Rev. Rul. 68-197

Advice has been requested as to who is the `importer' of certain taxable articles, for purposes of the manufacturers excise tax imposed under Chapter 32 of the Internal Revenue Code of 1954, under the circumstances described below.

X , a United States company, enters into an agreement with Y , a nonresident foreign corporation, to purchase articles manufactured by Y. X sells and distributes the articles in the United States. The articles are of the type subject to the manufacturers excise tax imposed under Chapter 32 of the Code when sold in the United States by the manufacturer, producer, or importer. In accordance with the agreement, X submits to Y a purchase order that acknowledges the order and ships the merchandise earmarked F.O.B. destination to specific warehouse locations in the United States as designated by X . As part of the agreement with X, Y engages a customhouse broker in the United States to clear the articles through customs. Y also agrees to incur and pay the insurance, customs duty, freight, and brokerage incurred in the importation and delivery of the articles to X . The agreement further stipulates that title to the articles does not pass to X until delivery. Y's selling price to X includes the costs incurred by Y for transportation, insurance, customs clearance and delivery. X agrees to pay the full selling price upon receipt of the merchandise.

Revenue Ruling 56-409, C.B. 1956-2, 796, holds that the person who withdraws taxable articles from a customs bonded warehouse for sale or use in the United States is the `importer' for purposes of the manufacturers excise taxes. That Revenue Ruling contemplates a person acting in his own right who withdraws such articles for his own sale or use. See Rev. Rul. 67-209, C.B. 1967-1, 297, amplifying Rev. Rul. 56-409. Thus, an `importer', within the meaning of Chapter 32 of the Code, is the person who as principal and not as agent arranges for, or is the inducing and efficient cause of, the goods being brought into the United States for purposes of sale or use by him. Whether title to the merchandise passes to such person at time of shipment or only after its arrival in the United States is not controlling in this determination.

In the instant case, Y is not engaged in selling articles in the United States. The technicalities of the import procedure, as a matter of fact, are subordinate to and geared to the needs and demands of X . Furthermore, Y's broker serves merely as a conduit through which the merchandise is cleared through customs for delivery to X . Thus, the fact that Y agrees to incur and pay all expenses of transportation, customs clearance, and delivery or the fact that title does not pass to X until delivery does not give Y any substance as an `importer' in the United States. Under such circumstances, X is the person in the United States who is the inducing and efficient cause of the articles being brought into the United States for his own sale or use. Therefore, it is held that X is the importer of the articles for purposes of the manufacturers excise tax.