ENT-1-03-CO:C:R:E 222020 JR
Regional Commissioner of Customs
Southeast Region
909 S.E. First Avenue
Miami, Florida 33131
RE: Internal Advice Request Regarding the Right to Make Entry;
19 U.S.C. 1484; 19 CFR Part 141, Subpart B
Dear Sir:
This is in response to your internal advice request of
November 14, 1989 (FILE 89-1015:CL:RSF), regarding Savannah Foods
and Industries' right to make entry on six entries of raw sugar
filed during 1984 and 1986.
FACTS:
Savannah Foods and Industries, Inc. (SFI) appeared as the
importer of record on six entry summaries for raw sugar filed at
Savannah, Georgia, during 1984 and 1986. Four of these entries
pertain to "tolling" contracts which SFI had with various trading
companies which required SFI to refine imported raw sugar owned
by those trading companies and provide companies designated by
the trading companies with refined sugar as instructed. Two of
the entries were sugars purchased by SFI under a sales agreement
with a raw sugar broker.
Pursuant to the Sugar Reexport Program (Presidential
Proclamation No. 5002, 47 FR 54269, November 30, 1982) SFI would
furnish to the trading companies a substituted quantity of the
desired product (bagged refined sugar) equivalent to the
production yield of the raw sugar less refining losses; under the
"tolling" contracts the refined sugar to be delivered was not
required to be specifically refined from the raw sugar furnished
by the raw sugar brokers, but could come from SFI's inventory of
refined sugar.
It is the position of Customs' Regulatory Audit office that
SFI did not have the right to enter, on its own behalf, the
imported sugar upon its arrival in Savannah, Georgia, since SFI
did not own or purchase the merchandise and had no direct
financial interest in the merchandise. Regulatory Audit
recommends an assessment of penalties against SFI under 19
U.S.C. 1641(b)(6) since SFI should have used a customs broker to
make the entries and under 19 U.S.C. 1592 because SFI entered the
merchandise through the use of false statements and documents.
Generally, SFI contends that they were authorized to make
entry because they had a "financial interest" in the imported
sugar by virtue of the "tolling" contracts which conveyed
"ownership" of the sugar to SFI, and as such, there can be no
violations of either sections 1592 or 1641 of Title 19 of the
United States Code.
ISSUE:
Whether SFI had sufficient "financial interest" in the
imported raw sugar upon its arrival in Savannah, Georgia, to
permit SFI the "right to make entry" of the sugar under section
484, Tariff Act of 1930, as amended (19 U.S.C. 1484).
LAW AND ANALYSIS:
Under 19 U.S.C. 1484 only an "importer of record" has the
right to make entry. "Importer of record" is defined as the
owner or purchaser of the goods, or when designated by the owner,
purchaser, or consignee, a licensed customhouse broker. A
nominal consignee may designate a customhouse broker to make
entry on his behalf but may not make entry on his own behalf. If
a customhouse broker makes entry for a nominal consignee, the
broker must appear as importer of record.
Customs Directive No. 3530-02, dated November 6, 1984,
entitled "Right to Make Entry" provides, in part:
An "owner" or "purchaser" is defined as 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 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
customhouse broker to make entry on his behalf and may
be shown as the importer of record on the CF 7501
(entry summary).
SFI's position is that Customs Directive No. 3530-02 clearly
grants SFI authority to make entry of the raw sugars since SFI
did have an ownership interest in the merchandise by virtue of
the "tolling" agreements which required them to process (alter or
fabricate) the raw sugar. The financial interest in the sugar is
demonstrated by the following factors: SFI possessed the right
of enforcing a mechanic's lien, if necessary, on the refined
sugar; SFI received an advance of monies to refine the sugar; SFI
paid the stevedoring charges for off-loading the raw sugar and
loading the refined sugar as well as any demurrage and/or
dispatch charges on the refined sugar. While the sugar was in
Savannah's possession, SFI assumed the risk of loss and purchased
the applicable insurance.
While we remain unconvinced by SFI's argument that SFI is
the "owner" of the imported sugar in the true legal sense of the
term via the "tolling" agreements, in that, SFI did not acquire
title to the imported sugar, we are persuaded that SFI clearly is
within the Customs Service definition of "owner" for the purpose
of making entry. The terms "owner" and "purchaser" are construed
liberally in Customs Directive No. 3530-02, paragraph 3.c., and
by applying that definition to the entries in question, it
appears to cover SFI's "tolling" arrangement with the trading
companies on four of the six entries. SFI qualifies as the
"owner" of the raw sugar for entry purposes by SFI's financial
stake in the sugar manufacturing process. On two of the six
entries (warehouse withdrawals), we are persuaded that SFI did,
in fact, own the raw sugar outright (as the actual owner of the
goods) pursuant to purchase agreements with invoices and on the
basis of the additional invoice documentation submitted to us by
SFI which substantiate their purchases.
HOLDING:
SFI possesses a sufficient "financial interest" in the raw
sugar through the "tolling" contracts to appear as the importer
of record entitled to enter the merchandise on CF 7501 under
19 U.S.C. 1484. Therefore, there is no violation of either
19 U.S.C. 1641 or 19 U.S.C. 1592 on the six entries in question.
This ruling is limited to the issue addressed, and is based
on Customs Directive 3530-02. This ruling is not to be construed
as holding that SFI's "ownership" interest for the purpose of
19 U.S.C. 1484 is equally applicable to the ownership interest
necessary under 19 U.S.C. 1313(b) to support a valid principal-
agency relationship. In drawback cases, complete, traditional
legal ownership is required.
Sincerely,
John A. Durant
Director, Commercial Rulings
Division