Main Idea: Individuals or companies that do not possess customs broker licenses and recommend HTSUS subheadings for customers to use when making entry violate the customs laws when (i) customers request subheadings to use and (ii) unlicensed individuals or companies provides specific subheadings for specific goods that will be subject to entry when customers import the goods.

In H290535 (Sept. 29, 2022), CBP discussed violations of customs business and broker rules, regarding a company’s HTSUS classification recommendations to its customers. At issue was Hampton Products International Corporation (Hampton’s) practice of providing HTSUS subheading recommendations for customers. Hampton supplies consumer goods to big box stores and when Hampton was the supplier, the customer acted as importer of record (IOR). Customers requested that Hampton provide the HTSUS subheadings for the merchandise the customers imported. Hampton provided HTSUS subheadings to customers, and included disclaimers stating that the recommended subheadings were for “informational purposes only.”

CBP determined that Hampton violated 19 U.S.C. § 1641(b)(1) by conducting customs business without a license, and that Hampton’s disclaimer did not release the company from the need to obtain a customs broker’s license to provide HTSUS tariff subheadings to its customers.

CBP’s decision hinged on the following:

  1. Hampton provided specific classification subheadings for specific goods sold to and then entered by its customers. CBP quoted HQ 115278 (Nov. 13, 2001), which stated 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. CBP found Hampton’s actions went beyond the allowable general advice about classifying merchandise because Hampton provided specific subheadings on specific goods that its clients ordered, and for which the customers would file entry documentation. Further, because Hampton’s customers requested the subheadings before importing the merchandise, CBP found there was a strong possibility that the customers would use subheadings Hampton provided on the entries filed with CBP.
  2. CBP acknowledged that under certain 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 referenced HQ H272798 (Jan. 26, 2017), where an unlicensed company prepared a database of HTSUS subheadings that customers used as a reference. CBP found that Hampton went beyond something like a permissible tariff classification database used for general reference purposes by providing specific HTSUS subheadings for specific merchandise purchased for importation. CBP found that Hampton’s disclaimer did not absolve the company of the violation.
Print:
Email this postTweet this postLike this postShare this post on LinkedIn
Photo of Simeon Yerokun Simeon Yerokun

imeon Yerokun is a counsel in Crowell & Moring’s International Trade group and based in the firm’s Washington, D.C. office. He advises clients on all areas of import regulatory compliance, trade remedies, and international trade litigation.

Simeon has extensive experience counseling companies in

imeon Yerokun is a counsel in Crowell & Moring’s International Trade group and based in the firm’s Washington, D.C. office. He advises clients on all areas of import regulatory compliance, trade remedies, and international trade litigation.

Simeon has extensive experience counseling companies in the areas of business and human rights law, including compliance with global anti-forced labor and human rights requirements. He regularly represents companies before U.S. government agencies on forced labor-related matters, including securing the release of goods detained and seized by U.S. Customs and Border Protection. He also offers deep experience assisting companies in mapping their supply chains, including linking imported products back to their raw materials using enterprise software and other inventory management audit tools. Simeon is highly accomplished in forced labor supply chain mapping and risk assessments, as well as verifying due diligence efforts with on-the-ground visits to client facilities, incorporating third-party intelligence and audit resources.

Simeon’s experience also covers a broad spectrum of trade and customs issues, including those related to import regulatory compliance matters such as valuation, classification, duty drawback, marking and labeling, entry procedures, and penalties; free trade agreements; antidumping and countervailing duty issues; trade litigation; intellectual property issues such as trademark and copyright infringement; the enforcement of exclusion orders issued by the International Trade Commission (ITC); steel and aluminum tariffs under the Section 232 National Security Investigation; and the additional tariffs on products from China under Section 301 of the Trade Act of 1974.

Additionally, Simeon handles antidumping (AD) and countervailing duty (CVD) investigations before the U.S. Department of Commerce’s International Trade Administration (ITA) and the U.S. International Trade Commission (ITC) under the Tariff Act of 1930, and litigation involving the U.S. Court of International Trade (CIT).

Prior to joining Crowell, Simeon was a trade and finance attorney in the Office of Chief Counsel—U.S. Customs and Border Protection (CBP), and before that, he served as counsel to Commissioner Irving A. Williamson at the U.S. International Trade Commission.

Simeon is a proud graduate of Howard University School of Law, where he served as technical editor of the school’s Human Rights and Globalization Law Review.

Photo of Emily Devereaux Emily Devereaux

Emily Devereaux is a senior international trade analyst I in Crowell & Moring’s Washington, D.C. office. She provides practice support to the International Trade Group on import regulatory matters pending before the Office of the U.S. Trade Representative (USTR) and U.S. Customs and

Emily Devereaux is a senior international trade analyst I in Crowell & Moring’s Washington, D.C. office. She provides practice support to the International Trade Group on import regulatory matters pending before the Office of the U.S. Trade Representative (USTR) and U.S. Customs and Border Protection (CBP). She works closely with attorneys developing courses of action for clients impacted by investigations under Section 301 of the Trade Act of 1974 and Section 232 of the Trade Expansion Act of 1962. She also supports unfair trade investigations, including antidumping (AD) and countervailing duty (CVD) investigations, sunset reviews, and changed circumstance reviews before the Department of Commerce and the International Trade Commission (ITC).