CBP Tightens Rules for De Minimis Duty-Free Entries by Nonresident Importers

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Aug. 7, 2020

CBP has issued an administrative ruling and subsequent Cargo Systems Messaging Service notice clarifying when imports by a nonresident importer, made in a single 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) (“Section 321”).

Section 321

Section 321 provides for low value imports to be exempt from duties and certain other administrative requirements. Under this provision, articles may be entered duty free if the aggregate value of articles imported by one person, on one day, does not exceed $800. The limit was previously $200, but the Trade Facilitation and Trade Enforcement Act (TFTEA) increased the threshold.

Customs Ruling HQ H290219

The transactions at issue in HQ H290219 (July 28, 2020) involved the broker Global Trade Solutions (“GTS”). Some of GTS’s clients import merchandise under the Section 321 administrative exemption and store the merchandise at warehouses operated by an online fulfillment service provider, such as Amazon, eBay, or Shopify. However, the merchandise is ultimately sold to consumers in the United States who purchases the merchandise via the online fulfillment provider website.

GTS consolidated multiple House Air Waybills (“HAWB”) under a Master Air Waybill (“MAWB”) as de minimis shipments. Because these shipments were individually valued at less than $800, and not covered by a single order or contract being forwarded in separate lots, GTS believed the shipments to be eligible for Section 321 cargo release. The foreign shippers were nonresident importers who sent the merchandise to themselves, in care of Amazon Fulfillment, to stock the merchandise at the warehouse for an eventual sale via Amazon’s website. There was no sale in the United States upon importation. Instead, the online fulfillment service provider acted as a consignment store and did not take title to the merchandise. 

In the analysis, CBP considered two issues: 

1) What constitutes a “shipment” for purposes of Section 321, and

2) Which entity’s values should be aggregated to decide whether the $800 cap has been exceeded

CBP found the “shipment” is described by a bill of lading or other document used to file or support entry. If the document submitted is an individual bill of lading, the de minimis monetary limitation is applied to the value of the shipment on the individual bill of lading. Alternatively, if the document used is a master bill of lading, then the de minimis monetary limitation is applied to the total value of the shipments on the master bill of lading. Consolidated shipments are treated as one importation when determining value.

Customs also indicated that where there is an identified owner or purchaser of the shipment or shipments, that owner or purchaser is the “one person” for purposes of Section 321. If an owner or purchaser is not identified, however, CBP will use the named consignee to determine whether shipments are made in excess of $800 per person on one day. Customs also made clear that the ultimate consignee cannot be a foreign entity, and a domestic ultimate consignee must be identified with every de minimis informal entry submitted. Where multiple nonresident importers are shipping to the same fulfillment center, this analysis makes it more likely that the $800 limit will be exceeded.

CSMS #43534680

In light of the ruling, CBP issued CSMS #43534680 providing the following guidance:

·       In order for the owner or purchaser to qualify as the “person” under Section 321, importers must provide the first and last name of the owner or purchaser, or the name of the business.

·       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.

·       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 also announced that it would take enforcement action against egregious violators who structure their shipments to evade duty and entry requirements and violators could lose their Section 321 privileges on subsequent shipments.

Contact any Barnes, Richardson & Colburn attorney if you have any questions about informal entries or consignment shipments.