• Deanna Clark-Esposito

ATTENTION: US Customs Increases Scrutiny Over Imports to Domestic Warehouses and Fulfillment Centers

Updated: Sep 15



BACKGROUND

CBP has issued an administrative ruling that clarifies whether importations made by a nonresident importer in one day and sent to a U.S. fulfillment facility or warehouse may qualify for informal duty-free entry under 19 U.S.C. § 1321(a)(2)(c) [hereafter “Section 321”]. The administrative ruling went into effect on July 28, 2020 and was published in the Customs Rulings Online Search System (CROSS) on July 31, 2020.


Moving forward, in situations where merchandise has not been sold to a consumer at the time of importation, CBP will consider the consignee (likely the U.S. fulfillment facility or warehouse taking custody of the merchandise) to be the “person” for Section 321 eligibility purposes. The owner or the purchaser of the merchandise (likely the foreign seller) may also qualify as the “person” provided the owner or purchaser’s identity is presented to CBP. Accordingly, when the identity of the owner or purchaser of the merchandise is not presented to CBP, any affiliated shipment(s) may be subject to informal or formal entry procedures when the aggregate value exceeds the $800 limit or CBP determines it is necessary to protect the revenue or national interest.


This ruling better positions CBP to identify duty evasions and other abuses consistent with current authorities and helps create a more predictable enforcement environment for trade. This ruling also provides CBP with important foreign seller information with which to target and interdict counterfeit products, consumer safety violations, and other threats before they enter the United States.

GUIDANCE

In order for the owner or purchaser to qualify as the “person” under Section 321, importers will be required to provide the first and last name of the owner or purchaser, or the name of the business. Specifically, AMS filers must provide in the “consignee” field, the name of the owner or purchaser “in care of” the address of the domestic warehouse or fulfillment center to which the shipment is destined. Similarly, ABI filers may provide in the “ship to” and/or “buyer” fields, the name of the owner or purchaser “in care of” the address of the domestic warehouse or fulfillment center to which the shipment is destined.


This ruling took effect and is thereby enforceable beginning July 28, 2020. CBP intends to take near-term enforcement action against egregious violators who the agency believes are structuring their shipments to evade duty and entry requirements. Longer-term, egregious and/or repeat violators may lose their Section 321 privileges and may be required to file formal entry on subsequent shipments.


CBP remains committed to providing the trade community with additional guidance needed to comply with this ruling moving forward.


Information Provided by U.S. Customs and Border Protection.

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