CBP Sets Nov. 25 Enforcement Date for Entering IITs w/ Residue; Will Begin 'Residue Entry' Pilot

CBP First Rule Entry Required in 2009; Four-Year Enforcement Delay

The move ends a four-year delay in enforcement of the ruling that first required entry on Instruments of International Traffic that contain residues. In 2009, CBP ruled in HQ H026715 that Instruments of International Traffic (IITs) containing residue are subject to entry requirements for the IIT’s contents (see 09072140). Previously, the IITs were allowed to be entered as empty. Given the magnitude of the change, CBP delayed enforcement (see 09091405).

CBP looked set to require entries on container residue when it announced a July 2011 enforcement date (see 11022519). But the agency delayed enforcement once again because of problems with electronic filing of low-value Section 321 in the rail and ocean environments (see 11050513). With the deployment of ACE M1 in early 2012, CBP fixed its problems with Section 321 entries in rail and ocean modes. And after gathering input on residual cargo entry, CBP developed a “residual entry” that would lessen the burden on carriers and importers (13041005). CBP is now announcing it will enforce entry requirements on residue in IITs beginning Nov. 25, and will allow the new “residue entry” type also beginning on that date.

Thresholds at 7% for Rail, 5% Air, 3% for Ocean and Truck

CBP is setting the threshold for “residue” at 7% of container capacity for rail cargo, 5% for air cargo, 3% for ocean and truck cargo. This may be measured by weight or value, depending on the commodity. CBP has said it based the thresholds on industry standards for minimum residues in containers for freight charges (see 13041005).

Consumption Entry Required if Cargo Exceeds Threshold

For containers with cargo that exceeds that threshold (i.e., >7% for rail, >5% for air, and >3% for ocean and truck), the cargo must be manifested and entered for consumption. Entry requirements and payment of duties, taxes, and fees will apply.

Cargo Under Threshold Eligible for Residue Entry

But CBP will consider containers with cargo that falls at or under those thresholds (i.e., ≤7% for rail, ≤5% for air, and ≤3% for ocean and truck) to contain “residual cargo.” The container must be manifested and entered as containing residue. If the residual cargo has no commercial value (i.e., the container will either be cleaned with the residue destroyed, or refilled for export), then CBP will allow the importer to file a “residue entry,” as follows:

• CBP will accept the declaration of the carrier, or the importer of record if other than the carrier, that the residue has no commercial value ($0) and the country of origin is the country from which the container is arriving
• The type of residue must be described at the 6-digit Harmonized Tariff Schedule level
• A residue entry will be required that says the residual cargo has no commercial value

Electronic filing required. CBP said all data must be submitted electronically.

Released as low value, but carriers can make entry. If a residue entry is filed, CBP will release the cargo under the low value mechanism, so no merchandise processing fee (MPF) will be due. Under the residue test, normal CBP regulations on low value shipments won’t apply. Carriers will have the right to make a residue entry, and the entry can be made off the manifest with no further document requirements if the container is at or below the thresholds for residue cargo.

If a residue entry is not filed, the importer will have to enter the cargo under normal entry mechanisms (i.e., formal or informal consumption entry).

Recordkeeping. A manifest record indicating a residue entry has been filed will meet recordkeeping requirements for residue entries, CBP said. Records must be maintained pursuant to 19 CFR Part 163.

Residue Entry Procedures

In its notice announcing the beginning of the test, CBP outlined the following system procedures for residue entries in each environment (rail, truck, sea, and truck):

ACE System Procedures for Rail Residue (≤7%)

• Carrier sends Bill of Lading (BOL) message (X12 309) with Bill Type 23 indicated.
• When Bill Type 23 is used, the carrier must also submit value (0 to 200) and country of origin information. Additionally, a reference identifier, ZF, has been created specifically for this type of shipment.
• Bills of Type 23 with the ZF qualifier will be identified by the system to the CBP officer reviewing the manifest for review and mass posting of release.
• Release Notifications (1C) will be sent electronically to the carrier and Secondary Notify Parties as currently enabled in the system.

System Procedures for Truck Residue (≤3%)

• In the Manifest Bill of Lading details the carrier would use either type code ‘13’ for Section 321 release without the Food and Drug Administration-Bio Terrorism Act (FDA-BTA) considerations, or type code ‘35’ for 321 release with FDA-BTA considerations.
• If the carrier uses the ACE Portal for submission, these identifiers are all drop down values in the manifest creation screens.
• If either type code is used, the carrier must supply ‘Customs Shipment Value’ and ‘country of origin’.
• Value submitted must currently be greater than 0 and less than $200. CBP is working to change this edit to accept 0 but will establish a value of $1 as an acceptable alternative to 0 if not available.
• CBP will review at arrival and post release.
• Release Notifications (1C) will be sent electronically to the carrier and Secondary Notify Parties as currently enabled in the system.

ACE System Procedures for Ocean Residue (≤3%)

• Regular Bill submitted electronically via EDI process at the master or simple bill level.
• Qualifiers for IIT with Residue (TBD) should be the first line of text in the description field, which will include value and country of origin information.
• A request for clearance should be made to the CBP port of arrival via existing port procedures for release request notifications.
• CBP will manually post release in ACE.
• Release Notifications (1C) will be sent electronically to the carrier and Secondary Notify Parties as currently enabled in the system.

System Procedures for Air Residue (≤5%)

For standard air freight:

• A Regular Bill should be submitted electronically via EDI process.
• Qualifiers for IIT with Residue (TBD) should be the first line of text in the description field, which will include the value and country of origin information.
• A request for clearance should be made to the CBP port of arrival via existing port procedures for release request notifications.
• CBP will manually post release in Air Manifest (AMS).
• Release Notifications (1C) will be sent electronically to the carrier and Secondary Notify Parties as currently enabled in the system.

For express air shipments:

• A request using entry type 86 can be filed in Air AMS Express codes.
• If entry type 86, then value and country of origin are required fields.
• System identifies shipment to CBP users at arrival port.
• Release Notifications are sent electronically as enabled in the system.

CBP said Air Cargo Advance Screening (ACAS) filings will not be required for containers with residue in the air environment.