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HQ 116443

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May 2, 2005

BRO-1-RR:IT:EC 116443 GOB

CATEGORY: CARRIER

Steven B. Zisser, Esq.
Zisser Customs Law Group
2297 Niels Bohr Court
Suite 114
San Diego, CA 92154

RE: Customs Broker; Freight Forwarder; 19 CFR 111.36(c)

Dear Mr. Zisser:

This letter is in reply to your letter of April 8, 2005 on behalf of Sanyo Customs Brokerage, Inc. (“Sanyo”), requesting a ruling regarding Sanyo’s proposed status as a freight forwarder. Our ruling is set forth below.

FACTS:

You describe the pertinent facts as follows:

Sanyo is presently operating as a licensed corporate customs broker. Sanyo is looking to obtain status as a licensed bonded carrier, pursuant to 19 CFR Part 112. The company understands that pursuant to 19 CFR Section 112.11, the port director may authorize freight forwarders (as one of four carrier types) to receive merchandise for transportation in bond from one port to another in the United States. Sanyo does not maintain nor does it intend to maintain its own trucks or conveyances.

Under 19 CFR Section 112.1, the term “Freight Forwarder” is characterized as a company who engages in the business of dispatching shipments in foreign or domestic commerce, and is authorized to operate as a freight forwarder by any agency of the United States.

To qualify as a Freight Forwarder, Sanyo proposes to obtain a “Freight Forwarder Authority” from the United States Department of Transportation (DOT). This permit is specially issued to those companies who may or may not own or operate their own trucks, but do in fact dispatch or coordinate shipments in foreign or domestic commerce. . . .
When Sanyo obtains its DOT freight forwarder authority it will do so as a part of Sanyo Customs Brokerage, Inc. Sanyo will maintain a single legal entity, a single business name and a single relationship with all of its clients. In the event that the company provides its clients with both brokerage and freight forwarder services, all charges will appear on a single billing statement issued by Sanyo Customs Brokerage, Inc. Sanyo’s sole purpose for obtaining DOT freight forwarder authority and bonded carrier status is merely to enhance and expand the types of services offered by Sanyo Customs Brokerage to its current clientele.

ISSUE:

Whether Sanyo’s proposed enrollment for “Freight Forwarder Authority” issued by the U.S. Department of Transportation and its subsequent enrollment as a bonded carrier under 19 CFR Part 112 are in conflict with Sanyo’s obligations and responsibilities under 19 CFR 111.36(c)?

LAW AND ANALYSIS:

“Freight forwarder” is defined in section 112.1, Customs and Border Protection (“CBP”) Regulations (19 CFR 112.1) as:

. . . one who engages in the business of dispatching shipments on behalf of other persons, for a consideration, in foreign or domestic commerce between the United States, its territories or possessions, and foreign countries, and of handling the formalities incident to such shipments, and is authorized to operate as such by any agency of the United States.

Section 112.11(a), CBP Regulations (19 CFR 112.11(a)) provides in pertinent part as follows:

§ 112.11 Carriers which may be authorized.

From port to port in the United States. The port director may authorize the following types of carriers to receive merchandise for transportation in bond from one port to another in the United States upon compliance with the provisions of this subpart: Common carriers.
Contract carriers.
Freight forwarders.
. . . [Emphasis added.]

Section 111.36, CBP Regulations (19 CFR 111.36) pertains to relations between licensed Customs brokers and unlicensed persons. (See 19 CFR 111.1 which defines the term “person” to include individuals, partnerships, associations and corporations.) Section 111.36(c) states conditions under which a licensed Customs broker may compensate a freight forwarder for referring brokerage business. We find that the requirements of section 111.36 are not applicable here because Sanyo will not be entering into a business relationship with an unlicensed person. Rather, Sanyo, the licensed Customs broker, proposes to obtain its freight forwarder authority as a part of its Custom brokerage business.

HOLDING:

Under the stated facts, Sanyo’s proposed enrollment for “Freight Forwarder Authority” issued by the U.S. Department of Transportation, and its subsequent enrollment as a bonded carrier under 19 CFR Part 112, are not in conflict with Sanyo’s obligations and responsibilities under 19 CFR 111.36(c).

Sincerely,

Glen E. Vereb
Chief

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