Abady Law Firm, P.C. – Customs and Import/Export Attorney Blog
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Archive for the "Customs Bonds" Category
Recently, U.S. Customs and Border Protection (“CBP”) amended its guidelines for the cancellation and mitigation of claims for liquidated damages in situations where the Petitioner is late in filing claims for relief. Petitions are considered “untimely” or “late” if they fall outside of the established regulatory time frames or after the expiration of any lawfully obtained extensions. 19 C.F.R. Part 172.
Under the new guidelines, untimely petitions will be accepted or considered only if the petitioner is able to demonstrate the existence of “extraordinary circumstances that prevented the petitioner from filing a timely petition or timely seeking a lawful extension of time in which to file a petition” (with limited exceptions). The Fines, Penalties, and Forfeitures Officer will exercise his or her discretion in determining whether the Petitioner meets the “extraordinary circumstances” standard.
As far as mitigation is concerned:
In calculating the mitigated amount on a late petition, CBP (with limited exceptions) will:
1. Determine the base amount (i.e., the amount of mitigation that would have been afforded on a timely petition or the previously available option one amount).
2. Determine the “additional mitigation amount” by multiplying the full assessed amount of the claim by 0.1% (.001) and then multiply by the number of days the petition is late.
3. The product will be the additional amount which will be added to the base amount to produce the mitigated amount applied to the untimely filed petition.
For example, a $100,000 liquidated damages claim for which a petition is filed 30 days late will be mitigated to the amount provided by the guidelines plus an additional amount calculated by the new formula (30 days late x .001 = .03 x 100,000 = $3,000 added charge.)
The above went into effect January 9, 2013.
As discussed above, untimeliness can result into substantial monetary loss. Thus, it is best to consult with an attorney regarding the new guideline applications and exceptions.
You may call us at 347-512-9007 for more information on your international trade and customs issues.
Liquidation is the process through which Customs completes its review of an entry and finalizes its position as to the duties. You may ask, what about those duties paid at the time of entry? When duties are paid at the time of entry they are referred to as “deposits” because they are not considered Customs’ final assessment of duties owed. Generally, the entry remains “unliquidated” for a period of 314 days after the date of entry. During this interim period the entry information may be revised regarding country of origin, classification, valuation, etc. The 314th day marks liquidation. An entry is “deemed” liquidated by operation of law through Customs inaction within (1) year from the date of entry or reconciliation, unless extended.
An entry can be liquidated in one of three ways:
1. No change as to the way the goods were declared or duty deposited.
2. Customs may issue a bill of underpayment due to reasons such as change in classification or valuation.
3. Customs may issue a refund for overpayment.
Liquidation is important because it signifies the final calculation as to the payment of duties for a given entry. Further, the date of liquidation triggers the statutory limitations period where the importer may challenge Customs decision. For example, an importer who wishes to challenge Customs classification, the importer must file an administrative protest within 180 days from the date of liquidation. As a result, it is important for the importer to monitor liquidations.
Goods that are imported are released based on the filing of the entry and/or entry summary with Customs but before Customs may have determined whether or not the goods are admissible into the U.S. “Release” refers to Customs relinquishing physical control over the goods. However, Customs will not release the goods without evidence of an entry bond being filed. The bond offers protection to Customs in that the importer guarantees return of the goods to Customs custody if requested. Customs will order the return of goods for 1) failure to abide by the customs laws and regulations; 2) a need for examination or appraisal of the goods; 3) issues regarding country of origin marking.
As mentioned goods that are released may be subject to redelivery.
Customs may make the demand for redelivery
1. 30 days after release; or
2. 30 days after the end of a “conditional release period;”
3. or via conditional release periods pursuant to regulations for certain products.
Customs cannot make a demand for redelivery after liquidation is finalized.
Examples that create a conditional release period include: 1) Customs demand for a sample of the goods; 2) Customs request for information (CF28). The consequences for failure to comply with Customs conditional release may include substantial delays and a claim for liquidated damages.
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.