H290535

HQ H290535 September 29, 2022 BRO 3-05 OT:RR:CTF:ER H290535 SLJ Ms. Betty Stansbury Hampton Products International Corporation 50 Icon Foothill Ranch, CA 92656 RE: Customs business and broker rules; HTSUS classification recommendations; disclaimers Dear Ms. Stansbury: This letter is in response to the ruling request originally filed by Nick Mauro and dated September 15, 2017. The request discussed Hampton Products International Corporation’s (Hampton’s) practice of providing tariff subheadings to customers, the effects of a disclaimer, and the potential risk to Hampton customers. FACTS: Hampton is an importer and supplier of packaged consumer goods whose customers include big box retailers in home and hardware stores. Hampton does not have a customs broker’s license. During a phone call on October 27, 2021, you clarified that when Hampton acts as a supplier, its customers are the importers of record. Many of these customers request that Hampton provide the Harmonized Tariff Schedule of the United States (HTSUS) subheading for the merchandise the customer is importing. You also stated that these customers have their own internal customs compliance teams who confirm Hampton’s recommended classification subheadings when preparing the entry documents. Hampton’s practice of providing HTSUS subheadings to customers includes a disclaimer that the “subheadings are advisory only, and the customer’s importing/export compliance teams need to verify the information provided, as they are responsible for final submission of entry documents to US Customs if they are importing or exporting goods.” In the alternative, Hampton proposes the following disclaimer: These are the HTSUS subheadings that Hampton uses for imports, in no way should this information be used as confirmation or endorsement that you (customer) should use these same subheadings for your import and export declarations. Importer of record accepts all responsibilities for ultimate submission to US Customs. Please consult with your Broker. You are inquiring whether the practice of recommending HTSUS subheadings is permissible without a customs broker’s license. ISSUE: Whether Hampton’s practice of providing HTSUS subheadings to its customers for Hampton products with a disclaimer stating that the HTSUS subheadings are for information only violates 19 U.S.C. § 1641(b)(1) by conducting customs business without a license? LAW AND ANALYSIS: Classifying goods for others is “customs business” and must be carried out by a licensed customs broker. 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 . . . .” “Customs business” is defined in 19 U.S.C. § 1641 as: [T]hose 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); see also 19 C.F.R. § 111.1 (reflecting the statutory definition and also excluding corporate compliance activities from the definition). The Customs regulations further 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. Corporations are considered to be persons for purposes of customs broker licensing. See 19 C.F.R. § 111.1 (“‘Person’ includes individuals, partnerships, associations, and corporations.”). The act of “classifying a client’s merchandise that will be entered with Customs” constitutes customs business and is precluded if provided without a license. HQ 114404 (Mar. 16, 1999). In HQ 115248, dated August 28, 2001, Customs indicated that even when there is a “possibility” that classification information will eventually be used for an entry, a broker’s license is required “to gather classification data which will be reflected on the entry.” Additionally, in HQ H068278, dated September 28, 2009, Customs and Border Protection (CBP) determined that an unlicensed entity would conduct “customs business” if it provided software to clients that determined classification and other entry-related information even though the entry forms were ultimately filed by a U.S. customs broker. A broker’s license was required because the software was going to “direct the U.S. customs broker in the preparation of the entry” and there would be no other action by the broker “other than the act of filing itself.” HQ H068278. However, an unlicensed person may advise clients “on U.S. Customs policies and procedures, provided such advice is general and does not include specifics on how to classify, value, or mark an item which is going to be the subject of a particular import entry.” HQ 114654 (May 28, 1999); see also HQ 115278 (Nov. 13, 2001). Therefore, CBP regulations and rulings dictate that classifying specific goods for others that are going to be the subject of an entry filed with Customs is customs business that requires a customs broker’s license. We note, however, that CBP has consistently held that classifying goods to the six-digit level of the HTS is not customs business and does not require a customs broker’s license. For example, in HQ H260075, dated April 3, 2017, CBP noted that classification to the six-digit level of the HTS “does not constitute customs business.” See also Importer Security Filing and Additional Carrier Requirements, 73 Fed. Reg. 71,730, 71,734 and 71,746 (Nov. 25, 2008). This level of classification “does not constitute customs business because the six-digit HTS provision is insufficient for entry.” H045695; see also Required Advance Electronic Presentation of Cargo Information, 68 Fed. Reg. 68140, 68146 (Dec. 5, 2003). However, “[i]f the number is reported to the ten-digit HTSUS level, then the [manifest information] concerns classification for purposes of customs business and requires a license.” H260075 (citing HQ H045695 (Oct. 15, 2010)). Thus, no customs broker’s license is required for the classification of goods to the six-digit level of the HTS. In this case, Hampton’s provision of tariff subheadings to the eight-digit and ten-digit level to its customers without a customs broker’s license violates the customs broker’s license requirement. The provision of HTSUS subheadings to others is customs business. Section 1641(a) provides that the “preparation of documents” that are “intended to be filed with” CBP is considered customs business, and HQ 115278 states that giving advice about how to classify a good is a necessary part of the preparation process for documents that will eventually be filed with CBP. Here, Hampton provides specific classification subheadings for specific goods sold to its customers which must be entered by its customers. This act goes beyond the allowable general advice about how to classify because Hampton is providing specific subheadings on specific goods that its clients have ordered and for which they will be filing entry documentation with Customs. See HQ 114404. Providing the classification subheadings for the goods that the customers are purchasing is a “specific on how to classify” and directs the customs broker in the preparation of ent

Classifying goods for others is “customs business” and must be carried out by a licensed customs broker. 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 . . . .” “Customs business” is defined in 19 U.S.C. § 1641 as:[T]hose 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); see also 19 C.F.R. § 111.1 (reflecting the statutory definition and also excluding corporate compliance activities from the definition). The Customs regulations further 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. Corporations are considered to be persons for purposes of customs broker licensing. See 19 C.F.R. § 111.1 (“‘Person’ includes individuals, partnerships, associations, and corporations.”). The act of “classifying a client’s merchandise that will be entered with Customs” constitutes customs business and is precluded if provided without a license. HQ 114404 (Mar. 16, 1999).