OT:RR:CTF:EPDR H317599 MY
Category: Entry
Center Director
Industrial and Manufacturing Materials
Center of Excellence and Expertise
U.S. Customs and Border Protection
Buffalo Field Office
Buffalo, NY 14225
Attn: Charlene T. Henley, Import Specialist
Re: Application for Further Review of Protest Number 4601-20-120362; alleged entry by
broker without authority
Dear Center Director:
The purpose of this decision is to address the application for further review (“AFR”) of
protest number 4601-20-120362 filed by Flagship Converters Inc. (“Flagship”) on August 31,
2020, regarding the liquidation of entry number xxx-xxxxx93-5.
FACTS:
Flagship Converters Inc. (“Flagship”) disputes its obligation to pay the final assessment
of duties owed on entry number xxx-xxxxx93-5 on the basis that it did not consent to be the
importer of record for the entry. The merchandise at issue consisted of 48 rolls of metalized film
entered on May 29, 2019, by customs broker NYC Supply Chain Solutions, Inc. (“NYCSCS”).
The entry (CBP Form 3461) and entry summary (CBP Form 7501) identify Flagship as the
importer of record, as well as the ultimate consignee of the imported merchandise. The
accompanying entry documentation, specifically the commercial invoice, packing list, and bill of
lading, identify Flagship as the purchaser and ultimate consignee for the imported merchandise.
Additionally, these documents identify Izotic Star SDN BHD (“Izotic”), an entity with a
Malaysian address, as the seller and exporter. NYCSCS sent Flagship an invoice, dated May 24,
2019, for $1,868.21, encompassing the cost of the “entry fee,” the “importer security filing fee,”
and “duties and fees.” Flagship paid the duties, and the entry was liquidated on April 24, 2020,
and later reliquidated on May 29, 2020, after U.S. Customs and Border Protection (“CBP”)
determined that the People’s Republic of China (“China”), rather than Malaysia, was the correct
country of origin for the merchandise and additional duties were owed pursuant to Section 301 of
the Trade Act of 1974 (“Section 301”).
Flagship does not protest CBP’s country of origin determination and additional duties
assessed at reliquidation. Instead, on August 31, 2020, Flagship protested its liability for payment
of the duties owed on entry number xxx-xxxxx93-5. Flagship asserts that it never authorized
NYCSCS to enter the merchandise on its behalf, and that the latter’s conduct “constitute[d] the
hijacking of Flagship’s identity…exposing Flagship to liabilities it never bargained for when it
purchased the subject metallized film…”
To substantiate that it did not authorize NYCSCS to make entry on its behalf, Flagship
raises two arguments: First, that NYCSCS did not execute a power of attorney with Flagship
prior to the entry date. The power of attorney provided by Flagship demonstrates that it was
executed January 29, 2020, several months after the May 29, 2019, entry date. Second, that
Flagship purchased the entered merchandise on a Delivered Duty Paid (“DDP”) basis, a
contractual arrangement whereby “seller [must] bear the risks and costs, including duties, taxes
and other charges of delivering the goods . . . cleared for importation” to the purchaser. Flagship
contends this DDP arrangement evidences it did not contractually consent to assume liability for
payment of duties.
Flagship provided CBP with a copy of a different entry with a similar DDP arrangement
where it was not designated as the importer of record to demonstrate how it intended for this
entry transaction to be structured. Finally, Flagship speculates that “NYCSCS benefitted
financially by filling of this entry [xxx-xxxxx93-5] through an undisclosed relationship with the
seller, freight forwarder or both.” Such speculation, and the documents pertaining to a different
entry, are outside the scope of the factual and legal analysis relevant for this protest of entry
number xxx-xxxxx93-5 and will not be addressed herein.
ISSUE:
Whether Flagship is liable for the duties owed on entry xxx-xxxxx93-5.
LAW AND ANALYSIS:
As an initial matter, we note that this protest was timely filed. Pursuant to 19 U.S.C. §
1514(c)(3)(A), a party must file a protest within 180 days after the date of liquidation. The
subject entry was liquidated on April 24, 2020, and later reliquidated on May 29, 2020. Flagship
filed its protest on August 31, 2020, within the 180-day protest deadline for both the initial
liquidation and subsequent reliquidation. We also find that this protest meets the criteria for
further review. Pursuant to 19 C.F.R. § 174.24(b), this protest involves questions of law and fact
which have not previously been ruled upon, specifically whether Flagship is liable for the duties
owed on entry number xxx-xxxxx93-5.
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Flagship disputes its obligation to pay duties on entry number xxx-xxxxx93-5 on the basis
that it did not consent to be the importer of record for the entry. Flagship does not dispute the
reliquidation of the entry due to CBP’s determination that the country of origin for the
merchandise was China, and additional duties were owed under Section 301. Consequently, this
determination and assessment of additional duties is final and conclusive. See 19 U.S.C. §
1514(a) (explaining that CBP decisions are “final and conclusive upon all persons . . . unless a
protest is filed”).
Pursuant to 19 C.F.R. § 141.1(b)(1), “[t]he liability for duties, both regular and additional,
attaching on importation, constitutes a personal debt due from the importer to the United States
which can be discharged only by payment in full of all duties legally accruing, unless relieved by
law or regulation.” The term “importer” in this circumstance refers to “the person primarily liable
for the payment of any duties on the merchandise” who is generally the importer of record. 19
C.F.R. § 101.1. An importer of record is the owner or purchaser of the merchandise or, when
appropriately designated by the owner, purchaser, or consignee of the merchandise, a customs
broker. 19 U.S.C. § 1484(a)(2)(B); see also Customs Directive 3530-002 (June 27, 2001)
(defining “owner or purchaser” for purposes of the right to make entry as “any party with a
financial interest in a transaction, including, but not limited to, the actual owner of the goods, [or]
the actual purchaser of the goods”). An importer of record can avoid liability for any additional
or increased duties owed on an entry if an actual owner’s declaration and superseding bond has
been filed in accordance with § 141.20 of CBP Regulations. 19 C.F.R. §141.20.
Flagship concedes that it was in fact the purchaser of the entered merchandise, and
accepted delivery of this merchandise as the ultimate consignee for the entry. The protest record
substantiates that Flagship, as the purchaser of the merchandise, qualifies as the importer of
record for the merchandise. There is no evidence in the protest record of any party, such as the
seller, filing “an actual owner’s declaration and superseding bond” to assume liability for duty
payment in lieu of Flagship pursuant to 19 C.F.R. § 141.20(a)(1)-(2). Nevertheless, Flagship
seeks to avoid liability for the duties owed on entry number xxx-xxxxx93-5 on the basis that it
did not consent to be designated as the importer of record for the entry, as evidenced by a power
of attorney executed with NYCSCS after the date of entry, and a private commercial contract
requiring the seller to assume liability for duty payment.
CBP has previously considered whether a party may avoid liability for duty payment by
alleging that a broker who made entry on their behalf was not actually authorized to do so. In
Headquarters Ruling Letter (“HQ”) H271023, dated August 14, 2017, a protestant requested that
CBP cancel an entry and the associated duty bill on the basis that “‘it did not intend, cause and/or
authorize the filing of the entry in question.” The protestant alleged the party who signed a power
of attorney on its behalf for purposes of the entry lacked the legal authority to bind the protestant
to such a contract. CBP determined that the evidence from the entry and accompanying
documentation, as well as evidence provided as part of the protest record, all pointed to the
protestant as being an actual owner or purchaser who qualified as an importer of record eligible
to make entry. CBP held that the protestant’s “contention that it cannot be the importer of record
does not outweigh CBP’s authority to rely on the entry documentation and evidence before it.”
CBP also held that even if the “broker did not possess a valid POA . . . [this would] not destroy
the validity of CBP’s reliance on the information provided in the entry documents.” Id. Finally,
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CBP noted that no actual owner’s declaration had been filed in order for another party to assume
liability for duties owed on the entry.
CBP has consistently held that “the remedy for misidentification of the IOR [i]s available
pursuant to 19 U.S.C. § 1485(d), which provides, in relevant part, that the consignee in whose
name an entry summary is filed shall not be liable for any additional or increased duties if” the
requirements specified in 19 C.F.R. § 141.20 are satisfied. See HQ 230208 (July 15, 2008).
Absent the filing of an actual owner’s declaration, CBP is duly authorized to hold the party
identified as the importer of record identified on the entry documentation liable for duties owed
on the entry. This holds true even in circumstances where a party alleges it did not intend to be
liable for duty payment, whether due to a commercial contract gone awry or fraud. See e.g. HQ
H291184 (May 11, 2021) (protestant alleging no entry was ever intended to be filed but-for a
shipping route failure preventing merchandise from being exported was nevertheless held liable
for duties owed on the entry); HQ 230339 (June 25, 2004) (finding that an allegation of fraud did
not relieve a party of its statutory liability to pay duties owed on an entry because it did not
implicate a protestable action or decision with respect to the entry by CBP). CBP may thus
properly ascertain the party liable for payment of duties based on the entry and entry summary,
and associated documents.
Here, CBP properly relied on Flagship’s designation as the importer of record on the
information presented at entry. Specifically, both the entry and the entry summary list Flagship as
the importer of record and ultimate consignee. The commercial invoice for the entry transaction,
along with the packing list, also name Flagship as the purchaser of the imported film. Flagship
does not dispute that it did in fact purchase the film and take delivery as the ultimate consignee.
As the “owner or purchaser” of the film, Flagship qualifies as the importer of record for the entry.
19 U.S.C. § 1484(a)(2)(B). CBP thus acted with due authority in holding Flagship liable for
payment of the duties owed on entry number xxx-xxxxx93-5 as the importer of record.
Significantly, Flagship did not avail itself of the remedy to avoid liability for payment of
duties provided by 19 C.F.R. § 141.20 – the filing of an actual owner’s declaration. See also 19
U.S.C. § 1485(d). We are unable to provide such a remedy under protest. Neither of the two
arguments raised by Flagship—that it did not duly authorize NYCSCS to make entry, and that it
did not contractually accept liability for duty payment by claiming DDP payment terms—
“outweigh CBP’s authority to rely on the entry documentation and evidence before it.” See HQ
H271023.
Although we make no determination as to whether NYCSCS was duly authorized to file
entry number xxx-xxxxx93-5, we note that pursuant to 19 C.F.R. § 141.46, “[b]efore transacting
Customs business in the name of [a] principal, a customs broker is required to obtain a valid
power of attorney to do so.” Given that the filing of an entry constitutes customs business,
NYCSCS was required to execute a power of attorney with Flagship in order to make entry on
Flagship’s behalf. See 19 C.F.R. § 111.1 (defining “customs business” as including “activities
involving transactions with CBP concerning the entry and admissibility of merchandise”). Any
broker who fails to obtain a valid power of attorney prior to conducting customs business on
behalf of a principle may be penalized “$1,000 for each power of attorney not on file.” Appendix
C to Part 171 of CBP Regulations, Section V.E.2 (“Section 1641(d)(1)(C)”).
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HOLDING:
Based on the preceding, Flagship is liable for payment of the duties owed on
xxxxxxxx93-5. The protest should be DENIED in full.
You are instructed to notify the Protestant of this decision no later than 60 days from the
date of this decision. Any reliquidation of the entry or entries in accordance with the decision
must be accomplished prior to this notification. Sixty days from the date of the decision, the
Office of Trade, Regulations and Rulings will make the decision available to CBP personnel and
the public on the Customs Rulings Online Search System (“CROSS”) at https://rulings.cbp.gov/,
or other methods of public distribution.
Sincerely,
Yuliya A. Gulis, Director
Commercial and Trade Facilitation Division
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