On February 18, 2021, Customs & Border Protection Agency (CBP) published a new ruling regarding fulfillment centers and domestic warehouses.
Under Section 321, CBP can admit qualifying goods tax-free and duty-free as long as the goods are imported on one day by one person and have a value of $800 or less in the country of origin.
In July 2020 an administrative ruling by the CBP recognized domestic warehouses and fulfillment centers as one person in instances of unsold goods imported into the US. Under the new ruling, foreign owners/sellers of unsold goods worth less than $800 on a single day may similarly be classified as “one person,” as long as they present their identity to the CBP on the ACE eManifest and Type 86 (Section 321). They also have to have imported goods not exceeding $800 in value on one day.
Who Qualifies as “One Person”
In the new administrative ruling, fulfillment centers and domestic warehouses are deemed one person if the merchandise imported is not sold to any specific client when it is imported.
For merchandise yet unsold, the owner of the goods (in the originating country) may be classified as “one person” as long as their identity is made known to Customs & Border Protection Agency at the time of importation.
Merchandise Owners Identity
The foreign seller needs to present their identity to the CBP at the time of importation. Failure to present the owner’s (foreign seller) identity to the CBP will mean that the goods may be subjected to formal or informal entry procedures if the value of the goods is more than $800. The CBP may also subject the merchandise to formal or informal entry procedures if it believes it is necessary to protect national interest or revenues.
How to Present Foreign Seller Merchandise Owner’s Identity to the CBP
For the purchaser or owner to be deemed “one person” under section 321, the last and first name of the purchaser or owner, or the name of the business have to be provided to the CBP.
It is up to AMS (ACE eManifest) Filers to provide details about the consignee including the name of the purchaser or owner and the address of the fulfillment center or domestic warehouse that is the destination of the shipment.
ABI filers using Type 86 can also provide the name of the purchaser or owner and the address of the fulfillment center or domestic warehouse where the shipment is headed to.
What Happens When Identity is Not Presented
If a single fulfillment center or domestic warehouse receives goods worth more than $800 of unsold merchandise without providing the identity of the foreign seller to the CBP, it can result in complications under Section 321. Since identity was not submitted to CBP, the goods will not qualify for duty-free entry under Section 321.
Several Shipments Filed Under Section 321
If a foreign seller (merchandise owner) sends several shipments each worth less than $800 to three different fulfillment centers or domestic warehouses, the goods will not qualify for Section 321 treatment. Even if the identity of the foreign seller is presented to the CBP by the one person (who in this instance is the owner of the goods), the total value of the shipments is greater than the $800 allowed for a single person on a single day.
The rules still apply even if the foreign seller ships the three packages using different modes of transportation or carriers.
Can the First Package be Admitted Duty-Free?
According to the rules one person cannot exceed $800 in aggregate fair market value in a single day. The fulfillment center, domestic warehouse, and merchandise owner are considered one person and they cannot exceed the fair market value of shipments on any given day. As such, any filer that ships goods above $800 will be subjected to formal and informal entry procedures as long as the aggregate value of all shipments on one day exceeds $800.
CBP Enforcement of the Ruling
CBP is partnering with stakeholders and trade partners to educate and identify the entities that are known to ship large volumes of goods that are not eligible. Repeat and egregious violators may have to deal with enforcement action from CBP.
These may include:
- Revocation of Section 321 privileges
- Holds on shipments found to be ineligible
- Enforcement of formal entry rules until the entity shows sustained compliance.
How Stakeholders Can Facilitate Compliance
- Fulfillment Center and Domestic Warehouse consignees that receive unsold merchandise worth more than $800 in a single day can work with the owners of the merchandise (foreign sellers) to ensure that they comply with the new regulations of Section 321.
- Merchandise owners can import goods under Section 321 as long as they present their identity (includes the name of the company or last name and first name) to the CBP through an Entry Type 86 filing or a manifest as long as the aggregate value of the shipments is worth $800 or less.
- Carriers and Shippers need to refer to the CATAIR for Type 86 and CAMIR (ACE Air Manifest) guidelines to ensure compliance with the new regulations on owner identity that needs to be presented to CBP.