ENT-1-01
OT:RR:CTF:ER H109795 GGK
Port Director
U.S. Customs and Border Protection
109 Shiloh Drive
Laredo, TX 78045
Attn: Ms. San Juanita Juarez
Category: Duty Free Stores
RE: Internal advice regarding the completion of CBP Form 7501 and Manufacturer I.D.
Dear Port Director:
This is in response to your June 10, 2010, request for internal advice regarding the proper method of generating Manufacturer Identification Codes (“MID”) when completing Customs and Border Protection’s (“CBP”) Form 7501, i.e., the entry summary.
FACTS:
In your internal request inquiry, you seek guidance with regards to two transactions involving Fairn & Swanson, Inc. (“F&S”) and its subsidiary, Fairn & Swanson, Inc. d/b/a Baja Duty Free (“Baja Duty Free”). F&S operates a foreign trade zone (“FTZ”) in Oakland, California. Imported alcohol is admitted into the FTZ under zone-restricted status by F&S and sold to Baja Duty Free. The alcohol is subsequently withdrawn from the FTZ and entered by Baja Duty Free into its class 9 bonded warehouses, or duty-free stores, for sale and exportation.
To illustrate the transactions you provided two representative warehouse entry summary packages filed by Baja Duty Free. The two warehouse entry summary packages illustrate identical issues raised in your internal advice inquiry. Therefore, we will only discuss one warehouse entry summary package, for entry xxxx664-0 filed on September 11, 2008, in detail as we address your questions. The entry summary package for entry xxxx664-0 includes the following documents: 1) the warehouse entry summary on CBP Form 7501; 2) a pro forma invoice for the purchase of alcohol by F&S from a U.S. company that distributes foreign alcohol (“domestic distributor”); 3) a Transportation Entry and Manifest of Goods Subject to CBP Inspection and Permit, on CBP Form 7512, documenting the movement of the alcohol from the Port of Miami to the FTZ (“First CF 7512”); 4) an Application for Foreign-Trade Zone Admission and/or Status Designation, on CBP Form 214, documenting the admittance of the alcohol into the FTZ under zone-restricted status; 5) a sales invoice between F&S and Baja Duty Free; 6) a second CBP Form 7512 (“Second CF 7512”) documenting the movement of alcohol from the FTZ to Baja Duty Free’s duty-free store located on Grand Central Boulevard, Laredo, Texas; 7) a Blanket Permit Summary for the withdrawal of alcohol from the Grand Central Boulevard duty-free store; and 8) a Record of Bonded Warehouse Activity documenting inventory movement at the Grand Central Boulevard duty-free store.
The warehouse entry summary on CBP Form 7501 is filed by Baja Duty Free. On the entry summary, the bill of lading or air waybill number is blank. However, the foreign port of lading for the alcohol at issue is specified as 42737, which correlates to Le Havre, France, and the export date is April 23, 2008. Moreover, Miami, Florida is listed as the U.S. port of unlading and the import date is May 4, 2008. Finally, the country of origin for the alcohol is listed as “FR” for France and the importing carrier is identified with the zone admission number found on the Application for Foreign-Trade Zone Admission and/or Status Designation (“CF 214”).
The First CF 7512, indicates that the first U.S. port of unlading for the alcohol at issue is Miami. Upon arrival in Miami, the alcohol entered into a bonded warehouse located at the port and operated by Schenker, Inc. The original entry summary for the Miami warehouse entry was not included as a part of the document submission. However, a review of CBP’s records associated with the Miami warehouse entry shows that the domestic distributor is listed as the importer of record and the date of importation is May 4, 2008. No invoices associated with the Miami warehouse entry or bills of lading associated with the importation of the alcohol are available for review.
Moreover, the First CF 7512 does not identify a country of origin or foreign port of lading for the alcohol; however, the document states that multiple vessels under U.S. flags were used to import the alcohol. Rather, the missing information is available on the CF 214. Specifically, the CF 214 states that the foreign port of lading for the alcohol is Le Havre, France and that the country of origin is also France. The exportation date is stated as April 23, 2008.
Based on the pro forma invoice, the sale of alcohol by the domestic distributor to F&S occurred on or about July 9, 2008, the order date, which is approximately two months after the alcohol’s date of importation into U.S. customs territory. The pro forma invoice contains only the addresses for F&S and the domestic distributor. It does not provide any details regarding the foreign manufacturer or shipper of the alcohol. The delivery address on the pro forma invoice is F&S’ Oakland, California FTZ. According to the CF 214 and the First CF 7512, the alcohol arrived at the FTZ from the Port of Miami on August 1, 2008.
The Second CF 7512 dated September 2, 2008, documents the transfer of alcohol from the FTZ to Baja Duty Free’s Grand Central Boulevard duty-free store in Laredo, Texas. According to the Second CF 7512, the alcohol is entered or imported by F&S. In addition, the Second CF 7512 also states that that the alcohol originated and was shipped from France on April 23, 2008, by means of a “domestic” carrier. The second invoice, dated September 5, 2008, is the sales invoice between F&S and Baja Duty Free for the alcohol transferred from the FTZ. Like the pro forma invoice, the sales invoice between F&S and Baja Duty Free does not provide any information with regards to the foreign manufacturer or shipper of the alcohol.
Based on the above facts, your office is requesting internal advice on the questions listed below. You ask:
1. Can an invoice be presented without the foreign manufacturer or seller listed on the invoice?
2. Can Fairn & Swanson, Inc. be considered the shipper of the goods on the invoice because it sent merchandise to supply its duty-free store?
3. Can CBP request that a warehouse entry summary be required to have a MID constructed on a CBP Form 7501 using the foreign manufacturer or shipper instead of the U.S. Company who owns the merchandise?
4. Do the MID instructions on the 1990 memorandum provided with the internal advice request apply to warehouse entries that are entering the commerce of the United States from an FTZ?
ISSUES:
1. Whether the invoice accompanying the warehouse entry must include the name and address of the foreign manufacturer or shipper.
2. Whether the (MID) must be based upon the foreign manufacturer or shipper.
LAW AND ANALYSIS:
In your internal advice, you list four specific questions for this office to address. These questions address what information is required on the invoices submitted as a part of Baja Duty Free’s warehouse entry summary and how to generate MID’s for these entries. To respond to your questions, applicable laws and regulations require that the name and address of foreign manufacturers or shippers must be included on invoices submitted as a part of warehouse entries. Moreover, MIDs for warehouse entries must be generated using the foreign manufacturers’ or shippers’ name and address.
1. Whether the invoice accompanying the warehouse entry must include the name and address of the foreign manufacturer or shipper.
The invoice accompanying the warehouse entry must include the name and address of the foreign manufacturer or shipper. When making a warehouse entry from an FTZ, 19 C.F.R. § 146.62(a) requires the individual with the right to make entry, or a properly appointed customs broker, to file CBP Form 7501, i.e., the entry summary. See also, 19 C.F.R. § 144.11(a).
Moreover, 19 C.F.R. § 146.62(b)(1) mandates that entry documentation, including invoices as provided by 19 C.F.R. parts 141 and 142, must accompany the entry summary. To determine what information is required on the invoices accompanying the entry summary, we turn to 19 C.F.R. § 142.6(a). Specifically, under 19 C.F.R. § 142.6(a)(5), the invoice must contain:
The name and complete address of the foreign individual or firm who is responsible for invoicing the merchandise, ordinarily the manufacturer/seller, but where the manufacturer is not the seller, the party who sold the merchandise for export to the U.S., or made the merchandise available for sale.
(Emphasis added). For further clarification, in Treasury Decision 90-25 (March 27, 1990) we considered comments to the final rule adopting 19 C.F.R. § 142.6(a)(5) and explained that:
Although in the great majority of situations, the manufacturer will be the seller of the merchandise, Customs acknowledges that there will probably be instances where the actual identity of the true manufacturer of the merchandise cannot be ascertained. For this reason, the proposed amendment has been modified to allow the importer to supply Customs with the name and complete address of the individual or firm who sells the merchandise in those situations where the actual manufacturer cannot be identified. The information Customs needs is the identity of the foreign person or firm who is responsible for introducing the merchandise into the U.S. stream of commerce. This amendment is intended to satisfy that need.
Manufacturer/Seller Identification Required at Time of Entry, 55 Fed. Reg. 12,342, 12,343 (final rule) (Apr. 3, 1990) (emphasis added). Thus, the invoice accompanying the warehouse entry summary must include the name and address of the foreign individual or firm, usually the manufacturer, who sold, or made available for sale, the merchandise for exportation to the United States. In the case of the alcohol at issue, an invoice accompanying Baja Duty Free’s warehouse entry summary must include the name and address of the French manufacturers of the alcohol or the foreign party that made the alcohol available to the domestic distributor for importation into the United States.
Moreover, we note that the facts presented in the internal advice request indicate that after importation, but prior to the filing of the warehouse entry summary by Baja Duty Free, the imported merchandise was sold twice on the documents. The first domestic sale occurred between the domestic distributor, who is the importer of the alcohol, and F&S. The second sale occurred between F&S and Baja Duty Free. Due to these intervening sales, 19 C.F.R. § 141.86(c) requires at least two invoices to accompany the entry summary. Specifically, 19 C.F.R. § 141.86(c) states:
If the merchandise is sold on the documents while in transit from the port of exportation to the port of entry, the original invoice reflecting the transaction under which the merchandise actually began its journey to the United States, and the resale invoice or a statement of sale showing the price paid for each item by the purchaser, must be filed as part of the entry, entry summary, or withdrawal documentation. If the original invoice cannot be obtained, a pro forma invoice showing the values and transaction reflected by the original invoice must be filed together with the resale invoice or statement.
(Emphasis added). A pro forma invoice, in turn, must include information regarding the name and address of the shipper, the seller, the consignee and purchaser; prices and values; country of origin information and so forth. See 19 C.F.R. § 141.85.
Based on the requirements of 19 C.F.R. § 141.86(c), the original invoice reflecting the transaction under which the merchandise actually began its journey to the United States must accompany the warehouse entry summary filed by Baja Duty Free. The imported alcohol at issue began its journey to the United States from France. The party listed as entering or importing the alcohol from France is the domestic distributor. Therefore, the original invoice that must be included as a part of Baja Duty Free’s warehouse entry summary is the invoice reflecting the transaction between the domestic distributor and the French manufacturers and/or sellers of the alcohol. Furthermore, if the original invoice cannot be obtained, then a pro forma invoice showing the values and transaction reflected by the original invoice must be filed together with the two resale invoices. See 19 C.F.R. § 141.86(c). In combining 19 C.F.R. § 142.6(a)(5) and 19 C.F.R. § 141.86(c), we conclude that the original or substituted pro forma invoice must provide the name and address of the foreign individual or firm who sold, or made available for sale, the merchandise for exportation to the United States.
To summarize, 19 C.F.R. § 142.6(a)(5) requires that the invoice accompanying a warehouse entry summary include the name and address of the foreign individual or firm who sold, or made available for sale, the merchandise for exportation to the United States. For situations where a sale occurred prior to the entry of merchandise, the original invoice reflecting the transaction under which the merchandise actually began its journey to the United States, or a substitute pro forma invoice, must accompany the resale invoice. See 19 C.F.R. § 141.86(c). In a situation where resale invoices reflect domestic transactions, the original or substitute pro forma invoice constitutes the invoice that contains the name and address of the foreign manufacturer or seller. Consequently, we find that Baja Duty Free must provide, as a part of the warehouse entry summary package, the original or substitute pro forma invoice reflecting the transaction under which the alcohol began its journey to the United States. This invoice should: 1) illustrate the transaction between the domestic distributor and the French manufacturers and/or sellers of the alcohol; and 2) include the name and address of the foreign individual or firm, usually the manufacturer, who sold, or made available for sale, the alcohol for export to the United States.
2. Whether the (MID) must be based upon the foreign manufacturer or shipper.
The MID on the warehouse entry summary must be generated using information supplied for the foreign manufacturer or shipper. Although there is a regulation explaining the generation of MIDs for textiles in 19 C.F.R. § 102.23, and the appendix, there is no regulation specifically addressing the generation of MIDs for other types of goods. However, CBP’s instructions for CBP Form 7501 provide guidance. We initially note that on March 17, 2011, CBP updated its CBP Form 7501 Instructions, which can be found at http://forms.cbp.gov/pdf/7501_instructions.pdf. Both the updated instructions and the previous version in effect when Baja Duty Free filed its warehouse entry summary on September 11, 2008, state:
For the purposes of [generating the MID], the manufacturer should be construed to refer to the invoicing party or parties (manufacturers or other direct suppliers). The name and address of the invoicing party, whose invoice accompanies the CBP entry, should be used to construct the MID.
These instructions direct that the manufacturer, invoicing party or parties, or other direct suppliers should be used to construct the code. For the warehouse entry summary filed by Baja Duty Free, however, multiple invoicing parties and invoices exist due to the domestic sales of the imported alcohol. Consequently, we must determine which invoice accompanying the warehouse entry should be used to generate the MID.
As explained above, CBP’s regulation, 19 C.F.R. § 142.6(a)(5), requires that the invoice submitted as a part of entry documentation contain the name and complete address of the foreign individual or firm who sold, or made available for sale, the merchandise for exportation to the United States. The legislative history of the regulation explained that the purpose for requiring invoices to include the name and complete address of the foreign person or firm was to provide the necessary information for CBP to verify and validate MID codes. See Manufacturer/Seller Identification Required at Time of Entry, 55 Fed. Reg. at 12,343. “The information Customs needs is the identity of the foreign person or firm who is responsible for introducing the merchandise into the U.S. stream of commerce.” Therefore, the MID must reflect the name and address of the foreign individual or firm to generate valid MIDs. In terms of the warehouse summary filed by Baja Duty Free, the MID should be generated by using the name and address of the foreign manufacturer or seller who sold, or made available for sale, the alcohol for exportation to the United States.
As a final note, your internal advice request questions whether the Memorandum, dated June 18, 1990, on “Clarification of MID Final Ruling” remains in effect. The Memorandum at issue provides guidance on the proper generation of MIDs using information found on invoices submitted with entry packages. It is applicable to all entries, not simply warehouse entries for merchandise entering the commerce of the United States. Consequently, the Memorandum is applicable to the situation presented in your internal advice request where zone-restricted status merchandise is entered into a class 9 bonded warehouse for sale and exportation.
HOLDING:
Sixty days from the date of this letter, Regulations and Rulings will make the decision available to CBP personnel, and to the public on the CBP Home Page on the World Wide Web at www.CBP.gov, by means of the Freedom of Information Act, and other public methods of distribution.
Sincerely,
Myles B. Harmon, Director Commercial and Trade Facilitation Division