HQ 086096: Customs Regulations. Transactions with Customs; brokers

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 086096

                       March 22, 1990

CLA-2:CO:R:C:G 086096 SER

CATEGORY: Classification

Mr. Peter Hilfrich
PBH International
P.O. Box 942
Bellevue, WA 98009

RE:  Customs Regulations.  Transactions with Customs; brokers

Dear Mr. Hilfrich:

     Thank you for your letters, received by this office on
December 13, 1989, (HQ 086095, 086096) concerning recent
transactions with the United States Customs Service.  Upon
examination of your correspondence with various officials at
Customs and with other United States Government Agencies, it has
come to our attention that you may not have fulfilled several
requirements of the regulations which govern Customs business.

I.  Transacting customs business without a license

    A.  Authorization to conduct Customs business

     The statutes and regulations which govern Customs establish
limits on who is allowed to conduct Customs business.  Primarily,
as stated in 19 U.S.C. 1641(b), no person may conduct customs
business unless that person holds a broker's license.  Any person
who intentionally transacts customs business, other than as
provided in section 111.3, without holding a valid broker's
license, shall be liable for a monetary penalty for each such
transaction as well as for each violation of the requirements of
19 U.S.C. 1641.  The penalty shall be assessed in accordance
with Subpart E of this chapter.  19 U.S.C. 1641(b), 19 Code of
Federal Regulations (C.F.R.) 111.4.

                               -2-

     In addition to brokers, Customs allows attorneys the right
to practice certain Customs transactions.  Treasury Decision
(T.D.) 86-161, and 19 C.F.R. Part 177.  The Treasury Decision
provides that an attorney is not required to obtain a broker's
license to represent a client in an administrative proceeding
before Customs.  Also, recognition is given to attorneys in 19
C.F.R. Part 177, which provides that, "[w]ith the exception of
attorneys whose authority to represent is known, any person
appearing before the Customs Service as an agent in connection
with a ruling request may be required to present evidence of his
authority to represent the principal."

     Further exceptions for transactions in which a license is
not required are provided for in 19 C.F.R. 111.3, and further
described in Part 177.  Section 111.3 states:

               A license is not required to engage in
          the following transactions with the Treasury
          Department or any representative thereof:

          (a)  For one's own account.  An importer or
          exporter transacting Customs business solely
          on his own account and in no sense on behalf
          of another is not required to be licensed,
          nor are his authorized regular employees or
          officers who act only for him in the
          transaction of such business.

          (b)  As employee of brokers.  An employee of
          a broker, acting solely for his employer, is
          not required to be licensed where:

               (1)  Authorized to sign Customs
          documents.  The broker has authorized the
          employee to sign Customs documents on his
          behalf, and has executed a power of attorney
          for that purpose.  The broker is not required
          to file the power of attorney with the
          district director, but shall provide proof of
          its existence to Customs upon request.  Only
          employees who are residents of the United
          States may be authorized to sign Customs
          documents; or

               (2)  Authorized to transact other
          business.  The broker has filed with the
          district director a statement identifying the
          employee as authorized to transact business
          on his behalf.  Such statement shall also be
          filed at each port within the district where
          the broker wishes the employee to act for
          him.
                               -3-

     The standard for acting for one's account is further
elaborated in 19 C.F.R. 177.1 (d)(4), which allows for an
individual representing his full-time employer, or a bona-fide
officer, director, or other qualified representative of a
corporation, association, or organized group, to not need a
statement of authority to represent a client as does a broker
upon request.

    B.  "Customs business"

     "Customs business" means 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.  19 C.F.R. 111.1  The interaction
you have had with Customs, primarily your requests for
classification of merchandise and the correlating questions of
issues such as country of origin, clearly fall within the
definition of transacting "Customs business".

    C.   Statutory purpose

     The limiting of those authorized to conduct Customs business
is for several purposes.  One fundamental purpose is to protect
the importers who transact international trade.  The legislative
history of an amendment to 19 U.S.C. 1641(d) helps illustrate
this purpose:

       While the large importers are more or less familiar
     with customs procedure the great majority of importers
     are solely dependent upon the honesty and the
     competency of their customs brokers to protect their
     interests.  Even in the case of large importers,
     however, due to the specialized nature of customs
     procedure, great reliance must be placed upon their
     brokers for proper entry of merchandise.

       In view of the fact that these customhouse brokers
     are quasi officers of the Treasury and that by
     licensing them the Treasury holds out to importers that
     it has investigated their character and represents to
     such importers that they are capable and honest in
     their conduct of their customs business, . . . , it is
     essential that the Department [of Treasury] have wide
     discretion in dealing with these brokers and that the
     Secretary of Treasury, therefore, be given broad powers
     to regulate and supervise these activities.
                               -4-

     In summary, the statutes and corresponding regulations
allow for licensed Customs brokers, attorneys, and those
individuals working for their own account and their employees to
conduct Customs business.  Upon examination of our records we
find no evidence that you are a licensed Customs broker or an
attorney, nor do you appear to fall within any of the exceptions
provided in the regulations which would allow you to conduct
Customs business.  If you desire to conduct further business with
Customs, you must either prove that you fall within one of the
categories of individuals authorized to practice Customs business
or become a licensed broker.

II.  Prospective rulings

     In the event that you satisfy the requirements relating to
the authorization of conducting Customs business, any further
transactions that you request must be of a prospective nature.
The regulations, in 19 C.F.R. 177.1 provide:

       It is in the interest of the sound administration of
     the Customs and related laws that persons engaging in
     any transaction affected by those laws fully understand
     the consequences of that transaction prior to its
     consummation.  For this reason, [Customs] . . ., will
     give full and careful consideration to written requests
     . . ., with respect to a specifically described Customs
     transactions, a definitive interpretation of applicable
     law, or other appropriate information.

     Customs does not provide rulings on hypothetical questions.
It appears from our review of your submissions that some of your
requests relate to hypothetical questions, such as what sources
of sugar could be used in a product, or whether a product can be
imported in bulk.  As a public agency Customs is not in a
position to provide business or legal advice to private
importers.

III.  Summary

     To further conduct Customs business you must prove that you
meet the requirements of the regulations which govern the
authorization to conduct Customs business.  If you meet those
requirements any further Customs business must be for prospective
Customs transactions.


                                   Sincerely,



                                   John Durant, Director
                                   Commercial Rulings Division