• Type : Entry • HTSUS :

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