Top Story: CBP Cracks The Door Open On U.S. 321 Entries

In a surprise ruling issued on July 28th to James Swanson, Director, Cargo Security and Controls , U.S. Customs Headquarters opened the possibility that merchandise could be brought into a U.S. warehouse for distribution using Section 321 de minimus entry procedures. While they will still not allow so-called 321 entries of foreign-status merchandise from foreign-trade zones, it does open the door that U.S. distribution facilities could take advantage of duty-free entry previously only available from foreign warehouses. Therefore FTZ distribution facilities could make use of the ruling to admit duty-free merchandise in domestic status.

Headquarters ruling HQ H290219 comes almost three years after a ruling request on behalf of Amazon. The ruling specifically allows the foreign shipper to act as the party for whom the $800 per day limit for such duty-free entries apply. This means the de minimus provision is still far more workable from a foreign location, but there are conditions under which informal, duty free entry could be made into a U.S. distribution center.

In other words, the ruling states that a 321 entry can be used at the time of import even if a sale has not taken place. However, when the final purchaser is not known, the consignee of the shipment must be used as the importer for the purposes of determining the $800/day limit. This limits the benefits of the ruling, but the smaller the foreign shipper’s organization, the more useful the provision becomes. The ruling also addressed the data requirements for such an informal entry into a U.S. warehouse. 19 C.F.R. § 143.23(k) provides that the following information is required as a part of an informal entry:

Earlier CBP rulings held that the ultimate consignee cannot be a foreign entity, rather a domestic ultimate consignee must be listed with every de minimis informal entry submitted. When a sale has not yet taken place in the U.S., i.e. there is no actual ultimate consignee, the owner of the U.S. premises of delivery at the time of entry of the unsold merchandise may be listed as the ultimate consignee. In situations where additional owner or purchaser information is not provided to CBP, the ultimate consignee, would be the entity used to determine the one person on one day Section 321 de minimis value qualifier.

Based on the ruling a foreign owner of the shipment or shipments may be identified as the one person on one day under 19 U.S.C. § 1321(a)(2)(C). If such an owner or purchaser is not identified, however, CBP shall use the named consignee to determine whether shipments are made in excess of $800 per person on one day.

The ruling noted that formal entries are required for all antidumping and countervailing duty entries. That same rule would not apply to entries subject to Section 301 or 232 duties.