Textiles and Trade: Administrative Ruling Related to Domestic Warehouses and Fulfillment Centers Frequently Asked Questions

Monday, February 22, 2021

Administrative Ruling Related to Domestic Warehouses and Fulfillment Centers Frequently Asked Questions

The below FAQ’s are for informational and discussion purposes only; they are not binding on the agency and have no legal effect. An administrative ruling pursuant to 19 C.F.R. Part 177 should be sought for specific fact scenarios.

What is Section 321?

19 U.S.C. § 1321, commonly referred to as Section 321, enables CBP to admit qualifying merchandise free of duty and tax provided that the merchandise is imported by “one person on one day” and has an aggregate fair market value of $800 or less.

The new administrative ruling recognizes domestic warehouses and fulfillment centers as the “one person” for merchandise that have not been sold to a specific consumer at the time of importation. Who else may qualify as the “one person”?

With respect to unsold merchandise, under the new administrative ruling, the owner of the merchandise (foreign seller) may also qualify as the “person” provided the owner’s identity is presented to CBP at the time of importation.

What if the merchandise owner’s (foreign seller) identity is not presented to CBP at the time of importation?

When the identity of the owner of the merchandise is not presented to CBP at the time of importation, shipments may be subject to informal or formal entry procedures when the aggregate value exceeds the $800 limit, or CBP determines it is necessary to protect the revenue or national interest.

How should the merchandise owner’s (foreign seller) identity be presented to CBP?

In order for the owner or purchaser to qualify as the “person” under Section 321, parties will be required to provide the first and last name of the owner or purchaser, or the name of the business.

Specifically, AMS filers must provide in the “consignee” field, the name of the owner or purchaser “in care of” the address of the domestic warehouse or fulfillment center to which the shipment is destined. Similarly, ABI filers may provide in the “ship to” and/or “buyer” fields, the name of the owner or purchaser “in care of” the address of the domestic warehouse or fulfillment center to which the shipment is destined. AMS and ABI filers should refer to the latest CAMIR and CATAIR guidance for filings.

On one day, a single domestic warehouse or fulfillment center takes custody of over $800 worth of unsold merchandise. With the merchandise owner’s (foreign seller) identity presented to CBP, can the merchandise be admitted duty-free under Section 321?

Shipments belonging to a single merchandise owner may be admitted duty-free provided their identity IS presented to CBP at the time of importation and the aggregate fair market value of those shipments on one day is $800 or less.

On one day, a single domestic warehouse or fulfillment center takes custody of over $800 worth of unsold merchandise. With the merchandise owner’s (foreign seller) identity NOT presented to CBP, can the merchandise be admitted duty-free under Section 321?

No. In situations where merchandise has not been sold to a consumer at the time of importation, CBP will consider the consignee (in this case the domestic warehouse or fulfillment center) to be the “person” for Section 321 eligibility purposes. The owner of the merchandise (foreign seller) may also qualify as the “person” provided the owner’s identity is presented to CBP. In this scenario, the merchandise owner’s identity was not presented to CBP at the time of importation.

On one day, a merchandise owner (foreign seller) sends 3 shipments with a value of $750 each to 3 different domestic warehouses or fulfillment centers. If the owner’s (foreign seller) identity is presented, can the merchandise be admitted duty-free?

No. The “one person” in this scenario is the merchandise owner (foreign seller). The aggregate fair market value of the three shipments is $2,250 and exceeds the $800 limit.

What if the merchandise owner ships the three separate shipments using different carriers or modes of transportation?

The ruling applies to all modes of transportation. The mode of transportation used does not influence Sec 321 eligibility.

In either of the two scenarios above, can the first $800 worth of merchandise be admitted duty-free under Section 321?

No. The $800 aggregate fair market value applies to the “one person”. In the first scenario, the domestic warehouse or fulfillment center is considered the “one person”. In the second scenario, the merchandise owner (foreign seller) is considered the “one person”. Under both scenarios, the aggregate fair market value of shipments imported on the one day exceeds $800. Accordingly, these shipments are subject to appropriate informal or formal entry procedures.

How is CBP enforcing this ruling?

CBP is working closely with its trade partners to identify and educate through informed compliance. In cases of egregious and repeat violators, CBP may take enforcement action, including placing holds on ineligible shipments, revoking Section 321 privileges, or requiring formal entry until sustained compliance is achieved.

Textiles and Trade