Abady Law Firm, P.C. – Customs and Import/Export Attorney Blog
Learn the Basics of Customs and International Trade Policy and Procedure
Archive for April, 2012
Last post was a discussion on the types of examinations. The question presents itself: Whose shipments will be inspected? The term one will hear is that examinations are random. However, determination for inspection of merchandise is by majority controlled by a automated system which is overseen by human judgment. Generally, Customs will inspect more shipments of an importer who has a history of poor compliance. Other factors may include, the familiarity with the importer, type of goods being imported, and the foreign factories being used to manufacture the merchandise.
In addition, Customs periodically targets for examination certain Harmonized Tariff numbers to determine compliance on a nationwide level. If the importer finds themselves being checked more than a few times by Customs it is best to investigate the matter, other issues may be at play.
All goods that enter into the United States are subject to examination by Customs or other regulatory agencies. Shipments are examined for purposes of determining whether all the requisite documentation has been provided, whether the documentation is accurate, as well as whether the goods are in compliance with U.S. laws. The examinations are said to be “random,” however I have heard time and again that importers believe Customs has put their company under a microscope while letting their competitors run free. There are generally two types of examinations that Customs utilizes:
1. Partial Examination – A sample is selected from a container load of goods.
2. Intensive Examination – An entire shipment of goods is unloaded and samples are selected randomly from within.
All entries must be covered by an import bond in order to make formal entry of merchandise into the United States. The bond serves to secure potential duties, taxes, and fees owed to CBP and guarantee performance of all Customs regulations requirements – but it is not insurance. The bond is to be filed on CBP form 301 and is a contract between the importer and CBP that protects Customs’ interests.
There are a number of surety companies who issue these bonds. Further, if the surety that provides the bonds makes any payment under a bond it has signed, the surety will look to the importer to recover its payment. Smaller and less frequent importers use what is called a “single entry” bond; issued for each transaction or importation. By contrast, “continuous” bonds cover all ongoing entries. The amount of the bond is based on a formula that is used for calculating risk set by CBP. Evidence of an import bond is required as part of the entry process.
International Shipping charges generally cover not only the cost for shipping overseas but also cover a certain number of days in which the goods are unloaded from the carrier. The time at which the goods remain at the carrier’s premises prior to the importers pick-up is known as free time. However when goods exceed their time at the carrier’s premises they are charged a daily fee known as demurrage or storage until picked up or delivered to Customs general order warehouse. The additional costs are designed to speed up the removal of goods and prevent a backlog of goods being held by the carrier; space = money for carriers.
Customs regulations require that a carrier move goods in what is called General Order when a shipment has been laying around for a certain amount of time and has not been released or entry filed for it. Depending on the port the length that goods stay at the port before being moved to General order vary. General Order may be be avoided by making a warehouse entry or sending the goods to a foreign trade zone.
If an importer suspects delays it is important to evaluate which method (storage/demurrage, general order, FTZ) will cut costs and get the goods to the proper person/entity as soon as possible.