CBP Ruling H091624

HQ H091624 January 6, 2012 OT:CTF:ER H091624 AMM CATEGORY: Entry Port Director Service Port-Area Port of Jacksonville 2831 Talleyrand Avenue Jacksonville, FL 32206 Attn: Mr. Karol Palenik RE: Internal Advice; Conducting Customs Business Without a License; 19 U.S.C. §1641; 19 C.F.R. §111 Dear Port Director, This is in regard to your Request for Internal Advice, dated January 19, 2010. At issue is whether Polo Express International Corp. (Polo Express) conducted customs business without a license when it applied for the release of chlorine cylinders. In your request, you also ask whether a penalty would be appropriate if Polo Express did conduct customs business without a license. With respect to whether a penalty should be issued, please contact the port's Fines, Penalties and Forefeiture officer as that decision is within the discretion of the Port Director. FACTS: On January 19, 2010, Polo Express, acting as a freight forwarder on behalf of JCI Jones Chemicals, Inc. (JCI), sent a fax to the Port of Jacksonville (the Port). The fax states, in pertinent part: "Kindly find attached copy of Customs Bond, CBP Form 3311, Bill of Lading and Authorization Letter from Seafreight Line, Ltd. This import consists of returned American Products, Chlorine cylinders to be refilled again for export purposes only under section 10.41A. Please tell us if this is acceptable by you and if you can release this import through [the Automated Manifest System] ...". Included with the fax were a U.S. Customs and Border Protection (CBP) Form 3311 (Declaration for Free Entry of Returned American Products), a bill of lading, a CBP Form 5291 (Power of Attorney form), and a CBP Form 301 (Bond form). The CBP Form 5291, Customs Power of Attorney form, was executed by JCI, and named Polo Express as its representative. The CBP Form 3311, Declaration for Free Entry of Retuned American Products, has as its Declarant a representative of Polo Express. The bill of lading reflects that JCI is the consignee. A letter from Polo Express, included with the fax, advised the Port that Seafreight Line Ltd. was to act on behalf of Polo Express in the clearance of the cylinders. Polo Express indicated that the cylinders are designed to contain chlorine gas, and arrived empty so that they could be refilled again for export. Polo Express also indicated that, upon importation, the cylinders contained chlorine residue. You indicate that Polo Express does not have a broker's license. You request internal advice as to whether Polo Express conducted customs business, based on the documents described above. ISSUE: Whether Polo Express conducted customs business by filing certain documents with its request to release the chlorine containers. LAW AND ANALYSIS: The issue in this case is whether Polo Express has conducted customs business. Persons not licensed by CBP as customs brokers are prohibited from transacting customs business on behalf of others per 19 U.S.C. §1641, which states, in pertinent part: "In general. No person may conduct customs business (other than solely on behalf of that person) unless that person holds a valid customs broker's license issued by the Secretary under paragraph (2) or (3)." See 19 U.S.C. §1641(b)(1). The same statute states: The term "customs business" means those activities involving transactions with the Customs Service concerning the entry and admissibility of merchandise, its classification and valuation, the payment of duties, taxes, or other charges, assessed or collected by the Customs Service 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 the Customs Service 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. See 19 U.S.C. §1641(a)(2). See also, 19 C.F.R. §111.1. In Delgado v. United States, 581 F.Supp.2d 1326, 1331 (Ct. Int'l. Trade 2008), the Court of International Trade (CIT) determined that the plaintiff's crimes "arose" out of customs business. The CIT stated that the definition of "customs business" contained in 19 U.S.C. §1641(a)(2) "is very broad: Customs business not only includes 'transactions with the Customs Service' it includes 'activities involving transactions with the Customs Service.' It not only includes 'preparation of documents . . . intended to be filed with the Customs Service,' but includes any 'activities relating to such preparation.'" Id. Polo Express asserts that the chlorine cylinders are "returned American products." Subheading 9801.00.10, HTSUS, provides for "Products of the United States when returned after having been exported, without having been advanced in value or improved in condition by any process of manufacture or other means while abroad." Goods classified in subheading 9801.00.10, HTSUS, are eligible for duty-free treatment, provided that certain documentary requirements are met. See 19 C.F.R. §10.1(a); See also Headquarters Ruling Letter (HQ) H149357 (May 20, 2011). Activities concerning the classification and valuation of merchandise fall within the definition of "customs business." See 19 U.S.C. §1641(a)(2). This includes the preparation of documents intended to be filed with CBP. See Delgado, 581 F.Supp.2d at 1331. Polo Express asserts on the CBP Form 3311 that the cylinders were originally manufactured in the State of Florida. Box 11 of this CBP Form 3311 states, in pertinent part: "I declare that ... the articles described above are the growth, production, and manufacture of the United States, and are returned without having been advanced in value or improved in condition by any process of manufacture or other means; ...". The form is signed by an employee of Polo Express, who is also identified as the "declarant." Furthermore, on the CBP Form 3311, Polo Express states the value of the merchandise for customs purposes. By submitting these documents, Polo Express has provided information relevant to the classification of the chlorine cylinders under subheading 9801.00.10, HTSUS. It has asserted that the all the criteria of the subheading are met, namely that the cylinders are "products of the United States when returned after having been exported, without having been advanced in value or improved in condition by any process of manufacture or other means while abroad". Furthermore, the CBP Form 3311 Polo Express submitted indicates the value of the cylinders. As discussed above, activities concerning the classification and valuation of merchandise is within the definition of "customs business," given in 19 U.S.C. §1641(a)(2). Because these documents, filed with CBP, concerned the classification of the cylinders under subheading 9801.00.10, HTSUS, and their valuation, Polo Express conducted customs business when preparing and filing the CBP Form 3311 and CBP Form 5291. HOLDING: Polo Express' application for release of the chlorine cylinders at issue, and the filing of forms in support of that application, constitutes "customs business" as defined in 19 U.S.C. §1641(a)(2) and 19 C.F.R. §111.1. 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, Myles Harmon, Director Commercial and Trade Facilitation Division 4