- Type : • HTSUS :
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Related:
115248
BRO-1
OT:RR:CTF:ER H167815 CSO
Mr. T. James Min II, Esq.
Vice President, Internal Trade Law & Corporate Compliance
Legal Department
DHL Americas
MS 1306
Erlanger, Kentucky 41018
Re: customs business
Dear Mr. Min:
This is in response to your letter, dated May 20, 2011, requesting a prospective ruling in accordance with 19 C.F.R. § 177.1 concerning whether billing verification activities are customs business. We regret the delay in our response.
FACTS
DHLE US is a licensed customs broker and conducts billing verification activities that involve resolving disputes or discrepancies for Delivered Duty Paid (DDP) billings to its clients. In situations when the party does not pay the bill, the Customer Finance Service Center (CFSC) researches the dispute or discrepancy and determines the correct billing party. The communication about the billing is directly between DHLE US and its clients, such as importers of record, consignees etc. DHLE US states that the employees that resolve the billing disputes do not prepare documents that are submitted to or make payments to CBP. DHLE US would like to move the billing activities that resolve disputes overseas and hence wants to know whether the billing verification activities are considered “customs business.”
DHLE US provided us with two scenarios in which the billing dispute or discrepancy between DHLE US and its customer could be resolved. Scenario one involves employees who would review information that was previously submitted to CBP and which specifically relates to a CBP transaction in order to resolve the billing dispute or discrepancy between DHLE US and its customer. The information that would be evaluated and reviewed includes CBP entry and entry summary forms that include invoice value, HTSUS number, name and address of the ultimate consignee and importer of record, as well as airway bill numbers, commercial invoices and other various types of information.
Scenario two involves an employee who would not have access to the CBP entry and entry summary. Rather, the employee would only have access to the air waybill, commercial invoices, other commercial documents, as well as billing information sent to the DHLE US customer.
ISSUE
Whether a review of the entry and entry summary is “customs business.”
LAW AND ANALYSIS
Section 641(b)(1) of the Tariff Act of 1930, as amended (19 U.S.C. § 1641(b)(1)), provides that no 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 in 19 U.S.C. § 1641(a)(2) as:
[t]hose 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 also, 19 C.F.R. § 111.1. Because “customs business” includes activities that relate to the preparation of documents to be filed with CBP, it follows that DHL US’ activities that are solely related to billing its clients and therefore do not involve transactions with CBP would not be considered customs business. Note, however, that CBP has found that activities such as verification of duty amounts constitute customs business when it is possible to correct a customs entry filed with CBP. See HQ 115248 (August 28, 2001) (stating that reviewing prepared entries and the paperwork supporting the data contained in the entries for verification of duty amounts may only be performed by the importer or by a licensed broker when the possibility exists that corrected duty information derived from the duty verification process will ultimately appear on the entry). Therefore, such verification activity that could result in a correction submitted to CBP must be conducted by a licensed customs broker.
DHLE US proposed two factual scenarios. The first included employees who would review information that was previously submitted to CBP and which specifically relates to a CBP transaction to resolve the billing dispute or discrepancy between DHLE US and its customer, the importer. The information that would be evaluated includes detailed CBP entry and entry summary forms and documents that include invoice value, HTSUS number, name and address of the ultimate consignee and importer of record, as well as airway bill numbers, commercial invoices and other various types of information. DHLE US has stated that such a review of the entry and entry summary transaction information would not lead to corrections made in entry and entry summary filings to CBP. However, if employees review the entry and entry summary and find discrepancies, this could lead to corrections with the entry and entry summary filed with CBP. Also note that once the employee identifies information that might have been inaccurate, the broker has a duty to advise the client of the inaccuracy because it concerns the entry of the merchandise. See 19 C.F.R. § 111.39(b). Hence, a billing verification and review that includes the entry and entry summary is considered customs business because the review could ultimately lead to corrections made to CBP entry or entry summary filings. See HQ 115248 (August 28, 2001).
The second scenario included a review of only a bill of lading or airway bill, commercial invoice and other commercial documents as well as a bill issued to DHLE US customer. In this instance, the potential for a corrected entry or entry summary does not exist because the employee does not see the entry and entry summary and so would not know whether they were erroneous. Only after the discrepancy was referred back to a broker would the broker be able to confirm whether erroneous information was submitted to CBP. Hence, the review of a bill of lading, commercial invoice and a bill in order to process a billing dispute and/or discrepancy issue is not included within the definition of “customs business.”
We also note that the DHLE US employees will be co-located with DP-DHL employees. However, as alleged by DHLE US in its submission to CBP, DHLE US will not be sharing CBP transaction information with employees of DP-DHL. Title 19 of the Code of Federal Regulations, Section 111.24 prohibits the broker from sharing an importer’s records with third parties other than the surety for a particular entry and CBP, other duly accredited officers or agents of the United States and the courts. Therefore, if there is no unauthorized sharing of information that would occur during the review of documents for the billing dispute resolution process, then the review would not violate this confidentiality requirement. Finally, we point out that DHL US is obligated to maintain its official records in the United States. See Customs Broker Recordkeeping Requirements Regarding Location and Method of Record Retention , 77 Fed. Reg. 33,964, 33,965 (June 8, 2012).
HOLDING
The verification of billing information that includes a review of detailed CBP entry and entry summary forms that include invoice value, HTSUS number, name and address of the ultimate consignee and importer of record, as well as airway bill numbers, commercial invoices and other various types of information is “customs business.” However, verification of billing information through review of an air waybill and billing information as described in scenario two is not “customs business.”
The holding set forth above applies only to the specific factual situation and procedures and processes identified in the ruling request. This position is clearly set forth in 19 C.F.R. § 177.9(b)(1). This Section states that a ruling letter, either directly, by reference, or by implication, is accurate and complete in every material respect.
Should it be subsequently determined that the information furnished is not complete and does not comply with 19 C.F.R. § 177.9(b)(1), the ruling will be subject to modification or revocation. In the event there is a change in the facts previously furnished, this may affect the determination of whether the work performed by the DHLE US employees is customs business. Accordingly, if there is any change in the facts submitted to CBP, it is recommended that a new ruling request be submitted in accordance with 19 C.F.R. § 177.2.
Sincerely,
Carrie L. Owens, Chief
Entry Process and Duty Refund Branch