Wind Tower Exporter Doesn't Have Enough Financial Interest, Can't Make Entry, CBP Says

An exporter of wind towers that enters into post-importation warranty and repair agreements with its customers, but does not hold title or risk of loss when the goods are imported, doesn't have a sufficient financial interest in the wind towers to make entry under the customs laws, CBP said in ruling HQ H312266, dated Oct. 29.

Marmen, the company that requested the ruling, ships wind towers in sections to an anonymous “Company X” in the U.S. Marmen invoices Company X after production is complete, and title and risk of loss pass to Company X after payment or 30 days after invoicing, whichever comes first. That typically happens prior to exporting the wind towers to the U.S., CBP said. Company X is responsible for all transportation cost, and while Marmen pays duties, taxes and fees, those are included on the invoice from Marmen to Company X.

Payment is either in full, or 98% of the invoiced value, with the remaining 2% balance owed the day after cargo release in the latter scenario, the ruling said.

Marmen does provide a warranty and a guarantee on the imported merchandise, and also keeps responsibility for any expense for repair of any defective towers after delivery to the U.S., the ruling said. It argued that its warranty, and the fact that the wind towers it produces are subject to regular purchase orders, means it has an “ongoing financial incentive after importation to continue ‘operations as arranged with regard to the goods’ and maintain its business with the customer,” which gives it enough financial interest to make entry.

While CBP noted that it has found post-entry obligations, such as assumption of risk during importation, the provision of insurance for imported goods, and storage and installation services, do represent a sufficient financial interest in the goods to make entry, it ruled Marmen’s operations differ from those examined in those previous rulings.

“Marmen does not maintain title to the goods, it does not assume any risk, but for minor repairs, and it has not described any significant post-importation processing, such as assembling the towers, that it would perform after importation,” CBP said. “Marmen is not the owner or purchaser of the goods, and the agreement does not create any significant right or interest between Marmen, and the goods purchased by Company X.” CBP also noted that the repairs are “minor in nature and are needed on less than 1% of imports.”

The payment scenario where 2% would be due post-importation is not significantly different from payment in full, CBP said. “Title to the goods and risk of loss remain with Company X at the time of importation. The fact that a mere partial 2% payment in the goods remains after entry, is not enough to afford Marmen a sufficient financial nexus between itself and the imported goods,” it said.

“Because Marmen has not demonstrated a significant financial interest in the imported wind towers, we find that there is not a sufficient financial nexus, at the time of entry, between Marmen and the imported goods. Accordingly, Marmen does not have the right to make entry,” CBP said.