CBP Revises Guidance on Subheading for US Goods Returned
CBP provided some more detail on the requirements of importers and brokers for duty-free claims under subheading 9801.00.10, in a recent CSMS message. The update revises a guidance issued by CBP in 2017 on legislative changes that allowed for duty-free treatment of products of the U.S. returned within any time frame after having been exported, or products of other countries returned within three years after having been exported, and not advanced in value or improved in condition (see 1702010047). CBP said it plans to propose regulatory changes to "align" the regulations with the law.
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While the 2017 guidance only mentioned a declaration by the foreign shipper to show the goods weren't advanced in value, CBP now says it may seek "declaration by the owner, importer, consignee, or agent having knowledge of the facts regarding the duty-free claim." When "the owner or ultimate consignee is a corporation, such declaration may be signed by the president, vice president, secretary, or treasurer of the corporation, or may be signed by an employee or agent of the corporation who holds a power of attorney and a certification by the corporation that such employee or other agent has or will have knowledge of the pertinent fact," the agency said. Based on that guidance, "employees of importers who utilize this provision should make sure that they have, not only the declaration, but also the appropriate authorization to sign on behalf of the company," Sidley Austin lawyer Ted Murphy said.
CBP may also require additional proof of eligibility for U.S.-origin goods beyond the declarations "including a statement from the U.S. manufacturer verifying that the articles were made," it said. More documentation may also "be requested to substantiate that the same articles exported from the United States are being returned," CBP said. "No substitution of the same type of articles under an inventory management system may occur. This merchandise must meet all of the requirements such that it was not advanced in value or changed in condition, and not processed under a drawback claim or Temporary Importation under Bond (TIB) entry."
Also new to the guidance is language that explains that customs brokers "have a duty of care in the filing of entry documents," but that "the burden of proof is not on the broker (unless the broker is acting as importer of record) when requests are made to prove a claim for duty-free treatment under Subheading 9801.00.10." Proof of such reasonable supervision and control include communications with the importer on what is required, the agency said. "If it is found that the broker did not provide responsible supervision and control when preparing and filing the entry, then CBP may address that deficiency through the broker informed compliance process as described in Chapter 15 of the Broker Management Interim Guidance II document."
This update "indicates that CBP expects brokers to at least communicate to their customers what the requirements are for making these preference claims and that there could be consequences if they fail to do so," Murphy said. "Also, there is nothing to suggest that CBP’s expectation of brokers should or will be limited to only 9801 claims. Presumably, this expectation will be expanded to apply to all preference claims one way or another. Importers should expect to start hearing more from their brokers when preference claims are made."
The National Customs Brokers & Forwarders Association of America seemed pleased with the new language. "This is a big accomplishment by the NCBFAA leadership and Customs Committee to have CBP revise this guidance per its request in a way that clarifies the importer's burden and what constitutes responsible supervision and control on the part of brokers," NCBFAA Customs Counsel Lenny Feldman said in an email.