It has come to the attention of our office, that in at least two ports of entry, U.S. Customs and Border Protection (CBP) officials have been declining informal entry (type 11) procedures to otherwise eligible products based on one of the following criteria: (1) the subject merchandise is commercial in nature, and (2) the merchandise is a textile product. CBP’s “recommendations” were made primarily to small and medium size companies and individuals that were not sophisticated importers. As a result, parties had to go through formal entry (type 01) procedures; having to obtain a bond and in some cases services of customs broker – increasing their transaction costs and eroding low margin for their businesses. This is unfortunate news, because informal entry procedures were designed to make it easier for smaller size importers to import with less red tape and lower barriers of international trade transactions.
Persons facing above mentioned red tape barriers should keep in mind that CBP officials are human beings, who may not have perfect knowledge, but with a right set of incentives would accept your invitation to informal entry process. The right set of incentives includes Code Of Federal Regulations; Federal Register; and CBP’s interpretative memoranda, including administrative guidance.
First CBP Incentive: Code of Federal Regulations
Title 19 Part 143 Subpart C is a regulatory mandate specifying what can and cannot be entered under informal entry. CBP officers dealing with informals may be accustomed to non-commercial nature of merchandise, such as household or personal effects, which is very much valid criteria under 19 C.F.R. § 143.21(d)-(g). However, pursuant to 19 C.F.R. § 143.21(a) commercial merchandise can be eligible for informal entry also so long as that merchandise:
- Does not exceed $2,500 in value; and
- Not classified in Chapter 99, Subchapters III and IV, HTSUS (listing very specific products: sugars, syrups and molasses; some Japanese products; cotton and food products).
But regulatory print out and citation may not always work, which brings one to the second incentive.
Second incentive: Federal Register
As any administrative agency, including U.S. Customs and Border Protection, is subject to rulemaking process under Administrative Procedures Act. Rulemaking process goes in line with democratic values of our system of government because it provides the dialogue and discussion as to why certain regulation was made or changed. With respect to informal entry regulations, one such dialogue, explaining CBP’s position was promulgated as a final rule on December 6, 2012: Informal Entry Limit and Removal of a Formal Entry Requirement (77 Fed. Reg. 72,715). Relevant to small importer asking CBP official to accept informal entry procedures would be the following:
- If reason for rejection is textile product, then CBP removed entry requirements for articles previously subject to absolute quotas under the Agreement on Textiles and Clothing. Specifically, 19 C.F.R. 102.24(a),which required the use of a formal entry and visa or export license for certain shipments of textile or apparel products, was removed.
- CBP explicitly ruled that surety bond is not required for informal entries.
Third CBP Incentive: CBP Information Center
As a part of reaching out to the public, CBP created and Information Center portal, where agency discusses issue of informal entry: “Filing an informal entry (for goods valued at less than $2500).”
In general, an informal entry involves the importation of merchandise that does not exceed $2,500 in value (As of January 7, 2013, the amount increased to $2,500).
Informal entries do not require a posting of a Customs bond and are liquidated at the time of release. Informal entries are used for both personal and commercial importations.
Informal entries may not be used for commercial importations of goods subject to quota, Anti-dumping or Countervailing duties.
An informal entry may be done on the spot. Once the carrier bringing your goods to the U.S. has notified you of your goods arrival, you should go to the entry branch of that port’s Customs house and inform the staff that you have an informal entry to process and pick-up.
(emphasis supplied to original)
Therefore, if CBP official declines to accept informal entry procedures on otherwise eligible merchandise (e.g. because it is commercial), having the Information Center printout handy (make sure that you have URL for CBP’s independent verification) can be a good incentive.
Fourth CBP Incentive: Cargo Systems Messaging Service (CSMS)
If your product is textile (not subject to quota or Chapter 99, Subchapters III and IV, HTSUS limitations), your product qualifies for informal entry by CBP’s own guidance. In CSMS # 13-000006 (Jan. 3, 2013) CBP guided CBP Officers and International Trade Community:
* * * for informal entries, as announced in the Federal Register on December 6, 2012 (see 77 FR 72715). The final rule increased the limit, from $2,000 to $2,500, for which commercial importations of merchandise may qualify for an informal entry. The increase goes into effect on January 7, 2013. The rule applies to goods entered or released (including goods released under special privileges for immediate delivery under 19 U.S.C. 1448(b)) on or after January 7, 2013.
The final rule also removed language requiring formal entry for certain articles that were formerly subject to absolute quotas under the Agreement on Textiles and Clothing because U.S. Customs and Border Protection (CBP) no longer needs to require formal entry for these articles. The change in regulation expanded the value increase to textile products; however, a formal entry is still required for goods classified in subheadings 9903 and 9904 of the Harmonized Tariff Schedule (HTS). The following ranges of HTS numbers are now eligible to be entered on an informal entry if the value does not exceed $2,500:
The change also affects the reporting of the ultimate consignee at the time of release, i.e., entries valued at $2,500 or less must be identified with an appropriate ultimate consignee name and address or ultimate consignee number. Entries valued at greater than $2,500 will require the appropriate ultimate consignee identification number and may not be identified with an ABI transmission of only the ultimate consignee’s name and address.
CBP is modifying the Automated Commercial System (ACS) according to the above changes, and we will publish a separate message when the changes have been completed.
(emphasis added to original text)
These four incentives should initiate a dialogue in a positive direction with CBP officers.