Wednesday, March 7, 2012
BLOG SITE HAS MOVED
Site has moved to my main website which has a blog tab: Go to http://customsesq.com/blog/
Monday, February 13, 2012
Intellectual Property and Imports
Enforcing intellectual property (ip) rights has become the hallmark area to which a majority of seizures stem from. It is vital that companies go through the procedures for registering their trademarks, copyrights, etc with Customs. There is a balancing act that must be accounted for, the rights of the owner protecting its exclusive property interest versus any user (whether innocent or not) who is subject to intelectual property infringement. However, if Customs is unaware as to the "marks" (i.e. they are not registered) goods may come in that violate a true owners ip rights. Thereafter it is too late; the damage has bee done, and consumer attitude towards a product becomes compromised.
Once an ip right is registered with Customs, all ports are given notice as to detain merchandise that is believed to be infringing. Customs will then give the ip holder with the opportunity to confirm or deny that a violation has occurred. Further, Customs will allow the potential infringer with the opportunity to remedy the situation by geting permission from the ip holder to import the goods. Absent this permission the violator will be fined and the merchandise subject to forfeiture actions. Further, the ip holder will know the identity of the violator who may sue them individually or keep tabs on their importing activity.
It is recommended that you be careful as to any product you import. Failure to take precautions will leave the importer subject to liability and severely tarnish your business.
Happy Importing :)
Once an ip right is registered with Customs, all ports are given notice as to detain merchandise that is believed to be infringing. Customs will then give the ip holder with the opportunity to confirm or deny that a violation has occurred. Further, Customs will allow the potential infringer with the opportunity to remedy the situation by geting permission from the ip holder to import the goods. Absent this permission the violator will be fined and the merchandise subject to forfeiture actions. Further, the ip holder will know the identity of the violator who may sue them individually or keep tabs on their importing activity.
It is recommended that you be careful as to any product you import. Failure to take precautions will leave the importer subject to liability and severely tarnish your business.
Happy Importing :)
Tuesday, February 7, 2012
Made in the good old USA
There are often substantial differences depending on the country regarding the determination as to the country of origin. A product that is produced for export in the United States may not be eligible for sale in the United States.
It is wonderful to see and hear of companies keeping production within the United States and bring jobs to Americans as opposed to having production done overseas. All the more so I give these companies credit because to use the term "Made in USA," on products requires strict adherence to the laws. Goods that are distributed in the United States are governed by United States law, and the rules instituted by the Federal Trade Commission ("FTC").
The FTC does not pre-approve claims for labeling products as "Made in USA". In order for a a product to be called "Made in USA," the product must be "all or virtually all" made in the U.S.
What does "all or virtually all" mean?
The FTC states that "All or virtually all" means that all significant parts and processing that go into the product must be of U.S. origin. That is, the product should contain no — or negligible — foreign content.
Therefore, be sure that you have a reasonable basis for complying with the "Made in USA" requirements and have all documentation necessary in case you are questioned.
Happy Importing :)
It is wonderful to see and hear of companies keeping production within the United States and bring jobs to Americans as opposed to having production done overseas. All the more so I give these companies credit because to use the term "Made in USA," on products requires strict adherence to the laws. Goods that are distributed in the United States are governed by United States law, and the rules instituted by the Federal Trade Commission ("FTC").
The FTC does not pre-approve claims for labeling products as "Made in USA". In order for a a product to be called "Made in USA," the product must be "all or virtually all" made in the U.S.
What does "all or virtually all" mean?
The FTC states that "All or virtually all" means that all significant parts and processing that go into the product must be of U.S. origin. That is, the product should contain no — or negligible — foreign content.
Therefore, be sure that you have a reasonable basis for complying with the "Made in USA" requirements and have all documentation necessary in case you are questioned.
Happy Importing :)
Tuesday, January 24, 2012
Marking Continued
As discussed in the last marking post the requirements for marking must be:
1. in a conspicuous place
2. legible
3. permanent
4. English name as to the country of origin
Let us explain these even further shall we.
Legible and Conspicuous
The person who ends up with the product the "Ultimate Purchaser," must be able to find the marking easily without straining him or her self. Some uses I have seen include, tags and stickers depending on the type of good.
What size font should I use? Depends on the type of product. For example, CBP found that lettering which was 1.7mm was the smallest font acceptable as a country of origin marking on a pen barrel according to HQ ruling 733940.
Ultimate Purchaser
Who is the ultimate purchaser?...that depends:
Article imported for retail - the end consumer will be the ultimate purchaser
Article imported as gift - the recipient will be the ultimate purchaser
Article imported for manufacturing - the manufacturer will be the ultimate purchaser if the article is going to be substantially transformed.
Permanence
The marking should be as permanent as the article permits it to be. It should should be sufficiently permanent so as to handle shipping and distribution until it finally reaches the ultimate purchaser.
English Name
Only the English name of the country of origin may be used unless Customs approves otherwise. Common forms for marking include "Made in..." "Product of..."
1. in a conspicuous place
2. legible
3. permanent
4. English name as to the country of origin
Let us explain these even further shall we.
Legible and Conspicuous
The person who ends up with the product the "Ultimate Purchaser," must be able to find the marking easily without straining him or her self. Some uses I have seen include, tags and stickers depending on the type of good.
What size font should I use? Depends on the type of product. For example, CBP found that lettering which was 1.7mm was the smallest font acceptable as a country of origin marking on a pen barrel according to HQ ruling 733940.
Ultimate Purchaser
Who is the ultimate purchaser?...that depends:
Article imported for retail - the end consumer will be the ultimate purchaser
Article imported as gift - the recipient will be the ultimate purchaser
Article imported for manufacturing - the manufacturer will be the ultimate purchaser if the article is going to be substantially transformed.
Permanence
The marking should be as permanent as the article permits it to be. It should should be sufficiently permanent so as to handle shipping and distribution until it finally reaches the ultimate purchaser.
English Name
Only the English name of the country of origin may be used unless Customs approves otherwise. Common forms for marking include "Made in..." "Product of..."
Tuesday, January 17, 2012
Marking
Generally, every imported or exported good is subject to marking regulations from at least one of the federal agencies. Marking requirements are enforced by physical inspection of the goods and also after release of the goods via a notice of redelivery and marking (CF4647). If Customs finds that marking is incorrect, they will delay the release of the goods until the marking is corrected.
Incorrect markings can result in delays and high expenses for remarking goods or may result in a liquidated damages claim against the importer for failing to redeliver the goods (example: when the goods were sold and shipped to buyers). Further, marking which is fraudulent may result in seizure and/or penalties.
Marking laws are not only U.S. Customs based. Customs enforces marking requirements for other agencies as well. For example the Federal Trade Commission requires clothing to have certain labels and information relating to fiber content, dry cleaning information, etc.
U.S. Customs marking requirements are as follows, the marking must be:
in a conspicuous place
legible
permanent
have English name of the country of origin.
Incorrect markings can result in delays and high expenses for remarking goods or may result in a liquidated damages claim against the importer for failing to redeliver the goods (example: when the goods were sold and shipped to buyers). Further, marking which is fraudulent may result in seizure and/or penalties.
Marking laws are not only U.S. Customs based. Customs enforces marking requirements for other agencies as well. For example the Federal Trade Commission requires clothing to have certain labels and information relating to fiber content, dry cleaning information, etc.
U.S. Customs marking requirements are as follows, the marking must be:
in a conspicuous place
legible
permanent
have English name of the country of origin.
Thursday, January 5, 2012
U.S. Customs Seized Your Money at the Airport - Learn More
Recently, more than a few clients had called me regarding the seizure of money by Customs at the airport and I figured I would share the information with my readers.
Can U.S. Customs seize your money at the airport?
Yes, if one failed to properly report all cash and cash equivalents transported into or out of the country. See Currency and Foreign Transaction Reporting Act (31 U.S.C. 5311, et seq.)
When do I have to declare my money to Customs?
Most people are uninformed of the reporting requirement however, "If you transport, attempt to transport, or cause to be transported (including by mail or other means) currrency or other monetary instruments in an aggregate amount exceeding $10,000 or its foreign equivalent) at one time from the United States to any foreign country, or into the United States from any foreign country, you must file a report with U.S. Customs and Border Protection." Currency Reporting
In other words: More than $10,000 you must declare whether entering or leaving the U.S.
What is the required form one has to fill out prior to transporting more than $10,000?
FINCEN Form 105
Does it cost anything to declare one's money over $10,000 to Customs?
No.
What happens if you do not declare your money over $10,000?
If Customs catches you, the money will most likely be taken from you. Thereafter, one will receive a seizure notice to which it is highly recommended to seek advice from an attorney experienced in these matters.
What is the reason for the government seizing the money under these circumstances?
In a nut shell the government believes that you are trying to evade paying taxes by transporting the currency without reporting it.
Happy Importing :)
customsesq.com
Can U.S. Customs seize your money at the airport?
Yes, if one failed to properly report all cash and cash equivalents transported into or out of the country. See Currency and Foreign Transaction Reporting Act (31 U.S.C. 5311, et seq.)
When do I have to declare my money to Customs?
Most people are uninformed of the reporting requirement however, "If you transport, attempt to transport, or cause to be transported (including by mail or other means) currrency or other monetary instruments in an aggregate amount exceeding $10,000 or its foreign equivalent) at one time from the United States to any foreign country, or into the United States from any foreign country, you must file a report with U.S. Customs and Border Protection." Currency Reporting
In other words: More than $10,000 you must declare whether entering or leaving the U.S.
What is the required form one has to fill out prior to transporting more than $10,000?
FINCEN Form 105
Does it cost anything to declare one's money over $10,000 to Customs?
No.
What happens if you do not declare your money over $10,000?
If Customs catches you, the money will most likely be taken from you. Thereafter, one will receive a seizure notice to which it is highly recommended to seek advice from an attorney experienced in these matters.
What is the reason for the government seizing the money under these circumstances?
In a nut shell the government believes that you are trying to evade paying taxes by transporting the currency without reporting it.
Happy Importing :)
customsesq.com
Tuesday, December 27, 2011
Substantial Transformation
A quick explanation of substantial transformation:
As mentioned in the earlier post - Country of Origin - substantial transformation is the degree to which processing of an article leads to a new article, with a different name, character, and use. In addition, Customs uses a second method known as the “tariff shift” i.e. change in tariff classification, which is also used to determine substantial transformation. As of now, there are no uniform rules that settle country of origin questions.
As a result, substantial transformation can be highly subjective and tend to be based on political considerations. There has been much litigation in this area and have case-specific interpretations. Further, determinations as to what is considered a substantial transformation change periodically. Thus, it would be wise to discuss the nature of the product with Customs prior to importation because you are not excused from exercising reasonable care when determining the proper country of origin for your goods.
As mentioned in the earlier post - Country of Origin - substantial transformation is the degree to which processing of an article leads to a new article, with a different name, character, and use. In addition, Customs uses a second method known as the “tariff shift” i.e. change in tariff classification, which is also used to determine substantial transformation. As of now, there are no uniform rules that settle country of origin questions.
As a result, substantial transformation can be highly subjective and tend to be based on political considerations. There has been much litigation in this area and have case-specific interpretations. Further, determinations as to what is considered a substantial transformation change periodically. Thus, it would be wise to discuss the nature of the product with Customs prior to importation because you are not excused from exercising reasonable care when determining the proper country of origin for your goods.
Wednesday, December 21, 2011
Country of Origin
What is the "Country of Origin?"
Generally, the country of origin refers to the country where the product was grown, produced, or manufactured. This is easily applied when the product is produced in one country using domestic materials. For example, a bicycle that is manufactured in India using components all made in India has the country of origin "Made in India."
However, today it is unrealistic to think that all materials, components, and labor all stem from the same country. Using the bicycle example, the wheels may be from USA, the bicycle frame from India, but the labor was done in China. In this example, it is not always clear as to where the country of origin is. In these situations the law created the concept of substantial transformation - it is a degree of processing requiring to change the country of origin (more on substantial transformation to be discussed next post).
An incorrect determination as to an imported product may lead to incorrect marking, incorrect duty, and incorrect documentation upon attempted entry. The consequences for these errors can be delays, additional costs, or seizures.
Happy Importing and Happy Holidays :)
www.customsesq.com
Generally, the country of origin refers to the country where the product was grown, produced, or manufactured. This is easily applied when the product is produced in one country using domestic materials. For example, a bicycle that is manufactured in India using components all made in India has the country of origin "Made in India."
However, today it is unrealistic to think that all materials, components, and labor all stem from the same country. Using the bicycle example, the wheels may be from USA, the bicycle frame from India, but the labor was done in China. In this example, it is not always clear as to where the country of origin is. In these situations the law created the concept of substantial transformation - it is a degree of processing requiring to change the country of origin (more on substantial transformation to be discussed next post).
An incorrect determination as to an imported product may lead to incorrect marking, incorrect duty, and incorrect documentation upon attempted entry. The consequences for these errors can be delays, additional costs, or seizures.
Happy Importing and Happy Holidays :)
www.customsesq.com
Tuesday, December 13, 2011
Countervailing duties - Protection against foreign government subsidies
What are countervailing duties?
Countervailing duties, similar to anti-dumping is a trade remedy to neutralize foreign economic threat. Specifically, countervailing duties are duties imposed by the U.S. government against tax reduction, grants, bounties, or any other subsidy provided by a foreign government on exported goods.
For example, in our country the government provides corn growers a tax credit whereby they pay them to use their corn for ethanol instead of food.
Who determines if a countervailing duty is applicable?
Same as in the anti-dumping matters, "Commerce determines whether the alleged . . . subsidizing is happening, and if so, the margin of dumping or amount of subsidy. The International Trade Commission determines whether the U.S. industry is materially injured or threatened with material injury by reason of the imports under investigation."
If the investigation of both agencies finds that goods are provided subsidies, countervailing duties will be implemented in addition to any duties they must pay under normal circumstances - enforcement of the anti-dumping duties via Customs and Border Protection. Countervailing duty is approximately equal to the amount of any subsidy that exists to which is creating harm in the U.S. market.
Happy Importing :)
customsesq.com
Countervailing duties, similar to anti-dumping is a trade remedy to neutralize foreign economic threat. Specifically, countervailing duties are duties imposed by the U.S. government against tax reduction, grants, bounties, or any other subsidy provided by a foreign government on exported goods.
For example, in our country the government provides corn growers a tax credit whereby they pay them to use their corn for ethanol instead of food.
Who determines if a countervailing duty is applicable?
Same as in the anti-dumping matters, "Commerce determines whether the alleged . . . subsidizing is happening, and if so, the margin of dumping or amount of subsidy. The International Trade Commission determines whether the U.S. industry is materially injured or threatened with material injury by reason of the imports under investigation."
If the investigation of both agencies finds that goods are provided subsidies, countervailing duties will be implemented in addition to any duties they must pay under normal circumstances - enforcement of the anti-dumping duties via Customs and Border Protection. Countervailing duty is approximately equal to the amount of any subsidy that exists to which is creating harm in the U.S. market.
Happy Importing :)
customsesq.com
Thursday, December 8, 2011
Anti-Dumping Duties - Protection from Lowball Pricing
What are anti-dumping duties? Duties imposed against goods from foreign countries that are sold significantly lower in their country of origin or comparable third country markets - destroying the U.S. market for that product in the process.
For example: Company X, an exporter from China is selling massive quantities of iPod's to U.S. resellers for the wholesale price of $50 a piece when the average price for an iPod sold at wholesale price in China is $200 a piece.
So what? a great deal is just that, a great deal, who determines whether it reaches the level of anti-dumping.
There are two players involved. The International Trade Commission (USITC) and the U.S. Department of Commerce, but each address a different issue.
"Commerce determines whether the alleged dumping . . . is happening, and if so, the margin of dumping. The USITC determines whether the U.S. industry is materially injured or threatened with material injury by reason of the imports under investigation."
If the investigation of both agencies finds anti-dumping, Company X from China will face anti-dumping duties in addition to any duties they must pay under normal circumstances - enforcement of the anti-dumping duties via Customs and Border Protection.
How do these agencies find out about the potential anti-dumping? Generally, the agencies are prompted to investigate after receiving word from a business harmed by the influx of cheap goods (e.g., your competitors!)
Happy Importing :)
www.customsesq.com
For example: Company X, an exporter from China is selling massive quantities of iPod's to U.S. resellers for the wholesale price of $50 a piece when the average price for an iPod sold at wholesale price in China is $200 a piece.
So what? a great deal is just that, a great deal, who determines whether it reaches the level of anti-dumping.
There are two players involved. The International Trade Commission (USITC) and the U.S. Department of Commerce, but each address a different issue.
"Commerce determines whether the alleged dumping . . . is happening, and if so, the margin of dumping. The USITC determines whether the U.S. industry is materially injured or threatened with material injury by reason of the imports under investigation."
If the investigation of both agencies finds anti-dumping, Company X from China will face anti-dumping duties in addition to any duties they must pay under normal circumstances - enforcement of the anti-dumping duties via Customs and Border Protection.
How do these agencies find out about the potential anti-dumping? Generally, the agencies are prompted to investigate after receiving word from a business harmed by the influx of cheap goods (e.g., your competitors!)
Happy Importing :)
www.customsesq.com
Monday, December 5, 2011
"Drawback" - What is it?
What is "Drawback"? A program that provides a refund for a majority of goods that are exported or destroyed after importation into the United States.
If the goods are exported or destroyed drawback permits Customs to refund 99% of the duties when the goods were imported into the U.S. The only difficult part about drawback is that you must maintain precise compliance with the drawback rules and regulations - the government is not going to just return money willy nilly. The importer must fill out the drawback application before exportation.
There are (4) types of drawback:
1. Merchandise not conforming to sample or specifications - Imported goods that were not solicited not conform to the samples or specifications at the time it was imported. Must be done within 3 years from the time the merchandise was released from Customs.
2. Unused merchandise drawback - Imported goods that have not been "used" (speak to an expert about whether your particular product qualifies as used). Must be done within 3 years from the time the merchandise was released from Customs.
3. Manufacturing drawback - Imported goods used to manufacture new goods. Manufacturer's Drawback requires that a "ruling" be approved by Customs so that Customs is aware of how the product is being manufactured.
4. Substitution for drawback purposes - Like manufacturing drawback, but you may substitute components of exported products with "commercially interchangeable" (again speak to an expert as to whether you qualify) components. For example: You import Company A screws into the U.S. but instead use Company B screws to manufacture your product. Company A screws and Company B screws are found to be commercially interchangeable, in other words industry equivalents. Must be done before the close of the 3-year period beginning on the date of importation of the imported merchandise
Happy Importing :)
If the goods are exported or destroyed drawback permits Customs to refund 99% of the duties when the goods were imported into the U.S. The only difficult part about drawback is that you must maintain precise compliance with the drawback rules and regulations - the government is not going to just return money willy nilly. The importer must fill out the drawback application before exportation.
There are (4) types of drawback:
1. Merchandise not conforming to sample or specifications - Imported goods that were not solicited not conform to the samples or specifications at the time it was imported. Must be done within 3 years from the time the merchandise was released from Customs.
2. Unused merchandise drawback - Imported goods that have not been "used" (speak to an expert about whether your particular product qualifies as used). Must be done within 3 years from the time the merchandise was released from Customs.
3. Manufacturing drawback - Imported goods used to manufacture new goods. Manufacturer's Drawback requires that a "ruling" be approved by Customs so that Customs is aware of how the product is being manufactured.
4. Substitution for drawback purposes - Like manufacturing drawback, but you may substitute components of exported products with "commercially interchangeable" (again speak to an expert as to whether you qualify) components. For example: You import Company A screws into the U.S. but instead use Company B screws to manufacture your product. Company A screws and Company B screws are found to be commercially interchangeable, in other words industry equivalents. Must be done before the close of the 3-year period beginning on the date of importation of the imported merchandise
Happy Importing :)
Tuesday, November 29, 2011
Programs to Reduce your Duties
The United States offers a number of special duty reduction programs for products that originate from certain countries. Each of the programs requires that the good originate from beneficiary country. If the good was imported into the beneficiary country then the material must be "transformed" by a process or manufactured into a product of that country. Transformation is where things get a bit gray, contact an expert to determine if and how a good can be transformed.
Value Requirements:
The amount of value to be added consists of:
1. the materials produced in the beneficiary country
2. the direct costs of processing operations performed in the beneficiary country
Documents Required:
Most duty reduction programs require a certificate of origin and basis for qualifying under the program. It must be filed with each entry of goods into the U.S.
Some examples of Duty Free Reduction Programs:
The U.S.-Australia Free Trade Agreement
The U.S.—Israel Free Trade Area Agreement
he North American Free Trade Agreement
Happy Importing :)
Value Requirements:
The amount of value to be added consists of:
1. the materials produced in the beneficiary country
2. the direct costs of processing operations performed in the beneficiary country
Documents Required:
Most duty reduction programs require a certificate of origin and basis for qualifying under the program. It must be filed with each entry of goods into the U.S.
Some examples of Duty Free Reduction Programs:
The U.S.-Australia Free Trade Agreement
The U.S.—Israel Free Trade Area Agreement
he North American Free Trade Agreement
Happy Importing :)
Friday, November 18, 2011
New Rule and Duty Rate Governing Textile-Bottomed Footwear! DECEMBER 3, 2011
THE FOLLOWING WILL BE IN EFFECT DECEMBER 3, 2011.
Ever since an intelligent business man designed footwear with a textile outer sole (i.e. textile bottom) that footwear was subject to duty rates approximately 25% - 35% lower than equivalent footwear with a rubber or plastic outer sole - what a way to utilize Tariff Engineering!
President Obama signed Presidential Proclamation 8742 that was published in the Federal Register on November 3, 2011. What the Proclamation did was add a U.S. Note 5 to the footwear Chapter in the tariff schedule ("Chapter 64").
The new note, Note 5 states “For the purposes of determining the constituent material of the outer sole pursuant to note 4(b) of this chapter, no account shall be taken of textile materials that do not possess the characteristics usually required for normal use of an outer sole, including durability and strength.” Consequently, based on this note duty rates for certain footwear with the textile bottom may be affected.
What does "normal" mean?
How does an importer determine "durability and strength"?
As always it is in the importers best interest to consult an expert and/or have your goods tested during the production phase to evaluate the best model for the lowest duty rates.
Happy Importing :)
Ever since an intelligent business man designed footwear with a textile outer sole (i.e. textile bottom) that footwear was subject to duty rates approximately 25% - 35% lower than equivalent footwear with a rubber or plastic outer sole - what a way to utilize Tariff Engineering!
President Obama signed Presidential Proclamation 8742 that was published in the Federal Register on November 3, 2011. What the Proclamation did was add a U.S. Note 5 to the footwear Chapter in the tariff schedule ("Chapter 64").
The new note, Note 5 states “For the purposes of determining the constituent material of the outer sole pursuant to note 4(b) of this chapter, no account shall be taken of textile materials that do not possess the characteristics usually required for normal use of an outer sole, including durability and strength.” Consequently, based on this note duty rates for certain footwear with the textile bottom may be affected.
What does "normal" mean?
How does an importer determine "durability and strength"?
As always it is in the importers best interest to consult an expert and/or have your goods tested during the production phase to evaluate the best model for the lowest duty rates.
Happy Importing :)
Thursday, November 17, 2011
The Foreign Trade Zone
What is a Foreign Trade Zone?
A United States Foreign Trade Zone (FTZ) is a geographic location within the United States but is considered to be outside of Customs territory. Similar to a Bonded Warehouse, (inside Customs territory) many prerequisites for entry such as quotas are not to be adhered to. Additionally, goods may be transferred to a foreign trade zone with less formality than the bonded warehouse.
What are its advantages?
1. Both Domestic as well as foreign goods may be stored in a foreign trade zone for an UNLIMITED amount of time (for a bonded warehouse only 5 years).
2. Good may be stored, manipulated, processed, and manufactured.
3. Domestic merchandise can be taken from the FTZ duty free. Customs duties are only due on foreign goods when removed from the FTZ and entered into the domestic market (unlike if exported - no duty requirements).
4. Ability to get "PRIVILEGED" status for goods - Dutiabilility based on the condition of the goods and the duty rate when the goods entered the FTZ even though they may have been changed by the time they are withdrawn from the FTZ. Meaning that you can alter the goods in the FTZ whereby they would have been subject to a higher duty rate. However, because they were placed in an FTZ, you the importer only pays the duty rate for the goods when entered in the FTZ.
5. Ability to get "NON-PRIVILEGED" status for goods - Dutiable based upon when the goods were withdrawn from the FTZ. An importer can manufacture goods within the FTZ whereby foreign materials are used to lower the duty rate.
A United States Foreign Trade Zone (FTZ) is a geographic location within the United States but is considered to be outside of Customs territory. Similar to a Bonded Warehouse, (inside Customs territory) many prerequisites for entry such as quotas are not to be adhered to. Additionally, goods may be transferred to a foreign trade zone with less formality than the bonded warehouse.
What are its advantages?
1. Both Domestic as well as foreign goods may be stored in a foreign trade zone for an UNLIMITED amount of time (for a bonded warehouse only 5 years).
2. Good may be stored, manipulated, processed, and manufactured.
3. Domestic merchandise can be taken from the FTZ duty free. Customs duties are only due on foreign goods when removed from the FTZ and entered into the domestic market (unlike if exported - no duty requirements).
4. Ability to get "PRIVILEGED" status for goods - Dutiabilility based on the condition of the goods and the duty rate when the goods entered the FTZ even though they may have been changed by the time they are withdrawn from the FTZ. Meaning that you can alter the goods in the FTZ whereby they would have been subject to a higher duty rate. However, because they were placed in an FTZ, you the importer only pays the duty rate for the goods when entered in the FTZ.
5. Ability to get "NON-PRIVILEGED" status for goods - Dutiable based upon when the goods were withdrawn from the FTZ. An importer can manufacture goods within the FTZ whereby foreign materials are used to lower the duty rate.
Monday, November 14, 2011
The Bonded Warehouse
What is a bonded warehouse?
Customs bonded warehouses are licensed warehouses that satisfy strict security regulations. It is within bonded warehouses that goods may enter the United States but are not considered "cleared" through customs. Merchandise in a bonded warehouse is considered still to be in Customs custody and duties do not have to be paid.
What are its advantages?
1. Customs duties do not have to be withdrawn until goods are released from the warehouse.
2. Duty rates that are applied are based on the time the goods are released not the time that they enter into the bonded warehouse.
3. No duty is paid if the goods are exported (so no need for drawback claim - to be discussed in another blog entry).
4. Merchandise can remain in a bonded warehouse for up to 5 years from the date of importation.
5. Manipulation of goods within warehouse is LIMITED to: cleaning, sorting, packing, repacking which are not considered manufacturing.
Happy Importing :)
Customs bonded warehouses are licensed warehouses that satisfy strict security regulations. It is within bonded warehouses that goods may enter the United States but are not considered "cleared" through customs. Merchandise in a bonded warehouse is considered still to be in Customs custody and duties do not have to be paid.
What are its advantages?
1. Customs duties do not have to be withdrawn until goods are released from the warehouse.
2. Duty rates that are applied are based on the time the goods are released not the time that they enter into the bonded warehouse.
3. No duty is paid if the goods are exported (so no need for drawback claim - to be discussed in another blog entry).
4. Merchandise can remain in a bonded warehouse for up to 5 years from the date of importation.
5. Manipulation of goods within warehouse is LIMITED to: cleaning, sorting, packing, repacking which are not considered manufacturing.
Happy Importing :)
Monday, November 7, 2011
My Goods Can Be Described In So Many Ways!
For Tariff Classification purposes, there are circumstances in which more than one word can describe an item. What do you do?! Well the law provides under the "General Rules of Interpretation" 2(b) that consideration is to be given to every heading that identifies an item by name, language or description. Okay, that is great but my goods can be described in more than one way.
General Rules of Interpretation 3 comes along and simplifies the identification of the goods.
Relative Specificity More SPECIFIC language is preferred over general language, thus the heading which more precisely describes the good will be used and the others will be ignored.
Composite Goods and Goods Sold in Retail Sets when a good is a mixture or a composite of different material, components, or sets Customs again uses the concept of Essential Character. In these cases, the question becomes which part of the retail set is causing you to purchase the item? To qualify as a retail set 1) there must be two or more articles with different classifications 2)a single commercial purpose and 3) packaged as ready for sale.
More Than One Essential Character What happens if the good has more than one essential character? Customs Answer: Look to the feature of the good that appears in the Tariff Schedule the last numerically.
Good Cannot be found in the Tariff Self Explanatory. Answer, General Rule of Interpretation 4 says pretend like the goods have changed to one in the tariff to which it is most akin.
Packing and Packaging Whether certain types of packaging are treated as part of the merchandise or must be classified separately. Fitted cases for example, camera cases, musical cases, gun cases, specifically designed for the particular product and have long term use are to be classified with the merchandise for which they are imported. However, if you import these separately then they would need there own tariff number.
General Rules of Interpretation 3 comes along and simplifies the identification of the goods.
Relative Specificity More SPECIFIC language is preferred over general language, thus the heading which more precisely describes the good will be used and the others will be ignored.
Composite Goods and Goods Sold in Retail Sets when a good is a mixture or a composite of different material, components, or sets Customs again uses the concept of Essential Character. In these cases, the question becomes which part of the retail set is causing you to purchase the item? To qualify as a retail set 1) there must be two or more articles with different classifications 2)a single commercial purpose and 3) packaged as ready for sale.
More Than One Essential Character What happens if the good has more than one essential character? Customs Answer: Look to the feature of the good that appears in the Tariff Schedule the last numerically.
Good Cannot be found in the Tariff Self Explanatory. Answer, General Rule of Interpretation 4 says pretend like the goods have changed to one in the tariff to which it is most akin.
Packing and Packaging Whether certain types of packaging are treated as part of the merchandise or must be classified separately. Fitted cases for example, camera cases, musical cases, gun cases, specifically designed for the particular product and have long term use are to be classified with the merchandise for which they are imported. However, if you import these separately then they would need there own tariff number.
Wednesday, November 2, 2011
How Many Pieces Make a Whole?
Many goods are unassembled or incomplete when they arrive at the port. The U.S. Harmonized Tariff Schedule for classification predominantly addresses complete and assembled products. However, the law provides via the "General Rules of Interpretation" for unassembled or incomplete goods by allowing certain goods to be classified as though they are complete and assembled.
The rule qualifies these goods by its ESSENTIAL CHARACTER. Essential character is not defined in the law but all depends on the specifications of the product. Can a person objectively recognize the product for what it is when incomplete? While Customs may have their own opinion it is within the importers best interest to convince them of the goods essential character for beneficial duty treatment.
The rule qualifies these goods by its ESSENTIAL CHARACTER. Essential character is not defined in the law but all depends on the specifications of the product. Can a person objectively recognize the product for what it is when incomplete? While Customs may have their own opinion it is within the importers best interest to convince them of the goods essential character for beneficial duty treatment.
Thursday, October 27, 2011
How Much Duty Do I Have To Pay?
CLASSIFICATION is the process by which goods are categorized for determining payment of duty as well as for statistical purposes. The United States is apart of the Harmonized System of Classification which functions under an International and a Domestic (Country Specific) level. On the international level all those who are parties to the Harmonized system will classify the product the same. However, at the domestic level each country has its own detailed descriptions and rates of duty one has to pay.
There are many laws and rules regarding interpreting the Harmonized Tariff Schedule of the United States (HTSUS). For every product there is a place for classifying it and if your good comes from outer space there are ways to squeeze your item some place in the tariff. I would hate to describe to you the tedious nature of columns, headings, and subheadings involved in tariff (if you do e-mail me). Thus, it is important to have a customs broker handling these transactions and counsel assisting on difficult matters if they should arise. Incorrectly classifying a product can result in improper duty liability, failure to meet the free trade opportunities if applicable, or major penalties. Be Cautious and choose your customs agents wisely.
Happy Importing :)
There are many laws and rules regarding interpreting the Harmonized Tariff Schedule of the United States (HTSUS). For every product there is a place for classifying it and if your good comes from outer space there are ways to squeeze your item some place in the tariff. I would hate to describe to you the tedious nature of columns, headings, and subheadings involved in tariff (if you do e-mail me). Thus, it is important to have a customs broker handling these transactions and counsel assisting on difficult matters if they should arise. Incorrectly classifying a product can result in improper duty liability, failure to meet the free trade opportunities if applicable, or major penalties. Be Cautious and choose your customs agents wisely.
Happy Importing :)
Monday, October 24, 2011
What is the "Value" of my goods?
The duty, taxes, and Customs' fees due on an imported article are its percentage of its DUTIABLE VALUE. The dutiable value is determined by the process of appraisement. Generally, appraisement is calculated by determining the transaction value of the goods, i.e. the price actually paid or payable for the goods when sold for export into the United States. Usually, the the price paid or payable is based on the F.O.B price at the port of export and shipping it onto the carrier.
Improper valuation of goods affects the duty liability. If the value of the goods is in excess of its proper value, the importer will pay a greater amount than necessary. Conversely, under declaring the value of goods may result in costly penalties. Our firm assists importers in appraising the value of goods as well as preparing and submitting binding rulings to Customs for calculating the correct value of goods.
The following costs are included in the price actually paid or payable:
1. Selling Commissions - Any commission paid to the seller's agent (anyone who is related to , controlled, by, works for, or on behalf of the manufacturer or seller).
2. Assists - Anything that the buyer provides to the manufacturer and/or seller directly or indirectly either free of charge or for less than the arms length price for which he would have charged the buyer.
3. Royalties or License fees - Fees that the buyer must pay directly or indirectly as a condition of sale for export to the United States.
4. Packing Costs - Any costs incurred by the buyer for labor and materials to make them ready for exportation.
5. Proceeds of subsequent sale - Generally, if subsequent to the importation an importer pays or is required to pay more for the imported goods than was declared at the time of entry, those additional payments are part of the price paid for the goods.
Happy Importing :)
Improper valuation of goods affects the duty liability. If the value of the goods is in excess of its proper value, the importer will pay a greater amount than necessary. Conversely, under declaring the value of goods may result in costly penalties. Our firm assists importers in appraising the value of goods as well as preparing and submitting binding rulings to Customs for calculating the correct value of goods.
The following costs are included in the price actually paid or payable:
1. Selling Commissions - Any commission paid to the seller's agent (anyone who is related to , controlled, by, works for, or on behalf of the manufacturer or seller).
2. Assists - Anything that the buyer provides to the manufacturer and/or seller directly or indirectly either free of charge or for less than the arms length price for which he would have charged the buyer.
3. Royalties or License fees - Fees that the buyer must pay directly or indirectly as a condition of sale for export to the United States.
4. Packing Costs - Any costs incurred by the buyer for labor and materials to make them ready for exportation.
5. Proceeds of subsequent sale - Generally, if subsequent to the importation an importer pays or is required to pay more for the imported goods than was declared at the time of entry, those additional payments are part of the price paid for the goods.
Happy Importing :)
Thursday, October 6, 2011
Documents you should know!
Providing documentation to U.S. Customs and Border Protection ("CBP") dictates the basis for all CBP decisions. Without complete and accurate information results in delay and added expenses. What are the documents usually involved in international trade?
The Invoice:
1. Provides the documents evidencing the commercial transaction.
2. Government agencies such as CBP, Food and Drug Administration, Consumer Product Safety Commission use the invoice to determine importing compliance.
3. Special information may be required accompanying the invoice. For example, Footwear requires the following:
Footwear, classifiable in headings 6401 through 6405 of the HTSUS-
(1) Manufacturer’s style number.
(2) Importer’s style and/or stock number.
(3) Percent by area of external surface area of upper (excluding
reinforcements and accessories) which is:
Leather a._________%
Composition Leather b.__________%
Rubber and/or plastics. c. __________%
Textile materials d.__________%
Other (give separate percent for each type of material) e.__________%
f. ___________%
Certificates of Origin:
The certificates of origin are declarations as to where the imported goods are originating from.
1. Important for establishing preferential treatment for rates of duty if they come from a certain country e.g., Israel, Canada, and Mexico.
2. For certain programs if the certificate of origin is missing the goods may be seized.
Documents of Transportation and Title:
Bills of Lading (Water and Ground Shipping) and Air Waybills (Air Shipping) are the documents under which goods are transported.
1. They are contracts! Thus, they list the terms and liabilities for goods that are damaged during shipment.
2. They evidence the right to delivery or possession of goods.
3. They evidence the right to make a CBP entry into the U.S.
Export Licenses
Export Licenses provide that government authorizations to export certain types of products to a specific country. Highly technological goods such as electronics or military products generally require a validated license.
The Invoice:
1. Provides the documents evidencing the commercial transaction.
2. Government agencies such as CBP, Food and Drug Administration, Consumer Product Safety Commission use the invoice to determine importing compliance.
3. Special information may be required accompanying the invoice. For example, Footwear requires the following:
Footwear, classifiable in headings 6401 through 6405 of the HTSUS-
(1) Manufacturer’s style number.
(2) Importer’s style and/or stock number.
(3) Percent by area of external surface area of upper (excluding
reinforcements and accessories) which is:
Leather a._________%
Composition Leather b.__________%
Rubber and/or plastics. c. __________%
Textile materials d.__________%
Other (give separate percent for each type of material) e.__________%
f. ___________%
Certificates of Origin:
The certificates of origin are declarations as to where the imported goods are originating from.
1. Important for establishing preferential treatment for rates of duty if they come from a certain country e.g., Israel, Canada, and Mexico.
2. For certain programs if the certificate of origin is missing the goods may be seized.
Documents of Transportation and Title:
Bills of Lading (Water and Ground Shipping) and Air Waybills (Air Shipping) are the documents under which goods are transported.
1. They are contracts! Thus, they list the terms and liabilities for goods that are damaged during shipment.
2. They evidence the right to delivery or possession of goods.
3. They evidence the right to make a CBP entry into the U.S.
Export Licenses
Export Licenses provide that government authorizations to export certain types of products to a specific country. Highly technological goods such as electronics or military products generally require a validated license.
Subscribe to:
Posts (Atom)