CBP Finds Logistics Provider Can't Be Importer of Record
Logistics provider Your Special Delivery Services Specialty Logistics (YSDS) doesn't meet the criteria to act as the importer of record on a shipment, CBP said in a recent ruling. While the company would have a lien on shipments that it could exercise in the event of nonpayment, that doesn't qualify as enough of a financial interest in the shipment to give it the right to make entry, the agency said.
Sign up for a free preview to unlock the rest of this article
Export Compliance Daily combines U.S. export control news, foreign border import regulation and policy developments into a single daily information service that reliably informs its trade professional readers about important current issues affecting their operations.
YSDS is a logistics provider that primarily works with Wi-Fi service providers to import Wi-Fi components, CBP said in the ruling, issued in June but not released publicly by CBP until Jan. 23. While not a customs broker, it provides services including "damage control, insurance, packing control and service, assisting with export permit applications, offering (brokering) freight insurances, tender to airline-carrier, and final mile delivery," the agency said.
The logistics provider charges clients a one-time fee plus a "variable fee per transaction based upon a percentage of the underlying value," CBP said. YSDS said it would have a financial interest in the goods in the form of a lien that could be exercised on behalf of the seller whenever U.S.-based consignees don't meet their payment obligations to either YSDS itself or the seller.
CBP found that YSDS never possessed "title, ownership, or risk of loss," of the goods in question. The logistics provider's services cease once the cargo is released by CBP, and YSDS never at "any point in the transaction" takes title of the goods nor loss risk, the agency said.
Also, YSDS's security interest is never specified, the agency said. In order to act as the importer of record there must be "a significant nexus" between the importer's financial interest and the goods, CBP said. There is no evidence that YSDS's interest in the goods is "anything more than cursory," the agency said, and "full payment is not contingent upon any potential post-entry responsibilities because YSDS has admitted that its services generally cease when the merchandise is released by CBP," the ruling said.
"YSDS has not alleged any possible financial risk in the contemplated transactions," CBP said. "There is no evidence that YSDS has a sufficient financial interest in the goods so as to act as importer of record." Though YSDS characterized its role in the transaction as seller’s agent, which would ordinarily be permitted to make entry, "the facts do not give rise to a seller agent role for purposes of determining the right to make entry. YSDS’s role in the transaction closely resembles that of a nominal consignee, who cannot be 'owner' or 'purchaser,' rather than a seller’s agent," CBP said.
YSDS declined to comment.