Providing HTS Codes to Customers Is 'Customs Business,' Even With a Disclaimer, CBP HQ Rules
The practice of providing tariff schedule subheadings for merchandise sold to customers is "customs business," and requires a customs broker license even if a disclaimer is included that the customer shouldn't rely on the classification, CBP determined in a Sept. 29 ruling, released on Oct. 22.
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The ruling addressed a practice by Hampton, a supplier of packaged consumer goods, of providing Harmonized Tariff Schedule subheadings for merchandise it supplied to its customers, including big box home and hardware retailers. Hampton's customers acted as the importers of record, and many had their own internal customs compliance teams that verified the information and were responsible for final submission of entry documents to CBP. Hampton did not have a customs broker license.
Along with the subheading, Hampton included 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.” Hampton told CBP that, alternatively, it could use a disclaimer that the subheadings should in no way "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."
CBP ruled that Hampton's disclaimer does not shift the nature of the advice provided away from being customs business, and that Hampton needed a broker license to provide the classifications to its customers.
Under limited circumstances, providing a disclaimer advising that classification must be completed by a licensed customs broker may allow an unlicensed entity to provide classification guidance for others, CBP said. In HQ H272798, CBP ruled that an unlicensed company that prepared a database of HTSUS subheadings did not require a license because the database was accompanied by a disclaimer that stated that the report was for “general, educational and planning purposes” only and that the database did not direct a broker in the preparation of the entry documents.
Hampton took the classification "a step further" by providing specific subheadings for goods that will be subject to entry. "Hampton’s disclaimer accompanies subheadings for a specific good ... rather than a database that is used as a general reference," CBP said.
CBP also cited HQ H068278, a ruling in which it determined that an unlicensed entity would conduct customs business if it provided software to clients that determined classification and other entry-related information, even if the entry forms were ultimately filed by a licensed broker. Advice that directs a licensed broker in preparation of an entry is still "customs business," CBP said.
Unlicensed persons may advise clients on Customs 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,” CBP said.
The ruling did note that CBP has consistently held that classifying goods only to the six-digit level is not customs business and does not require a broker’s license, because "the six-digit HTS provision is insufficient for entry." But Hampton provided specific classification subheadings for specific goods provided to its customers to the eight-digit and 10-digit levels. CBP ruled that this level of advice goes beyond the "allowable general advice" because the company provided subheadings for specific goods for which clients will be filing entry documentation.