CBP Issues Q&A on its Feb 3 - 20, 2007 Grace Period for the WCO HTS Changes

The Q&A supplements and/or explains CBP's earlier notice on this grace period.

(See ITT's Online Archives or 01/18/07 news, 07011805, for BP summary of CBPs notice on this grace period. Note that BP's summary of CBP's notice was supplemented by information obtained from government sources over the phone. If any discrepancies are found between CBP's notice or BP's summary of it, and the Q&A, CBP's Q&A should be followed. )

Below is largely a transcription of CBP's Q&A document:

When will the WCO HTS updates take effect?

CBP states that the WCO HTS updates will be in effect on February 3, 2007.

When will the "Grace Period" be in effect?

CBP and sources states that the grace period will begin February 3, 2007 and end on February 20, 2007¹.

Can the ten-day filing requirement for filing entries with CBP be extended during the "Grace Period"?

No. CBP explains that the entry summary with all duty, taxes, and fees must be filed within ten working days after the time of entry (19 CFR 142.12).

Will both the 2006 and 2007 tariff numbers be accepted through ABI, i.e., will there be two versions of the ABI tariff file available during the "Grace Period"?

Only one version of the HTS will be accepted, and that is the tariff in effect at the time of transmission. The WCO 2007 HTS updates will be in effect and in the system on February 3, 2007.

Will the CBP ABI tariff file be updated and available for prefiled entries (air or sea imports filed up to 5 days before arrival) with arrival dates February 3, 2007 and after?

The tariff in effect on the day of ABI transmission must be used. However, immediate delivery (I.D.) procedures (19 CFR 142 Subpart C-Special Permit for Immediate Delivery) may be used for shipments released January 22, 2007 through February 2, 2007 to take advantage of the 2007 WCO HTS tariff. (See ITT's Online Archives or 01/17/06 news, 07011705, for BP summary of the "blanket" authorization for I.D. procedures to take advantage of WCO HTS changes early.)

Please outline in detail how rejected entry summaries are to be handled. Will the normal time limits for entry summary rejections still apply?

Corrections to entries rejected by an Import Specialist or Entry Specialist either manually or electronically by remote location filing (RLF) and returned to the filers are required to be corrected within 48 hours. This is in accordance with the current entry summary acceptance and rejection policy.

However, if an entry is rejected for misclassification attributed to the 2007 HTS, additional time will be allowed for correction if needed. A written explanation will be required justifying the additional time.

Are instructions given to the CBP Field Offices available to the trade?

Yes. Guidance on the implementation of the 2007 WCO can be found on CBP Web site at http://www.cbp.gov/xp/cgov/import/communications_to_trade/world_customs_org/.

When will the 2007 HTS tariff records be available in ABI/ACS for maintenance?

The Automated Commercial System (ACS) changes will be input, tested and available in ABI on February 3, 2007.

How does the "Grace Period" work, does it mean that both 2006 and 2007 data will be available simultaneously - or just that the filers have an extra 17 days to respond?

The "Grace Period" applies to classification errors related to tariff classification made by the WCO. These could be either the late filing of a rejected entry for correction or a post entry correction for entries filed during the "Grace Period" that were later found to have classification errors.

ACS will only have "active" HTS numbers available in the reference files for processing entry/entry summary transmissions. For example, if a HTS declared on the transmission of an entry summary on February 10, 2007 is for an HTS that expired on February 2, 2007, the transmission will be rejected by ABI/ACS back to the filer without acceptance. Therefore, the trade must utilize an active HTS number at the time of transmission.

If upon subsequent review of the entry summary by the Import or Entry Specialist CBP determines that the HTS successfully used on the February 10th ABI transmission is not the correct HTS and consequently issues either a penalty or formally rejects the entry summary package, this situation may be mitigated/resolved by using this grace period. This may also be the case if these same errors are discovered during an audit.

Can you give examples of actions that fall under the guidelines of the 17-day "Grace Period"?

CBP state that it realizes the trade may need additional time to conduct research and make the adjustments necessary for proper compliance. For example, if an importer has a substantial quantity of articles (such as machinery parts) that are affected by the 2007 HTS and will require additional time to make classification corrections, this could warrant the use of the "Grace Period".

Can you explain what is meant by - "Filers will be responsible for substantiating any additional time needed within the grace period for the late filling of entries and for making post-entry corrections"?

If an error is made related to merchandise classified under any of the WCO HTS updates, justification for post entry amendments or for the return of rejected entries beyond the 48-hour time limit must be submitted in writing to take advantage of the "Grace Period". The written explanation must explain the nexus between the correction or the need for additional time in refilling corrected entries and the WCO HTS classification.

How will we handle NAFTA blanket Certificates of Origin after the WCO HTS on February 3, 2007?

The North American Free Trade Agreement (NAFTA) product specific rules are being amended to reflect the 2007 HTS. However, they are not likely to be implemented on February 3, 2007 with 2007 HTS. However, because the amended rules do not include any substantive [changes], but are merely re-stated using HS 2007 nomenclature, Certificates of Origin completed using the 2006 rules of origin will be valid for 2007. Certificates of Origin completed prior to implementation will need to continue to reference the 2006 HTS numbers because the product specific rules are directly related to those HTS numbers.

To avoid confusion, it may be helpful for exporters to include both the old and new HTS on the Certificate of Origin. Once the new rules are issued, CBP may request that an amended Certificate of Origin be presented if there is no reference to the 2007 HTS number.

Note that this only pertains to importations into the U.S. and not procedures for importing into Mexico and Canada.

What happens if the trade has not completed their internal classification by February 20, 2007?

On February 3, 2007, ABI software updates should be completed and on February 20, 2007 it is expected that importers will have completed all internal classification updates. If importers experience difficulties in completing their internal classification updates timely, they should work with CBP through their assigned Account Manager.

Will classification changes eventually have to be made to those entries filed January 1, 2007 through February 2, 2007 or will they remain as entered?

The WCO HTS updates are not retroactive. They will be in effect on February 3, 2007.

¹ Though this one Q&A says the end date is February 21, 2006, another question in the Q&A, CBP's earlier notice, and CBP sources state that the end date is February 20, 2007.

CBP's Q&A on the WCO conversion grace period (dated 01/18/07), available at http://www.cbp.gov/xp/cgov/import/communications_to_trade/world_customs_org/harmonized_tariff_qa.xml