Announcement of National Customs Automation Program Test Regarding Reconciliation

DEPARTMENT OF THE TREASURY

Customs Service

Announcement of National Customs Automation Program Test

Regarding Reconciliation

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

ACTION: General notice.

-----------------------------------------------------------------------

SUMMARY: This notice announces Customs plan to conduct a voluntary

prototype test regarding reconciliation. This reconciliation test will

cover entries to which antidumping and countervailing duties apply.

This notice invites public comments concerning any aspect of the

planned test, informs interested members of the public of the

eligibility requirements for voluntary participation in the testing of

this prototype, and describes the basis on which Customs will select

participants.

EFFECTIVE DATES: The test of this prototype will commence no earlier

than July 9, 1996. This test will end when liquidation or reliquidation

of all Reconciliations has become final. Comments concerning the

methodology of this prototype must be received on or before June 10,

1996. To participate in this prototype test, the necessary information,

as outlined in this notice, must be filed with Customs on or before

June 10, 1996.

ADDRESSES: Written comments regarding this notice, and information

submitted to be considered for voluntary participation in this

prototype should be addressed to Reconciliation Prototype Team, U.S.

Customs Service, 1301 Constitution Avenue, N.W., Room 1322, Washington,

D.C. 20229-0001.

FOR FURTHER INFORMATION CONTACT: For questions on reconciliation:

Rychelle Ingram (202) 927-1131.

For questions on Antidumping and Countervailing duties: Frank Crowe

(202) 927-0402.

SUPPLEMENTARY INFORMATION:

Background

Title VI of the North American Free Trade Agreement Implementation

Act (the Act), Public Law 103-182, 107 Stat. 2057 (December 8, 1993),

contains provisions pertaining to Customs Modernization (107 Stat.

2170). Subtitle B of Title VI establishes the National Customs

Automation Program (NCAP)--an automated and electronic system for the

processing of commercial importations. Section 637 of the Act amends

Section 484 of the Tariff Act of 1930 by establishing a new subsection

(b) entitled ``Reconciliation.'' Reconciliation is a planned component

of the NCAP. Section 631 authorizes tests of planned NCAP components.

Section 101.9(b) of the Customs Regulations (19 CFR 101.9(b)),

implements the testing of NCAP components. See T.D. 95-21 (60 FR 14211,

March 16, 1995). This test is established pursuant to those

regulations.

Previous NCAP initiatives include Customs prototype of remote

location filing (60 FR 17605), and the announcement of a reconciliation

prototype for related party importers making upward adjustments to the

price of imported merchandise, pursuant to 26 U.S.C. 482. (60 FR 46141

and 60 FR 64470.)

I. Description of Proposed Test

The Concept of Reconciliation

Reconciliation will allow an importer to provide Customs with

information (other than that related to the admissibility of

merchandise), which is not available at the time of entry summary

filing, at a subsequent time. A notice of intention to file a

Reconciliation (``Notice of Intent'') permits the liquidation of an

entry as to all issues other than those which are transferred to the

Reconciliation. By filing a Notice of Intent, an importer is requesting

that a certain issue be separated from the entry. The importer

voluntarily requests and accepts that the issue identified in the

Notice of Intent remains open and outstanding and is transferred to the

Reconciliation. In this prototype, the issue of liability for

antidumping and countervailing duties (AD/CVD) will be transferred to

the Reconciliation. This permits Customs to liquidate the underlying

entry as to the other issues, e.g., classification, but the issue of

liability for AD/CVD is held open at the request of the importer, and

is transferred to the Reconciliation.

Upon liquidation of the entry, any decision by Customs entering

into that liquidation, e.g., classification, may be protested pursuant

to 19 U.S.C. 1514. When the outstanding information, e.g., final

antidumping duty owed as per the assessed rate, is later furnished in

the Reconciliation, the Reconciliation may be liquidated. The

Reconciliation will operate as an entry for purposes of liquidation and

protest of the issue in the Reconciliation. The liquidation of the

Reconciliation may be protested but

[[Page 21535]]

the protest may only pertain to elements contained in the liquidated

Reconciliation, i.e., the protest may not re-visit elements previously

liquidated in the entry.

The Reconciliation shall be filed within 90 days of posting of

liquidation instructions by the Customs Service. Customs posting of the

liquidation instructions will serve as the notice to the importer by

the Customs Service that a period of review for antidumping or

countervailing duty purposes has been completed. Consequently, because

the Reconciliation is filed after the suspension of liquidation has

been lifted, the liquidation of the Reconciliation is subject to 19

U.S.C. 1504(a), but not subject to 19 U.S.C. 1504(d).

Description of the Reconciliation Prototype

This prototype will commence no sooner than July 9, 1996. Customs

would like to afford the opportunity to participate to all those who

volunteer for this test. However, the number of participants may be

limited in view of the fact that this prototype will be conducted with

minimal computer changes, requiring Customs to manually intervene in

tracking and processing. While all interested parties are encouraged to

apply for participation, Customs, in conjunction with the Department of

Commerce (DOC), will specifically be targeting those AD/CVD cases for

which liquidation instructions will be issued in the short term. All

procedures and processes will be closely coordinated with the selected

and affected parties. The purpose of this prototype is to test such

operational issues as establishment of the Notice of Intent,

liquidation of the underlying entry summaries, and processing and

liquidation of the Reconciliation.

This prototype will cover entries to which antidumping and

countervailing duties apply. As required by Section 637 of the Act,

Customs has coordinated with the DOC in the development of this test,

and will continue to consult with the DOC throughout the test.

There are several reasons Customs has selected AD/CVD for this

reconciliation prototype. First, this test can be initiated prior to

having full computer mainframe programming, partially due to the fact

that drawback cannot be claimed on AD/CVD duties. In addition, Customs

will no longer have to suspend liquidation as to all issues affecting

the entry until final instructions have been issued for all AD/CVD

cases on the entry. Faster processing of refunds will result in a cash-

flow benefit to importers. Should the AD/CVD assessment result in an

increase due Customs, faster processing will enable the government to

collect duties more timely. As intended by the Act, liquidation of the

non-reconciliation issues on the subject entries will result in a

reduction of contingent liabilities for the importer. Finally, this

prototype will result in a workload savings for the government. Of all

entries currently being withheld from liquidation, 75% are suspended

for pending AD/CVD cases. Reconciliation provides Customs with the

authority to liquidate the underlying entries as to all issues other

than the liability for the AD/CVD case, which is identified by the

importer in the Notice of Intent, and at his request, transferred to

the Reconciliation. By submitting a Notice of Intent, an importer is

requesting that the issue of liability for AD/CVD remain open and be

transferred to the Reconciliation.

There are various situations which lend themselves to this

prototype, including (1) entries having one AD/CVD case, for which the

importer wants to reduce its contingent liabilities and leave only the

AD/CVD case open on the Reconciliation, and (2) entries having multiple

AD/CVD cases, one or more of which has been terminated, or one or more

of which has had liquidation instructions issued. Also, parties who

have drawback claims against import entries that are suspended for AD/

CVD will expedite the liquidation of their drawback entries if they use

this prototype to transfer the AD/CVD issue off the import entries.

The following is an example of a situation which would benefit from

this prototype. Importer X has 800 entries filed in the port of

Cleveland, all of which have merchandise which is subject to three

antidumping cases. The DOC has previously provided Customs with

liquidation instructions on two of the cases, each having an assessed

rate lower than the deposit rate. As a result, Customs owes importer X

refunds based on the results of the two cases. However, the 800 entries

presently must continue to be suspended from liquidation, pending

instructions on the third case. No money is refunded until the entries

can be liquidated. In the case of a separate Notice of Intent being

filed for each of the three cases, Customs is capable of isolating each

case on a single Reconciliation and liquidating the underlying entries

as to the other issues. As the DOC provides instructions, each case can

be liquidated individually. In this example, this prototype provides

for more efficient processing by Customs and quicker refunds to the

importer. Additionally, Customs would issue one check for each

Reconciliation, as opposed to the current obligation of issuing 800

separate checks.

Customs posting of the AD/CVD liquidation instructions on the

Customs Electronic Bulletin Board and the Administrative Message System

will initiate the 90 days in which the participant has to file the

Reconciliation. Customs posting of the liquidation instructions will

serve as the notice to the importer by the Customs Service that a

period of review for antidumping or countervailing duty purposes has

been completed. The publication in the Federal Register by the

International Trade Administration (DOC) does not constitute Commerce's

instructions to Customs to liquidate, and as such, will NOT trigger the

90 day period for submission of the Reconciliation.

Prerequisites for Reconciliation Under this Prototype

The following are the prerequisites for this prototype covering AD/

CVD transactions:

A. Common Elements: Each Reconciliation under this prototype will

be limited to entries filed by one importer and one filer, and in one

port location. Importers who file entries at more than one port may

participate if the other prerequisites are met; however, they will have

to file one Notice of Intent/Reconciliation for each port. Each

Reconciliation is limited to one Antidumping or Countervailing duty

case (the individual ten digit case number), and will cover only one

manufacturer/shipper/grower. Each Reconciliation will cover only one

review period, as defined in 19 CFR 353.22 and 19 CFR 355.22.

B. Bonding: Adequate bonding will be required for each

Reconciliation. Since there is no additional liability created on the

Reconciliation, the bond filed on the underlying entries will in most

cases be used to cover the Reconciliation. However, Customs will

analyze each participant's individual situation, and take action to

ensure sufficient bond coverage exists. While Customs prefers to have

one common set of legally responsible parties for each Reconciliation,

importers with entries filed within one review period which were

secured by more than one surety will not be excluded from participation

in this prototype.

C. Eligible Entries: The following types of entries will be

eligible for this prototype: (1) Entry type 03--Antidumping and

Countervailing duty consumption entries, (2) Entry type 06--Foreign

trade zone consumption entries, and (3) Entry type 07--Quota/Visa and

[[Page 21536]]

Antidumping/Countervailing duty consumption entries.

Customs is developing a system to accommodate the details involved

on Reconciliations covering warehouse withdrawals. Importers interested

in filing a Reconciliation on warehouse withdrawals (Entry type 34--

Antidumping/Countervailing duty warehouse withdrawal, and Entry type

38--Quota/Visa and Antidumping/Countervailing duty warehouse

withdrawal) are encouraged to submit comments and apply for

participation, if interested.

D. Time frame: Those entries filed via ABI between February 1, 1990

and the start of this test will be considered eligible for this

prototype. (Entries filed prior to February 1, 1990 are not eligible

for this test because prior to such date, Customs did not track AD/CVD

case information by entry summary line within the Automated Commercial

System.)

E. Notice of Intent/Reconciliation: Once a participant is selected,

a Notice of Intent must be filed. The Notice of Intent is irrevocable.

The Notice of Intent must contain the Reconciliation number and the

common elements of the Reconciliation, (i.e., importer/filer/AD-CVD

case/review period/manufacturer/Port).

The Reconciliation will be due within 90 days of Customs' posting

of the liquidation instructions. For AD/CVD cases which have had

liquidation instructions previously posted by Customs, the filing of

the Notice of Intent will trigger the 90 days for submission of the

Reconciliation. For purposes of this prototype, the Reconciliation will

be submitted to Customs in an ASCII text, tab-delimited file format,

both on hard copy and diskette, and will contain the following

information for each entry line subject to the Reconciliation:

(1) Entry number;

(2) Date of entry;

(3) Date of export from foreign country (if Reconciliation pertains

to CVD case);

(4) Entered value;

(5) AD/CVD duty deposited (Indicate ``B'' if bonded);

(6) Amount of supplemental AD/CVD duty payment(s), if any;

(7) Date(s) of supplemental payment(s), if any;

(8) Total quantity (only if liquidation instructions provide

specific rate of duty);

(9) AD/CVD duty due as per assessed rate; and

(10) Net difference in duty.

Participants will be provided with a sample Reconciliation.

F. Liquidation: Importers who chose to participate in this

prototype will recognize that the liquidation of the underlying entries

pertains only to those issues not identified by the importer on the

Notice of Intent. Upon liquidation of the underlying entries, any

decisions of the Customs Service entering into that liquidation can be

protested pursuant to 19 U.S.C. 1514. The liquidation of the

Reconciliation will be posted to the Bulletin Notice of Liquidation.

The liquidation of the Reconciliation may also be protested, but the

protest may only pertain to elements contained in the liquidated

Reconciliation, i.e. the protest may not re-visit elements previously

liquidated in the entry.

Under this prototype, once the participant files the Notice of

Intent, the referenced entries will be liquidated as to all issues

other than that identified in the Notice of Intent, barring any

outstanding non-reconciliation issue. The AD/CVD liability issue is

transferred to the Reconciliation. The liquidation of tariff

classification/rate of duty and/or the appraised value under 19 U.S.C.

1401a shall not preclude the assessment on the Reconciliation of AD/CVD

duties according to the instructions issued by the DOC to Customs.

Regulatory Provisions Suspended

Section 113.62 of the Customs Regulations (19 CFR 113.62),

pertaining to basic importation and entry bond conditions, will be

suspended during this prototype test. Certain provisions in Part 159 of

the Customs Regulations (19 CFR Part 159), pertaining to liquidation of

duties, will also be suspended during this prototype test.

II. Eligibility Criteria

The following requirements must be met to be considered for

selection in this prototype:

(1) All entries and entry summaries subject to the Reconciliation

must have been filed via ABI on or after February 1, 1990 and before

the start of this test.

(2) There can be no more than 1,000 entries subject to a single

Reconciliation.

(3) Adequate bond coverage must exist for the Reconciliation.

(4) Participants may not be the subject of a current audit or

investigation by the Customs Service. Closed audits/investigations will

not necessarily preclude an importer from participating. However, the

findings will be taken into consideration, as will the importer's

demonstrated efforts to correct past problems.

(5) Participants must be willing and able to supply the information

identified above in the Reconciliation in the specified text, tab-

delimited file format.

(6) Participants must agree to participate in the evaluation of

this test.

Note that participation in this test will not constitute

confidential information and that lists of participants will be made

available on the Customs Electronic Bulletin Board and the

Administrative Message System.

Reconciliation Prototype Application

This notice requests importers, or brokers or attorneys on behalf

of importers, to voluntarily apply for participation in this prototype

by submitting to the Reconciliation Prototype Team, U.S. Customs

Service, 1301 Constitution Avenue, N.W., Room 1322, Washington, D.C.

20229-0001, on or before the date set forth in the effective date

paragraph at the beginning of this notice, the following information:

(1) Importer name and IR number;

(2) Broker name and filer code;

(3) Surety name(s) and surety code(s);

(4) Bond coverage, i.e., whether a continuous bond and/or single

entry bonds were used for coverage on the subject entries;

(5) Supplier name, address, and manufacturer's number;

(6) AD/CVD case number at the 10 digit level and the review period

being reconciled;

(7) Commodities covered under the Reconciliation;

(8) Port(s) at which entries have been filed and at which the

Notice(s) of Intent will be filed;

(9) Number of entries covered under the Reconciliation;

(10) Any supplemental payments made on the subject entries;

(11) Main contact person and telephone number for participation

questions; and

(12) Any comments on prototype participation.

By applying to participate in this test, the importer is agreeing

to participate pursuant to the terms of the test as defined in this

notice.

Basis for Participant Selection

Eligible importers or importers with brokers will be considered for

selection as participants in this prototype. Selection will be based on

electronic capabilities and volume of entries within the designated

criteria. In addition, Customs will work with the DOC to identify those

cases which lend themselves to this prototype. The amount and timing of

supplemental payments made for an AD/CVD case may have impact on

participant selection. Customs is looking for a variety of

circumstances and

[[Page 21537]]

participants in this prototype; however, a limited number of

participants will be selected. This prototype will be limited to 25

Reconciliations, due to the minimal automated programming available to

support this test. We stress that those applicants not selected for

participation, and any interested parties, are invited to comment on

the design, conduct, and evaluation of this prototype. Participants

selected will be notified in writing. The list of participants will be

made available on the Customs Electronic Bulletin Board and the

Administrative Message System.

III. Test Evaluation Criteria

Once participants are selected, Customs and the participants will

meet to review all public comments received concerning any aspect of

the test program or procedures, finalize procedures in light of those

comments, form problem-solving teams, and establish baseline measures

and evaluation methods and criteria. Interim evaluations of the

prototype will be published on the Customs Electronic Bulletin Board,

and the results of the final prototype evaluation will be published in

the Federal Register as required by 19 CFR 101.9(b). The following

evaluation methods and criteria have been suggested:

1. Baseline measurements to be established through dataqueries and

questionnaires;

2. Reports to be run through use of dataquery throughout the

prototype; and

3. Questionnaires from both trade and Customs participants to be

used before, during, and after the prototype period. Preliminary

suggestions for evaluation criteria are workload impact (workload

shifts, cycle time, etc.), cost savings (staff, interest, issuance of

fewer checks or bills, tracking refunds or bills, reduction in

contingent liabilities, etc.), policy and procedural accommodation,

trade compliance impact, problem solving and system efficiency.

Customs will request that test participants be active in the

evaluation, identifying costs and savings experienced in this

prototype.

Customs intends to conduct several prototypes of the reconciliation

component of the NCAP. These tests will determine the system and

operational design of reconciliation which will allow all filers to

participate in this type of entry process at a national level. At this

time, how the final reconciliation program will operate is unknown.

Prototype participants must recognize that these are true prototypes to

test the benefits and potential problems of reconciliation for Customs,

the trade community, and other parties impacted by this program. It is

important to note that time and money spent on these prototypes may not

carry forward to the final program.

The next reconciliation prototype is tentatively scheduled to

commence no sooner than January, 1997. This subsequent prototype will

continue to address operational impact and procedures, and begin

addressing additional systemic needs. This prototype is intended to

include AD/CVD, as well as other issues which lend themselves to

processing by reconciliation. The experience gained from the

reconciliation prototype for AD/CVD transactions will be incorporated

into subsequent prototypes.

Dated: May 6, 1996.

Samuel H. Banks,

Assistant Commissioner, Office of Field Operations.

[FR Doc. 96-11734 Filed 5-9-96; 8:45 am]

BILLING CODE 4820-02-P