Background

U.S. Customs and Border Protection has issued an administrative ruling that clarifies the Section 321 duty-free exemption status of certain low-value shipments sent to U.S. fulfillment centers and domestic warehouses. CBP states that this ruling better positions it to identify duty evasions and other abuses and helps create a more predictable enforcement environment for trade. It also provides CBP with foreign seller information with which to target and interdict counterfeit products, consumer safety violations, and other threats before they enter the U.S.

19 USC 1321, commonly referred to as Section 321, enables CBP to admit qualifying goods duty- and tax-free provided they are imported by one person on one day and have a total fair market value of $800 or less. According to CBP, the new administrative ruling recognizes fulfillment centers and domestic warehouses as the “one person” for any goods that have not been sold to a specific consumer at the time of importation, making them potentially eligible for Section 321 provisions.

The owner or purchaser of the goods (likely the foreign seller) may also qualify as the “one person” if the importer provides the first and last name of the owner or purchaser or the name of the business. Accordingly, when such identifying information is not presented to CBP, any affiliated shipment(s) 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.

The administrative ruling took effect July 28 and is enforceable as of that date. CBP intends to take near-term enforcement action against egregious violators it believes are structuring their shipments to evade duty and entry requirements. Longer-term, egregious, and/or repeat violators may lose their Section 321 privileges and may be required to file formal entry on subsequent shipments.

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