HQ 115944 - Vessel Cargo Declaration; Shipments Consolidated under One Bill of Lading; 19 CFR 4.7 and 4.7a(c)(4) - United States International Trade Commision Rulings

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HQ 115944

July 8, 2003

VES-5/8-01-RR:IT:EC rb

CATEGORY: CARRIER

John M. Peterson, Esq.
Neville Peterson LLP
80 Broad Street - 34th Floor
New York, New York 10004

RE: Vessel Cargo Declaration; Shipments Consolidated under One Bill of Lading; 19 CFR 4.7 and 4.7a(c)(4)

Dear Mr. Peterson:

This is in reference to your letter of January 23, 2003 (Your File: 2401-01), on behalf of your client, Xerox Corporation, requesting a ruling concerning whether the Customs Regulations preclude a foreign freight forwarder and/or a Consolidator from consolidating several shipments under a single bill of lading, where the freight forwarder and/or Consolidator receives the shipments, on behalf of your client, from different vendors in a foreign country for consolidation and shipment to your client (hereinafter company “X”) in the United States. Our ruling in this matter is set forth below.

FACTS:

Company “X” is a large and established manufacturer and importer of information technology equipment and associated parts and accessories. In many cases, company “X” sources parts and materials from multiple vendors in a single country. Where these individual vendor orders, taken separately, are not large enough to fill a single cargo container, company “X” will usually engage a freight forwarder and/or a Consolidator to act as a consolidator for such goods. To accomplish this, company “X” will arrange to have its freight forwarder and/or Consolidator collect the goods from the vendors, consolidate and place such shipments into a single oceangoing container, and issue a single bill of lading for the goods. In most cases, the bill of lading will list company “X” as both shipper and consignee; however, in some cases, the freight forwarder and/or Consolidator may be listed as the shipper, and the consignee may be identified as “company ‘X,’ in care of the freight forwarder’s and/or Consolidator’s United States agent or affiliate.”

ISSUE:

Whether §§ 4.7 and 4.7a of the Customs Regulations (19 CFR 4.7, 4.7a) prevent a foreign freight forwarder and/or a Consolidator from including several shipments of goods under a single bill of lading, where the freight forwarder and/or Consolidator, acting on behalf of company “X,” has received these shipments from various vendors in the foreign country for consolidation and shipment to company “X” in the United States.

LAW AND ANALYSIS:

Section 4.7, Customs Regulations (19 CFR 4.7), provides that every vessel arriving in the United States and having to make entry have on board a manifest, as required under 19 U.S.C. 1431 and § 4.7 itself. Such manifest must consist of, among other things, a cargo declaration. Under § 4.7a(c)(1), Customs Regulations (19 CFR 4.7a(c)(1)), in pertinent part, the cargo declaration must list all the inward foreign cargo aboard the incoming vessel, regardless of the port of discharge.

Section 4.7 was recently amended by T.D. 02-62 (67 FR 66318; October 31, 2002) to add a new paragraph (b)(2) requiring that the cargo declaration, or its electronic equivalent, be presented to Customs (now Customs and Border Protection (CBP)) at least 24 hours before the cargo is laden aboard the vessel at the foreign port for transport to the United States (this requirement is commonly known as the “24-hour rule”). Moreover, § 4.7a, Customs Regulations (19 CFR 4.7a), was also amended by T.D. 02-62 to add a new paragraph (c)(4) requiring that the cargo declaration, or electronic equivalent, contain certain additional, more detailed information for the inward foreign cargo.

Most significantly, the additional, more detailed information under § 4.7a(c)(4) is critically needed in order to enable CBP to evaluate the risk of smuggling weapons of mass destruction through the use of oceangoing cargo containers before the containers are loaded on vessels for importation into the United States. Hence, it is this underlying purpose which governs the proper interpretation of § 4.7a(c)(4)
pertaining to the precise level of detail and accuracy of the informational content, including the shipper and consignee information, that is required on the cargo declaration and on any related shipping documents on which the cargo declaration is based (bills of lading).

In light of the pressing purpose of the “24-hour rule,” as described, therefore, information for each individual cargo shipment must be presented to CBP with each individual shipper and consignee being identified along with the cargo description (see 67 FR at 66325). In short, for each shipper/consignee relationship, a separate bill of lading must be issued. As such, the inclusion of multiple cargo shipments having different shippers and/or consignees on the same bill of lading, or, in the alternative, the listing of a freight forwarder and/or a Consolidator in place of the actual shippers and/or consignees for the shipments, would not be authorized (Ibid.).

Accordingly, based upon the facts presented in this case, it is clearly the foreign vendor (and not Company “X” or its freight forwarder and/or Consolidator) who is the shipper; and it is company “X” (and not the freight forwarder and/or Consolidator or its United States affiliate or agent) who is the consignee. Where, as in this case, the shipper information is different, the freight forwarder and/or Consolidator must issue a separate bill of lading in favor of each foreign vendor (shipper) whose goods the freight forwarder and/or Consolidator collects for consolidation and shipment to company “X” (the consignee) in the United States.

Parenthetically, with further reference to the identity of the consignee, the only exception under which the true consignee name would not be recorded would be in the case of a “to order” shipment where the merchandise is sold in transit. A “to order” party is only an interested party, such as a bank, which is securing payment, and is not the true consignee. In these circumstances, it is either the party holding title to the goods (the owner), or that party’s representative, who has the real interest in the shipment. For this reason, the owner or the owner’s representative must be listed in place of the consignee for a “to order” shipment. However, if the consignee’s name is available, the shipper must disclose this information (67 FR at 66324).

Notably, in this overall regard, CBP intends to provide further explanation as to the underlying intent and meaning of the shipper and consignee data elements, respectively, in § 4.7a(c)(4)(viii) and (ix), in connection with a proposed rule that will be published shortly in the Federal Register in furtherance of implementing section 343(a) of the Trade Act of 2002 (19 U.S.C. 2071 note).

HOLDING:

Sections 4.7 and 4.7a of the Customs Regulations (19 CFR 4.7, 4.7a), as amended by T.D. 02-62 (the “24-hour rule”), prevent a foreign freight forwarder and/or Consolidator from including several shipments of goods under a single bill of lading, where the freight forwarder and/or Consolidator, acting on behalf of company “X,” has received these shipments from different vendors (shippers) in the foreign country for consolidation and shipment to company “X” (the consignee) in the United States. For each such shipper/consignee relationship, a separate bill of lading must be issued.

Sincerely,

Glen E. Vereb

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