Substantial Post-Entry Work Sufficient for Right to Make Entry, CBP Finds

A company that undertakes substantial post-entry work on imported equipment but doesn't hold the title to the goods can still have the right to make entry, CBP said in a recently released ruling (here), dated Aug. 24. The companies involved in the ruling were granted confidential treatment, meaning some information, including company names, was redacted in the ruling. A lawyer for the companies, Joseph Acayan of Givens and Johnston in Houston, requested the ruling from CBP on whether one of the companies has enough financial interest for the right to make entry.

One company that constructs "plants," identified as Company A, signed an agreement with another company that sells such plants, Company B, to manage all imports and to construct the plants after the parts are imported. Ownership of the parts will remain with Company B, though Company A is responsible for customs duties, storage and delivery to the construction sites, CBP said. The agreement "states that Company A on behalf of Company B, will have the duty of care, custody, control, and risk of loss for any item of the imported equipment, which commences from the time of first landing of the item in the U.S. port of entry," CBP said. Company A must also obtain insurance for the equipment, making it liable for deductibles and risk of loss until "acceptance of work."

A 2001 customs directive examined this issue and provided an outline of financial interest considerations. Based on that directive, "if Company A can show that it has a financial interest in the Plant at the time of entry, sufficient enough to constitute a nexus between Company A’s financial welfare and the imported goods, it may serve as the importer of record," CBP said. Past rulings give precedent "to demonstrate that the post-entry construction work on the Plant is sufficiently substantive to give Company A the right to make entry, even though it lacks title to the goods," the agency said.

Based on Company A's post-entry responsibilities, including the costs of all engineering and design, labor, procurement and other services for the Plant, while also assuming risk during transport and storage, Company A does have the right make entry, CBP said. "On account of its post-entry activities and financial interest in the imported goods, Company A is considered an 'owner or purchaser' of the imported parts and components and has the right to make entry as importer of record," it said.