CBP Says Legislative History Doesn't Affect Section 321 Statutory Provisions in New FTZ Ruling
Merchandise imported in bulk and then stored in a foreign-trade zone prior to sale is not eligible for the Section 321 exemptions when the goods are withdrawn upon consumer sales, CBP said in a Sept. 18 ruling. CBP's ruling, HQ H282601, was in response to a ruling request from Sandler Travis lawyer Robert DeCamp on behalf of the American Apparel and Footwear Association. CBP's analysis in this ruling is similar to another ruling on de minimis shipments and FTZs (see 1807180022). There are efforts underway to change the treatment of such goods, on Capitol Hill (see 1808150007) and in CBP's regulations through the Commercial Customs Operations Advisory Committee (see 1810040019).
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The ruling request explained that AAFA members want to ship bulk commercial merchandise and admit it to an FTZ. "Once a purchase, valued at $800 or less is made, based on the aggregate purchase by a single customer on a single day, AAFA Members propose to enter the merchandise using informal entry procedures pursuant to Section 321," CBP said. To determine if that's allowed, CBP must "analyze whether merchandize stored in FTZs qualify for the administrative exemption under Section 321 by examining the total value of the shipment at importation rather than at the time of withdrawal from the FTZ," the agency said. "Here, because the merchandise is imported in bulk and only broken down into shipments of $800 or less at the time of withdrawal from an FTZ, we find that at the time of importation, the value of the merchandise shipment exceeds $800."
The AAFA members are acting as the importers, with the ultimate purchaser unknown at the time of importation, in this scenario, CBP said. "At the time of importation, the party that would qualify the goods for the administrative exemption under Section 321 is the AAFA Member, rather than the ultimate purchaser," the agency said. The trade group also argued that Congress intended to allow for the de minimis exemption to apply to such goods in FTZs. The AAFA argued that any "interpretation which prevents the 321 provisions from applying . . . on goods withdrawn from foreign trade zones . . . would effectively provide for the application of duties against goods entered into the foreign trade zone, as opposed to goods that are entered directly from a foreign country,” it said.
While the AAFA referenced the legislative history behind FTZs, "we note that the requirement that the administrative exception under Section 321 applies to a 'shipment of articles imported by one person on one day' is statutory," CBP said. The agency "must comply with the plain language of the governing statutes rather than consider legislative history," it said. "When applying U.S. Customs laws to FTZ merchandise, slated for entry, CBP will not ignore existing laws that require a determination related to the status of the merchandise at importation; therefore, CBP will not replace the importation event with the entry event from an FTZ."