HQ 223845: Internal Advice request concerning power of attorneyrequirement for a licensed custom broker to sign a Type 2 bond19 U.S.C. 1641; 19 CFR 141.46; 19 CFR 111.1

Native CBP ruling rendition. Applicability is fact-specific; modification/revocation relationships and original publisher date are retained. Publisher sentinel year0001 means unknown date, not a historical legal adoption.

                            HQ 223845

                       September 11, 1992

BRO-4-01-CO:R:C:E  223845  SR

CATEGORY:  Entry/Brokers

District Director
Los Angeles, CA 90012

RE:  Internal Advice request concerning power of attorney
requirement for a licensed custom broker to sign a Type 2 bond
19 U.S.C. 1641; 19 CFR 141.46; 19 CFR 111.1

Dear Sir:

     This request for internal advice was initiated by a letter
dated March 24, 1992, from the District Director of Customs in
Los Angeles.

FACTS:

     Western Overseas Corporation, a licensed Customs broker, was
granted power of attorney by the principal, Senko Logistics.  The
broker then filed a Type 2 Custodial Bond (CF 301).  Customs
requested that a power of attorney be provided because the bond
was not executed by an officer of the corporation.  The broker
refused saying that he need only have the power of attorney in
his files.  The Los Angeles Customs office rejected this bond (CF
301) on the basis that a Type 2 Custodial Bond allows the broker
to secure approval, on behalf of the principal, for operations
that are not "customs business" as defined in 19 U.S.C.
1641(a)(2), 19 CFR 111.1(c).  

ISSUES:

                            ISSUE 1 

     Whether a power of attorney must be filed by a licensed
broker with the district director of Customs in order to execute
a Type 2 Custodial Bond.

                             ISSUE 2

     Whether a CF 5291 may be used by a licensed broker as proof
of power of attorney to obtain a Type 2 Custodial Bond.




                               -2-


LAW AND ANALYSIS:

                             ISSUE 1

     In the facts at issue Customs denied a Type 2 Custodial Bond
on the basis that the operations allowed under this type of bond
are not "customs business".  "Customs business" is defined in 19
U.S.C. 1641(a)(2), (19 CFR 111.1(c)) as:

     . . . those activities involving transactions with Customs
     concerning the entry and admissibility of merchandise, its
     classification and valuation, the payment of duties, taxes,
     or other charges assessed or collected by Customs upon
     merchandise by reason of its importation, or the refund,
     rebate, or drawback thereof.

     The legislative history of 19 U.S.C. 1641, ((H.R. Rep. No.
1015, 98th Cong., 2d Sess. at 72, reprinted in 1984 U.S. Code
Cong. & Admin. News 4960, 5030) discusses the legislation as
follows:

     . . . defines the term "customs business" and restricts the
     scope of Customs' review of customs brokers to such customs
     business.  It also specifies that only licensed brokers may
     conduct customs business for third parties; sets forth
     licensing and permit procedures; establishes a duty for
     customs brokers to exercise responsibility and control over
     its customs business; provides for disciplinary proceedings,
     including monetary penalties and revocation or suspension of
     licenses or permits under prescribed procedures . . .

     As stated in the legislative history, the legislation
imposes on licensed brokers a duty to operate in a responsible
manner, and allows Customs to take disciplinary action.  The
customs broker at issue has filed a Type 2 Custodial bond which
would allow him to operate a Customs bonded warehouse, a
container freight station, operate as a carrier of bonded
merchandise or as a Customhouse cartman.  These operations are
not mentioned in the definition of "customs business" as provided
in 19 U.S.C. 1641(a)(21), (19 CFR 111.1(c)), however, operation
of a Customs bonded warehouse, for example, involves the entry
and admissibility of merchandise and therefore involves "customs
business".  The customs broker has a duty to perform in a
responsible manner when performing the duties for which he is
licensed.
 


                               -3-


     19 CFR 141.46 which concerns the power of attorney retained
by customs brokers provides as follows:

       Before transacting Customs business in the name of his
     principal, a customhouse broker is required to obtain a
     valid power of attorney to do so.  He is not required to
     file the power of attorney with a district director. 
     Customhouse brokers shall retain powers of attorney with
     their books and papers, and make them available to
     representatives of the Department of the Treasury as
     provided in subpart C of part 111 of this chapter. 

     It is logical that licensed brokers need not file a power of
attorney with Customs because the laws establish a duty on the
part of licensed brokers.  Therefore, a power of attorney need
not be filed with the district director of Customs, however, it
must be kept on file by the broker and readily available in case
Customs (or any representative of the Department of the Treasury)
wants proof of agency.  Customs, as an agency under the
Department of Treasury, has the right to demand the presentation
of a power of attorney.

                             ISSUE 2

     The Customs Form (CF) 5291 is a general power of attorney
for Customs purposes.  The language of CF 5291 specifically
mentions activities that are not mentioned in the definition of
"customs business"; for example; the third and forth paragraphs
mention lading, unlading, and other means of conveyance.  

HOLDING:

                             ISSUE 1

     A power of attorney does not need to be filed with the
district director of Customs by a licensed customs broker in
order to secure approval for a Type 2 Custodial Bond.

                             ISSUE 2

     A CF 5291 may be used as proof that power of attorney has
been granted by the principal to the Customs broker to execute a
 

                               -4-



Type 2 Custodial Bond.

                                   Sincerely,




                                   John Durant, Director
                                   Commercial Rulings Division