HQ 225375 - Internal Advice; appointment by freight forwarder of customs broker for importer; 19 CFR 141.31(a); 19 CFR 141.43; C.S.D. 79- 111; 19 U.S.C. 1641(a)(2); Section 648, NAFTA Implementation Act. - United States International Trade Commision Rulings

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HQ 225375

October 31, 1994

BRO-4-02/4-01-CO:R:C:E 225375 AJS

CATEGORY: BROKERS

District Director of Customs
U.S. Customs Service
10 Causeway Street, Suite 603
Boston, MA 02222-1059
Attn: Ms. Anna Simons

RE: Internal Advice; appointment by freight forwarder of customs broker for importer; 19 CFR 141.31(a); 19 CFR 141.43; C.S.D. 79- 111; 19 U.S.C. 1641(a)(2); Section 648, NAFTA Implementation Act.

Dear Ms. Simons:

This is in reply to your correspondence dated May 2, 1994, concerning freight forwarders. We are treating your correspondence as a request for internal advice under 19 CFR 177.11(a).

FACTS:

A freight forwarder receives a power of attorney from an importer. The power of attorney appears to use the same language as Customs Form (CF) 5291 but also includes language permitting the freight forwarder "to authorize other Customs Brokers to act as grantor's agent". The freight forwarder desires to use this power of attorney to issue, on the importer's behalf, another power of attorney to a Customs broker so that this broker may file entry documents for the importer.

ISSUE:

Whether the freight forwarder may use the subject power of attorney in the described manner.

LAW AND ANALYSIS:

19 CFR 141.31(a) provides that a power of attorney may be executed for the transaction by an agent or attorney of a specified part or all the business of the principal. The subject power of
attorney allows the authorization of "other Customs Brokers" by the agent to act as the grantor's (i.e., the importer) agent. The plain language of the power of attorney would permit the freight forwarder to act on behalf of the importer to appoint a licensed broker as the importer's agent.

19 CFR 141.43 states that except as otherwise provided for in paragraph (c) of this section, the holder of a power of attorney for a resident principal cannot appoint a subagent except for the purpose of executing shippers' export declarations. In Customs Service Decision (C.S.D.) 79-111, Customs addressed the issue of whether an importer may issue a power of attorney to one broker (broker A) that would empower that broker to issue, on the importer's behalf, powers of attorney to other brokers in other ports. Under this arrangement, the broker appointed by broker A would not be a subagent of broker A but, rather, would be considered an agent of the principal (i.e., the importer) because the importer's power of attorney to broker A would specifically authorize broker A to appoint another broker and because that broker, once appointed, would act solely on account of the importer and have no agency relationship to broker A. Customs determined that this arrangement is permissible under the Customs Regulations and that section 141.43 was inapplicable.

19 U.S.C. 1641(b)(1) states that no person may conduct customs business (other than solely on behalf of that person) unless that person holds a valid customs broker's license. See also 19 CFR 111.1(b). 19 U.S.C. 1641(a)(2) states that the term "customs business" means those activities involving transactions with the Customs Service concerning the entry and admissibility of merchandise, its classification and valuation, the payment of duties, taxes, or other charges assessed or collected by the Customs Service upon merchandise by reason of its importation, or the refund, rebate, or drawback thereof. This provision was amended by section 648 of the North American Free Trade Agreement (NAFTA) Implementation Act to provide that the term "customs business" also includes the preparation of documents or forms in any format and the electronic transmission of documents, invoices, bills, or parts thereof, intended to be filed with the Customs Service in furtherance of such activities, whether or not signed or filed by the preparer, or activities relating to such preparation, but does not include the mere electronic transmission of data received for transmission to Customs. See Pub. L. No. 103-182, 107 Stat. 2057, 2207 (December 8, 1993). The activity of the freight forwarder in signing, for the importer, the power of attorney does not encompass customs business within the meaning of section 1641(a)(2). Therefore, this activity would be permissible without a customs broker's license.

HOLDING:

A freight forwarder acting under an importer's power of attorney may sign for the importer another power of attorney which appoints a licensed customhouse broker as the importer's agent.

The Office of Regulations and Rulings will take steps to make this decision available to Customs personnel via the Customs Rulings Module in ACS and the public via the Diskette Subscription Service, Freedom of Information Act and other public access channels 60 days from the date of this decision.

Sincerely,

John Durant, Director
Commercial rulings Division

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