CBP Final Rule Raises Fee for Express Carriers, Etc. (Part II)

This is Part II of a two-part series of summaries of this final rule and highlights the comments CBP received on its proposed rule to raise the fees for such processing. See ITT's Online Archives or 06/12/07 news, 07061200, for Part I.

Highlights of the comments received on CBP's proposed rule include (partial list):

Only formal entries valued at $2,000 or less are subject to both MPF and fee. Several commenters interpreted section 2004(f) of the Miscellaneous Trade and Technical Corrections Act of 2004 as authorizing the assessment of both the merchandise processing fee and the reimbursable fee for each air waybill or bill of lading, for formal entries valued at $2,000 or less.

CBP agreed with commenters and clarified the final rule to state that only formal entries valued at $2,000 or less are subject to both the merchandise processing fee and the reimbursable fee assessed per individual air waybill or bill of lading.

Fees paid on "lowest level" air waybill/bill of lading. A commenter questioned CBP's requirement that the fee be paid on the ''lowest level'' air waybill or bill of lading contained in a consolidated shipment rather than on the master bill that represents the actual shipping document.

CBP responded that 19 USC 58c(b)(9)(A)(II)(ii) states that the fee is assessed ''per individual air waybill or bill of lading.'' CBP believes the use of the word ''individual'' indicates that applying the fee to a bill at the lowest level is appropriate, as opposed to applying the fee to a master bill that covers numerous and separate individual bills.

1592 penalties for underpayment or failure to pay. Certain commenters viewed the assessment of 19 USC 1592 penalties for the underpayment or failure to pay reimbursable fees, as prescribed in 19 CFR 24.23(b)(4)(iv), as inappropriate because such penalties apply to fraud, gross negligence and negligence.

CBP believes it may be appropriate to apply these penalties in cases where a false and material statement or omission is made by negligence, gross negligence or fraud regarding the number of air waybills subject to the fee but acknowledged that clerical errors or mistakes of fact are not violations unless they are part of negligent conduct.

Provision of Section 1592 penalties and liquidated damages. Commenters expressed the opinion that assessment of 19 USC 1592 penalties and liquidated damages constitutes double penalization.

CBP disagreed, stating that 19 USC 1592 penalties apply to false and material statements or omissions made by fraud, gross negligence and negligence, while liquidated damages result under 19 CFR 113.64(a) for the breach of bond conditions, i.e., for breach of contract. Thus, liquidated damages are the result of a breach of a contract and are not penalties and there is no ''double penalization."

Means to protest/appeal decisions. Commenters stated that CBP needs to establish a means to protest and appeal decisions regarding the underpayment or overpayment of reimbursable fees.

CBP believes there are adequate administrative review processes available to challenge decisions regarding the underpayment or overpayment of the fee. Initially, the Express Consignment operator calculates the number of individual air waybills or bill of ladings processed for the required calendar quarter and remits a payment equal to that number multiplied by the set fee. 19 CFR 24.23(b)(4)(iii)(A) contains a mechanism for challenging an overpayment by providing up to one year to request a refund for overpayment. In addition, if CBP assesses a charge or exaction, the assessment is subject to an administrative challenge through the filing of a protest under 19 USC 1514.

Surplus funds. Commenters suggested that CBP address whether there were periods when CBP's collections exceeded costs and stated that any such surplus funds should be carried over from one period to another.

CBP stated that any surplus funds would be maintained in the user fee account for providing services to express consignment operations until the funds were expended, but noted that it has not had a surplus of funds since the enactment of the Trade Act of 2002 and the implementation of the provisions of 19 USC 58c.

(See ITT's Online Archives or 08/03/06, 08/07/06, and 08/17/06 news, 06080305, 06080720, and 06081720, for Parts I, II, and III of BP's summary of the proposed rule.)

CBP Contact - Michael Jackson (202) 344-1196

CBP final rule (CBP Dec. 07-29; USCBP-2006-0015, FR Pub 06/08/07) available athttp://a257.g.akamaitech.net/7/257/2422/01jan20071800/edocket.access.gpo.gov/2007/pdf/E7-11071.pdf