Notification to Importer of Increased Duties

DEPARTMENT OF THE TREASURY

19 CFR Part 152

Notification to Importer of Increased Duties

AGENCY: U.S. Customs Service, Department of the Treasury.

ACTION: Withdrawal of proposed rule.

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SUMMARY: This document withdraws a proposal to amend the Customs

Regulations to provide that the district director of Customs shall

notify the importer on Customs Form (CF) 29, Notice of Action, when the

estimated aggregate of the increase of duties on an entry exceeds $100.

The regulations now provide that the importer shall be notified if the

increase exceeds $15. Most of the commenters were opposed to the

proposal and cited reasons why the proposed rule would not be in the

best interests of importers, brokers or the Customs Service. Customs

has concluded that the proposed rule would result in more time, effort

and cost for the government, importers and brokers.

DATES: Withdrawal effective on March 29, 1994.

FOR FURTHER INFORMATION CONTACT: Joanne Roman Stump, Office of

Regulations and Rulings, 202-482-7040.

SUPPLEMENTARY INFORMATION:

Background

On October 23, 1992, Customs published a notice in the Federal

Register (57 FR 48347), proposing to amend Sec. 152.2 of the Customs

Regulations (19 CFR 152.2) to provide that the district director would

notify the importer on Customs Form (CF) 29, Notice of Action, when the

estimated aggregate of the increase of duties on an entry exceeded

$100.

The notice proposed that in lieu of the current requirement of

preparing a CF 29 when the increase in duties is $15 or more, the

estimated increase which would trigger the sending of a CF 29 would be

raised to $100.

The reasons given for the proposed change were that it would lessen

the administrative burden and costs associated with notifying the

importer of minimal increases while it would not result in a

significant reduction of services provided to importers.

Discussion of Comments

Twelve comments were received in response to the notice of proposed

rulemaking. Ten of the twelve commenters objected to the proposed

amendment to Sec. 152.2 of the Customs Regulations. All ten of these

commenters believe that the proposed change would result in an increase

rather than a decrease in the administrative burden and costs to

Customs associated with notifying the importer of minimal increases in

duties.

Specifically, they point out that it would increase the demand to

review entry summaries after liquidation to determine the basis of the

duty increase (i.e., entered value, trade preference eligibility or

tariff classification), rather than during the initial entry stage when

the entry summary is processed by the import specialist. This change

would place an added burden upon Customs to locate and produce the

liquidated entry package and to research the reason for the increase,

since the liquidation generally follows the change by a certain time

period.

Most commenters thought it far more efficient to resolve a duty

difference on the basis of one entry, at the initial stages of

liquidation, rather than to wait several months until liquidation, by

which time numerous entries of the same merchandise may have been made

and by which time significant purchase orders may have been placed by

the importer based on the initial false impression that lower duties

would be due.

Moreover, they state that the absence of early notification of

increased duties will deprive the broker or importer of the opportunity

to receive valuable information from Customs necessary to modify future

importations to avoid repeating the same error and causing additional

increases. Two commenters stated that the size of the duty increase is

not a measure of the severity or complexity of the issue which is

causing the duty increase, and that a CF 29 involving one entry and a

minor duty increase could be the means for resolving a potentially

contentious matter involving many similarly entered entries and a much

greater increase in aggregate duties due.

Another factor militating against the proposed regulation change

which was mentioned by most commenters is that instead of seeking

resolution of a dispute in the assessment of increased duties prior to

liquidation through such methods as discussions with an import

specialist, use of the internal advice procedure or obtaining a binding

ruling, the number of protests filed under 19 U.S.C. 1514 would

increase on many entries involving the same issue. If the proposed

amendment to the regulations became effective, several areas of the

Customs Service (e.g., the import specialist teams, the protest

section, the liquidation section and the National Finance Center) would

have to expend considerable time and effort in processing more

protests.

Several commenters are brokers along the northern border handling

truck and rail shipments. These commenters said that the CF 29 is

essential to their business, citing the fact that they are usually the

importer of record on the entries for their clients, who import in high

volume and low value, and that approximately 25 percent of increased

duty bills are less than $100 per entry. The northern border brokers

assert that the preponderance of their customers will not pay the

increased duties without knowing why and how the duties are calculated.

These brokers reject the argument that by raising the $15 limit,

the inquiries between Customs and brokers or importers would decrease.

They observe that while many importers would not question an increase

in duty for $12 without notification and explanation, most importers

would challenge an increase of $50, $75 or $100 upon receipt of a

Customs bill.

Some commenters suggested further automating the liquidation

procedures so that comments or explanations pertinent to the duty

increase could be incorporated in the liquidation information

distributed via the Automated Commercial System to reduce the clerical

burden on the Customs Service.

The two commenters who supported the adoption of the proposal

stated--without elaboration--that it would reduce the overall cost of

importing into the United States and that it would relieve Customs of

repetitive minor administrative tasks. However, one did note that the

importer would not have knowledge of a value or classification change

causing a duty increase simply by viewing the liquidation notice.

The majority of the commenters point out that by using the CF 29 to

provide a clear explanation of its action regarding an entry before it

is liquidated, the Customs Service will avoid extra administrative

costs and burdens after the entry is liquidated.

Conclusion

Taking all of the factors and comments mentioned above into

consideration, Customs has determined that it should not proceed with

the proposal at this time. After further consideration and review of

the comments, Customs now believes that the proposed change would not

reduce cost, effort or time for Customs or for importers or brokers.

Given the validity of the comments and the fact that the majority of

the commenters were opposed to the changes, Customs believes that the

current regulation is preferable to the proposed regulation.

Accordingly, Customs has concluded that the proposal be withdrawn

at this time.

Approved: March 15, 1994.

George J. Weise,

Commissioner of Customs.

John P. Simpson,

Deputy Assistant Secretary (Regulatory, Tariff and Trade Enforcement).

[FR Doc. 94-7261 Filed 3-28-94; 8:45 am]

BILLING CODE 4820-02-P