In late 2014, U.S. Customs and Border Protection denied an importer of record’s protest that claimed that it was incorrectly held liable for the payment of antidumping duties assessed on furniture from the People’s Republic of China.
Importing goods that are subject to antidumping (AD) or countervailing (CV) duties is inherently risky business—one reason being that the importer of record is solely responsible for paying all AD/CV duties. Consequently, savvy U.S. companies introduce third-party importers of record that are willing to undertake the financial risks involved with assuming the liability for AD/CV duties. Where such arrangements have been made, the onus is on the contracting parties to ensure that the agreed-upon importer of record has been properly listed on all official entry documents submitted to U.S. Customs and Border Protection (CBP). In a case of first impression, CBP recently denied the protest of an importer of record that claimed it was incorrectly held liable for the payment of AD duties assessed on wooden bedroom furniture from the People’s Republic of China.
Importing goods into the United States imposes many legal obligations, including the proper determination of duties, country of origin, and valuation. Although one does not need a license or to be a resident to import, an “importer of record” number must be established with CBP, and a bond must be filed to secure the importer’s financial obligations. CBP is responsible for collecting the duties, taxes, and fees assessed on those products and setting the formula for establishing importers’ bond amounts.
Only an “importer of record” has the right to make entry of goods.Corresponding to that right, the importer of record is held liable for all customs-related aspects of the import transaction, including depositing and paying AD/CV duties.
CBP’s role in liquidating entries and assessing AD duties is purely ministerial—it liquidates an entry and assesses antidumping duties pursuant to the U.S. Department of Commerce’s directions.
Once an investigation is complete, the Department of Commerce issues an AD/CV duty order, which specifies the products for which importers must pay AD/CV duties and indicates the rates applicable to several specific exporters and an all-others rate for remaining exporters that did not receive a specific rate. The AD/CV duty order also instructs CBP to collect cash deposits at the time of importation at those rates on all merchandise subject to the order.
If CBP does not receive full payment of the AD/CV duties within eight months of sending the first bill demanding payment, it sanctions the delinquent importer. Sanctioned importers are required to make the full payment of all estimated duties, taxes, and fees before products can leave the port of entry.
In CBP Headquarters’ Ruling Letter (HQ) H157616, dated September 22, 2014, CBP held that it did not err in holding the importer of record shown on the entry documents liable for the entry, which included the payment of AD duties where the importer of record failed to take affirmative steps to correct the entry documents and substitute the importer of record. The importer of record claimed that the seller of the merchandise, wooden bedroom furniture from China subject to AD duties in the amount of 216%, should have in fact been listed as the importer of record. The importer attributed the error to unauthorized entry by a customs broker on its behalf. In denying the importer’s protest, CBP noted that the five years that had lapsed between the entry of the wooden bedroom furniture and the demand for payment at liquidation was sufficient time to correct the alleged error. Further, the importer took no additional action to correct the alleged error, even after it received a CBP Form 29 Notice of Action that demanded payment or prior to liquidation.
This decision highlights the importance of properly designating the importer of record on import entry documents, particularly when a U.S. company makes arrangements with a third party to undertake importer of record responsibility, as well as to assume the associated financial risks involved, including liability for AD/CV duties. In such cases, the relevant U.S. company is well-advised to document such arrangements in a contract with such third party prior to the importation of any goods. The contract between the parties should clearly establish that the third party (a) will be listed on official CBP entry documents as the importer of record, (b) agrees to accept the financial responsibility associated with the importation, (c) shall verify the entry documents to ensure that the third party is properly listed as the importer of record, and (d) will immediately correct any entry documents that show the U.S. company instead of the third party as the importer of record.
If you have any questions or would like more information on the issues discussed in this LawFlash, please contact any of the following Morgan Lewis lawyers:
Washington, D.C.Margaret M. Gatti
. “Importer of record” is defined as the owner or purchaser of the goods, or, when designated by the owner, a licensed customs broker. “Owner or purchaser” is in turn defined as including “any party with a financial interest in a transaction, including, but not limited to, the actual owner of the goods, the actual purchaser of the goods, a buying or selling agent, a person or firm who imports on consignment, a person or firm who imports under loan or lease, a person or firm who imports for repair or alteration or further fabrication, etc.” See 19 U.S.C. § 1484.
. The remedy for misidentification of an importer can be found in 19 U.S.C. § 1485(d), which provides, in relevant part, that the consignee in whose name an entry summary is filed shall not be liable for any additional or increased duties if (1) he or she declares at the time of entry that he or she is not the actual owner of the merchandise, (2) he or she furnishes the name and address of such owner, and (3) within 90 days from the date of entry, he or she produces a declaration of such owner conditioned that he or she will pay all additional and increased duties.