HQ 116189 - Customs Business; 19 U.S.C. §1641 - United States International Trade Commision Rulings

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HQ 116189

June 9, 2004

BRO-1-RR:IT:EC 116189 CK

CATEGORY: BROKERS

Edmund Maciorowski, Esq.
33 Bloomfield Hills Parkway, Suite 250
Bloomfield Hills, MI 48304

RE: Customs Business; 19 U.S.C. §1641

Dear Mr. Maciorowski:

This is in response to your ruling request, dated March 23, 2004, and supplemental letter dated May 23, 2004, made on behalf of your client D.J Whelan & Company. At your behest, we also had a telephone conference on May 20, 2004. Your request concerns the issue of whether the activities your client performs constitute “customs business” as that term is defined in U.S. Customs and Border Protection Regulations. Our ruling on this issue follows.

FACTS:

D.J. Whelan & Company is largely a messenger service operating in the port of Detroit and Port Huron. In this capacity, the corporation works for a variety of brokers and importers from around the country to service their broker activities at the port of Detroit and Port Huron.

As part of its messenger service, the company has a broker’s license and a permit from U.S. Customs and Border Protection (CBP) in order to properly conduct its activities. The company also holds customs powers of attorney from various importers and broker accounts. Its activities as a messenger service are broken down into four categories: airport services; bridge services; primary services; and adjunct services. These activities are more fully described below.

Airport Services

The messengers mostly pick up CF 3461’s (entry documents) for broker clients. The messenger checks that the documentation is complete, that signatures are in place, and that all documents are in proper order, then files the entry with CBP. Once CBP has issued the release, the messenger returns to CBP and checks to ensure the appropriate CBP officer’s signature appears on the documents. The messenger thereafter takes the CBP designated copy of the release to the airline and pays the terminal charges, then delivers the receipt for the terminal charges payment to the broker with the release copy of the CF 3461.

Bridge Services

This activity is mostly off-site releases. The messenger will file the CF 3461 for a shipment to be released at a railroad, trucking company or pier. Once CBP has issued the release, the messenger returns to pick up the release document and ensures the appropriate CBP officer’s signature appears on the documents. The documents are then sorted and delivered to the proper location.

Primary Services

The corporation’s messenger services include review of, when requested, and filing of entries, protests, supplemental information letters, and correspondence. However, these entries are not prepared in its own name or as an agent for any of its non-broker clients.

The messenger also unlocks its broker client’s boxes, and sorts and reviews all documents. Misrouted documents are redirected as appropriate. The messenger service may also do the following: sign documents for importers or brokers for which they have a power of attorney; make pen and ink corrections, when required, to entry documents after consultation with the broker/client; and attempt to reconcile rejected entries.

An example of the messenger’s work in this category is that the messenger may find a rejected CF 7501 in a broker client’s box. The messenger will contact the broker by handheld radio and advise of the reason for the rejection, i.e., missing signature or incorrect HTS number. After consultation with the broker, the messenger will correct the entry summary and resubmit to CBP.

Adjunct Services

The corporation routinely engages in discussions with both CBP personnel and its broker clients regarding the preparation and correction of a wide variety of documents being filed with CBP that affect, inter alia, classification, value and release of merchandise imported into the United States.

An example of these adjunct services is when the messenger may return an “intensive exam” notice to the broker client for a marking issue. After consultation with the client, the service may advocate the broker client’s position to the inspector in such a matter in order to effect release of the merchandise. Another example may include the messenger service discussing with CBP personnel the release of merchandise for which a visa is required but which may have been submitted after an import quota had expired.

ISSUE:

Whether the above-described activities constitute “customs business.”

LAW AND ANALYSIS:

Section 641(b)(1) of the Tariff Act of 1930, as amended (19 U.S.C. §1641(b)(1)) provides that no person may conduct customs business on behalf of another unless that person is a licensed broker.

“Customs business” is defined in 19 U.S.C. §1641(a)(2) as:

[T]hose 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. It 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 futherance of such activities, whether or not signed or filed by the preparer, or activities related to such preparation, but does not include the mere electronic transmission of data received for transmission to Customs.

In Headquarters Ruling Letter (“HRL”) 114199, dated February 26, 1998, CBP stated that:

[A] license is not required to give instruction and general advice on various Customs topics. Teaching brokers, importers and exporters how to prepare and file drawback claims, and helping them to establish drawback programs would fall under this category. We permit these types of educational activities because they have no direct relationship to actual transactions with Customs... We would, however, draw the line at unlicensed persons advising clients on issues involving particular entries or drawback claims filed or to be filed with Customs. This is because 19 U.S.C. §1641(a)(2) specifically states that transactions involving the entry and admissibility of merchandise, [its classification and valuation], the payment of duties thereon, and the refund or drawback of duties, fall within the definition of customs business. For this reason, you may not advise brokers or other clients on actual drawback contracts or claims.

In regard to the activities of D.J. Whelan & Company under consideration, our position is as follows. The filing of the CF 3461 and other entry documents in order to effectuate the release of merchandise falls squarely within the intended meaning of customs business, and as such, may only be done for others by a licensed broker. Also squarely within the definition of customs business is the filing of supplemental information letters and other correspondence relating to the filing of a particular entry, as is the making of pen and ink changes to reconcile an entry so that it may be re-filed. In addition, engaging in discussions with CBP personnel and clients regarding the preparation and correction of a wide variety of documents that effect the classification, value and release of merchandise constitutes customs business, as does the advocating of a client’s position with CBP personnel.

Those activities of D.J. Whelan & Company not constituting customs business include the unlocking of a broker’s box and re-directing misrouted documents. Furthermore, CBP regulations specifically allow for the filing of protests by authorized agents of the importer who are other than customs brokers. (See 19 CFR 174.3).

HOLDING:

As discussed in the Law and Analysis Section of this ruling, with few exceptions, D.J. Whelan & Company’s activities are customs business as defined in 19 U.S.C. §1641(a)(2). It should therefore maintain its corporate broker’s license and its local permits in order to lawfully continue to engage in those activities.

Sincerely,

Glen E. Vereb

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