HQ 224433: Internal Advice request concerning expanding the TIBprovisions to allow domestic sale to purchasing agent; 19 U.S.C.1202; 19 CFR 10.31

Native CBP ruling rendition. Applicability is fact-specific; modification/revocation relationships and original publisher date are retained. Publisher sentinel year0001 means unknown date, not a historical legal adoption.

                            HQ 224433
                          July 1, 1993



CON-9-CO:R:C:E  224433  SR

CATEGORY:  Bonds

Ms. Constance Lewis
Acting Director 
Seizures & Penalties Division

RE:  Internal Advice request concerning expanding the TIB
provisions to allow domestic sale to purchasing agent; 19 U.S.C.
1202; 19 CFR 10.31

Dear Ms. Lewis:

     This request for internal advice was initiated by a letter
dated December 21, 1992, from Radix Group International.  

     Customs conducted a forum in Houston, Texas, in which
attending parties recommended changes in various aspects of
Customs procedures.  The recommendation currently at issue
involves the regulations concerning importations temporarily
imported free of duty under bond (TIB).  The "Houston
Recommendation # 2" is as follows:

          Simplify the exportation evidence to allow the broker
     to certify that the imported merchandise is the same as
     exported.  This action will avoid invoicing dissimilarities
     for imports and exports.  Change the regulation to allow
     multiple sales where the merchandise is always intended for
     export."

     The participants in the forum suggested a change in the
interpretation of "domestic sale" to allow a domestic purchasing
agent to buy TIB goods as an agent for an overseas purchaser. 
Currently, if goods under a TIB are sold they are subject to
liquidated damages.  The participants felt that a domestic
purchasing agent should be allowed to purchase TIB goods if they
are then exporting them to an overseas purchaser.  It is argued
that the goods are not purchased for his own account, but rather
as an agent representing the overseas buyer.  

     Generally, purchasing agents represent foreign companies by
purchasing equipment needed by the company.  They arrangement
shipment of the merchandise, sometimes storing it in their
warehouse.  If the purchasing agent buys merchandise that is in
this country under the TIB then they would have to pay liquidated
damages that equal double the duty if it is considered to be a 

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domestic sale.  

     The provisions of the law governing temporary importation
under law are provided for in Subchapter XIII of the Harmonized
Tariff Schedule of the United States (HTSUS) (19 U.S.C. 1202).  
U.S. Note 1(a) of Subchapter XIII provides as follows as follows:

     The articles described in the provisions of this subchapter,
     when not imported for sale or for sale on approval, may be
     admitted into the United States without the payment of duty,
     under bond for their exportation within 1 year from the date
     of importation . . .

     The language of the statute is clear; however, in the past
Customs has allowed TIB merchandise to be sold provided the sale
is for export.  T.D. 54640 (25) states as follows:

     Merchandise which is to be sold in the United States for
     exportation to a foreign purchaser is not imported for sale
     or sale on approval within the meaning of section 308, as
     amended, that phrase relating only to sales within the
     United States for domestic use or consumption.

     Pursuant to this T.D., in order to sell goods that are
entered under a TIB the purchasing agent must be acting in the
capacity of an agent for a foreign principle.  It must be shown
that the purchasing agent was a nominal consignee, that they
never owned title to the goods.  If the purchasing agent
purchased the goods then later found a foreign purchaser, this
would be considered a domestic sale and would violate the terms
of the TIB.  We requested sample copies of sales contracts from
the Houston trade contact to see if the agency capacity is
clearly disclosed, but she was unable to provide any copies.   

     The intention of the statute is to allow goods to enter the
U.S. free of duty as long as they are exported without entering
the commerce in this country.  By allowing a nominal consignee to
purchase goods that are only for export the goods do not enter
the commerce.  However, it would seem that this would allow goods
in the country under a TIB to compete at an advantage with goods
that are in the U.S. that have had to pay the duty.  By allowing
a sale in the U.S., even if it is for export, the goods would in
essence be in the stream of commerce of the U.S. by competing
against U.S., or imported duty paid goods for sale.

     Another potential problem to consider is the fact that the
broker that acted as importer of record is held liable if the
goods are not exported.  If multiple party sales are allowed the
merchandise will be out of the control of the broker who, as 

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importer of record, could be held for liquidated damages, under
19 CFR 10.39(d)(1), if the purchasing agent fails to export the
goods.  

                                   Sincerely,





                                   John Durant, Director