Revision and Expansion of National Customs Automation Program Test of Account-Based Declaration Prototype

DEPARTMENT OF THE TREASURY

Customs Service

Revision and Expansion of National Customs Automation Program

Test of Account-Based Declaration Prototype

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

ACTION: General notice.

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SUMMARY: This document is a replacement of a notice published in the

Federal Register on March 27, 1997, which announced Customs' plan to

conduct an account-based prototype (NCAP/P) under the National Customs

Automation Program (NCAP). This notice broadens the eligibility

requirements for participation in the NCAP/P, incorporates enhancements

to reconciliation (based on the February 6, 1998 announcement of the

ACS Reconciliation Prototype) and clarifies the statement process. This

notice also outlines the development and evaluation methodology to be

used in the test and invites public comment on any aspect of the

planned test.

With this notice, Customs is also inviting additional importers to

apply to participate in the NCAP/P in accordance with the eligibility

requirements specified in this notice. Applicants that have already

been accepted as participants in the NCAP/P based on the 3/27/97 NCAP/P

notice need not re-apply. All participants in the NCAP/P, including

previously accepted applicants, are required to follow all the

operational procedures described in this notice, e.g., procedures on

the account-based import declaration process, reconciliation, remote

location filing, and maintenance of account information, and are bound

by the terms and conditions of this notice.

The NCAP/P will become operational under a staged implementation

program. Implementation of the NCAP/P will be as follows: (1) Cargo

release, (2) Cargo release with examination, (3) Entry summary

acceptance and processing, and periodic statement processing, and 4)

Reconciliation.

DATES: The cargo release stage of the NCAP/P commenced on April 27,

1998. The NCAP/P will be operational for up to three years, with

evaluations of the prototype occurring periodically. Applications to

participate in the test may be submitted throughout the duration of the

prototype. Priority review will be given to applications received on or

before September 18, 1998. Public comments on any aspect of the planned

test must be received on or before September 25, 1998. All comments

received will be part of the public record and made available to third

parties upon request.

ADDRESSES: Applications and comments should be addressed or faxed to

Don Luther, U. S. Customs Service, 1300 Pennsylvania Avenue NW, Room

5.2A, Washington, DC 20229, fax number (202) 927-1096.

FOR FURTHER INFORMATION CONTACT: For inquiries regarding eligibility of

specific importers contact: Margaret Fearon at (202) 927-1413. For

questions on reconciliation contact: Don Luther at (202) 927-0915. For

questions on statement processing: contact Tim Raeck at (317) 298-1520,

extension 1445. For questions on violation billing: contact Jim Gleason

at (202) 927-2995. For questions on other aspects of the Account-Based

Declaration Prototype contact: Daniel Buchanan at (617) 565-6236.

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 (the Mod Act).

Subtitle B of title VI establishes the National Customs Automation

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

of commercial importations. Section 631 of the Act creates sections 411

through 414 of the Tariff Act of 1930 (19 U.S.C. 1411-1414), which

define and list the existing and planned components of the NCAP

(section 411), establish program goals (section 412), provide for the

implementation and evaluation of the program (section 413), and provide

for remote location filing (section 414). Section 637 of the Act amends

Section 484 of the Tariff Act of 1930 to establish a new subsection

(b), entitled ``Reconciliation'' (19 U.S.C. 1484(b)). Section 101.9(b)

of the Customs Regulations (19 CFR 101.9(b)), provides for the testing

of NCAP components. See, T.D. 95-21 (60 FR 14211, March 16, 1995). This

test is established pursuant to that regulation.

A key element of Customs efforts to re-engineer its Trade

Compliance process is a shift in emphasis from the traditional

transaction-based approach of ensuring compliance with import laws and

regulations to an account-based approach, which addresses an importer's

overall compliance through account management, process reviews, and

audits. One feature of this approach is a new account-based declaration

process. Customs is also developing a new commercial processing system,

the Automated Commercial Environment (ACE), which is designed to

support the new Trade Compliance processes. The account-based

declaration prototype (NCAP/P) is being developed to provide the first

operational demonstration of ACE capabilities for processing imports,

integrating the new account-based import declaration process with other

aspects of the Trade Compliance process and with selected features of

NCAP elements of the Mod Act.

I. Development Methodology

The NCAP/P will be monitored by a Joint Prototype Team consisting

of trade participants, Customs personnel, and other interested

government agencies. This team will meet regularly throughout the

prototype period at appropriate locations to set development

milestones, monitor progress, resolve issues and evaluate program

effectiveness. The development effort will be coordinated with other

on-going NCAP prototype programs such as Remote Location Filing and

Reconciliation, and will be as consistent as possible with the overall

direction of ACE development.

Potential participants should recognize that this is a prototype

test of new processes. Data definitions and values and formats for

electronic transmission of manifest, entry and commercial data will

differ from those currently used in the Automated Commercial System

(ACS). It is also important to note that development efforts undertaken

for the NCAP/P may not meet the eventual requirements for programs as

they are finally implemented in ACE.

The public is invited to comment on any aspect of the NCAP/P as

described by this notice. All comments received will be part of the

public record and made available to third parties upon request.

II. Eligibility Requirements

In order to be eligible for participation in the NCAP/P, an

importer must:

A. Be participating or approved for participation in the Importer

Compliance Monitoring Program (63 FR 20442) or be scheduled for,

participating in, or, in the application, agree to undergo and

cooperate fully with a Customs Compliance Assessment. At

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the time the application is filed, if a Customs Compliance Assessment

or other type of Customs audit is in progress, the importer must be

fully cooperating and provide timely and accurate information and the

resources necessary for Customs to conduct the Compliance Assessment or

audit. If the importer is subject to a compliance improvement plan, the

importer must be abiding by the terms and conditions of the plan;

B. For Southern border NCAP/P shipments, use carriers who

participate in the Land Border Carrier Initiative Program (LBCIP). No

importer may enter Southern border cargo transported by non-participant

carriers;

C. Commit in the application to file or maintain a continuous bond

with sufficient liability coverage which will be obligated upon release

of each NCAP/P shipment. Participants who elect to reconcile entry

summaries must have on file a rider along with the continuous bond,

which will be obligated on the underlying entries and used to cover the

Reconciliation. (See Section VIII below);

D. Be capable of and/or commit to arranging for timely and accurate

electronic transmission to Customs of all data required in the NCAP/P

declaration process, including data required to pre-identify parties

and commodities involved in NCAP/P transactions, manifest and pre-

release shipment data, additional data required to support physical

examinations of cargo, entry summary data, detailed commercial data

when requested, and reconciliation data. If an importer does not

transmit electronic data for a particular shipment, Customs may exclude

that shipment from NCAP/P processing; and

E. Be capable of and/or commit to arranging for timely electronic

payment of applicable duties, taxes, fees, and interest.

Applications will be accepted from all volunteers; however,

priority consideration will be given to:

F. Companies within the top 379 importers ranked by entered value

(the top 379 represent approximately 50 percent of all imports by

value);

G. Companies within the top 250 importers within any of Customs'

Primary Focus Industry (PFI) categories, which are as follows:

1. Agriculture

2. Automotive

3. Communications--Telecommunications, Advanced Displays, Board Level

Products

4. Critical Components--Bearings, Fasteners

5. Footwear

6. Production Equipment

7. Steel

8. Textiles--Textile Products, Wearing Apparel; and

H. Companies that do not represent an unacceptable compliance risk.

III. General Requirements

For the NCAP/P, the following restrictions will be placed upon

importers:

A. Importers must enter merchandise identified in the application

as being from their typical commodities in their established lines of

business and coming from pre-identified sellers and shippers;

B. Importers must enter only the merchandise identified in the

application as being within a range of pre-identified commodities

(classified at the 6-digit Harmonized Tariff Schedule (HTS) level);

C. Importers must only enter merchandise conveyed on trucks

operated by carriers pre-identified by participants in the application;

D. Importers must enter merchandise for release into the commerce

under a consumption entry at the port of arrival, and may not enter

NCAP/P merchandise into a warehouse or Foreign Trade Zone, or as an in-

bond entry;

E. Importers must enter merchandise at the ports of Laredo, Texas

(Colombia Bridge only), or at Detroit or Port Huron, Michigan;

F. Importers may not enter merchandise in the NCAP/P if it is

subject to antidumping or countervailing duty, quota, trade preference

level or visa requirements, or pre-release reporting requirements

imposed by other federal agencies;

G. No prohibited or embargoed merchandise will be permitted in

prototype shipments; and

H. Importers are responsible for ensuring that ineligible

merchandise is not included in NCAP/P shipments, and that all shipments

aboard a conveyance are eligible for NCAP/P processing. Customs will

exclude ineligible shipments from NCAP/P processing.

IV. Application

NCAP/P participants previously selected need not re-apply under

this notice. Importers who wish to participate in the NCAP/P and have

not yet been accepted must submit a written application that contains

the following information:

A. Importer name, address and IRS employer identification number;

B. Names and addresses of all shippers for the NCAP/P;

C. Names and addresses of all sellers/vendors for the NCAP/P, and,

for each seller/vendor identified, a listing of all the 6-digit HTS

numbers in which the commodities to be imported are classified;

D. The surety and surety code and the number of the continuous

surety bond which will cover all cargo processed under NCAP/P

procedures. If the applicant plans to reconcile their NCAP/P entry

summaries, a commitment to file the bond rider prior to flagging

underlying entry summaries for reconciliation, along with

identification of the port in which the continuous bond and rider are

filed must be included;

E. Names, addresses and Standard Carrier Alpha Codes of truck

carriers who will be transporting NCAP/P shipments across the

international borders. For Southern border carriers, the Carrier

Initiative Program number must also be provided;

F. Names, addresses and filer codes of any customs brokers who will

be filing data;

G. The approximate total number of entries per month expected to be

processed at each of the following locations: Colombia Bridge, Laredo;

Ambassador Bridge, Detroit; Windsor Tunnel, Detroit; and Blue Water

Bridge, Port Huron;

H. Detailed description of anticipated issues (from the eligible

issues listed in Section VIII of this Notice) and commodities for which

the participant anticipates electing reconciliation; and

I. For applicants not participating in or approved for

participation in the Importer Compliance Monitoring Program or not

already scheduled for or participating in a Customs Compliance

Assessment, a statement in which the applicant commits to undergo and

cooperate fully with a Customs Compliance Assessment.

Customs will make admissibility determinations on NCAP/P shipments

based on cargo examinations and the information supplied with the

application, which shall serve as a pre-filed entry for NCAP/P

purposes.

Importers who submit applications to participate in the NCAP/P will

be notified in writing of their acceptance or rejection. If an

applicant is selected for NCAP/P participation, Customs will assign the

importer an NCAP/P Authorization Code. If an applicant is denied

participation, the notification letter will include the reasons for

that denial. Eligible importers whose initial applications are rejected

may re-apply upon correction of the situation which led to the denial.

Preference in accepting applicants will be given to those who

indicate that they plan to maintain an average of at

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least 25 entries per month throughout the prototype period.

V. Maintenance of Account Information

Each entry filer participating in the NCAP/P must provide Customs

with a range of entry numbers to be reserved for assignment by Customs

to NCAP/P shipments. Entry filers may not assign these numbers to

transactions, either for NCAP/P or for non-prototype entries.

Throughout the prototype period, participating importers must

provide Customs with advance notification of any proposed changes in

the information provided in the application. This notification will be

considered an amendment to the application. Amendments must be

submitted at least seven days prior to the arrival of any cargo that

reflects the proposed changes. Participants must not enter any cargo

referenced in an amendment before Customs has approved the amendment.

By notification to the participating importer, Customs may reject any

proposed change, e.g., use of a particular carrier, shipper, or seller,

entry of particular merchandise under this prototype, etc. Customs will

notify participants of the decision regarding proposed changes to the

applications. If a participant's proposed changes are rejected, Customs

will specify the reason for the rejection. The importer may re-submit

proposed changes upon correction of the situation which led to the

denial.

VI. Account-Based Declaration Process

The account-based declaration process is a fully electronic process

that will base cargo examination decisions primarily on pre-filed

account/entry information; thereby, minimizing the transaction data

that needs to be transmitted to Customs prior to the release of cargo.

Cargo examinations will also be performed on the basis of selectivity

criteria and random compliance measurement sampling. This process will

also permit reporting of detailed entry summary data on a monthly

cycle, provide for payment of duties, taxes, and fees on a periodic

statement cycle employing semi-monthly estimated payments and allow for

reconciliation of summary data.

Cargo will be released and duties, taxes, and fees assessed on the

basis of data transmitted to the NCAP/P system. For shipments processed

in the NCAP/P, participants will not be required to provide parallel

filing of ACS data or paper documents.

While various automatic notifications and back-up procedures will

also be supported, the basic declaration flow when the NCAP/P is fully

implemented will be as follows:

A. The application, including any amendments, will serve as a pre-

filed entry for NCAP/P purposes. A participating importer or authorized

broker will electronically transmit data to Customs to provide timely

and accurate identification of any proposed changes to the original

application, e.g., changes in a participant's NCAP/P business partners

or merchandise imported under the prototype. These changes must be

provided at least seven days prior to the arrival of the referenced

cargo.

B. Prior to arrival of cargo at the border, the carrier issuing the

manifest or an authorized agent will electronically transmit to Customs

basic manifest data: coded identification of the carrier; trip details;

identification of drivers, the conveyance and other equipment; and an

identifying number and the laden quantity for each shipment on the

conveyance.

C. Also prior to arrival of the cargo at the border, data

pertaining to each individual shipment must be electronically

transmitted to Customs. This shipment data will include information

generally found on freight bills, plus the NCAP/P Authorization Code

assigned to the participating importer by Customs, and identification

of the entry filer and the seller and buyer of the merchandise. This

shipment data may be transmitted by the carrier issuing the manifest,

an authorized agent acting on behalf of the carrier issuing the

manifest, or the entry filer (i.e., either the importer of record or

the importer of record's customs broker.)

D. Customs will assign an entry number to each shipment from the

range of entry numbers provided in advance by each participating entry

filer for that purpose. When a truck arrives at the border, shipments

for which no physical examination of cargo is required will be released

without additional data or documentation. For any shipment aboard that

truck selected by Customs for physical examination of cargo, Customs

will issue to the entry filer designated in the shipment data an

electronic request for additional information. This request may be

satisfied by transmission of either partial or complete entry summary

and commercial data, as requested by Customs, plus packing data. The

commercial data required for cargo examination, whether partial or

complete, will be at the detailed line item level. Cargo will not be

examined until this data is received by Customs.

E. The date of entry will be the date on which merchandise is

released by Customs. The release will obligate the continuous bond

identified in the prototype application of the importer whose NCAP/P

Authorization Code is present in the shipment data.

F. If the participant uses a blanket flag to notify Customs of

entry summaries subject to reconciliation, the flag must be received by

Customs no later than seven working days prior to transmission of the

first entry summary being flagged under the blanket.

G. For each shipment released during a calendar month, the entry

filer must electronically transmit complete entry summary data to

Customs on or before the filing deadline for that month. The filing

deadline for each month will be the 10th calendar day of the following

month, or, if the 10th falls on a weekend or holiday, the next business

day. Entry summary data transmitted prior to this deadline will be

considered provisional and may be replaced by the entry filer anytime

before the deadline. All summaries filed on or before the deadline will

be considered as filed on the deadline date. If the participant uses

individual entry flags to notify Customs of entry summaries subject to

reconciliation, such flags must be included in the transmission of the

final entry summary data.

H. For any entry summary selected by Customs for data review,

Customs will issue to the entry filer an electronic request for

complete commercial data, unless such data was previously transmitted

to support a cargo examination. This request must be satisfied by

electronic transmission of a complete set of commercial data, as

requested by Customs, plus packing data if specifically requested.

I. By virtue of 19 CFR 101.9, Customs may impose requirements

different than those specified in the Customs Regulations; but only to

the extent that such different requirements do not affect the

collection of revenue. Consequently, in order to permit a different

procedure to test the periodic deposit of estimated duties without

adversely affecting the collection of revenue, participants must abide

by the following procedures. Each participating importer will make

semi-monthly preliminary estimated payments through an electronic

medium. Preliminary estimated payments will be initiated electronically

using Automated Clearinghouse (ACH) credit on the 15th and the last day

of the month. If the 15th or the last day of the month falls on a

weekend or holiday, the payment must be initiated the next business

day. Under the prototype,

[[Page 44952]]

special electronic payment procedures will be utilized. The preliminary

estimated payments will be based upon the following percentages: (a)

the payment initiated on the 15th will be 75% of the estimated revenue

due to Customs as a result of entry activity for the 1-15th of the

month, (b) the payment initiated on the last day of the month will be

57% of the estimated revenue due to Customs as a result of entry

activity from the 16th to the last day of the month. These percentages

will be reviewed and may have to be adjusted to maintain revenue

neutrality. Payment for the remaining balance will be initiated

electronically on the 15th of the following month, and it is this date

which will serve as the date of actual deposit of estimated duties and

fees for purposes of assessing interest under 19 U.S.C. 1505. Customs

will create two types of statements each month, one before and one

after the monthly filing deadline. Each statement will list each

importer's revenue NCAP/P activity at all locations for the reporting

month, and will list entry summary revenue data that has been filed and

amounts due.

J. Within the period of time prescribed for each issue, the entry

filer must transmit an electronic Reconciliation to resolve each issue

identified for reconciliation in the Notice of Intent. (See Section

VIII below.)

VII. Remote Location Filing

Remote location filing allows participants to electronically file

data for the entry of merchandise with Customs from any location in the

United States regardless of the port designated in the entry for

examination or the port of entry.

An NCAP/P participant will be voluntarily utilizing remote location

filing if the electronic transmission of an entry, entry summary,

commercial data (when required by Customs) and payment of duties,

taxes, and fees is received from a participant not located in the port

of arrival, which for purposes of this prototype will also be the port

of entry and examination.

The designation of alternative locations for cargo examination will

not be supported in the NCAP/P. All cargo examinations will be

conducted at the port where the cargo first arrives in the United

States.

VIII. Reconciliation

A. The Concept of Reconciliation

When certain information (other than that related to the

admissibility of merchandise) is not determinable at the time of entry

summary, an importer may later provide Customs with that information on

a Reconciliation. A Reconciliation is treated as an entry for purposes

of liquidation, reliquidation, and protest. Upon liquidation of any

underlying entry summary, any decision by Customs entering into that

liquidation, e.g., classification, may be protested pursuant to 19

U.S.C. 1514. When the outstanding issue, e.g., value as determined by

the actual costs, is later furnished in the Reconciliation, the

Reconciliation will be liquidated. The liquidation of the

Reconciliation will be posted to the Bulletin Notice of Liquidation,

and may be protested pursuant to 19 U.S.C. 1514, but the protest may

only pertain to the issue(s) flagged for reconciliation (i.e., the

protest may not re-visit issues previously liquidated on the underlying

entry summary).

Importers must be aware of the distinction between prior disclosure

and reconciliation. A prior disclosure exists when a person concerned

discloses the circumstances of a violation pursuant to the Customs

Regulations. The person disclosing this information must do so before,

or without knowledge of, the commencement of a formal investigation of

that violation. Reconciliation is the process by which an importer

notifies Customs of undeterminable information, and by which the

outstanding information is provided to Customs at a later date. Under

reconciliation, the importer is not disclosing a violation, but rather

identifying information which is undeterminable and will be provided at

a later time.

B. Definitions

1. Reconciliation: The process which allows an importer to identify

undeterminable information (other than that affecting admissibility) to

Customs, and provide the outstanding information at a later date. The

term ``reconciliation'' also describes the entry used to submit the

outstanding information.

2. Underlying entry summary: A consumption entry summary flagged

for reconciliation.

3. Flagging an entry summary for reconciliation: Providing Customs

with a notice of intention to file a Reconciliation (``Notice of

Intent''). The Notice of Intent will identify to Customs that an entry

summary is subject to reconciliation for a defined issue(s). There are

two ways an importer can flag an entry summary for reconciliation:

a. Individual entry flagging: At time of summary filing, the

importer electronically inputs an indicator on any entry summary which

is subject to reconciliation. This indicator identifies the issue(s)

subject to reconciliation.

b. Blanket flag: Prior to filing entry summaries subject to

reconciliation, the importer notifies Customs of the importer of record

number, the time period in which entry summaries are subject to

reconciliation, and the issue(s) subject to reconciliation. Customs

will input an electronic indicator on ALL entry summaries within the

defined scope, which will identify them as being subject to

reconciliation for the issue(s) indicated. Please note: Customs will

determine at a later date if the blanket flag can include more specific

parameters, e.g., HTS number, country of origin, etc.

4. Entry-By-Entry Reconciliation: A Reconciliation in which the

revenue adjustment is specifically provided for each affected entry

summary.

5. Aggregate Reconciliation: A Reconciliation filed with summarized

data showing reconciled adjustments at an aggregate level. A list of

the affected entry summaries is required, but the revenue change need

not be broken out according to individual underlying entries. Aggregate

Reconciliations may be used only where all adjustments covered by the

Reconciliation result in absolute increases in duties, taxes, and fees.

Drawback is not available and may not be requested on the increased/

reconciled adjustment.

6. Absolute increase: Each underlying entry summary covered by the

Reconciliation results in an increase or no change in duties, taxes,

and fees. Only absolute increases are eligible for Aggregate

Reconciliations.

Examples: Where entry summaries A and B are both covered by a

Reconciliation, the Reconciliation would have an Absolute Increase if

the changes to both entry summaries would be increases or no changes.

If A increased and B decreased, even if A's increase is greater than

B's decrease, this is NOT an Absolute Increase. See Netting, below.

Note: This principle applies at the entry level rather than at

the line level. That is, regardless of decreases on individual lines

on entry A, as long as the total change for entry A resulted in an

increase in duties, taxes, and fees, it could be considered part of

an Absolute Increase.

7. Netting: Situations in which increases AND decreases resulted at

the end of the reconciliation period. In any netting situation, the

importer has the following options:

a. File an Entry-By-Entry Reconciliation to account for both the

increases and decreases, or

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b. File two Reconciliations: An Aggregate Reconciliation for all

the increases and an Entry-By-Entry Reconciliation for all the

decreases.

C. Description of the NCAP/P Reconciliation Component

1. Exclusive Means

Operating concurrent with the reconciliation component of the NCAP/

P is a reconciliation prototype in ACS (see 63 FR 6257, dated February

6, 1998). Any party who elects to reconcile entries pursuant to 19

U.S.C. 1484(b) may only do so through the reconciliation component of

the NCAP/P or the ACS Reconciliation Prototype. These prototypes will

serve as the exclusive means to reconcile entries for (1) value, (2)

classification on a limited basis, (3) merchandise entered under

Harmonized Tariff Schedule of the United States (HTSUS) heading 9802,

and/or (4) merchandise entered under the North American Free Trade

Agreement (NAFTA). Outside of reconciliation, the only alternative

post-entry, pre-liquidation adjustment will be to file a Supplemental

Information Letter for each affected entry summary, with appropriate

corrective data and duty tenders. (For information on the Supplemental

Information Letter, see Automated Broker Interface (ABI) administrative

message #97-0727, posted on 8/4/97, entitled ``314 Day Liq Cycle--Trade

Notice''.) As always, importers retain the right to request extension

of liquidation of entry summaries, as described in 19 CFR

159.12(a)(ii).

2. Notice of Intent

A notice of intention to file a Reconciliation (``Notice of

Intent'') identifies an undeterminable issue, transfers liability for

that issue to a Reconciliation and permits the liquidation of the

underlying entry summary as to all issues other than those which are

transferred to the Reconciliation. By providing a Notice of Intent, an

importer is requesting that a certain issue or group of issues be

separated from the entry summary. The importer voluntarily requests and

accepts that the issue(s) identified in the Notice of Intent remain

open and outstanding. The importer remains responsible for filing a

Reconciliation, and liable for any duties, taxes, and fees resulting

from the filing and/or liquidation of the Reconciliation. The Notice of

Intent creates an obligation on the importer to file the

Reconciliation. Importers participating in this prototype will

recognize that the liquidation of the underlying entry summaries

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

Notice of Intent.

Only consumption entries may be filed in the NCAP/P system, and

therefore, only consumption entries via the NCAP/P may be flagged for

reconciliation under this prototype. The underlying entry summaries

flagged for a Reconciliation may be filed at any port within the NCAP/

P, including any combination of ports.

a. Option: Individual Entry Flag. During this prototype, the

importer may ``flag'' the underlying entry summaries at time of summary

filing via an electronic indicator, which will serve as the Notice of

Intent.

b. Option: Blanket Flag. Importers may provide their Notice of

Intent by filing a ``blanket flag'' in lieu of individual entry flags.

The blanket flag will identify the Importer of Record number, range of

dates in which the underlying entry summaries will be subject to

reconciliation, and the issue(s) subject to reconciliation. (Customs

will determine at a later date if additional parameters, such as HTS

number, may be specified in the blanket flag.) This notification must

be received by Customs no later than seven working days prior to

transmission of the first entry summary being flagged under the

blanket. Upon receipt of the blanket flag, Customs will automatically

apply the above-mentioned electronic indicator to the entry summaries

within the identified scope.

c. Option: Retroactive Flag. Customs is exploring the

implementation of an option to retroactively flag entry summaries for

reconciliation. A retroactive flag, if implemented, would enable the

importer to request a Notice of Intent after filing and prior to

liquidation of the entry summary. Retroactive flags would be requested

on an individual entry basis, and would require approval by Customs.

Customs will notify participants if this option is implemented.

3. Issues To Be Reconciled

The NCAP/P reconciliation component will allow the following issues

to be flagged for reconciliation: value, HTSUS heading 9802, NAFTA, and

classification on a limited basis.

a. Value--The reconciliation component of the NCAP/P is open to

reconciliation of all value issues.

b. HTSUS heading 9802--The issue of 9802 includes the value aspect

involved with this HTSUS provision, e.g., reconciling the estimated to

actual costs.

c. NAFTA--Reconciliation may be used as a vehicle to file post-

importation refund claims under 19 U.S.C. 1520(d). NAFTA

Reconciliations are subject to the obligations of 19 CFR Part 181,

subpart D. The importer must possess a valid Certificate of Origin at

the time of making a NAFTA claim. Presentation of the NAFTA Certificate

of Origin to Customs is waived for the purposes of this prototype, but

the filer must retain this document, which shall be provided to Customs

upon request. The Certificate of Origin is part of the (a)(1)(A) list

(19 U.S.C. 1508(a)(1)(A)), and covered by the recordkeeping provisions

of the Customs laws and regulations. Filers are reminded that interest

shall accrue from the date on which the claim for NAFTA eligibility is

made (the date of the NAFTA Reconciliation) to the date of liquidation

or reliquidation of the Reconciliation. The obligation to file a

Reconciliation opened by the Notice of Intent applies to all

Reconciliations, including NAFTA, even if the participant finally

concludes it cannot file a valid 520(d) claim, in which instance the

NAFTA Reconciliation would be filed with no change.

d. Classification--Classification issues will be eligible for

reconciliation as long as the reconciled HTS classification falls

within the pre-identified 6-digit HTS provisions provided on the

participant's application. Generally, the exercise of reasonable care

should ensure that Reconciliations do not result in a tariff shift

outside the pre-identified HTS provisions. However, at the time such a

tariff shift has been identified, the participant must immediately

refrain from entering the merchandise classified outside the pre-

identified HTS provisions in any future NCAP/P shipments. A participant

may include this merchandise in future NCAP/P shipments only after

submitting an application amendment with the proposed changes to HTS

provisions and obtaining Customs approval of this amendment. The

failure to identify merchandise not included in the original

application or filed in amended applications in a timely manner may

result in penalties, administrative sanctions and/or suspension from

the prototype.

4. Filing of the Reconciliation

The continuous bond on the underlying entry summaries flagged for

reconciliation will be used to cover the Reconciliation. Customs will

accept no drawback claims on the underlying entry summaries until the

Reconciliation is filed with duties, taxes, and fees deposited.

The following choices are for the type of Reconciliation filed.

They are not conditioned on the method of flagging used. In other

words, an importer can

[[Page 44954]]

flag entry summaries either individually or via a blanket application,

and reconcile those entry summaries via an Entry-By-Entry or Aggregate

Reconciliation.

a. Entry-by-Entry Reconciliation.

(1) This option can be used for all reconciliation adjustments,

including refunds of duties, taxes, and fees.

(2) The revenue adjustment will be broken down to entry-by-entry

detail for all underlying entry summaries.

(3) After the Reconciliation has been filed, drawback may be

claimed against the underlying entry summaries and, if appropriate, the

reconciled increase.

b. Aggregate Reconciliation.

(1) This option applies only to those situations which involve an

absolute increase, i.e., each entry covered by the Reconciliation

results in an increase or no change in duties, taxes, and fees. If

netting is involved to reach a net increase, this option does not

apply. (See Definitions section above for more details.) For example,

entry 123 covers product A. Entry 234 covers product B. An assist was

provided for product A, which resulted in an increase in duty. The

value of product B was affected by currency fluctuations, which

resulted in a decrease in duty. An Aggregate Reconciliation cannot be

filed to cover both entry 123 and entry 234. Remember, this restriction

against netting applies only to netting between different entries. If

entry 456 covers both products A and B, as long as entry 456 as a whole

had an increase in duties, taxes, and fees, it may be included in an

Aggregate Reconciliation.

(2) After the Reconciliation has been filed, drawback may be

claimed against the underlying entry summaries, but may NOT be claimed

against the reconciled increase. Furthermore, participants should be

aware that duties, taxes, and fees paid on an Aggregate Reconciliation

may only be refunded through adjustments to that Reconciliation on

which the duties, taxes, and fees were paid, i.e., not through drawback

or any other claims on the underlying entry summaries or a related

Reconciliation (when two Reconciliations are filed on one entry

summary.)

Example: The duty paid on the underlying entry summary is $1,000,

and the amount of the Aggregate Reconciliation adjustment is $10,000.

The $1,000 paid at entry summary is eligible for a drawback refund. The

$10,000 reconciliation adjustment is not eligible for a drawback

refund. By opting to file an Aggregate Reconciliation, all participants

understand that they waive their ability to claim drawback or transfer

drawback rights for the amount of the reconciled increase.

(3) The Reconciliation will include a list of all underlying entry

summaries, but will not require the revenue adjustment to be broken

down by entry.

5. Filing of the Reconciliation--Grouping, Timeliness, and Location

Reconciliation is to be used to group entries together for a

common, outstanding issue. Entry summaries flagged for reconciliation

which have the same outstanding information should all be grouped on

one Reconciliation, e.g., entry summaries flagged for reconciliation

awaiting finalization of assist information should be grouped on one

Reconciliation where the assist information is provided.

A Reconciliation of value, HTSUS heading 9802 and/or classification

shall be filed within 15 months of the date of the oldest entry summary

flagged for and grouped on that Reconciliation. A Reconciliation may

cover any combination of value, HTSUS heading 9802 and classification

issues. Should the issues of value, HTSUS heading 9802 and/or

classification on one entry summary be flagged for reconciliation, the

participant shall address all those issues on the same Reconciliation.

A NAFTA Reconciliation must be filed within 12 months of the date

of importation of the oldest entry summary flagged for and grouped on

that Reconciliation. NAFTA Reconciliations may not be combined with

other issues, because of NAFTA's unique nature and different due dates,

and so that Customs may expedite the processing of such refunds.

One underlying entry summary may have up to two Reconciliations,

one for any combination of classification, HTSUS heading 9802 and/or

value, and one for NAFTA. A Reconciliation which is not filed by the

appropriate deadline will be handled as a liquidated damages claim for

failure to file.

6. Effect of Reconciliation on Drawback

Inherent in the concept of reconciliation is the fact that, because

certain issues are kept open pending filing of the Reconciliation, the

information regarding these issues and the resulting liability for the

duties, taxes, and fees previously asserted by the importer may change

when the Reconciliation is filed. Customs will therefore not accept

drawback claims or certificates on underlying entry summaries flagged

for reconciliation until the Reconciliation is filed with all duties,

taxes, and fees deposited. In the case of a drawback claim and a

reconciliation refund against the same underlying entry summaries, the

importer is responsible for ensuring that a claim for a refund in

excess of the duties paid is not filed with Customs and for

substantiating how the drawback and reconciliation refund requests

apply to different merchandise.

Since drawback is paid on a per-entry basis, reconciled adjustments

filed with aggregate data are not eligible for drawback. As the

adjustment made pursuant to an Aggregate Reconciliation is not

connected to specific entry summaries, it would be impossible for

Customs to ensure that those duties were indeed entitled to drawback,

and/or that the duty for which the drawback was claimed had not been

previously refunded on the underlying entry summary(ies).

7. Filing of Reconciliation--Bond Issues

Entry summaries flagged for reconciliation will require a

continuous bond, which must be accompanied by a rider. The rider shall

read as follows:

By this rider to the Customs Form 301 No.________, executed on

________, by ________ as principal(s), importer no(s). ________, and

________, as surety, code no. ________, which is effective on ________,

the principal(s) and surety agree that this bond covers all

Reconciliations pursuant to 19 U.S.C. 1484(b) that are elected on any

entries secured by this bond, and that all conditions set out in

Section 113.62, Customs Regulations, are applicable thereto. The

principal(s) and surety also agree that, when an Aggregate

Reconciliation under this rider lists entries occurring in more than

one bond period, any liabilities to Customs reflected in that Aggregate

Reconciliation shall be attributable (up to the full available bond

amount) to any or all of those bond periods.

The continuous bond obligated on the underlying entries, along with

the rider, will be used to cover the Reconciliation. Adequate bond

coverage must exist for the Reconciliation.

All underlying entry summaries subject to one Reconciliation must

be covered by one surety and one continuous bond. Each Reconciliation

must be covered by one surety. Termination of the continuous bond,

either by the bond principal or surety, will require that a

Reconciliation be filed for the entries covered by the terminated bond,

and a separate Reconciliation be filed for the entries covered by the

new bond (within the designated time frames).

Termination of the Reconciliation Bond Rider by either the

principal or the surety may be affected in accordance

[[Page 44955]]

with procedures set forth in part 113.27, Customs Regulations.

Termination of the Reconciliation Bond Rider will not serve to

terminate the underlying bond. Moreover, it should be noted that

Customs will not terminate bonds or riders filed pursuant to this

prototype.

8. Reconciliation Component of the NCAP/P--Chain of Events

a. Entry summaries flagged for reconciliation--

(1) An electronic indicator, or ``flag'', signifying that

underlying entry summaries are to be reconciled, will be applied at the

header level. The flag designates that the indicated issue(s) for the

entire entry summary (not just a specific line) is subject to

reconciliation.

(2) As mentioned above, there is also a ``blanket application''

option, in which ACE will automatically set the flag for all of an

importer's entry summaries for a given period for a given issue(s).

(3) For purposes of this prototype, the ``flag'' (set either by the

filer or by Customs in accordance with a blanket application) serves as

the importer's Notice of Intent to file a Reconciliation. The flag may

be transmitted at the time of summary filing, or after summary filing

in the case of a retroactive flag.

(4) The importer must use reasonable care in filing the entry

summary, including but not limited to declaring the proper value,

classification, and rate of duty on the underlying entry summary,

regardless of whether a particular issue has been flagged for

reconciliation. For example, if the entry summary is subject to value

reconciliation, the importer must still use reasonable care in

providing a good faith value estimate, and deposit the appropriate

duties, taxes, and fees at time of entry summary.

(5) Entry summaries may be flagged for reconciliation until the

close of the test period.

b. Liquidation of underlying entry summaries--Liquidation of the

underlying entry summary will occur as with any entry summary and will

be posted to the Bulletin Notice of Liquidation. Importers who

participate in this prototype will recognize that the liquidation of

the underlying entry summary pertains only to those issues not

identified by the importer as subject to reconciliation. Upon

liquidation of the underlying entry summaries, any Customs decisions

entering into that liquidation can be protested pursuant to 19 U.S.C.

1514. It should be noted that liquidation of the underlying entry

summaries may, but does not necessarily, precede the filing of the

Reconciliation.

c. Importer Electronically Transmits the Reconciliation--

(1) When the importer has finalized the outstanding information,

and has the answer to the issue in question, the filer, using

reasonable care, will electronically transmit the Reconciliation to

Customs.

(2) Transmission of a Reconciliation for value, HTSUS heading 9802,

and/or classification must occur within 15 months of the date of the

oldest entry summary flagged for and grouped on that Reconciliation.

Transmission of a NAFTA Reconciliation must occur within 12 months of

the date of importation of the oldest entry summary flagged for and

grouped on that Reconciliation.

(3) Each Reconciliation will be limited to one importer of record

and one surety, i.e., the underlying entry summaries and the

Reconciliation must have the same importer of record and the same

surety.

(4) This prototype will allow up to 9,999 underlying entry

summaries per Reconciliation.

(5) The importer must clearly document how the information in the

Reconciliation was derived. The importer must maintain all supporting

documentation required to substantiate the declaration made via the

Reconciliation, and provide this information to Customs or Census upon

request. Supporting documents may include, but are not limited to:

(a) CF 247--Cost Submission;

(b) Detailed line-level spreadsheets;

(c) Landed cost analysis sheets;

(d) Invoices, purchase orders, and contracts; and

(e) Documents supporting apportionment of assists in accordance

with 19 CFR 152.103(e).

(f) Documents supporting a post-importation NAFTA claim in

accordance with 19 CFR 181.32.

The recordkeeping provisions of the Customs laws and regulations

apply to the Reconciliation and all supporting documentation as

described above.

(6) While underlying entry summaries may be flagged until the close

of the test period, Reconciliations may be filed and liquidated after

the closing date of the test.

(7) Structure--For both the entry-by-entry and aggregate methods of

reconciliation, the structure of the Reconciliation will include a

header, association file, and line item data. The header record will

contain basic summary data for the Reconciliation. The association file

will contain the list of entry summaries being reconciled, and for

Entry-by-Entry Reconciliations, the revenue adjustment per entry

summary. Under the line item data, each reconciliation line will be

consolidated for all of the underlying entry summaries listed in the

association file. Each combination of HTSUS, country of origin, Special

Program Indicator (SPI) and calendar year of release will require a

separate line. Upon request, Customs will provide applicants and other

interested parties with sample Reconciliations of each type.

d. Payment--Payments of duties, taxes, fees, and interest due from

the participant as a result of the Reconciliation will be reflected on

the participant's periodic statement and are due on the statement pay

date. (See Section IX below). Refunds will be paid individually at the

time of liquidation. Interest on increases due Customs must be

deposited when the Reconciliation is filed, and will be calculated

pursuant to 19 U.S.C. 1505.

e. Taxes and fees--For entry-by-entry Reconciliations, all taxes

and fees on each entry summary must be adjusted to show the correct

amount appropriate to that entry summary had the complete information

for the transaction been known at the time of entry summary filing. On

Aggregate Reconciliations, since monetary changes to individual entry

summaries are not reported, adjustments to taxes and fees will be

reported as follows:

(1) Taxes and Fees applied to individual commodities, such as

Cotton Fee, Beef Fee and the like, will be adjusted by multiplying any

increase in dutiable value by the rate associated with the tariff

number for the product in question.

(2) For Harbor Maintenance Tax (HMT), the importer is responsible

for determining and declaring the amount owed, based on any increase in

dutiable value, for those products which had been subject to HMT at the

time of original entry summary.

(3) Merchandise Processing Fee (MPF) will be determined and

declared in a similar fashion. The importer is responsible for

determining and declaring the proper amount of MPF due based on any

increase in dutiable value, at the MPF rate applied to the product at

time of filing the underlying entry summary. Because there is a maximum

assessment of MPF for entry summaries, Customs will use the following

formula to set the maximum MPF to be paid on an Aggregate

Reconciliation: [($485 x number of entries covered by the

Reconciliation which were subject to MPF), less the amount of MPF

already paid on those same entries.]

f. Liquidation of Reconciliation--

[[Page 44956]]

(1) The Reconciliation will be reviewed and liquidated, and the

liquidation of the Reconciliation will be posted to the Bulletin Notice

of Liquidation. One bill or refund will be issued if a revenue change

is appropriate. Revenue changes determined at liquidation will not be

included on the periodic statement. Participants should recognize that

there may be instances where no bill or refund is necessary. Interest

will be calculated in accordance with 19 U.S.C. 1505. Please note:

Customs is in the process of analyzing options for interest calculation

which are revenue-neutral and do not link to every underlying entry

summary. A subsequent Federal Register notice will be published with

any options for interest calculation. Until such further notice,

interest must be calculated in accordance with 19 U.S.C. 1505.

(2) On a matter of dispute, the importer may follow normal protest

procedures (pursuant to 19 U.S.C. 1514) with regard to any decision

pertaining to the liquidation of the Reconciliation.

D. Reasonable Care and Recordkeeping

Under the statutory mandate of 19 U.S.C. 1484, the importer is

responsible for using reasonable care in declaring at entry, among

other things, the proper value, classification and rate of duty

applicable to imported merchandise. The public is reminded that the

obligation to use reasonable care applies to all aspects of

reconciliation, including the filing and flagging of the underlying

entry summaries and the filing of the Reconciliation.

Auditable and verifiable financial records must be the basis for

any Reconciliation. Accordingly, the importer is required to maintain

all records to support the Reconciliation, whether an Entry-By-Entry or

Aggregate Reconciliation, pursuant to Customs recordkeeping laws and

regulations, and maintain a system of records providing an audit trail

between the data provided in the Reconciliation and the importer's

books and records.

Upon request by Customs and/or Census, further information in

support of the Reconciliation must be provided by the importer. For

example, Customs may, for verification purposes, request that the

importer break down a certain [HTSUS/country of origin] line by part

number, contract number, etc., and provide the documentation to support

the change made at that level. The importer will have to track the

adjustment to entry if requested by Customs. Census may in certain

circumstances request that the yearly change for a given [HTSUS/country

of origin/SPI] be broken down to quarterly adjustments, in order to

capture seasonal fluctuations.

IX. Statement Processing

In order to permit a different procedure to test the periodic

deposit of estimated duties without adversely affecting the collection

of revenue, participants must abide by the following procedures.

A. Periodic Statements

Customs will electronically produce two types of statements each

month, one before (preliminary) and one after (final) the filing

deadline. The preliminary statement will be available anytime from the

1st of the month following the release period (calendar month) until

the 10th of the month following the release period. The preliminary

statement must be requested by the participant; it will not be issued

automatically. It will then be produced as part of a scheduled periodic

automated routine. The preliminary statement is for information

purposes only.

The final statement will be produced immediately after the 10th of

the month following the release period (filing deadline). The final

statement will show amounts due to, or payable by, Customs. Any amounts

due shall be initiated via ACH credit by the 15th of the month

following the release period. Only NCAP/P entry release transactions

will be included on the statement.

1. Entries Released During the Release Period

All entries, with revenue due, released during the release period,

will be listed on the final statement. This will include

Reconciliations filed during the release period. The statement will

show the amount due and the amount of the preliminary estimated

payments (described below) applied to each entry. The statement will

normally contain a balance due, but if the preliminary estimated

payments exceed the total estimated duties, taxes, and fees due, there

would be an amount payable by Customs.

2. Prior Statement Items

Any estimated duties, taxes, and fees that have appeared on a

previous statement that have an open balance, payable to Customs, will

be listed on the final statement. This will consist of any NCAP/P entry

transactions where the participant still owes Customs estimated duties,

taxes, and fees.

3. Violation Bills

Any violation bills that are open at the time the final statement

is produced will be listed on the statement for informational purposes

only. The violation bills will be shown separately and the amounts will

not be consolidated with entry related transactions. Customs will only

apply funds to violation bills if specifically designated by the

participant. (See Section X below.)

B. Payment Process

The participant will make three types of payments to Customs via

ACH credit. The three types include preliminary estimated payments,

final statement payments, and specific payments.

1. Preliminary Estimated Payments

The preliminary estimated payments shall be initiated by the 15th

and last day of the month of the release period. If the 15th or the

last of the month falls on a weekend or holiday, the payment shall be

initiated by the next business day. These estimated payments are to

ensure revenue neutrality.

a. All payments shall be made via ACH credit and initiated no later

than the 15th or the end of the month.

b. The first preliminary estimated payment will be 75% of the

estimated revenue due to Customs as a result of entry activity for the

first 15 days of the calendar month.

c. The second preliminary estimated payment will be 57% of the

estimated revenue due to Customs as a result of entry activity from the

16th to the end of the month.

These percentages will be reviewed and may have to be adjusted to

maintain revenue neutrality. The participant will be required to

identify the applicable release period for the payment. This

identification will be done as part of the ACH transaction. The

preliminary estimated payment will always be applied against the

entries released during the period identified by the participant. If

there is an amount remaining after this application, that is, if the

estimated payments exceed the total duties, taxes, and fees due for the

period, it will be held by Customs and applied to the next statement,

unless the participant requests a refund within 10 calendar days.

2. Final Statement Payment

This payment shall be initiated by the 15th of the month following

the release period, and should include:

a. Any prior period estimated duties, taxes, and fees, payable to

Customs; and

b. The difference between the total amount of revenue due on entry

[[Page 44957]]

summaries filed during the release period and the preliminary estimated

payments.

The final statement payment shall be initiated, through ACH, on the

15th of the month following the release period. The settlement date of

this transaction is the date which will serve as the date of actual

deposit of estimated duties and fees for purposes of assessing interest

under 19 U.S.C. 1505. The final statement payment received by Customs

will be applied against any estimated duties, taxes, and fees payable

to Customs listed on the statement. If there is an amount remaining

after this application, that is, if the final statement payment exceeds

the final statement amount due, it will be held by Customs and applied

to the next statement, unless the participant requests a refund within

10 calendar days.

3. Specific Payment

This is a payment that explicitly identifies the item to be paid.

This identification is done as part of the ACH payment transaction. A

specific payment will be applied against the specifically identified

item. If there is an amount remaining after this application, that is,

if the payment exceeded the amount due for the specific item, it will

be held by Customs and applied to the next statement, unless the

participant requests a refund within 10 calendar days. If the specific

item identified by the participant is not found, the payment will be

held in suspense until further instructions are provided by the

participant. The participant may notify Customs of any individual

amounts due to which they do not want Customs to apply funds. Customs

will not apply any funds to these items until explicitly informed to do

so by the participant.

X. Misconduct Under Prototype

All participants in the NCAP/P, whether accepted under the prior

notice or this notice, are required to abide by the terms and

conditions of this notice. Customs may employ the violation billing

process for certain instances of misconduct. In those instances where a

bond breach has occurred, the facts are known, and the harm to the

government is quantifiable, Customs may issue a violation bill to the

participant. The participant may choose to pay the violation bill, in

which case, liquidated damages will not be issued and the matter will

be closed. Should the participant wish to contest or fail to pay the

violation bill, liquidated damages will be issued and the

administrative procedures of Part 172 of the Customs Regulations will

be invoked.

If a participant is removed from or voluntarily discontinues

participation in the Importer Compliance Monitoring Program; if a

participant fails to cooperate fully in a Compliance Assessment or

audit, provide timely and accurate data and adequate resources in

support of a Customs Compliance Assessment or audit; if a participant

fails to abide by the terms and conditions of a compliance improvement

plan; if a participant enters or attempts to enter goods conveyed by

non-LBCIP carriers on the southern border; enters or attempts to enter

goods from shippers or sellers/vendors or conveyed by carriers not

approved by Customs; enters or attempts to enter goods classified in

commodity ranges not approved by Customs; files non-consumption

entries; enters or attempts to enter or submit data relating to

prohibited merchandise, merchandise subject to quota or antidumping or

countervailing duties, or other non-eligible merchandise; fails to

maintain sufficient continuous bond coverage; files erroneous or

untimely data; makes late or inadequate payments; misuses

reconciliation by using it when the reconciliation issue is not truly

undeterminable at the time of entry summary; fails to supply Customs

with requested invoice data or sufficient supporting documentation for

a Reconciliation; fails to maintain a sufficient level of compliance;

fails to exercise reasonable care in the execution of participant

obligations; or otherwise fails to follow the procedures outlined

herein, and applicable laws and regulations, then the participant may

be suspended from the prototype, subject to liquidated damages,

penalties, and/or other administrative sanctions, and/or prevented from

participation in future prototypes. Customs has the discretion to

suspend a prototype participant based on the determination that an

unacceptable compliance risk exists. This suspension may be invoked at

any time after acceptance in the prototype.

Any decision proposing suspension of a participant may be appealed

in writing to the Director, Trade Compliance, within 15 days of the

decision date. Such proposed suspension will apprise the participant of

the facts or conduct warranting suspension. Should the participant

appeal the notice of proposed suspension, the participant should

address the facts or conduct charges contained in the notice and state

how he does or will achieve compliance. However, in the case of

willfulness or where public health interests or safety are concerned,

the suspension may be effective immediately.

XI. Regulatory Provisions Suspended

Certain provisions of Parts 24, 111, 113, 141, 142, 143, 159 and

181 of the Customs Regulations (19 CFR Parts 24, 111, 113, 141, 142,

143, 159 and 181) will be suspended during this prototype test to allow

for monthly filing of entry summary data, periodic payment of duties,

taxes, and fees, reconciliation for NAFTA, classification, value and

9802 issues, liquidation, billing and remote filing by Customs brokers

in ports where they currently do not hold permits.

Absent any specified alternate procedure, the current regulations

apply.

XII. Prototype Evaluation

Once the importers are selected for the NCAP/P, the Joint Prototype

Team will, during the initial six months of the test period, evaluate

the effectiveness of the automation involved. Subsequent reviews will

additionally consist of evaluating the data received from the

importers, along with the internal and external process operations of

the NCAP/P.

Additional importers may become eligible during the prototype

period, using the eligibility requirements cited above, thereby

increasing the number of companies involved in the NCAP/P. The

evaluation of the prototype as it pertains to these importers may occur

separately from that which is done on the original participants.

Regardless, the intention of the evaluations is to enhance operational

procedures and to develop the detailed data requirements that are

needed for the NCAP/P.

Note that the fact of participation in the NCAP/P is not

confidential information. Lists of participants will be made available

to the public by means of the Customs Electronic Bulletin Board and the

Customs Administrative Message System, and upon written request. We

stress that all interested parties are invited to comment on the

design, conduct, and evaluation of the NCAP/P at any time during

prototype.

Upon conclusion of the prototype the final results will be

published in the Federal Register and the Customs Bulletin as required

by Sec. 101.9(b), Customs Regulations, and reported to Congress.

Dated: August 17, 1998.

Robert S. Trotter,

Assistant Commissioner, Office of Field Operations.

[FR Doc. 98-22480 Filed 8-20-98; 8:45 am]

BILLING CODE 4820-02-P