Most managers who are involved in international shipping have heard about the controversial changes that the U.S. Department of Commerce has made with its recent rulings concerning the "Exporter of Record." Less well known is a similar situation involving importers and the "Ultimate Consignee."

In most cases, the "Ultimate Consignee" and the "Importer of Record" are one and the same. But there are times when they are not, and the difference between them is greater than a casual reading of an international trade dictionary might imply. Nevertheless, some U.S. Customs Service officials have been known to proceed as though there were no regulatory difference between the Ultimate Consignee and the Importer of Record.

In my observation, moreover, the Customs Service often does not care that the exporter's customs broker was the Importer of Record and another party was the Ultimate Consignee. Customs is generally of the opinion that the Ultimate Consignee caused the import, that it is one of the responsible parties in an import transaction, and that therefore the Ultimate Consignee has certain regulatory duties that can be enforced through fines and penalties. To change that opinion may require the assistance of outside legal counsel.

Customs' official opinions can have important consequences for a company that is the Ultimate Consignee when foreign goods have been imported under the term "Free Domicile," which makes the seller responsible for duty, freight, customs clearance, etc. The Ultimate Consignee may believe that it can avoid all the usual issues of importing, but that is not always the case.

That is because 19 U.S. Code 1508 requires that if a buyer "causes an import," then it must have all the usual import records concerning that transaction, such as a bill of lading, consumption entry, import invoice, and purchase order. If a "Free Domicile" buyer causes an import, then it, too, must make the import documents available to the Customs Service upon reasonable notice. There is no confidentiality, and no search warrant is required in this case. Records must be maintained for five years from the entry's date of liquidation.

What does it take to "cause an import"? Section 1508 states:

"A person ordering merchandise from an importer in a domestic transaction does not knowingly cause merchandise to be imported unless—(1) the terms and conditions of the importation are controlled by the person placing the order; or (2) technical data, molds, equipment, other production assistance, material components, or parts are furnished by the person placing the order with knowledge that they will be used in the manufacture or production of the imported merchandise."

Imagine you are buying on a "Free Domicile" basis and you get a call from the importer's customs broker asking for your company's Internal Revenue Service identification number. If you give that number to the broker, it will be added to the entry document and your company will become a party to the import transaction, thereby potentially subjecting you to the Customs Service's later pursuit of information and liability. If you refuse to give the broker your IRS number, it will not be able to submit the entry and thus the shipment will get hung up. It's a tough choice to make.

Rodney C. Schonland is a Boston-based attorney who specializes in international trade, transport, and U.S. Customs law.

He also is a licensed customs broker. He may be reached at One Broadway, Suite 600, Cambridge, MA 02142. Phone: (617) 621-1560; e-mail: schonlr@aol.com .