Enhanced enforcement strategies have been a common theme from Customs & Border Protection (CBP) over the past few years. Their targets have covered issues from the enforcement of forced labor laws, collection of ADD/CVD duties, the validity of claims made under preferential trade agreements, and the still red-hot topic of goods imported under de minimis provisions. Sometimes, the target is a specific product, such as textiles or foodstuffs. In the case of textiles, importers are required to provide the name, address, and country of origin of the actual manufacturer. In any case, it is incumbent on importers to understand what is expected of them and the consequences of falling short. Understanding current issues affecting your products, knowing your supply chain, and good recordkeeping is a must.
Importers, like brokers, are held accountable by Customs for their transactions; however, the importer’s liability far exceeds that of the broker. In almost all cases, it is the importer of record (IOR) who is held solely responsible for the information presented to Customs upon entry. When a Customs Broker files an entry, they are doing so only as an agent of the IOR. Under the regulations, an IOR must use reasonable care when making an entry, providing the declared value, classification, and rate of duty, and other documentation required to assess the duty and apply any applicable laws (19 US Code 1484).
Obviously, the responsibility to pay duties, fees, or taxes rests with the IOR, as are any increased amounts assessed by CBP following a review of an entry. Penalties and interest associated with a late payment are the importer’s responsibility, including payments that are deemed late following a review. Should imported goods be found to be eligible for uncollected provisional duties such as those under Section 301 (China) or Section 232 (certain steel and aluminum products), an additional payment demand is sent to the IOR. Duties paid on goods under an anti-dumping (ADD) or countervailing (CVD) case are an estimate at the time of entry. The actual ADD/CVD rate is not determined until the case has been reviewed by the Department of Commerce when the actual rate is established, so depending on the outcome, there may be additional duties owed.
Less obvious is the liability of the IOR for non-compliant filings. An ISF filed late or incomplete is the responsibility of the IOR regardless of who is transmitting the filing or who is providing the data, and the importer may be fined up to $10,000 per shipment. Similarly, filings required for partner government agencies such as the FDA and USDA also may result in penalty actions. Again, the IOR is held responsible even if it is the shipper who provides the information. Importers of foodstuffs are required to institute and maintain a Foreign Supplier Verification Program (FSVP) as a requirement of the FDA. Failure to maintain an FSVP can result in significant fines issued by the FDA. Liability for written conformity statements made under the USMCA agreement falls to the party signing the statement. When completing the required USMCA statement, you are attesting that you have information to validate the claim and that the information will be available to Customs for up to five years. You should not sign a statement unless you can comply with the requirements.
Both importers and brokers are required to maintain records of their transactions with CBP for five years following the last Customs action; usually, this is the liquidation of the entry. Failure to do so can result in a fine. Even though a Customs Broker must keep the same records, it does not relieve the IOR of their responsibility to maintain these records and have them available upon demand. CBP has the authority to audit an IOR, and good recordkeeping and evidence of an importer’s reasonable care will pay dividends should you be selected. Customs issued an Informed Compliance Publication (ICP) on reasonable care that serves as a guideline for compliance. It can be found on their ICP webpage, or let us know and we would be happy to forward a copy.
We wish all our business partners a prosperous and healthy new year.
Best Regards,
Sam McClure, LCB
Director of Compliance & Customs Services