CBP:OT:RR:ER H326926 IPW
Category: Entry
Ms. Latoria Harris
Heizwerthy Customs & Freight Solutions LLC dba Heizwerthy
209 Swanton Way, Suite 2038
Decatur, Georgia 30030
Re: Use of an Unlicensed Data Entry Company; Customs Business; 19 U.S.C. 1641; 19 C.F.R. 111.1
Dear Ms. Harris:
This is in response to your ruling request, on behalf of Heizwerthy Customs and Freight Solutions LLC ("Heizwerthy"), regarding whether an unlicensed company would impermissibly conduct customs business by keying data into an entry filing that will be transmitted to U.S. Customs and Border Protection ("CBP") via Heizwerthy's Automated Broker Interface ("ABI")[1] software system.
FACTS:
Heizwerthy is a licensed customs broker. You state that Heizwerthy would like to use a foreign and unlicensed "offshore data entry company" (hereinafter "Unlicensed Company") to "key data" into Heizwerthy's ABI software system. This Unlicensed Company would enter data elements provided by Heizwerthy through the use of "standard operating procedures and shipment documents." When asked to further define this process you explained that the Unlicensed Company would review shipment documents, such as a bill of lading and commercial invoice, and extrapolate certain data elements necessary to file entry for the imported merchandise to key into the ABI software based on instructions provided by Heizwerthy. You noted that the Unlicensed Company would sign a confidentiality agreement and would only be granted a "limited access role" in Heizwerthy's ABI software system, which would prevent the Unlicensed Company from transmitting entry data to CBP directly, generating customs documents, or viewing importer files. After the data has been entered, you state that Heizwerthy would audit the data, make necessary amendments, and transmit the entry data to CBP.
ISSUE:
Whether an Unlicensed Company will conduct customs business by extrapolating entry-related data from shipment documents and keying that data into Heizwerthy's ABI system.
LAW AND ANALYSIS:
Pursuant to 19 U.S.C. 1641(b)(1), no person may conduct customs business on behalf of another unless they hold a valid customs broker's license. See also 19 C.F.R. 111.2(a)(1); 111.2(a)(2)(i). A broker may not allow an unlicensed third party to conduct customs business on their behalf. 19 C.F.R. 111.37. Customs business is defined as:
[A]ctivities 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); 19 C.F.R. 111.1. The Court of International Trade has stressed that the definition of "customs business" is "very broad." Delgado v. United States, 581 F. Supp. 2d 1326, 1331 (Ct. Int'l Trade 2008). Activities constituting customs business encompass not just the transmission of electronic documents, or parts of such documents, intended to be filed with CBP, but also activities "in furtherance of" such transmissions, and "relating to" preparing such documents for transmission to CBP. Id.; 19 U.S.C. 1641(a)(2).
CBP has previously addressed the extent to which certain activities related to the preparation of entry documents and data constitute customs business. In Headquarters Ruling ("HQ") H068278, dated September 28, 2009, a service bureau inquired whether they could hire an unlicensed contractor to use optical character recognition ("OCR") technology to scan shipping documents. The purpose of the scan was to identify and extract the data necessary for entry. The service bureau would utilize the data to generate and transmit entry documents via ABI, although the actual transmission of the data and documents would be effectuated by a licensed customs broker. We held that the contractor, as the provider of the OCR technology, would impermissibly be conducting customs business by determining what valuation, classification, and other entry-related data would be transmitted to CBP as part of an entry filing.
Heizwerthy proposes to utilize an Unlicensed Company to review shipment documents, determine the necessary entry-related data, and key that data into their ABI system for eventual submission to CBP by customs brokers. This proposal closely parallels the scenario proposed in H068278. Similar to the OCR technology in H068278 that scanned shipment documents to determine the relevant information to generate an entry file, here, the foreign employees would review shipment documents, albeit manually, to determine the relevant information to generate an electronic file for eventual transmission to CBP. After determining the necessary entry-related data, the unlicensed employees would key the data they selected for the entries that Heizwerthy will file with CBP into Heizwerthy's ABI software system. While the Unlicensed Company will not actually transmit the entry data to CBP, 19 U.S.C. 1641(a)(2) explicitly includes within the definition of "customs business" 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 [CBP] . . . . whether or not signed or filed by the preparer." Identifying entry-related data and keying it into an ABI system falls squarely within the scope of preparing parts of an entry intended to be filed with CBP. Consequently, the Unlicensed Company would impermissibly be performing "customs business" in violation of 19 U.S.C. 1641(b)(1) and 19 C.F.R. 111.37.
We note three additional concerns implicated by Heizwerthy's proposal to allow the Unlicensed Company to access their ABI. First, the participants eligible to access ABI for entry and entry summary purposes can only be customs brokers, importers, and ABI service bureaus. 19 C.F.R. 143.1(a). Since the Unlicensed Company is none of these parties, they are by regulation not eligible to access ABI for entry and entry summary purposes. Second, to be granted permission to access ABI, an applicant must commit to "develop, maintain and adhere to the performance requirements and operational standard of the ABI system in order to ensure the validity, integrity, and confidentiality of the data transmitted," and be specifically approved by CBP to access ABI. 19 C.F.R. 143.2, 143.3(a). As Unlicensed Company has not applied for access to ABI, nor been approved to access ABI by CBP, they are not authorized to access ABI by utilizing Heizwerthy's account. Third, permitting a third party such as the Unlicensed Company to access Heizwerthy's account, containing client records and data, would breach Heizwerthy's obligation under 19 C.F.R. 111.24 to "not disclose [the] contents or any information connected with [client] records to any persons other than those clients," in order to preserve the confidentiality of client records, unless Heizwerthy's clients have provided written authorization for such disclosure.
Finally, we note that as of December 19, 2022, when the final rule amending Part 111 of Customs Regulations went into effect, all "customs business must be conducted within the U.S. customs territory." 19 C.F.R. 111.3(a); Modernization of the Customs Broker Regulations, 87 Fed. Reg. 63,274 (Oct. 18, 2022). The term "customs territory," pursuant to 19 C.F.R. 101.1, "includes only the States, the District of Columbia, and Puerto Rico." We caution that Heizwerthy must abide by 19 C.F.R. 111.3(a) to ensure customs business is conducted within the customs territory of the United States whenever engaging with foreign entities.
HOLDING:
We find that an Unlicensed Company would impermissibly conduct customs business by extrapolating entry-related data from shipping documents and keying that data into Heizwerthy's ABI software system.
Please note that 19 C.F.R. 177.9(b)(1) provides that "[e]ach ruling letter is issued on the assumption that all of the information furnished in connection with the ruling request and incorporated in the ruing letter, either directly, by reference, or by implication, is accurate and complete in every material respect." If any fact in the transaction varies from the facts stipulated to herein, this decision shall not be binding on CBP, as provided for in 19 C.F.R. 177.9(b).
Sincerely,
Monika R. Brenner, Interim Chief
Entry Process and Duty Refunds Branch
-----------------------
[1] ABI is an ACE-interface maintained by CBP. Brokers, and other eligible filers, must obtain CBP approval to use ABI and create their own account. See e.g. 19 C.F.R. Part 143, Subpart A.