LEGL4900 Chapter 12

entry process

customs authorities determine whether any import prohibitions or restrictions apply to the goods, whether the goods are subject to any other laws or regulations affecting their entry, and whether any tariffs or import duties are due

essential character

If two or more headings or subheadings each describe only certain materials or components in composite goods, the article must be classified under the heading that describes the material or components blended together

manufacturing drawback

a refund of duties and taxes paid on merchandise that is imported, subjected to manufacture or production, and then exported within five years. designed to encourage US manufacturers to export

production assists

goods, services, or intellectual property furnished by the importer to a foreign producer, free or at a reduced price, for use in producing merchandise for import and sale in the US

civil customs fraud

a violation exists where there is clear and convincing evidence that the importer knowingly made a materially false statement or omission while entering or attempting to enter goods into the US

rule of relative specificity

if an article can be classified under two or more headings or subheadings, it must be classified under the one that most specifically-most narrowly-describes the article with the greatest degree of accuracy and certainty

informed compliance

the "softer" mechanisms designed to place the burden of voluntary compliance on importers

enforced compliance

the active investigation of customs violations and the prosecution of violators

formal entry

the administrative process required to import goods into the customs territory of a country

importing

the entering of goods into the customs territory of a country or the receipt of services from a foreign provider

liquidation

the final computation and assessment of the applicable duty on entered goods by customs

ultimate purchaser

the last person in the US who receives an article in the form in which it was imported

dutiable status

the legal status of imported goods at the time of entry for purposes of compliance with the tariff and customs laws

principal use

the ordinary use to which articles of the same class and kind as those being imported are usually put and which is greater than any other single use of the article

transaction value

the price actually paid or payable for goods when sold for export plus packaging, commission, royalty, and assistance costs

General Rules of Interpretation (GRIs)

the six international rules designed to help you understand and properly apply the Harmonized System categories. The additional U.S. rules of interpretation apply to 8-digit U.S. subheadings.

preferential rules of origin

those applicable to goods traded within a free trade area or customs union, goods imported from countries that receive special tariff treatment pursuant to a trade agreement, or goods imported under a trade preference program for developing countries

notice of adjustment

when Customs at the port of entry determines that additional duties are owed, this is sent to the importer

prior disclosure

when importers voluntarily report their own possible violations of the customs laws

rejected merchandise drawback

allowed for imported merchandise that was shipped without consent, is defective, or does not conform to specifications or to samples. merchandise returned to US customs within 3 years and either destroyed or reexported

same condition drawback

A drawback of duties paid on imported goods that are re-exported in the "same condition" as they were imported, provided they were not significantly altered.

commercial invoice

A statement prepared by the seller of merchandise addressed to the buyer showing a detailed listing and description of merchandise sold, including prices and terms. required for all shipments intended for sale or commercial use in the US

customs broker

An authorized agent, licensed by federal law, to act for and on behalf of importers in making entry of goods.

global supply chain

an integrated international network of logistics, communications, finance, and trade relationships designed to take a product from inception through production and delivery to customers

port of entry

any place when customs or immigration authorities permit the entry of goods or people

composite goods

articles made of different materials or components

compound tariff rate

combination of both ad valorem and specific rates

tariff engineering

process of modifying or engineering a product prior to importation, or importing it at an earlier stage of manufacturing, for the purposes of obtaining a lower rate of duty

binding ruling

represents the official position of Customs with respect to the specific transaction for which it was issued (importers may request this prior to shipment if there is possible disagreement on how an item will be classifies)

specific tariff rate

specified dollar amount per piece, or unit of weight or measure

tariff shift rule

states that the country of origin is the last country in which all 'inputs' into the finished article underwent a required change in tariff classification

dutiable value

Customs value of goods entered into any country must be reported by the importer-of-record to national customs authorities at time of entry

substitution drawback

Duties paid on imported goods may be received by a U.S. firm that imports goods and then exports other goods of the "same kind and quality "

substantial transformation

Occurs when the original article loses its identity as such and is transformed into a new and different article of commerce having "a new name, character, or use" different from that of the original item

drawback

a refund of duties already paid on imported goods when the goods are reexported or destroyed

domestic/regional value content test

Requires some minimum percentage of the value of materials and direct processing operations be performed in a country in order for it to have "originated" there

ad valorem tariff rate

Tariff based on a percentage of the value of the articles imported

country of origin

The country from which an imported article is said to have originated according to specific rules, known as rules of origin

non-preferential rules of origin

Those applicable to imports of DEVELOPED countries that will receive normal tariff treatment.

contract manufacturing

a business arrangement in which the production of goods is contracted or "outsourced" by one firm to a manufacturing firm, often overseas

tariff schedule

a listing of specific items, coded numerically and described by name or use

rules of origin

legal rules used to determine the country of origin of imported products

foreign trade zone

legally defined sites - warehouses and manufacturing facilities - operated pursuant to legislation and under government license, that are legally "outside" the customs territory of the country they are in

informal entry

personal and commercial shipments valued at $2500 or less may be cleared through informal entry