CBP: Importer Liable for Duties That Broker Paid
An importer is liable for duties on merchandise that it sought to import in 2019, despite arguing that it didn't consent to having its broker designate it as an importer of record, according to a recent CBP ruling.
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Flagship Converters brought its case before CBP in August 2020 for two reasons. The company claims that its customs broker, NYC Supply Chain Solutions (NYCSCS), had not been authorized to make entry on Flagship's behalf because NYCSCS did not execute a power of attorney prior to the entry date, according to CBP's summary of the company's argument in ruling HQ H317599.
Flagship also argued that it had purchased the entered merchandise on a Delivered Duty Paid basis, which meant that the seller would bear the risks and costs, as well as duties, to be cleared for importation.
The goods consisted of over 48 rolls of metalized film entered on May 29, 2019, by NYCSCS. In the entry and entry summary, Flagship was identified as the importer of record and the ultimate consignee of the imported merchandise, while Izotic Star SDN BHD, an entity with a Malaysian address, was identified as the seller and exporter.
NYCSCS sent Flagship an invoice, dated May 24, 2019, for $1,868.21, encompassing the cost of the “entry fee,” the “importer security filing fee,” and “duties and fees.” Flagship paid the duties, and the entry was liquidated on April 24, 2020.
The entry was reliquidated on May 29, 2020, after CBP determined that China, not Malaysia, was the country of origin for the film. CBP also assigned additional Section 301 duties because of that change.
Flagship didn't dispute CBP's country of origin finding, nor did it protest the additional Section 301 duties. However, it did protest its liability for payment of the duties owed on entry number xxx-xxxxx93-5, saying that it never authorized NYCSCS to enter the merchandise on its behalf, and that the latter’s conduct “constitute[d] the hijacking of Flagship’s identity … exposing Flagship to liabilities it never bargained for when it purchased the subject metallized film.”
Flagship argued that NYCSCS didn't execute a power of attorney with Flagship before the entry date, and Flagship purchased the entered merchandise on a Delivered Duty Paid basis. As a result, this DDP arrangement is evidence that it didn't contractually consent to assume liability for payment of duties, Flagship said. The company also argued that NYCSCS may have benefited financially "by filling of this entry [xxx-xxxxx93-5] through an undisclosed relationship with the seller, freight forwarder or both."
CBP said it wouldn't address whether NYCSCS benefited financially, as that was "outside the scope of the factual and legal analysis relevant for this protest of entry number xxx-xxxxx93-5."
However, the agency did address Flagship's other protestations. Based on prior proceedings, CBP determined that "absent the filing of an actual owner’s declaration, CBP is duly authorized to hold the party identified as the importer of record identified on the entry documentation liable for duties owed on the entry. This holds true even in circumstances where a party alleges it did not intend to be liable for duty payment, whether due to a commercial contract gone awry or fraud."
In this situation, CBP properly relied on Flagship’s designation as the importer of record on the information presented at entry, the agency said. Furthermore, Flagship didn't avail itself of the remedy to avoid liability for payment of duties, as provided for in the customs regulations, CBP said.
"Neither of the two arguments raised by Flagship -- that it did not duly authorize NYCSCS to make entry, and that it did not contractually accept liability for duty payment by claiming DDP payment terms -- 'outweigh CBP’s authority to rely on the entry documentation and evidence before it,'" CBP said.
"Given that the filing of an entry constitutes customs business, NYCSCS was required to execute a power of attorney with Flagship in order to make entry on Flagship’s behalf. ... Any broker who fails to obtain a valid power of attorney prior to conducting customs business on behalf of a principle may be penalized '$1,000 for each power of attorney not on file.'"
For these reasons, Flagship is liable for the duties, CBP concluded.