HQ 224636: Right to make entry; 19 U.S.C. 1484

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 224636

                         August 28, 1993

ENT-1-01-CO:R:C:E 224636 WR

CATEGORY:  Entry

Patrick D. Gill, Esq.
RODE & QUALEY
295 Madison Avenue
New York, NY 10017

RE:  Right to make entry; 19 U.S.C.  1484

Dear Mr. Gill:

     This is in response to your letter of April 6, 1993, wherein
you requested a binding ruling on behalf of your client, Sumitomo
Corporation of America regarding the importation of certain rail
cars and rail car shells.

FACTS:

     Rail cars and rail car shells owned by Sumitomo Corporation
(SC), a trading company, will be consigned to Sumitomo Corporation
of America (SCOA).  That merchandise will be sold by SC to Morrison
Knudson Corporation (MK).  The available evidence indicates that
SCOA will only act for SC and will not own the merchandise and will
not bear any risk of loss.  
     
     There is a contract between SC and SCOA under which SC is to
perform all contractual requirements with MK.  The contract also
specifies that SC will negotiate with the actual manufacturer of
the merchandise from whom SC will buy that merchandise.  The
contract does not refer to SC as the principal or to SCOA as SC's
agent.  The contract requires SCOA to assist SC in negotiations
with the buyer, MK.  Under the contract SCOA is to assist SC's
supplier when requested to do so by SC.  SCOA is to assist SC in
obtaining inland transportation, document preparation and to
transmit communications from SC to MK.  Under the contract SCOA
will share in 50 per cent of the profit from the sale between SC
and MK.  There is no contract provision dealing with the situation
in which the cost of sales and transportation exceeds the sales
price received from MK by SC.

ISSUE:

     Whether SCOA has the right to make entry?
 

LAW AND ANALYSIS:

     Under 19 U.S.C.  1484, the right to make entry is limited to
an owner, purchaser or a properly authorized customhouse broker. 
The Customs Service implemented that statute with instructions
contained in Customs Directive 3530-02 of November 6, 1984.  That
directive provided in part:

     An "owner" or "purchaser" is defined as 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. . . ."

There is no evidence to show that SCOA owns the merchandise by way
of payment and obtaining title to the goods.  It is not claimed
that SCOA is the purchaser from SC.  It is asserted that SCOA has
the right to make entry because it is the selling agent of SC.

     A selling agent for Customs purposes is a person who acts for
a foreign supplier in selling the supplier's goods to a U.S.
importer.  Norco Sales Co. v. United States, 65 Cust. Ct. 778, R.D.
11732 (1970).  In the case of F.C. Gerlach & Co. et al v. United
States, Reap. Dec. 5084, 6 Cust. Ct. 710, 714 (1941), the court
discussed the attributes of a selling agent.  There, the contract
expressly provided for an exclusive agency contract.  Here, the
contract does not state that it is a contract of agency nor does
it refer to the parties as principal and agent.  There, the agent
was to receive a commission even if the principal did not use the
services of the agent.  Here, the terms of the contract call for
SCOA to provide assistance to SC upon SC's request.  However, those
terms do not exclude the payment of 50 per cent of the net profits
even if SC fails to request assistance from SCOA.  In the case, the
court found that the foreign manufacturer, and not the U.S. agent,
was responsible for delivery to the U.S. purchaser.  Here, SC is
responsible for performing all contractual requirements with MK. 
In Gerlach, the court found that the foreign manufacturer was
responsible for setting the sales price.  Under the SC-SCOA
contract, there is no authority for SCOA to set the price. 
Further, SC collects the sales price and remits the SCOA share to
SCOA.  The Gerlach court found that the U.S representative of the
foreign manufacturer was a selling agent.  The significant
difference is that in the court case, the contract expressly
provided that the contract was an exclusive sales agency contract. 
Here, the contract is silent as to whether the parties are a
principal and agent.  

     The facts are critical to a proper analysis of whether an
agency relationship exists.  New Trends Inc. v. United States, 10
CIT 637, 645 F. Supp. 957 (1986).  In that case, the court held
that one can submit to a degree of control by another without
becoming the agent of another.  The court, relying on earlier
cases, held that significant factors illustrative of an agency
showing active control were:  the active role of the principal in
the sales process, direct negotiations with the suppliers as to
price and specifications, the awareness of the subsidiary parties
of the principal's role, and the lack of discretion on the part of
the agent as to the purchase of the merchandise.  While that case 
dealt with a buying agency, the agency criterion that the court
employed are equally applicable to any agency analysis.  In the
instant case, SC was responsible for controlling the contract both
with SC's suppliers and SC's customer MK.  Under the SC-SCOA
contract, SCOA was responsible only to assist SC in technical and
commercial negotiations and only when requested by SC.  It was to
collect specification information and to transmit this to SC.

     The case of Jay-Arr Slimwear Inc. v. United States, 12 CIT
133, 681 F. Supp. 875 (1988), concerned the issue whether the
importer's representative was a buying or selling agent.  The court
first noted that regardless of how the parties characterize the
relationship the existence of an agency is determined by examining
the actual transaction.  Thus, the absence of the words "principal"
and "agent" in the SC-SCOA contract is not automatically fatal to
finding that an agency was created.  The court said at 137:

     Examples of services which are characteristic of those
     rendered by a bona fide agent include:  compiling market
     information, gathering samples, translating, placing orders
     based on the buyer's instructions, procuring the merchandise,
     assisting in factory negotiations, inspecting and packing the
     goods, and arranging for shipment and payment.

     Under the SC-SCOA contract SCOA was responsible for assisting
SC in negotiations with MK, the customer and with SC's suppliers. 
SCOA was responsible for collecting changes in specifications and
to transmit that information to SC.  SCOA was to provide
information on inland transportation and to arrange for a
performance bond in the name of SC, SCOA was responsible for
preparing the necessary documentation on SC's request.  Thus, the
actual performance terms of the SC-SCOA contract meet those
illustrations with respect to an agency and the absence of the
terms "principal" and "agent" would not be controlling in this
instance.  It cannot be over emphasized that a proper determination
depends on the actual facts of each situation.  To the same effect
is Rosenthal-Netter Inc. v. United States, 12 CIT 77, 79, 679 F.
Supp. 21 (1988), aff'd 7 Fed. Cir. 11, 861 F.2d 261 (1988); Moss
Mfg. Co. Inc. v. United States, 13 CIT 420, 714 F. Supp. 1223,
aff'd  8 Fed. Cir. 40, 896 F.2d 535 (1990); Monarch Luggage Co. v.
United States, 13 CIT 523, 525, 715 F. Supp. 1115 (1989); and Pier
1 Imports, Inc. v. United States, 13 CIT 161, 167, 708 F. Supp. 351
(1989).
 

HOLDING:

     The Sumitomo Corporation of America (SCOA) is the agent of the
Sumitomo Corporation (SC) and, therefore, it has a sufficient
financial interest in the subject transaction to entitle it to be
importer of record for the rail cars and rail car shells.

                                   Sincerely,




                                   John Durant, Director
                                   Commercial Rulings Division