CBP Ruling on Section 321 Entries Through FTZ Expected to Focus on Definition of 'Importation'

An eagerly awaited CBP ruling on how foreign-trade zones are treated under Section 321 entry exemptions is expected to conclude that withdrawals from FTZs don't meet the requirements for such exemptions, National Association of Foreign-Trade Zones President Erik Autor said in a June 5 interview. Among other issues, CBP was considering whether larger shipments can be brought into foreign-trade zones, then broken up into smaller shipments valued under the $800 de minimis so they can be entered exempt from taxes and fees under Section 321 (see 1802140015).

Jim Swanson, CBP director-cargo and conveyance security and controls, discussed the ruling during a recent NAFTZ event, Autor said. "What customs appears to be focusing on is language in the 321 de minimis provision, which talks about that articles admitted free of duty or any tax imposed by reason of importation by one person on one day, with a fair retail value of the country of shipment of the articles imported," Autor said. "In other words, there are two instances in this language where it refers specifically to importation or import, and apparently CBP is basically saying that a withdrawal from a U.S. foreign-trade zone into U.S. commerce is not an importation." The ruling hasn't been released yet by CBP and the agency didn't comment.

While goods from an FTZ entering commerce must by filed as a type 06 entry, the Section 321 language "doesn’t say entry or withdrawal from warehouse," Autor said. "It says importation and customs does not consider an entry from an FTZ into US commerce to be an importation. That’s what they appear to be focusing on. But we won’t know for certain until we actually see the ruling." There's already an effort to address the issue legislatively, he said. "It’s obviously of interest to a lot of companies, particularly those who are doing distribution operations in zones of consumer products that may have high duty."