CBP Issues Interim Rule on the New Softwood Lumber Import Data/Declaration Requirements

(See below for scope of softwood lumber and softwood lumber products, including exclusions and exceptions. Note that separate entry and declaration requirements are listed for excepted single family home packages or kits.)

This interim rule is required by the Softwood Lumber Act of 2008 (SLA 2008), which was enacted as part of the 2008 Farm Bill (P.L. 110-246). Written comments on this interim rule are due by October 24, 2008.

(This interim rule is effective September 18, 2008; however, the SLA 2008 requires importers to submit the additional data elements beginning August 18, 2008. CBP has granted a 30-day grace period, until September 18, 2008, for enforcement of the SLA 2008 requirements. Subject importations made between August 18 and September 17 will not be rejected based on any SLA 2008 requirements, nor will they need to be amended or supplemented to provide the new data elements.)

Export Price, Estimated Export Charge, Importer Declaration

For each shipment of softwood lumber or softwood lumber products, unless excluded or excepted, that is entered or withdrawn from warehouse for consumption, in the U.S. customs territory, the importer must submit electronically the (1) export price, (2) estimated export charge, and (3) importer declaration.

(However, this information must be submitted to CBP on paper for softwood lumber and softwood lumber products for which a Certificate of Origin has been issued from Canada's Maritime Lumber Bureau.)

Export price. The export price, expressed in U.S. dollars, must be provided on the entry summary in the designated space provided on the CBP Form 7501. The export price (F.O.B. value) depends on the amount of processing, tenure rights, etc., as detailed in the interim rule.

If the F.O.B. value cannot be determined according to CBP's guidelines, the export price will be the market price for the identical softwood lumber or softwood lumber product sold in an arm's length transaction in the country of export at approximately the same time. (See interim rule for CBP's "order of preference" for determining market price.)

According to CBP's preamble, the export price is to be provided at the line level.

Estimated export charge. The estimated export charge (i.e., a tax, charge, or other fee), if any, to be collected by the country (including any political subdivision of the country) from which the softwood lumber or softwood lumber product was exported pursuant to an international agreement entered into by that country and the U.S. (to date only Canada) as calculated by applying the percentage determined and published by the Commerce Department to the export price.

According to CBP's preamble, the export price is to be provided at the line level.

Importer declaration. A softwood lumber declaration must be provided on the electronic entry summary by entering the letter code ''Y'' in the first space of the field designated for the estimated export charge data.

(However, this "Y" placement must be on the paper entry summary for softwood lumber and softwood lumber products for which a Certificate of Origin has been issued from Canada's Maritime Lumber Bureau.)

The letter code ''Y'' represents the importer's declaration to CBP that the importer has (1) made appropriate inquiry, including seeking appropriate documentation from the exporter and consulting the determinations published by the Commerce Department; and,

(2) to the best of the person's knowledge and belief: (i) the export price provided is determined in accordance with its definition, (ii) the export price provided is consistent with the export price provided on the export permit, if any, granted by the country of export; and (iii) the exporter has paid, or committed to pay, all export charges due in accordance with the volume, export price, and export charge rate or rates, if any, as calculated under an international agreement entered into by the country of export and the U.S. and consistent with the export charge determinations published by the Commerce Department.

Any substantiating documentation that supports an importer's softwood lumber declaration is subject to the recordkeeping provisions in 19 CFR 163.

CBP May Impose Penalties for Failure to Provide Required Data

CBP states in the preamble that failure to timely provide the required softwood lumber entry data will constitute a breach of the terms of the importer's bond under 19 CFR 113.62(b) and could give rise to a claim for liquidated damages under the bond equal to the value of the merchandise involved in the default.

Scope of SLA 2008

The interim rule's preamble states that SLA 2008 sets forth the scope of softwood lumber and softwood lumber products covered by the import data/declaration program. All softwood lumber and softwood lumber products classified under Harmonized Tariff Schedule subheadings 4407.10.00, 4409.10.10, 4409.10.20, or 4409.10.90 are subject to the importer declaration program established under section 803 including the following softwood lumber, flooring, and siding:

(1) Coniferous wood, sawn or chipped lengthwise, sliced or peeled, whether or not planed, sanded, or finger-jointed, of a thickness exceeding 6 millimeters;

(2) Coniferous wood siding (including strips and friezes for parquet flooring, not assembled) continuously shaped (tongued, grooved, rabbeted, chamfered, v-jointed, beaded, molded, rounded, or the like) along any of its edges or faces, whether or not planed, sanded, or finger-jointed;

(3) Other coniferous wood (including strips and friezes for parquet flooring, not assembled) continuously shaped (tongued, grooved, rabbeted, chamfered, v-jointed, beaded, molded, rounded, or the like) along any of its edges or faces (other than wood moldings and wood dowel rods) whether or not planed, sanded, or finger-jointed;

(4) Coniferous wood flooring (including strips and friezes for parquet flooring, not assembled) continuously shaped (tongued, grooved, rabbeted, chamfered, v-jointed, beaded, molded, rounded, or the like) along any of its edges or faces, whether or not planed, sanded, or finger-jointed; and

(5) Coniferous drilled and notched lumber and angle cut lumber.

In addition, any product classified under HTS 4409.10.05 that is continually shaped along its end or side edges, and unless excepted or excluded from the import data/declaration requirement, softwood lumber products that are stringers, radius-cut box-spring frame components, fence pickets, truss components, pallet components, and door and window frame parts classified under HTS 4418.90.46.95, 4421.90.70.40, or 4421.90.97.40 are covered by the SLA 2008.

Exclusions from scope of SLA 2008. The following products are not subject to the import data/declaration program established under SLA 2008 because they are defined as excluded from the program:

(1) Trusses and truss kits, properly classified under HTS 4418.90;

(2) I-joist beams;

(3) Assembled box-spring frames;

(4) Pallets and pallet kits, properly classified under HTS 4415.20;

(5) Garage doors;

(6) Edge-glued wood, properly classified under HTS 4421.90.97.40;

(7) Complete door frames;

(8) Complete window frames;

(9) Furniture;

(10) Articles brought into the U.S. temporarily and for which an exemption from duty is claimed under HTS Chapter 98, Subchapter XIII; and

(11) Household and personal effects.

Exceptions from scope of SLA 2008. Also, the following softwood lumber products are not subject to the import data/declaration program established under SLA 2008 because they are defined as excepted from the program (see below for entry and declaration requirements for single family home packages or kits):

(1) Stringers (pallet components used for runners), if the stringers have at least two notches on the side, positioned at equal distance from the center, to properly accommodate forklift blades; and are properly classified under HTS 4421.90.97.40;

(2) Box-spring frame kits, if the kits contain two wooden side rails; two wooden end (or top) rails; and varying numbers of wooden slats; and the side rails and the end rails are radius-cut at both ends. Box spring frame kits must be individually packaged, and contain the exact number of wooden components needed to make the box-spring frame described on the entry documents, with no further processing required. None of the components contained in the package may exceed one inch in actual thickness or 83 inches in length.

(3) Radius-cut box-spring frame components, not exceeding one inch in actual thickness or 83 inches in length, ready for assembly without further processing, if radius cuts are present on both ends of the boards and are substantial cuts so as to completely round one corner.

(4) Fence pickets requiring no further processing and properly classified under HTS 4421.90.70, one inch or less in actual thickness, up to eight inches wide, and six feet or less in length, and having finials or decorative cuttings that clearly identify them as fence pickets (in the case of dog-eared fence pickets, the corners of the boards shall be cut off so as to remove pieces of wood in the shape of isosceles right angle triangles with sides measuring 3/4 of an inch or more).

(5) Lumber originating in the U.S. that is exported to another country for minor processing and imported into the U.S. if the processing occurring in another country is limited to kiln drying, planing to create smooth-to-size board, and sanding; and the importer establishes to CBP's satisfaction upon entry that the lumber originated in the U.S.

(6) Any softwood lumber or softwood lumber product that originated in the U.S., if the importer, exporter, foreign processor, or original U.S. producer establishes to CBP's satisfaction upon entry that the softwood lumber entered and documented as originating in the U.S. was first produced in the U.S.; and

(7) Softwood lumber or softwood lumber products contained in a single family home package or kit, regardless of the classification under the HTS, if the importer declares that the following requirements have been met:

(i) The package or kit constitutes a full package of the number of wooden pieces specified in the plan, design, or blueprint necessary to produce a home of at least 700 square feet produced to a specified plan, design, or blueprint; (ii) the package or kit contains all necessary internal and external doors and windows, nails, screws, glue, subfloor, sheathing, beams, posts, and connectors; and if included in the purchase contract, the decking, trim, drywall, and roof shingles specified in the plan, design, or blueprint; (iii) prior to importation, the package or kit is sold to a U.S. retailer that sells complete home packages or kits pursuant to a valid purchase contract referencing the particular home design, plan, or blueprint, and the contract is signed by a customer not affiliated with the importer; and (iv) softwood lumber products entered as part of the package or kit, whether in a single entry or multiple entries on multiple days, are to be used solely for the construction of the single family home specified by the home design, plan, or blueprint matching the CBP import entry.

For each entry of softwood lumber products contained in a single family home package for which the importer declares that the four requirements under item (7) above are met, the importer must retain and make available to CBP upon request the following:

(1) A copy of the appropriate home design, plan, or blueprint matching the customs entry in the U.S.; (2) A purchase contract from a retailer of home kits or packages signed by a customer not affiliated with the importer; (3) A listing of all parts in the package or kit being entered into the U.S. that conforms to the home design, plan, or blueprint for which such parts are being imported; and (4) If a single contract involves multiple entries, an identification of all the items required to be listed under item (3) that are included in each individual shipment.

(Much of this information on single family home packages or kits is in 19 CFR 12.142(d), which also states that there is no requirement to present physical copies of the softwood lumber home packages and kits documentation to CBP at the time of filing the entry summary; however copies must be maintained in accordance with the applicable recordkeeping provisions set forth in 19 CFR Part 163..)

19 CFR 12.140 (SLA 2006) Requirements Still Apply to Canada

Imports of softwood lumber or softwood lumber products from Canada may also be subject to 19 CFR 12.140, which sets forth the entry requirements prescribed by the U.S.-Canada Softwood Lumber Agreement entered into on September 12, 2006 (SLA 2006).

Even those imports of softwood lumber and products that are exempt from the terms of 19 CFR 12.140 (Entry of softwood lumber products from Canada) remain subject to the softwood lumber entry requirements contained in new 19 CFR 12.142.

(See ITT's Online Archives or 08/21/08 news, 08082110, for BP summary of CBP granting a 30-day grace period for enforcing the softwood lumber import data reporting requirements and International Trade Administration's posting of export charges data for Canada.

See ITT's Online Archives or 08/19/08 news, 08081910, for BP summary of CBP's completion of ABI changes for reporting the data elements and announcement that CBP was to grant a 30-day grace period.

See ITT's Online Archives or 08/15/08 news, 08081507, for BP summary of CBP's announcement of August 18th as the effective date for the trade to report these data elements.

See ITT's Online Archives or 08/14/08 news, 08081410, for BP summary of details of the importer data/declaration, as enacted by the Farm Bill.)

- comments must be received on or before October 24, 2008

CBP contact - Joseph Rees (202) 863-6065

CBP interim rule (USCBP-2008-0052; Dec. 08-32, FR Pub 08/25/08) available at http://edocket.access.gpo.gov/2008/pdf/E8-19641.pdf