DDP Shipments – Ultimate Consignee and Importer of Record

DDP Shipments into the United States are defined as shipments where the foreign shipper (most of the time also known as the Seller of the goods) is paying for all charges including freight, duties, taxes, customs clearance charges up to the buyer’s door, warehouse or fulfillment center.

 

If the shipper (seller) overseas is selling on DDP terms, there are rules that must be followed in order to prevent any delays or customs holds.

 

There are two parties in a DDP shipment that must be clarified before the cargo is shipped into the United States: Importer of Record and Ultimate Consignee

 

Importer of Record

In a DDP shipment, the Importer of Record is the foreign shipper of the goods. The foreign shipper must obtain a foreign entity customs bond by a US Customs Broker, through a Freight Forwarder or a Surety company (either single entry or annual/continuous). This is the law regardless of whether the goods are going to an Amazon fulfillment center, a warehouse, or any other U.S. location for that matter.

The party who is obtaining the customs bond will need to know details on the type of goods being imported, the value, and frequency of imports.

 

Ultimate Consignee

  • The ultimate consignee that will be used on the shipping documents as well as the customs entry will depend on whether the goods have been sold at the time of importation or not.
  • If the goods have been sold at the time of importation, the U.S. buyer of the goods must be the ultimate consignee. However, many times the U.S. buyer does not want to give their EIN #. An attempt to must be made by the Customs Broker or Freight Forwarder to ask the U.S. buyer for their EIN # and records must be kept on file.
  • If the U.S. buyer is unwilling to act as the ultimate consignee, an option is to use the EIN # of the warehouse where the goods are to be delivered. The U.S. regulations, which are found in S. Customs Directive 3550-079A under section 7 stipulates that the ultimate consignee can be a Nominal Consignee (i.e., carrier, express consignment operators, freight forwarders, or consolidators). A Nominal Consignee may not be identified as the Ultimate Consignee unless they own the merchandise, or there is no known U.S. buyer and the accompanying documentation shows their premises as the location to which the merchandise is to be delivered. Nominal Consignees cannot be identified as the Importer of Record on a formal entry unless they own, or have purchased the imported merchandise. If the goods are being delivered to a forwarder’s warehouse, the Customs Broker can use the forwarder’s EIN # and enter them as the ultimate consignee.
  • If there has been a sale (or a sale on consignment), but the U.S. buyer is unwilling to be the ultimate consignee, your Customs Broker may consider using the warehouse where the goods are to be delivered as the ultimate consignee. They may ask you for a copy of the correspondence with the buyer as well as a copy of the Purchase Order (PO) showing who the buyer of the goods is so that they can assess the liability on a case-by-case basis

FYI: it is possible that the State Board of Equalization will attempt to collect Use Tax from the ultimate consignee. You have to discuss this with your customs broker to ensure proper documentation is held on file in case such an instance arises so they may argue on your behalf to withdraw such Use Taxes

 

 

DDP Shipments going to Amazon Fulfillment Centers (FBAs)

  • If the goods have been sold at the time of importation to a buyer who purchased the goods through Amazon.com, then Amazon must be the Ultimate Consignee.
  • If the goods are being shipped to a FBA warehouse, it should have an FBA Shipment ID. The Customs Broker or Freight Forwarder who is arranging the customs clearance and delivery will need the Shipment ID number along with the purchase order or commercial invoice in order for them to contact Amazon to request permission to use them as the Ultimate Consignee for the Customs entry. Amazon requires that this procedure must be done prior to shipping any goods to their warehouse. If Amazon agrees, they will provide the Customs Broker their EIN# to use for the customs entry.
  • If Amazon allows the Customs Broker to declare them as the ultimate consignee, Amazon’s EIN # will be used for the customs entry.
  • If Amazon is unwilling to act as the ultimate consignee, an option is to use the EIN # of the warehouse where the goods are to be delivered. The U.S. regulations, which are found in S. Customs Directive 3550-079A under section 7 stipulates that the ultimate consignee can be a Nominal Consignee (i.e., carrier, express consignment operators, freight forwarders, or consolidators). A Nominal Consignee may not be identified as the Ultimate Consignee unless they own the merchandise, or there is no known U.S. buyer and the accompanying documentation shows their premises as the location to which the merchandise is to be delivered. Nominal Consignees cannot be identified as the Importer of Record on a formal entry unless they own, or have purchased the imported merchandise. If the goods are being delivered to a forwarder’s warehouse, the Customs Broker can use the forwarder’s EIN # and enter them as the ultimate consignee.

 

FYI: it is possible that the State Board of Equalization will attempt to collect Use Tax from the ultimate consignee. You have to discuss this with your customs broker to ensure proper documentation is held on file in case such an instance arises so they may argue on your behalf to withdraw such Use Taxes