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Understanding Importer of Record and First Sale Compliance

  • Le
  • Jun 12
  • 3 min read

With recent increases in U.S. tariffs, many importers are exploring cost-saving strategies such as purchasing goods under Delivered Duty Paid (DDP) terms or leveraging the First Sale rule. While these methods can be effective, it’s critical to ensure compliance with U.S. Customs and Border Protection (CBP) regulations.

One key area of focus is understanding who qualifies as the Importer of Record (IOR).


Who Can Be an Importer of Record?

Under Section 484(a)(1) of the Tariff Act of 1930, as amended (19 U.S.C. § 1484(a)(1)), only parties that qualify as the “importer of record” may make entry. These parties include:

  • The owner or purchaser of the goods

  • A licensed customs broker appointed on behalf of the owner, purchaser, or consignee under 19 U.S.C. § 1484(a)(2)(B)

CBP further defines “owner” and “purchaser” in Customs Directive 3530-002A (June 27, 2001). According to Section 5.3.1 of the directive:

“The terms ‘owner’ and ‘purchaser’ include any party with a financial interest in a transaction, including, but not limited to, the actual owner or purchaser, a buying or selling agent, a consignee under consignment, or a party importing goods for repair, lease, or exhibition.”

Importantly, a “nominal consignee”—someone who only holds the goods under a bill of lading or air waybill—does not qualify as an IOR.

To qualify, the IOR must have a financial interest in the goods that goes beyond mere custody. This means there must be a clear connection between the party’s financial welfare and the imported goods


Key Questions to Ask Before Importing

To ensure compliance, consider the following:

  • Who is listed as the Importer of Record?

  • Is the IOR properly documented and compliant with CBP’s definition?

  • What are the shipping terms (e.g., FOB, CIF)? Are they consistent across all documents?

  • Who is the middleman, and what is their relationship with the factory?

  • Does the middleman assume title and risk of loss at any point?

The middleman must be a bona fide owner or purchaser with a legitimate financial interest—not just a pass-through entity or agent.


Supporting Documentation for First Sale Claims

If you're using the First Sale rule, CBP may audit your transaction to verify that the middleman qualifies as a true owner or purchaser. To support your claim, gather the following documentation:

  1. Purchase Order – between the middleman and the factory

  2. Purchase Order – between you and the middleman

  3. Invoice – from the middleman to you

  4. Invoice – from the factory to the middleman

  5. Transport documents – Sea waybill or air waybill

  6. Insurance policy

  7. Proof of payment – from the middleman to the factory and from you to the middleman

  8. Supplementary Terms & Conditions of Purchase – between you and the middleman

  9. Purchasing Agreement – between the middleman and the factory

  10. Distribution Agreement – between you and the middleman

  11. Written Statement confirming:

    • The sale between the middleman and the factory is a bona fide sale for export to the U.S.

    • The goods were clearly destined for the U.S. at the time of the first sale

    • The relationship between the middleman and the factory does not influence the sales price

  12. Email or correspondence trails showing negotiation and confirmation of terms


Conclusion

Cost-saving strategies like DDP and First Sale can be beneficial, but only if executed with full compliance. Understanding the role and qualifications of the Importer of Record is essential. Always ensure your documentation supports a legitimate, arm’s-length transaction that can withstand CBP scrutiny.



📌 Disclaimer & Contact Information

This blog post is intended to provide general information about the First Sale rule and the role of the Importer of Record. It does not constitute legal advice or a comprehensive compliance guide. For specific questions or assistance with your import transactions, please consult official U.S. Customs and Border Protection resources or reach out to a licensed customs broker.

For more information, visit the official CBP website: https://www.cbp.gov

Or contact Spirit CHB, Inc. – A Trusted Customs Brokerage📞 Phone: (714) 383-9973📧 Email: customsbroker@spiritchbinc.com

 
 
 

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