Abady Law Firm, P.C. – Customs and Import/Export Attorney Blog

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Posts Tagged "AES"

Exporting New and Used Vehicles from the United States to an Overseas Buyer

The question of whether one is permitted to export a vehicle from the United States to a foreign buyer (in China, Dubai, etc) is a tricky one.  Over the last few years there have been cases of federal officials seizing vehicles and cash associated with the business of exporting vehicles. News articles and government press releases of such scenarios have been reported on:

Two California Men Plead Guilty In “Far-Reaching And Elaborate” Automobile Export Scam (April 29, 2013)

U.S. Targets Buyers of China-Bound Luxury Cars (February 11, 2014)

Man accused of identity theft, fraud in car scheme arrested (March 18, 2015)

Selling vehicles for export angers automakers, but is it illegal? (July 21, 2014)

Exporting luxury cars is lucrative, legally questionable (August 6, 2014)

U.S. authorities are cracking down on oversea auto exporters (October 2, 2014)

Investigators pursue luxury car exporters (January 17, 2015)

Inside Stories From the War Between Automakers And Dealers Over Exports (February 12, 2016).

In United States v. Content of Wells Fargo Bank, et al,  the court ordered the federal government to return money and vehicles it seized from an automotive export business that sold luxury vehicles to the overseas market.  The government argued that there were federal wire fraud laws violated by using foreign money to defraud American car dealers into selling them vehicles that were intended to stay in the United States. Specifically, luxury vehicle dealers are prohibited by their manufacturers from selling cars for export.  Dealers have the purchaser sign a contractual agreement stating that the cars are not to be exported. In order the facilitate the purchase of luxury vehicles the automotive export company used “straw buyers” to purchase said vehicles (if the same purchaser walked into the same dealership multiple times to purchase luxury vehicles the dealership may get suspicious and prohibit the sale) and thereafter shipped them overseas.  The court held that the government could not establish probable cause to believe that the funds seized are the “proceeds” of wire or mail fraud.  The court reasoned that the misrepresentation was only a civil matter (not criminal) because the party deceived by a material misrepresentation (dealer) is NOT the same party injured (manufacturer). Therefore, the court ordered the immediate release of seized funds and vehicles.

While this decision may protect one from criminal liability there is still the question of civil liability.  In an article written by Automotive News entitled Dealer scores in suit against illegal exporters over 100 vehicles were purchased and exported overseas without the dealer’s knowledge.  As a result, the dealer violated its franchise agreement (which prohibited the sale of vehicles for export) and was liable to reimburse the manufacturer for incentive money it did not qualify for. Thereafter, the dealer filed suit against the purchasers and a jury found in favor of the dealer under claims of fraud, breach of contract, and intentional misrepresentation or concealment and violation of the RICO act.

Based on these cases, one must be careful in conducting an auto export business.

In addition, U.S. Customs and Border Protection (“Customs”) provides a list of regulations on its website regarding the export of vehicles here. One important point is the definition of “used” vehicles for purposes of filings in the Automated Export System (“AES”). For example, you go into a dealership and purchase a vehicle.  You drive it off the lot, is it now considered a “used” vehicle? Further, the distinction between a “new” versus “used” and “titled” versus “untitled” vehicle correlates to the type of documentation needed to be provided to Customs.

With respect to the definition of “used”:

  • Used. “Used” refers to any self-propelled vehicle the equitable or legal title to which has been transferred by a manufacturer, distributor, or dealer to an ultimate purchaser.
  • Ultimate Purchaser. “Ultimate Purchaser” means the first person, other than a dealer purchasing in his capacity as a dealer, who in good faith purchases a self-propelled vehicle for purposes other than resale.

A mistake in the designation of a vehicle as “new” versus “used” in the AES can result in the seizure of said vehicles. Thus, it is vital that one carefully reviews the Customs regulations prior to export.

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For more information about this blog post, please contact Abady Law Firm, P.C. and speak with our customs lawyer at (800) 549-5099. Also visit www.customsesq.com to chat with a customs lawyer — who has insight into Exporting Vehicles — about your company’s export situation and to schedule a consultation.  To chat with us, click the bottom right corner tab of our homepage.

Hunters Traveling With Firearms and New Requirements by CBP

We have received inquiries regarding changes to the enforcement procedures for individuals traveling abroad with their firearms. Previously, if an individual was traveling with not more than three non-automatic firearms and not more than 1,000 cartridges of ammunition (provided this is for the person’s exclusive use and not for re-export or other transfer of ownership), the individual would complete U.S. Customs and Border Protection (“CBP” or “Customs”) Form 4457 and present it to Customs.  Now there have been changes in CBP enforcement procedures for such articles which have targeted those who use firearms for hunting trips or sporting events.

CBP is responsible for the enforcement of Department of Commerce and Department of State regulations when it comes to the export of certain controlled items. Specifically, the export regulations for handguns, rifles, associated parts and components, and related ammunition are found in the International Traffic in Arms Regulations (ITAR) administered by the Department of State’s Directorate of Defense Trade Controls (DDTC).  Additionally, the export regulations for sporting shotguns (barrel length of 18 inches or more), muzzle loading firearms, associated parts and components, and related ammunition are found in the Export Administration Regulations (EAR) administered by the Department of Commerce’s Bureau of Industry and Security (BIS).

All persons who travel from the United States to a foreign country with firearms and/or ammunition must comply with all applicable laws and regulations governing the lawful exportation of these controlled items. This includes understanding whether or not you are required to obtain a license prior to permanent or temporary export.  Thus, one should contact an attorney experienced in handling such matters to determine what type of license or license exemption you fall under.

I determined the type of license or license exemption I require, now what? 

Per U.S. Immigration and Customs Enforcement’s Website (https://www.ice.gov/cpi/faq):

Before exporting any firearms and/or ammunition with a valid DDTC or BIS export license or a qualifying license exemption, the traveler, or an agent acting on the traveler’s behalf, must file the Electronic Export Information (EEI) using the Automated Export System (AES) or the Internet-based system AESDirect which is publicly available and free of charge. In addition to filing the EEI in AES or AESDirect prior to export, all firearms, ammunition and additional mandatory documentation (e.g., certifications, foreign import permits, proof of AES filing; such as the Internal Transaction Number) must be presented to [Customs] authorities for visual inspection at the port of departure from the United States.

If you failed to file an EEI you can read about the consequences here.

UPDATE: “U.S. Customs and Border Protection (CBP) announced today [April 27, 2015] that it is returning to its previous system of facilitating the international transport of personal firearms and ammunition, after meeting with representatives from the NRA, firearms industry and sportsmen’s groups, and key members of Congress.” Read more: http://www.ammoland.com/2015/04/nra-scores-important-victory-for-american-hunters-and-sport-shooters/#ixzz3YYQJnDcN

For more information about this blog post, please contact Abady Law Firm, P.C. and speak with our customs lawyer at (800) 549-5099. Also visit www.customsesq.com to chat with a customs lawyer — who has insight into the federal agency export requirements — about your company’s export situation and to schedule a consultation.  To chat with us, click the bottom right corner tab of our homepage.

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U.S. Customs and Border Protection Export Issues and Enforcement

We are seeing many Automated Export System (“AES”) violations as of late, especially with FedEx, DHL, and UPS shipments. As a result, please find information below regarding the export regulations and enforcement by U.S. Customs and Border Protection (“CBP”). 

What is the Automated Export System?

CBP published the Trade Act regulations in the Federal Register on December 5, 2003. The rule requires advance transmission of electronic cargo information to CBP for both arriving and departing cargo. In the Federal Register notice, CBP identified the AES  as the system for transmission of advance electronic export data for all modes of transportation.

On June 2, 2008, the U.S. Census Bureau published amendments to Title 15, Code of Federal Regulations, Part 30, Foreign Trade Regulations, mandating the filing of export information by the U.S. Principal Party in Interest (“USPPI”) or its authorized agent through the AES or AESDirect for all shipments where a Shipper’s Export Declaration (“SED”) was previously required.  SED information filed to AES became known as Electronic Export Information (“EEI”).

When do you need to prepare the EEI formerly SED to be filed with CBP?

  • Shipment of merchandise under the same Schedule B commodity number is valued at more than US$2,500 and is sent from the same exporter to the same recipient on the same day. (Note: Shipments to Canada from the U.S. are exempt from this requirement.)
  • The shipment contains merchandise, regardless of value, that requires an export license or permit.
  • The merchandise is subject to the International Traffic in Arms Regulations, regardless of value.
  • The shipment, regardless of value, is being sent to Cuba, Iran, North Korea, Sudan or Syria.
  • The shipment contains rough diamonds, regardless of value (HTS 7102.10, 7102.21 and 7102.31)

What happens if you fail to file the EEI or file the EEI late?

The absence or late filing of the Electronic Export Information in the Automated Export System (AES) or late filing of AES commodity data subjects the shipment to seizure.

If my goods get seized by U.S. Customs for an AES violation what do I do?

Read the following blog post for details about the U.S. Customs seizure process here and contact a professional experienced in such matters.

Additionally, look for the following language in your Notice of Seizure and Information to Claimants Non-CAFRA Form that would indicate an alleged AES violation:

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Resource Information

For more information about this blog post, please contact Abady Law Firm, P.C. and speak with our customs lawyer at (800) 549-5099. Also visit www.customsesq.com to chat with a customs lawyer — who has insight into the Notice of Seizure — about your company’s export situation and to schedule a consultation.  To chat with us, click the bottom right corner tab of our homepage.