Every Dog Has Its Day - In Court

Since OFAC updated their list of violators and the former University of Tennesse professor was sentenced for his violations this week, it’s only fair that we add an importer to this list.

The importers of contaminated pet food that killed and caused severe sickness in cats and dogs across the country in 2007 may face jail time for their involvement. The pet food was manufactured with tainted gluten from China. The owners pleaded guilty to various charges contained in a Feb. 6, 2008, federal indictment. As a result of an investigation by the Food & Drug Administration (FDA) and U.S. Immigration and customs Enforcement (ICE), the importers were prosecuted by the U.S. Attorney’s Office for the Western District of Missouri.

The two owners of the import company could face two years in prison and a maximum fine of $200,000; however, it is likely they will be given the lesser sentence of probation and a reduced penalty payment. The corporation is subject to a fine of up to $400,000 and a requirement for restitutions. Sentencing hearings will be scheduled after the U.S. Probation Office completes its investigations.

Trade Terms Tuesday

Welcome to Trade Terms Tuesday! Each Tuesday, we will share three trade-related terms. In order to reach out to our diverse readership, we will try to provide one for exports, one for imports and one for logistics/transportation. This week, we continue with the J’s.

Jettison
Jettison is the intentional throwing of cargo overboard to lighten the weight of a vessel to save the ship and its content. Although some contents are lost, the act serves the common good for the interests of the vessel, crew and remaining cargo.


J-List
The J-List is a list of items found in 19 CFR 134.33 that are exempted from individual country or origin marking; however, the outer containers/packaging must be marked.


Jurisdiction
Export commodities are generally regulated by the Department of Commerce or Department of State.

Commodity jurisdiction requests are made to determine whether an item or service is covered by the U.S. Munitions List (USML) and therefore subject to export controls administered by the U.S. Department of State pursuant to the Arms Export Control Act and the International Traffic in Arms Regulations (ITAR). The Directorate of Defense Controls (DDTC) is responsible for providing information on commodity jurisdiction, which determines the export licensing authority between the Department of Commerce and Department of State. The U.S. Department of Commerce has export control jurisdiction over the export of dual use items and items which have strictly civilian or commercial uses.

Classification of Decals, Stickers & Labels

Thank you for joining us for our series on classification. Last Monday, we discussed the classification of gaskets. Today, we will explore the classification of decals, stickers and labels.

Aren’t decals, stickers and labels all the same thing? These items “stick” to something else, right? Is there one tariff provision that covers these items? Obviously, the answer to these questions is “no.” The HTS makes classification of certain items more complex than we might expect. Thus, we have the need to provide a little more depth to our research and not just assume that the first provision we find will cover our product. This requirement becomes quite evident in our attempt to classify decals, stickers and labels. Due to the information needed and complexity of classifying these items, the purpose of this article is only to identify the primary differences between the articles so that our readers will be aware of the options.

First, it is important to have a basic definition of each article for classification purposes.

Decal
A decal usually consists of an image printed onto a coated sheet, usually of paper or plastic. The imprint is coated with an adhesive and is designed to be transferred from the sheet to another object to serve as a decoration, informational marking, etc. The transfer is generally made by placing the entire sheet to the receiving surface and applying pressure to the back of the sheet.

Sticker
For CBP purposes, a sticker is a gummed piece of paper or plastic that has been printed with designed, pictures, words, etc. Stickers are normally peeled off their backing and stuck onto the surface using the pressure from a finger.

Label
Labels are virtually indistinguishable from the paper stickers; however, for purposes of the tariff, the difference is related to their principal use. Stickers are primarily used for decorative purposes, while labels are used to convey information about the items to which they are attached.

Maybe our first thought was correct. To the average consumer, decals, stickers and labels are all the same thing, but to the importer, customs broker and CBP, they are very different items.

As with many products, the classification of the decals, stickers and labels will depend on what they are made of and how they are used. Therefore, before these articles can be classified, we must determine what they are made of and how they are used.

Next, we want to identify the possible classifications. Decals, stickers and labels are found in some of the following HTS Chapters.

Plastic Stickers – 3919 (flat)
Plastic Stickers – 4911 (3-dimensional)
Paper Decals - 4908
Paper Stickers – 4911
Paper Labels - 4921
Textile Labels - 6307

Consulting the Section/Chapter Notes and Explanatory notes will also provide some additional detail about the properties of these articles that are included in and/or excluded from certain tariff provisions.

Closely related to this step is the importance of the invoice description of these items. Since the average person might consider these items to be indistinguishable, the party preparing the invoice might describe all of these articles as decals. If you were presented with an invoice for “decals,” could you properly classify them from only one word? From our research, we now know that we must determine the material and use in order to properly classify these items. It would be extremely difficult and unwise, from a compliance standpoint, to attempt classification with only the word “decal.” Remember, binding rulings and Informed Compliance Publications can be great resources when classifying difficult items.

Click HERE to view a CBP Ruling on plastic decals.
Click HERE to view a CBP Ruling distinguishing a paper sticker from a paper label.
Click HERE to view CBP’s Informed Compliance Publication on Decals and Stickers.

Join us next week as we tackle another challenging classification issue. If you have any specific commodities or sections of the HTSUS that you would like to see discussed in this series, please feel free to post a comment or send your suggestions to wizard@boskage.com.

Ask the Wizard: Skills Brokers Need

Each Friday, the Wizard joins us to share an answer to one of the questions asked during the week. This week we had an excellent question about skills needed in order to become a customs broker.

Question:
Other than passing the exam, are there other skills that someone needs to be a broker?

In addition to the passing the brokers exam, there are other skills and abilities that are helpful for brokers to have. Customs brokers should possess above average communication skills, a good memory, patience and high standards of integrity. They should enjoy working with a diverse group of clients as well as computers. Brokers must be able to keep up with a fast-paced environment and constantly changing computer systems and trade regulations. They need the ability to evaluate shipments and details in a short time and work well under pressure. Since brokers work with the law, they must be honest and ethical or risk losing their licenses if they provide inaccurate or incorrect information to customers. Because of the deadlines, laws and amount of information involved, being detail-oriented and organized are also important traits for being successful.

If you have any other skills to add to this list, please leave your comment for others to see.

Do you have a question for the Wizard? Submit your question by clicking on the link in the space for “Ask the Wizard.” See you next Friday!

How to Win a Free Place to Stay with Three Meals a Day

Need a break from your office? Would you like three free meals a day and a free place to stay? Check out the following tips. Only importers are eligible for this exciting opportunity.

1. Send emails to your foreign suppliers requesting two invoices – one with a lower cost for CBP and one with the actual cost submitted directly to you.
2. Submit fraudulent invoices to CBP.
3. Instruct your foreign supplier declare only 50% of the value on items with higher duty rates.
4. Intentionally misclassify goods to receive lower duty rates.
5. Keep records of all of these communications.

If you participate in the activities above, you might be the winner of an all expense paid trip to PRISON. Your first thought might be that another exporter made the news for shipping regulated goods to the wrong party. On the other hand, maybe you are thinking about the sentencing of the professor who was found guilty of export violations. There is a lengthy list of exporters that have been fined for violating one of the export laws, but we seldom hear of importers going to jail. That’s right, this time an importer is going to jail. What could this importer have done to land him in jail? Take a look at that list again. Pay attention, importers, this could be you!

On May 15, 2009, the importer from Mississippi was sentenced to nine months of imprisonment and was ordered to pay restitution in the amount of $10,403 and a $3,000 fine for his part in a customs fraud. Upon release from jail, the importer will be required to serve three years of supervised release. Did I forget to mention the free ankle bracelet?

Michael Holt, Special Agent-in-Charge of ICE’s Office of Investigation in New Orleans states, “We will continue to pursue those individuals and companies that circumvent duty requirements on imports. Those companies that perpetrate commercial fraud pose a serious problem for our country and will continue to be the focus of our enforcement actions."

Don’t mess with CBP or ICE in Mississippi or Louisiana unless you need/want a free place to stay with three meals a day.

CBP Posts Notice of Exam for October 2009

U.S. Customs and Border Protection posted a notice to its web site announcing the October 2009 Customs Broker License Exam. The exam will be held at various locations on Monday, October 5, 2009. Contact your local port office to verify testing locations. Applications (CBP 3124E) and the exam fee of $200 must be received on or before Friday, September 4, 2009. Applicants should bring the following reference materials to the exam. Please note the appropriate editions for the HTSUS and CFR.



- Harmonized Tariff Schedule of the United States (2009 version) (Supplement 1)

It is important to use this edition since questions often require the determination of the correct HTS number, duty rate and applicability of Free Trade Agreements, all of which may change slightly from year to year.

Note: This year's Supplement 1 has not yet been released by the ITC, but we expect that it will be released later this summer.

- Title 19, Code of Federal Regulations (revised as of April 1, 2009) Parts 0 to140, 141 to 199 and 200 to End) (no supplements)
CBP added Part 200 to End for the April Exam and there were five (5) questions from Part 351 on antidumping. Part 149 covering ISF was added to Title 19 this year, so it is a target for this exam.

Note: Because the April 2009 editions of Title 19 CFR are not yet available, Boskage has an inquiry in as to whether or not this is a typo. If it is not, all purchasers from Boskage of the 19 CFR for the October 2009 exam will be given the material they need to have an up-to-date edition.

- Customs and Trade Automated Interface Requirements (CATAIR)

• Appendix B - Valid Codes


• Appendix D - Metric Conversion


• Appendix E - Valid Entry Numbers


• Appendix G - Common Errors


• Appendix H - Census Warning Messages


• Appendix L - Drawback Errors


• Glossary of Terms
  

- Instructions for Preparation of CBP Form 7501 (8-30-2005)

-C-TPAT - Minimum Security Criteria for Customs Brokers (3-20-2007)

-Submission Changes for Supplemental Information Letters and Post Entry Amendments

-Remote Location Filing Eligibility Requirements

- Directives

• 3510-004, Monetary Guidelines for Setting Bond Amounts


• Amendment to 3510-004 for Certain Merchandise Subject to Antidumping/Countervailing Duty Cases


• 3550-055, Instructions for Deriving Manufacturer/Shipper Identification Code


• 3550-067, Entry Summary Acceptance and Rejection Policy


• 3550-079A, Ultimate Consignee at time of Entry or Release


• 3560-001A, Census Interface-Processing Procedures


• 5610-002A, Standard Guidelines for the Input of Names and Addresses Into Automated Commercial System (ACS) Files
  

It’s time to get ready for the next Customs Broker Exam! Click HERE for a complete list of the Boskage study plans and products designed to help you study and pass the exam! Guarantee that you receive the correct editions of the materials listed on the Notice of Exam by ordering the Required Testing Material Package. Don’t delay! Find the study plan that fits best with your schedule and learning preference. Remember, there is no substitute for actually reading and studying the required materials. Visit the Boskage Trade News Blog for additional for import/export news updates, articles about specific trade topics and helpful posts related the Customs Broker Exam!

Trade Terms Tuesday

Welcome to Trade Terms Tuesday! Each Tuesday, we will share three trade-related terms. In order to reach out to our diverse readership, we will try to provide one for exports, one for imports and one for logistics/transportation. This week, we continue with the I’s.

In Bond
The In-Bond System, a part of CBP’s Automated Commercial. Merchandise that is in the custody of Customs and Border Protection (CBP) is considered to be "in bond." To transport goods under CBP custody, the carrier’s surety bond is obligated for safe delivery of the merchandise and for holding the merchandise until it is released from CBP custody by either consumption entry or exportation. If the carrier fails to fulfill its obligation to transport and retain merchandise until it is properly entered into the customs territory or exported, CBP will issue a penalty for payment of damages.

International Trade Data System
The International Trade Data System (ITDS) is a government project that works with participating government agencies (PGA) and Customs and Border Protection (CBP) for the development of the Automated Commercial Environment (ACE). Prior to ITDS and ACE, the trade community was required to submit documentation required by the various government agencies to each individual agency using a variety of different automated systems, various paper forms, or a combination of both. With ITDS and ACE, the trade community will submit standard electronic data for imports or exports only once to ACE. Then, the data will be distributed to the federal agencies that have an interest in the transaction. ACE serves as a government data collection and distribution facility, a "single electronic gateway" through which information required for processing import and export transactions can flow efficiently from the trade to agencies. This single transmission to the common database eliminates the redundancy of the over 500 forms required by the various government agencies. ACE is the system and ITDS is the process that leads to the system. The implementation of ITDS will be extremely beneficial for uniting all the government agencies and streamlining the import process. ITDS will facilitate pre-arrival, arrival, revenue accounting, and collection along with the capabilities to track licenses and permits, monitor trade transactions, query and report, and provide a single storage area for centralized data management.

International Traffic in Arms Regulations
The ITAR is administered by the Department of State to control the export of articles, services and technical data that are designed, developed or modified for military use. The ITAR is covered by 22 CFR §§ 120-130.