS], with seller’s security rights in the subject merchandise so that YSDS can bring legal action or attach a lien on the merchandise in any jurisdiction allowable by law in the event that the buyer engaged by seller does not comply with the terms contained in the agreement between seller and purchaser.” According to YSDS, under both scenarios, it would have a security interest in the underlying merchandise that can be exercised on behalf of the seller whenever U.S. based consignees do not meet their payment obligations to either YSDS itself or the seller. Specifically, YSDS will have the right to a lien on the imported goods in the event of non-payment or the right to collect payment from the U.S. buyer for remission to the foreign seller. For its services, YSDS charges its clients, i.e., the seller of the imported merchandise, an initial, one-time flat fee plus a variable fee per transaction based upon a percentage of the underlying value. ISSUE: Whether YSDS has sufficient financial interest in the imported goods, at the time of entry, to act as importer of record based on a security interest in the imported merchandise? 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 qualifying as the “importer of record” may make entry. Those qualified parties are identified as the “owner” or “purchaser” of the goods, or a broker appointed on behalf of an owner, purchaser or consignee under 19 U.S.C. § 1484(a)(2)(B). Owner and purchaser are further defined in Customs Directive (“C.D.”) 3530-002A, dated June 27, 2001. Section 5.3.1 of the directive provides: 5.3.1 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. C.D. 3530-002A. Accordingly, C.D. 3530-002A states that the terms owner and purchaser include any party with a financial interest in a transaction. According to C.D. 3530-002A, owners or purchasers must have more than custodial interest in the goods. Owners or purchasers have a financial interest in the goods that goes beyond that of a bailee. “Financial interest” means there is a nexus between the financial welfare of the owner or purchaser and the imported goods. See HQ H007168 (Aug. 2, 2007) (noting that rulings have identified “a nexus between the financial welfare of the would-be importer and the imported goods when finding that the financial interest in the goods is sufficient to entitle the would-be importer to act as importer of record”). In HQ 116344 (Jan. 25, 2005), we determined that where the seller of goods retained a "security interest" in the goods to ensure its right to payment for products sold and shipped, such seller retained a continuing "financial interest" in the goods so as to enable the seller to act as importer of record with the right to make entry for the merchandise upon importation. In that case, title, ownership and risk of loss passed to the buyer upon the seller's delivery of the products to the foreign carrier for shipment to the customer in the U.S. The seller determined the means of carriage of the sold goods and invoiced the buyer for costs related to the shipment of the goods (shipping, handling, customs, insurance and similar charges). HQ 116344 stated that "significantly, however, notwithstanding that title and ownership of the products pass to the [buyer] upon their delivery to the foreign port of lading for shipment, [the seller], under its sales agreement, retains a ‘security interest’ in all such products delivered to the [buyer] ‘as security for the performance by [buyer] of all of [buyer]'s obligations arising under this Agreement . . . .’" Similarly in HQ H007168 (Aug. 2, 2007), the sel

Section 484(a)(1) of the Tariff Act of 1930, as amended (19 U.S.C. § 1484(a)(1)) provides that only parties qualifying as the “importer of record” may make entry. Those qualified parties are identified as the “owner” or “purchaser” of the goods, or a broker appointed on behalf of an owner, purchaser or consignee under 19 U.S.C. § 1484(a)(2)(B). Owner and purchaser are further defined in Customs Directive (“C.D.”) 3530-002A, dated June 27, 2001. Section 5.3.1 of the directive provides:5.3.1 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.C.D. 3530-002A.Accordingly, C.D. 3530-002A states that the terms owner and purchaser include any party with a financial interest in a transaction. According to C.D. 3530-002A, owners or purchasers must have more than custodial interest in the goods. Owners or purchasers have a financial interest in the goods that goes beyond that of a bailee. “Financial interest” means there is a nexus between the financial welfare of the owner or purchaser and the imported goods. See HQ H007168 (Aug. 2, 2007) (noting that rulings have identified “a nexus between the financial welfare of the would-be importer and the importe