OT:RR:CTF:ER
H281992 ABH
Port Director
Port of Baltimore
U.S. Customs & Border Protection
40 South Gay Street
Baltimore, MD 21202
Attn: Thomas Hefferman, Assistant Port Director
RE: Internal Advice Request; Customs Business
Dear Port Director:
This is in response to a request for internal advice (“IA”) dated December 13, 2016. You seek clarification and guidance on whether the submission and/or completion of certain U.S. Customs and Border Protection (“CBP”) Forms and a Department of Defense (“DOD”) Form constitute “customs business.” Specifically, you inquire into whether it would constitute customs business to complete or submit any one of the following four forms: CBP Form 3461, “Entry;” CBP Form 7501, “Entry Summary;” CBP Form 3299, “Declaration for Free Entry of Unaccompanied Articles,” and DOD Form 1252, “Declaration for Personal Property Shipments.”
FACTS:
At the time of the request for internal advice, the Port of Baltimore had been rejecting CBP Forms 7501, 3461, 3299, and DOD Form 1252 when they were filed by an unlicensed person (i.e., not a Customs broker) for purposes of releasing and entering merchandise into the United States. The Port of Baltimore determined that such activities constituted the engagement of “customs business” and provided an “informed compliance” to the unlicensed party seeking to file the aforementioned forms. The unlicensed party filed an application for a Customs broker license with CBP, but the Port of Baltimore sought clarification on several issues.
ISSUES:
Does the submission and/or completion of CBP Forms 3461, 7501, 3299, and DOD Form 1252, constitute “customs business”?
Is a Customs broker’s license required by an agent that submits CBP Forms 3461, 7501, 3299, and DOD Form 1252?
In the event that Headquarters determines that the submission of such forms do not constitute customs business, who should be identified as the importer of record?
Is a valid power of attorney required when submitting the forms?
LEGAL ANALYSIS:
Pursuant to 19 U.S.C. § 1641(b)(1), “[n]o person may conduct customs business (other than solely on behalf of that person) unless that person holds a valid customs broker’s license . . ..” The term “customs business” is defined as,
those activities involving transactions with [U.S. Customs and Border Protection] concerning the entry and admissibility of merchandise, its classification and valuation, the payment of duties, taxes, or other charges assessed or collected by [U.S. Customs and Border Protection] 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 [U.S. Customs and Border Protection] in furtherance of such activities, whether or not signed or filed by the preparer, or activities relating to such preparation, but does not include the mere electronic transmission of data received for transmission to Customs.
19 U.S.C. § 1641(a)(2). The regulatory definition of “customs business” provided in 19 C.F.R. § 111.1, mirrors the language set forth in 19 U.S.C. § 1641(a)(2). The Customs regulations indicate that “[a]ny person who intentionally transacts customs business . . . without holding a valid broker’s license, will be liable for a monetary penalty for each such transaction as well as for each violation of any other provision of 19 U.S.C. § 1641.” 19 C.F.R. § 111.4. The performance by an unlicensed person of an activity amounting to “customs business” may subject that person to a penalty of up to $10,000 for each violation. 19 U.S.C. § 1641(b)(6).
The U.S. Court of International Trade (“CIT”) clarified in Delgado v. United States, 581 F. Supp. 2d 1326 (Ct. Int’l Trade 2008), that the “definition of ‘Customs business’ is very broad.” Customs business includes “transactions with the Customs Service” and any “activities” involving such transactions. Id. at 1331. Customs business also includes the “preparation of documents . . . intended to be filed with the Customs Service” as well as any “activities relating to such preparation.” Id. In Delgado, the Court held that the filing of CBP Forms 7501 and 3461 qualifies as customs business. 581 F. Supp. 2d 1326, 1332 (Ct. Int’l Trade 2008); see also HQ 116189 (June 9, 2004) (“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.”). Thus, generally speaking, the execution and filing of CBP Forms 7501 and 3461 must be done by a party qualified as the “importer of record” or a licensed customs broker. 19 U.S.C. § 1484(a)(1); 19 U.S.C. § 1641(b)(1). To the extent a licensed customs broker conducts customs business in the name of a principal, a valid power of attorney must be obtained. 19 C.F.R. § 141.46.
At issue in this internal advice request, however, are household and personal effects entered pursuant to Harmonized Tariff Schedule of the United States (“HTSUS”) subheading 9905.00.50. Subheading 9905.00.50 states that the following can come into the United States duty free:
The personal and household effects (with such limitation on the importation of alcoholic beverages and tobacco products as the Secretary of the Treasury may prescribe) of any person in the service of the United States who returns to the United States upon the termination of assignment to extended duty (as defined in regulations issued in connection with this provision) at a post or station outside the customs territory of the United States, or of returning members of his family who have resided with him at such post or station, or of any person evacuated to the United States under Government orders or instructions.
The entry of household and personal effects falls under informal entry procedures pursuant to 19 U.S.C. § 1498(a)(5), whereby CBP is delegated with the authority to “prescribe rules and regulations for the declaration and entry” of household and personal effects.
Pursuant to this authority, CBP promulgated 19 C.F.R. § 148.77(b)(1), with regard to the “exemption on termination of assignment to extended duty or on evacuation,” and stated that the “[d]eclaration and entry for articles claimed to be exempt from duty and tax under subheading 9805.00.50, HTSUS (19 U.S.C. 1202), may be made on Customs Form 3299, or Department of Defense Form (DD) 1252 when entry is made in the name of the person who is entitled to the benefits of the exemption.” Further, such forms may be “executed on behalf of the owner of unaccompanied personal and household effects by either a United States Dispatch Agent or a designated responsible military official in his own name . . ..” 19 C.F.R. § 148.77(b)(2). In sum, by regulation, regarding an entry claiming exemption from duties and taxes under subheading 9805.00.50, HTSUS, CBP Form 3299 or DOD Form 1252 may be submitted to CBP by the owner of the effects, a United States Dispatch Agent, or a designated responsible military official.
If any of those three parties seeks a third party to file the Customs Form 3299 or DOD form 1252 on their behalf, the question arises as to whether the filing of those two forms constitutes customs business. In HQ H286759 (June 1, 2017), CBP held that “we find that execution of CBP Form 3299 constitutes customs business.” In that Ruling, we held that an employer, who is not a licensed customs broker, may not execute CBP Form 3299 on behalf of its employees. Regarding DOD Form 1252, no ruling has been issued vis-a-vis customs business.
As discussed above, pursuant to Customs regulations, a DOD Form 1252 can be submitted for declaration and entry of articles claimed to be exempt from duty and tax under subheading 9805.00.50, HTSUS. 19 C.F.R. § 148.77(b). DOD Form 1252, beyond providing identifying data, is a declaration as to the veracity of the goods qualification for classification under subheading 9805.00.50. Namely, that the goods are personal or household effects of a person (or family members of that person) in service of the United States returning to the United States from a post or station outside the customs territory of the United States upon termination of assignment to extended duty or evacuated under Government orders or instructions.
Customs business involves transactions with CBP concerning the entry of merchandise and its classification. 19 U.S.C. § 1641(a)(2). Customs business also includes forms intended to be filed with CBP in furtherance of such activities and the preparation of any such documents as well as any activities related to such preparation. Id.; Delgado v. United States, 581 F. Supp. 2d at 1331. DOD Form 1252 is a declaration that the goods are classified under subheading 9805.00.50, HTSUS, and eligible for duty-free treatment because all the criteria of the subheading are met. As such, it is a document concerning the entry of merchandise and its classification. Thus, the completion and/or submission of DOD Form 1252 constitutes customs business.
This decision is further supported by our prior ruling in HQ H091624 (Jan. 6, 2012), which addressed the issue of whether a freight forwarder conducted customs business without a license when it submitted CBP Form 3311, Declaration for Free Entry of Returned American Products. In that ruling, we reasoned that by declaring on CBP Form 3311 that the goods were classified under subheading 9801.00.10, HTSUS, and eligible for duty-free treatment because all the criteria of the subheading had been met, the freight forwarder had conducted activities concerning the classification of merchandise, which was within the express definition of customs business. HQ H091624 (Jan. 6, 2012). There is no exception regarding who may make entry for non-dutiable merchandise. HQ 114396 (Jan. 20, 1999).
Accordingly, the preparation and filing of CBP Form 3299 and DOD Form 1252 constitutes customs business and may be done by the owner of the personal and household effects or by either a United States Dispatch Agent or a designated responsible military official. In such an event, the regulation does not require that the United States Dispatch Agent or designated responsible military official obtain a power of attorney from the owner. If any of those three parties seek a third party to file entry on their behalf, that third party must be a licensed customs broker with a duly executed power of attorney. Under no circumstances may these forms be completed by any other entity that does not fit these descriptions, including an employer or a freight forwarder.
HOLDING
We agree with the Port of Baltimore that the submission and/or completion of CBP Forms 3461, 7501, 3299, and DOD Form 1252, individually or in combination, constitutes “customs business.”
The execution and filing of CBP Forms 7501 and 3461 must be done by a party qualified as the “importer of record” or a licensed customs broker. By regulation, the preparation and filing of CBP Form 3299 and DOD Form 1252 may be done “on behalf of the owner of unaccompanied personal and household effects by either a United States Dispatch Agent or a designated responsible military official in his own name.” Either the owner, the United States Dispatch Agent, or the designated responsible military official can contract with a licensed customs broker with a duly executed power of attorney to submit CBP Form 3299 and DOD Form 1252.
Because we have determined that the submission of CBP Forms 3461, 7501, 3299, and DOD Form 1252, constitutes customs business, we need not reach the issue of who should be identified as the importer of record.
To the extent a licensed customs broker conducts customs business in the name of a principal, a valid power of attorney must be obtained.
You are directed to mail this decision to the internal advice applicant, no later than 60 days from the date of this letter. On that date Regulations and Rulings will make the decision available to CBP personnel, and to the public on the CBP Home Page on the World Wide Web at www.CBP.gov, by means of the Freedom of Information Act, and other public methods of distribution.
Sixty days from the date of this letter, Regulations and Rulings will make the decision available to CBP personnel, and to the public on the CBP Home Page on the World Wide Web at www.CBP.gov, by means of the Freedom of Information Act, and other public methods of distribution.
Sincerely,
for Craig Clark, Director
Commercial & Trade Facilitation Division