BRO-2-01
OT:RR:CTF:ER H045695 JHR
Mr. Ralph Natale
The American Companies
250 Moonachie Road
Moonachie, New Jersey 07074
Re: Ruling Request on Filing Importer Security Filings Outside of the United States
Dear Mr. Natale:
This is in response to your letter dated November 17, 2008, in which you request a ruling on whether, and to what extent, a licensed U.S. customs broker may transact customs business, including filing entries with CBP, from a non-U.S. location on behalf of U.S. clients. However, your request was later amended to inquire as to only whether unlicensed employees of an affiliate of your company may file Importer Security Filings (ISFs). Our ruling follows.
FACTS:
The primary inquiry in your original ruling request concerned whether a licensed U.S. customs broker may transact customs business from a location outside of the United States. The U.S. company is a non-vessel operating common carrier (NVOCC) that holds a corporate customs broker license. It has an affiliated company in China that is also an NVOCC whose main function is to expedite shipments for the U.S. company from Asia to the United States. Once the shipments reach the United States, the U.S. company handles the clearance through CBP in order to release the shipments and deliver them to the importer.
During a telephone conversation on August 25, 2010, and in subsequent emails, you clarified that the employees of the Chinese affiliate would not be preparing or filing entry documents, but would solely file ISFs. All customs business would be transacted in the United States by the licensed U.S. company.
ISSUE:
Whether unlicensed employees of a Chinese affiliate of a U.S. company that holds a corporate customs broker license may file Importer Security Filings using the U.S. company’s ABI software.
LAW & ANALYSIS:
Since you amended your ruling request to state that the employees of the Chinese affiliate will only file ISFs and will not be filing entry documents, this ruling will not address the three scenarios you described in your original request. Instead, we will address the only question now before us, whether an unlicensed affiliate can file ISFs using its affiliate’s ABI software.
The ISF requirement originates in Section 203 of the Security and Accountability for Every Port Act of 2006 (Pub. L. 109–347, 120 Stat. 1884 (SAFE Port Act) (codified at 6 U.S.C. § 943)), which provides that the Secretary of Homeland Security (Secretary), acting through the Commissioner of CBP, shall promulgate regulations to ‘‘require the electronic transmission to the Department [of Homeland Security] of additional data elements for improved high-risk targeting, including appropriate security elements of entry data, as determined by the Secretary, to be provided as advanced information with respect to cargo destined for importation into the United States prior to loading of such cargo on vessels at foreign seaports.’’ Pursuant to this Act, and section 343(a) of the Trade Act of 2002 (19 U.S.C. § 2071 note), CBP published a Notice of Proposed Rulemaking (NPRM) in the Federal Register proposing to require importers and carriers to submit additional information pertaining to cargo before the cargo is brought into the United States by a vessel. See Importer Security Filing and Additional Carrier Requirements, 73 Fed. Reg. 90 (Jan. 2, 2008) (Proposed Rule). The proposed rule is the basis for the ISF, which is required to be transmitted by the importer or his agent via ABI or Vessel Automated Manifest System (AMS). See Importer Security Filing and Additional Carrier Requirements, 73 Fed. Reg. 71,730, 71,733 (Nov. 25, 2008) (ISF Interim Final Rule). An importer may designate an agent to file the ISF on its behalf and that agent does not have to be a licensed customs broker, nor does it have to be located within the United States. The regulations do, however, require the agent to retain powers of attorney in English until revoked and require the agent to provide proof of powers of attorney and revocation upon request by CBP. See 19 C.F.R. § 149.5(c).
Pursuant to 19 C.F.R. § 143.1, the only parties who may use ABI for transmitting data relating to entry and entry summary are customs brokers, importers and ABI service bureaus. However, any party may participate in ABI solely for the purpose of filing the ISF. See 19 C.F.R. § 143.1(b). If a party other than a customs broker or an importer submits the ISF, no portion of the ISF can be used for entry or entry summary purposes. Id.
In response to comments by the trade solicited prior to the promulgation of the final rule on ISFs, CBP stated that if an importer chose to have the elements submitted for the ISF used for entry/entry summary purposes, the ISF and entry/entry summary (unified filing) must be self-filed by the importer or filed by a licensed customs broker in a single transaction to CBP. See ISF Interim Final Rule, 73 Fed. Reg. at 71,734 and 71,746. In response to comments by the trade, CBP also stated that classification at the six-digit HTSUS level required for the ISF does not constitute “customs business,” nor does providing the importer record number and consignee number. Id. Therefore, an agent does not need a customs broker license to only file the ISF. Additionally, we note that CBP stated that agents filing ISFs are not limited to U.S. based entities. Id. 73 Fed. Reg. at 71,745.
In your amended ruling request, the unlicensed employees of an affiliated company in China would file ISFs using your ABI software. Affiliates are considered separate and distinct legal entities. See HQ223804 (June 29, 1992) (stating that parent and subsidiary corporations are separate legal entities). Therefore, the importer would need to designate the Chinese affiliate as its agent for purposes of filing the ISF and execute a power of attorney for that purpose. Alternatively, the importer may issue a power of attorney to the U.S. company that would permit the U.S. company to issue, on the importer’s behalf, a power of attorney authorizing its affiliates to file the ISF. See HQ225375 (October 31, 1994) (stating that an importer may issue a power of attorney to one broker that would empower that broker to issue, on the importer’s behalf, powers of attorney to other brokers in other ports). Further, since the companies are separate legal entities, they may not share ABI access and each must apply for its own access. See 19 C.F.R. § 143.2 (stating ABI application requirements).
Since the filing of the ISF is not considered customs business, there is no need for the employees to be licensed and they do not need a licensed customs broker to oversee their filings. The unlicensed employees, however, would be restricted to only filing the ISF, may not file the entry documents, and none of the information used for the ISF may be used for the entry. It should be noted that 19 C.F.R. § 149.3(a)(8) requires the first six digits of the HTSUS for the ISF. However, the HTSUS can only be used for entry purposes if provided at the ten digit level or higher by the importer of record or customs broker. Thus, when filing the ISF data elements, the employees of the Chinese affiliate are limited to providing only the first six digits of the HTSUS. The employees of the affiliate may not file the ISF and entry/entry summary together (unified filing) as this may only be done by the importer or licensed customs broker. See ISF Interim Final Rule, 73 Fed. Reg. at 71,734 and 71,746.
HOLDING:
Employees of a Chinese affiliate of a U.S. based NVOCC company that are not licensed customs brokers may file ISFs, so long as they are designated agents of the importer, acquire their own access to ABI, and limit their use of ABI to only filing the ISF data elements.
Sincerely,
Myles B. Harmon
Director
Commercial and Trade Facilitation Division