Logistics Consultant Lacks Sufficient Financial Interest to Act as Importer of Record, CBP Rules

A logistics consulting company cannot act as an importer of record for various wireless electronics devices because it has insufficient financial interest in the goods at issue, CBP ruled June 5. The decision came in response to a binding ruling request from Your Special Delivery Services Specialty Logistics (YSDS).

The company provides logistical consultation services to shippers and arranges for the transportation of merchandise from foreign sellers to U.S. buyers and is not a licensed customs broker, CBP said. YSDS said it provides damage control, insurance, assistance with permit applications and similar services. According to the company, the services "generally cease" when CBP releases the merchandise.

The ruling request concerned proposed terms and conditions that would be inserted into purchase orders between YSDS and both purchasers and sellers. YSDS argued that the purchase orders would give the company "a security interest in the underlying merchandise that can be exercised on behalf of the seller whenever U.S. based consignees do not meet their payment obligations to either YSDS itself or the seller." YSDS would have the right to a lien on the goods in the event of nonpayment and the right to collect payment from the U.S. buyer for remission to the foreign seller.

CBP pointed to 19 U.S.C. 1484(a)(1), which requires importers of record to be the “owner” or “purchaser” of the goods, terms that include "any party with a financial interest in a transaction." CBP cited a series of HQ rulings that laid out what the agency considers a "security interest" in imported goods. In HQ H31226, CBP determined that a seller, Marmen, did not maintain a “security interest” sufficient to establish a significant financial interest in the imported merchandise because the company was still entitled to the full payment regardless of post-entry responsibilities and it did not possess title to the goods or risk of loss.

Similarly to Marmen, YSDS charges an initial, one-time flat fee plus a variable fee per transaction based upon a percentage of the underlying value, CBP said. YSDS also never possesses title to the goods or assumes risk of loss at any point, the agency said. To act as importer of record, "there must be a significant nexus, between the would-be importer’s financial interest and the goods," CBP said. In contrast, YSDS’ interest in the goods appears to be only temporary, CBP said.

YSDS' supposed financial interest is contingent upon a buyer’s failure to perform pursuant to a sales contract, CBP said. Any financial interest YSDS possesses would be triggered by the buyer’s failure to fulfill its contract with the seller, not with YSDS. The security interest would be generated only if the seller engages YSDS under the purchasing agreement. YSDS therefore has no possible financial risk in the contemplated transactions, CBP said.

The agency concluded YSDS can "in no way" be considered as an "owner" or "purchaser" with sufficient financial interest to act as the importer of record. Its "security interest" in the goods is unspecified. "While YSDS may characterize its role in the transaction as seller’s agent ... YSDS’s role in the transaction closely resembles that of a nominal consignee," who cannot serve as the owner or purchaser, CBP said.