Articles
Customs Alert - States Court of Appeals for the Federal Circuit Remands Case Broker Responsible Supervision and Control What is Required?
By C.J. Erickson & Carl R. Soller
Aug. 18, 2009
On August 11, 2009 the U.S. Court of Appeals for the Federal Circuit (CAFC) reversed and remanded the case of the U.S. v. UPS Customs House Brokerage Inc. While the court affirmed the lower court’s opinion “holding that UPS is-classified certain merchandise”…the CAFC also concluded that the lower court failed to consider those elements that Customs is “required to consider…when determining whether a broker exercised responsible supervision and control”.
The CAFC determined that Customs did not consider all of the factors set forth in 19 CFR 111.1. The factors that must be considered as quoted by the CAFC are as follows:
While the determination of what is necessary to perform and maintain responsible supervision and control will vary depending upon the circumstances in each instance, factors which CBP [Customs & Border Protection] will consider include, but are not limited to: The training required of employees of the broker; the issuance of written instructions and guidelines to employees of the broker; the volume and type of business of the broker; the reject rate for the various customs transactions; the maintenance of current editions of CBP Regulations, the Harmonized Tariff Schedule of the United States, and CBP issuances; the availability of an individually licensed broker for necessary consultation with employees of the broker; the frequency of supervisory visits of an individually licensed broker to another office of the broker that does not have a resident individually licensed broker; the frequency of audits and reviews by an individually licensed broker of the customs transactions handled by employees of the broker; the extent to which the individually licensed broker who qualifies the district permit is involved in the operation of the brokerage; and any circumstance which indicates that an individually licensed broker has a real interest in the operations of a broker.
To summarize the CAFC determination, it concluded that merely finding that a broker mis-classified certain merchandise does not equate to its failure to exercise responsible supervision and control.
Please contact either Carl R. Soller (212) 790-9231 (crs@cll.com) or C.J. Erickson (212) 790-9274 (cje@cll.com) for information.