The US Government is requesting that the World Customs Organization (WCO) establish an international BASE CODE set of intended use codes. Governments often need to understand the intended use of an imported product to effectively review products for admission at borders. Although there is the Harmonized Commodity Description and Coding System can be used to [...]
The US Government is requesting that the World Customs Organization (WCO) establish an international BASE CODE set of intended use codes. Governments often need to understand the intended use of an imported product to effectively review products for admission at borders. Although there is the Harmonized Commodity Description and Coding System can be used to denote the static characteristics of a product, there is no standardized global set of intended use codes.
The US has proposed just such a system based on a standardized list of codes developed by the ITDS Product Information Committee (PIC). These codes were developed for adoption in the US, and is coordinating with the Canadian Border Services Agencies on behalf of the Canadian Other Government Departments under the auspices of the US Beyond the Border Single Window Initiative the adoption of these intended use codes as a regional standard. This code set is offered as the starting point for the development of an international standard by WCO.
Description of code set
A standardized intended use code set must meet two objectives: 1) ensure that each consignment can be codified with a high-level intended use code that is globally applicable; and 2) allow relevant specific use cases to be identified in accordance with national regulations. To accomplish both purposes, a two-part intended use code value is proposed, similar in concept to the Harmonized Tariff Schedule. The first part of the intended use code would be a globally managed base code that denotes the high-level intended use for that imported product. The second part of the code would be a nationally managed sub code that uses a three-digit ISO country code prefix to identify the nation that defined the sub code. The use of sub codes by national governments would be optional.
Read the full article on the Harmonized System for Intended Use Codes.
Bryce Hanson is a Search Engine Marketing Administrator for CUSTOMS Info | Global Data Mining and is a frequent blogger on their International Trade Industry Blog. Please feel free to reach out to him on Twitter, Google+, or Linkedin.
The U.S. Department of Justice (“DOJ”) recently announced that a Japan-based company, Toyo Ink SC Holdings Co. Ltd., and various affiliated entities, have agreed to pay $45 million plus interest to settle allegations that they knowingly failed to pay antidumping and countervailing duties. DOJ alleged that these companies, between 2002 and 2010, knowingly misrepresented or [...]
The U.S. Department of Justice (“DOJ”) recently announced that a Japan-based company, Toyo Ink SC Holdings Co. Ltd., and various affiliated entities, have agreed to pay $45 million plus interest to settle allegations that they knowingly failed to pay antidumping and countervailing duties. DOJ alleged that these companies, between 2002 and 2010, knowingly misrepresented or caused to be misrepresented the country of origin on documents presented to U.S. Customs and Border Protection (“Customs”). These misrepresentations allegedly allowed the companies to avoid paying duties, and particularly countervailing and antidumping duties, on certain imported products.
This case represents much more than just an importer allegedly evading duty payments as it has many different elements to it, one being substantial transformation. The products at issue were colorant carbazole violet pigment number 23 (CVP-23). While the companies represented the products’ country of origin to be either Japan or Mexico, to which antidumping or countervailing duties would not apply, the products actually originated either in India or China, to which antidumping or countervailing duties would apply. The CVP-23 products went through a finishing process either in Japan or Mexico before being imported into the U.S., but the government maintained that those processes were not sufficient to substantially transform the products into products of Japan or Mexico. Consequently, the government challenged the companies’ claims that the products were not subject to antidumping or countervailing duties. If nothing else, this case underscores the value of making honest and accurate country-of-origin claims based on substantial transformation. But this case raises important additional concerns for importers. Continue reading »
The CBSA manages compliance with the Tariff Classification, Tariff Treatment, Valuation, and Origin programs using the following two post-release verification processes: 1) Random Verifications; and 2) Targeted Priorities. Random Verifications Random verifications are designed to measure compliance rates and revenue loss and the results may be used for many purposes, including: • Risk assessment; • [...]
The CBSA manages compliance with the Tariff Classification, Tariff Treatment, Valuation, and Origin programs using the following two post-release verification processes: 1) Random Verifications; and 2) Targeted Priorities.
Random Verifications
Random verifications are designed to measure compliance rates and revenue loss and the results may be used for many purposes, including:
• Risk assessment;
• Establishing client service activities;
• Revenue assessment; and
• Promoting voluntary compliance.
Targeted Priorities
Targeted priorities are determined through a risk-based, evergreen process, meaning that new targets are added throughout the fiscal year. Targeted priorities may also be carried over from previous years. The current targeted priorities are:
Tariff Classification HS Number(s)
1.Pet Toys | 9503.00.90
2.Steel T-Posts | 7308.40.00.90
3.Fresh Cut Flowers | 0603.19.00
4.Safety Headgear | 6506.10.10.90
5.Wheel Rims and Spokes | 8714.92.00
6.Other Food Preparations | 2106.90.95
7.Dextrins and Other Modified Starches | 3505.10.90
8.Tariff Item 9948.00.00 (Televisions and Other Consumer Goods) | 9948.00.00
9. Coconut Milk | 1106.30.00; 2008.19.90 and 2106.90.10.20 Continue reading »
In the current global economic downturn, many companies have been hit hard with falling orders and rising costs – a double whammy so to speak. For the immediate short term, there does not appear to be an end in sight to the bad economic news. Many companies are looking to reduce costs, but often neglect [...]
In the current global economic downturn, many companies have been hit hard with falling orders and rising costs – a double whammy so to speak. For the immediate short term, there does not appear to be an end in sight to the bad economic news. Many companies are looking to reduce costs, but often neglect to review their international trade activities. There are certainly savings to be made here.
Customs duty and other import-related taxes can be manageable costs, if you assess your operations to determine the different elements. Many companies don’t know the true extent of their import duties and taxes, simply because they are often hidden in the Cost of Goods Sold account. For some companies, the true cost may be higher than the corporate tax cost, particularly during a downturn when profits are reduced.
You can start by looking at your cross border transactions for the past year, which will give you a good snapshot of your international trade activities and costs. Next, you can take proactive steps to determine if these costs can be legitimately reduced, and how best to accomplish it.
Here are a few key areas you may consider reviewing:
Many companies do not take full advantage of available bilateral and multilateral preferential trade agreements, due to concerns about liability for errors, complex qualification rules, increased compliance burden and risks, or just a lack of awareness of the opportunity. A well-structured claim for preferential tariff treatment can provide huge cost savings, particularly as the ASEAN rules have been amended to make qualification more straightforward and potentially simpler.
Click here to read the complete article.
Source:
Michael Fung | PricewaterhouseCoopers WMS Pte Ltd.
Business World Online
Having focused on either imports or exports throughout our careers, many professionals ask – are the two really so different? In this unique webinar, Sandler, Travis & Rosenberg will compare and contrast the similarities and differences in handling everyday import and export issues. In particular, the presenter will provide examples of how you can apply and [...]
Having focused on either imports or exports throughout our careers, many professionals ask – are the two really so different? In this unique webinar, Sandler, Travis & Rosenberg will compare and contrast the similarities and differences in handling everyday import and export issues. In particular, the presenter will provide examples of how you can apply and leverage your experience and knowledge in certain areas to those where you may be less familiar.
Key topics to be addressed:
• The missions and priorities of import and export enforcement
• The exporter/forwarder versus importer/broker relationship
• Identifying critical regulatory agencies and admissibility/control requirements
• Dealing with restricted parties, countries and transactions
• Definitions of import/export and importer/exporter of record
• Transaction documents for imports and exports
• Classification, valuation and preference claims for imports versus exports
• Making post import/export corrections
• Addressing penalties, seizures and disclosures
• Compliance and security programs
• Question & Answer Forum
Speaker:
Lenny Feldman Esq. Managing Member, Miami Office, Sandler, Travis & Rosenberg, P.A. Lenny has innovatively and effectively advised hundreds of importers and exporters to simultaneously develop and adopt best practices and compliance programs in the import and export context. Prior to joining the Firm, Lenny served nine years as a senior attorney with the U.S. Customs Service responsible for issuing national rulings, decisions and directives relating to import and export compliance and enforcement and served as the Chief Compliance Officer of a software development company created to automate global import and export regulatory requirements.
Date: Thursday, August 2, 2012
Time: 1:00PM-2:30PM
Cost: $250 USD
Note: This seminar has been certified by NCBFAA Educational Institute for Certified Customs Specialist (CCS) continuing education credits. CCS credits: 2.
While it might not seem urgent to a company just entering the import business, incorrectly classifying goods brought into Canada can compound as the stream of imports grows and, if not spotted in time, end up costing them in overpaid duty they can’t recover or penalties for underpaid duty. Even seasoned importers don’t always pay [...]
While it might not seem urgent to a company just entering the import business, incorrectly classifying goods brought into Canada can compound as the stream of imports grows and, if not spotted in time, end up costing them in overpaid duty they can’t recover or penalties for underpaid duty.
Even seasoned importers don’t always pay enough attention to their imports’ classifications. For example, a poor translation into English cost one company that was importing gears when it incorrectly identified them as grease dispensers on the customs documents. The mistake went unnoticed for several years and resulted in a retroactive assessment of more than $50,000 in duty plus interest. Continue reading »
Companies of all sizes in all industries struggle with trade compliance programs and the trade compliance role. There are many reasons why a compliance program is controversial. Here are the top 10 reasons why a trade compliance program is truly an unnecessary waste of resources: 1. Trade compliance is a cost center with no financial [...]
Companies of all sizes in all industries struggle with trade compliance programs and the trade compliance role. There are many reasons why a compliance program is controversial. Here are the top 10 reasons why a trade compliance program is truly an unnecessary waste of resources:
1. Trade compliance is a cost center with no financial benefit to the company.
Except for avoiding audits, penalties and border delays. Except for avoiding duty under special programs such as the North American Free Trade Agreement, the Central America Free Trade Agreement, the Generalized System of Preferences. Except for tariff engineering, broker management, supplier management.
2. Classification is easy.
Anyone can do it — just pick the lowest duty rate and let Customs tell us if we’re wrong. Until Customs catches you and sends you a bill for the duty (plus interest) for all entries made over the last five years. And don’t forget the penalty that’s sure to follow.
3. Shipments to and from Canada and Mexico are not really imports/exports.
Tell that to U.S. Customs. Canada and Mexico may be our biggest trading partners, but they have their own customs services to deal with. And, oh yeah, those folks at Commerce may require an export license.
Read the complete article here.
Source: Rick Miller | Tyler Search Consultants — Originally printed in The Journal of Commerce.
Regardless as to what your product or service may be, it is your responsibility as a U.S. exporter to screen your customers, including distributors. A new free export compliance tool called “Trade Wizards” from automated trade management solution provider Amber Road, Inc. allows U.S. exporters to establish whether a company or individual is present on [...]
Regardless as to what your product or service may be, it is your responsibility as a U.S. exporter to screen your customers, including distributors.
A new free export compliance tool called “Trade Wizards” from automated trade management solution provider Amber Road, Inc. allows U.S. exporters to establish whether a company or individual is present on any official restricted party or transshipment list, banned from import of export transactions, sanctioned by a government for performing illegal acts or a forced child labor or convict labor violation.
In addition to trade party screening, Trade Wizards also allows users to classify a product’s HS or ECN using number and Legal text search capabilities and to calculate the landed cost for a transaction including duties, taxes (excise, value-added, provincial, etc.) customs fees, port charges, and all other import taxes.
To learn more through a series of instructional videos an/or register for your free account, click here.
Attorney, author and blogger Larry Friedman recently highlighted what he deems to be the top five most common ways importers trip up when it comes to determining the proper tariff classification of their goods. The advice is perfectly sound and none of the information provided will surprise experienced traders or compliance professionals (not that we [...]
Attorney, author and blogger Larry Friedman recently highlighted what he deems to be the top five most common ways importers trip up when it comes to determining the proper tariff classification of their goods.
The advice is perfectly sound and none of the information provided will surprise experienced traders or compliance professionals (not that we can’t all benefit from being reminded about the essentials from time to time), but seeing as humour is an exceptionally rare commodity when it comes to this kind of subject matter, Friedman’s effort deserves special commendation for its lighthearted tone and the witty graphics selected to accompany his various points. The archetypal computer geek circa 1980-something used to illustrate cautionary point #2 “Relying on Technical Experts” is especially memorable…
More seriously, Friedman concludes his exercise with the following six-step process to more reliably achieve the right classification result and ensure due diligence:
1) Gather the facts about your product;
2) Review the section and chapter titles to narrow your search;
3) Identify all the headings that describe your product;
4) Apply the section and chapter notes to eliminate the incorrect headings;
5) Search for rulings, court decisions, and Explanatory Notes to finalize your analysis; and
6) Document what you did for later reference and as proof of reasonable care.
By the way, although written from a U.S. Customs perspective, the same basic principles described in the article apply equally to Canada Customs.
In the United States, a ruling may be requested under Part 177 of the CBP Regulations (19 C.F.R. Part 177) and in Canada, advance rulings concerning the tariff classification of goods may be obtained from the CBSA under paragraph 43.1(1)(c) of the Customs Act. The key advantage of obtaining an advance ruling from Customs is [...]
In the United States, a ruling may be requested under Part 177 of the CBP Regulations (19 C.F.R. Part 177) and in Canada, advance rulings concerning the tariff classification of goods may be obtained from the CBSA under paragraph 43.1(1)(c) of the Customs Act.
The key advantage of obtaining an advance ruling from Customs is that it provides certainty to the importer as to how the specific goods in question are to be classified. This not only firmly establishes the applicable duty rate for purposes of determining landed cost, but also facilitates the various documentation requirements for clearing goods at the border.
So why might you NOT want to get a binding ruling? Seattle-based compliance expert Jim Dickeson addressed this seemingly counterintuitive question in a recent article entitled The Ruling that Binds.
The foremost reason Dickeson offers is the possibility that the classification ruling you perhaps hoped to obtain may not wind up being that which Customs arrives at. After assessing your ruling request if, for whatever reason, Customs mistakenly determines that your merchandise should be classified under another tariff item that happens to attract a higher rate of duty than was initially anticipated, you will now be legally obligated to pay the higher rate of duty whenever the goods are imported until such time as the dispute is eventually resolved (presumably in your favour) through a lengthy and potentially expensive re-determination and refund claims process.
As an alternative approach to the conventional gambit, Dickeson recommends that importers undertake everything needed to properly make a ruling request with the intent of being absolutely sure that Customs fully understands the product in question and gives you the correct classification; e.g., providing product literature, detailed technical information, references to other rulings to support your position, and even samples if necessary. However, at the point you get all of that information together, Dickeson suggests you STOP right there and not submit the request… but instead, just file the information away in a safe place.
Dickeson’s reasoning is that in compiling all the information needed to make a ruling request you have already more than adequately fulfilled your precautionary “reasonable care” standard and, in the event Customs ever challenges the tariff classification of your product at some later point in time, it should be sufficient to prove your case.
Of course, there is an element of risk involved in either approach and we are not necessarily in complete agreement with Dickeson’s opinion on the matter. It is though perhaps something that may be worth bearing in mind when considering whether or not to obtain a binding ruling from Customs in future.
The international trade specialists at Sandler, Travis & Rosenberg, P.A. have posted a highly relevant article on their Customs Classification Blog concerning how tariff classification affects duty-free treatment under free trade agreements. With the entry into force of new free trade agreements (FTA) with South Korea, Colombia and Panama just around the corner — well, [...]
The international trade specialists at Sandler, Travis & Rosenberg, P.A. have posted a highly relevant article on their Customs Classification Blog concerning how tariff classification affects duty-free treatment under free trade agreements.
With the entry into force of new free trade agreements (FTA) with South Korea, Colombia and Panama just around the corner — well, there are some long corridors before we get to the corner, but they are coming — it’s a good time consider the important role tariff classification plays in benefiting from an FTA.
ST&R’a Deborah B. Stern, Esq. points out that classification dictates whether a product is eligible for such treatment under the terms of the FTA and may also determine whether that product qualifies for that treatment if it is made with foreign inputs.
Tariff classification dictates both whether a product is eligible for preferential treatment under the agreement and may determine whether that product qualifies for preferential treatment if it’s made with foreign inputs. So even if it is manufactured in an FTA party country, it may not be entitled to preferential duty treatment.
Click here to read the complete article.
An expert in the field offers lessons to the hardwood industry coming from the recent Gibson Guitar raids and the concerns being raised about the Lacey Act… The Fish and Wildlife Service (FWS) claims in its search warrant affidavit that Gibson 1) improperly filed Customs declarations, and 2) imported Indian rosewood guitar backs and ebony [...]
An expert in the field offers lessons to the hardwood industry coming from the recent Gibson Guitar raids and the concerns being raised about the Lacey Act…
The Fish and Wildlife Service (FWS) claims in its search warrant affidavit that Gibson 1) improperly filed Customs declarations, and 2) imported Indian rosewood guitar backs and ebony fretboard blanks under the wrong Harmonized Tariff Schedule (HS) codes. These shipments allegedly left India as “finished parts for musical instruments” (HS 9902) and arrived in the U.S. classified as “veneer” (HS 4408), but should have been classified as “lumber” (HS 4407) all along. Indian law allows the exportation of HS 9902 items of rosewood and ebony, but not lumber (HS 4407) of the same species, unless sawn from imported logs.
Under the Lacey Act, the burden falls on the importer of record to ensure that everyone in the supply chain classifies the products correctly. In this case, Gibson is on the hook for misclassifications by the shipper, the broker, and the receiving company—whether or not Gibson had any role in or knowledge of those misclassifications. Not knowing is no excuse.
With the Lacey Act amendment in place, a “knowingly” misclassified shipment could result in jail time and fines of up to $250,000. “Unknowing” misclassifications carry less significant penalties, but what importer or manufacturer can afford to defend a position of ignorance of proper codes? As such, proper HS classification ought to be of primary concern to everyone in the trade from this day forward. Improper codes may be the “broken taillight” that gives officials probable cause to pull companies over and search for more serious violations.
Click here to read more alarming lessons that every forest products importer, manufacturer and distributor need to learn from these events.
The Canadian Customs Tariff will undergo a major overall in 2012 as a result of international changes to the Harmonized System (HS) at the World Customs Organization (WCO), as well as simplification initiatives by both the Department of Finance and Statistics Canada. HS 2012 includes 220 sets of accepted amendments, divided as follows: • 98 [...]
The Canadian Customs Tariff will undergo a major overall in 2012 as a result of international changes to the Harmonized System (HS) at the World Customs Organization (WCO), as well as simplification initiatives by both the Department of Finance and Statistics Canada.
HS 2012 includes 220 sets of accepted amendments, divided as follows:
• 98 relate to the agricultural sector;
• 27 to the chemical sector;
• 9 to the paper sector;
• 14 to the textile sector;
• 5 to the base metal sector;
• 30 to the machinery sector; and
• an additional 37 that apply to a variety of other sectors.
Environmental and social issues of global concern are the major feature of these amendments, particularly the use of the HS as the standard for classifying and coding goods of specific importance to food security and the early warning data system of the Food and Agriculture Organization of the United Nations (FAO). HS 2012 amendments also feature new subheadings for specific chemicals controlled under the Rotterdam Convention and ozone-depleting substances controlled under the Montreal Protocol.
The Order Amending the Schedule to the Customs Tariff (Harmonized System Conversion, 2012), SOR/2011-191 is available in the October 12 edition of the Canada Gazette (refer to the Supplement at the end of the document).
Further changes to simplify the Customs Tariff, including the Schedule, were introduced into Parliament by the Minister of Finance on October 4th as Bill C-13. The proposed legislation upon approval will reduce the number of eight-digit tariff items by just over 1,100 and eliminate numerous end-use provisions. Details are available in Parts 3 and 4 as well as Schedules 1 to 3 of the Bill.
Statistics Canada has also been engaged in a simplification project that will remove approximately 7,000 ten-digit classification numbers from the Schedule to the Customs Tariff.
As changes are made at the eight-digit tariff item level by the Department of Finance, Statistics Canada must make the corresponding changes at the ten-digit classification number level. Statistics Canada has already undertaken this exercise with respect to the WCO-related changes to the HS. However, it is still working on the changes resulting from the proposed amendments contained in Bill C-13. The Canada Border Services Agency anticipates publishing all of the changes to the Schedule to the Customs Tariff with concordance tables by December 1, 2011 at the latest.
Depending on the types of products you export and import, you may need to change their classifications. Re-classification could potentially affect any associated licenses, authorizations and inspections. It may also affect how those products are treated under any preferential trade agreements, since reclassification may involve rules of origin.
(James A. Cooke – DC Velocity) When trade documentation threatened to become a major chokepoint, engine maker Tognum America turned to software to rev up the process As any importer or exporter can attest, trade documentation is a necessary evil of doing business on the global stage. Tognum America is no exception. The U.S. subsidiary [...]
(James A. Cooke – DC Velocity)
When trade documentation threatened to become a major chokepoint, engine maker Tognum America turned to software to rev up the process
As any importer or exporter can attest, trade documentation is a necessary evil of doing business on the global stage. Tognum America is no exception. The U.S. subsidiary of Germany’s Tognum Group, Tognum America (formerly MTU Detroit Diesel) is doing a brisk business in propulsion systems and engines for ships, rail equipment, and defense vehicles, bringing in parts from abroad and selling the finished product both here and overseas. As a global trader, it expects to spend time and money to ensure it’s in compliance with regulatory requirements.
Nonetheless, things were getting out of hand by 2009. Even by the standards of a company that’s heavily involved in cross-border trade, Tognum America found itself devoting an inordinate amount of time and money to trade documentation. [...]
What made the task particularly burdensome for Tognum America was the wide array of items it had to classify. Many of its engines are custom built for a specific application or customer, which means the company often has to bring in parts it has never used before. Each time that happens, it has to start from scratch to determine the item’s classification from a list of more than 17,000 unique 10-digit numbers.
Although Tognum America often consulted with its customs broker on classification matters, it couldn’t just hand off that responsibility to an outside party. Nor did it want to, says Christin Gleissner, the company’s manager of logistics and customs compliance. “We work closely with our broker, but we decide what’s the tariff code,” she says. “The importer of record carries the responsibility to classify the good accurately according to the Harmonized Tariff Schedule.” [...] Continue reading »
