CBP Ends Paper Courtesy Liquidation Notices

In an attempt to streamline the notification process and reduce mailing costs, U.S. Customs and Border Protection (CBP) has decided to eliminate mailing paper copies of courtesy notices of liquidation. Although not statutorily necessary, CBP had established the practice of issuing courtesy copies of liquidation notices to importers of record whose entry summaries are filed in the Automated Broker Interface (ABI). Such courtesy liquidation notices provide informal and advance notice of an entry’s liquidation date.

CBP will cease mailing paper copies, but will continue to issue electronic courtesy notices to all ABI filers, which include importers of record who file their own entries and customs brokers who file as the agent of the importer of record. Importers of record who do not file entries through ABI will continue to receive the paper liquidation notices. CBP has also indicated that importers of record with an Automated Commercial Environment (ACE) Secure Data Portal Account can monitor the liquidation of their entries by using the reporting tool in the ACE Portal.

CBP estimated that upon implementation of the new policy, the agency will avoid duplication of the courtesy notices and save approximately $3,000,000 in postage annually. Although CBP received several comments praising CBP’s effort to save money, other commentators were concerned that importers of record would become completely reliant on their brokers to provide the liquidation date information that affect myriad of deadlines and customs compliance issues.

In response, CBP indicated that brokers are obligated to provide the liquidation dates. In addition, CBP responded that the agency is currently reprogramming ACE to permit all importers of record to monitor liquidation of entries filed under their importer of record numbers through the ACE Portal. CBP explained that even for those importers who do not have ACE Portal Account, an importer may gain limited access to a broker’s ACE Portal Account to obtain reports for entries filed by the broker using the importer of record number belonging to that importer. CBP is also considering posting an electronic courtesy bulletin notice of liquidation.

In light of this change, importers should consider revising their import policies to ensure that their customs brokers(1) provide the liquidation notices to importers upon receiving the electronic courtesy copy and (2) permit the importer limited access to their ACE Portal Account so that the importer can obtain reports for its entries.

The final rule is effective September 30, 2011. See 76 Fed. Reg. 50883 (Aug. 17, 2011), http://www.gpo.gov/fdsys/pkg/FR-2011-08-17/pdf/2011-20957.pdf, CBP will implement the rule the first day on or after September 30, 2011 that CBP can provide importers with complete liquidation reports, including liquidation dates, through the ACE Portal. CBP will announce the exact date of implementation after it determines when the ACE reports will be ready.

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 L’s.

Less than Container Load (LCL)
LCL is the designation for cargo that does not meet the criteria for a full container based on quantity or weight. Since the cargo does not fill the container, it is combined with cargo belonging to another consignee to make a full container for shipping.

Liquidation
Liquidation is the final review by CBP of an entry. The date of liquidation starts the 180-day clock for filing protests. Unless an entry is subject to suspension or extension of liquidation or manual intervention, the entry will liquidate on the 314th day after entry. Liquidation closes the entry unless post-entry issues are pursued or fraud is suspected.

License Exception
Subject to certain conditions, a License Exception is an authorization that allows export without a license of items subject to the Export Administration Regulations that would otherwise require a license. The license exemptions are signified by three-letter symbols such as GBS, LVS and TMP. A license exception may depend on the nature of the item being exported, the country of ultimate destination, the end-use or end-user, or other circumstances surrounding the export. License exceptions are found in Part 740 of the EAR.

Ask the Wizard: Lessons on Liquidation

Each Friday, the Wizard joins us to share an answer to one of the questions asked during the week. This week we had several questions related to liquidation, so the Wizard wrapped them up into one neat little package for delivery to you. No CBP clearance required!

Question:

What is liquidation? How does it work and why should we care whether entries have liquidated?

In the midst of an economic crisis, the term “liquidation” might sound like something to be feared, but in reality, it is a good thing. “Liquidation” is a legal term that indicates all CBP requirements regarding an entry and the imported merchandise covered by it have been met. Liquidation indicates that the final computation of duties and review of the entry have been completed. Liquidation closes the entry unless post-entry issues are pursued or fraud is suspected.

Now that we have a definition, let’s see how the process works and why importers should care. The entry summary has been filed by the importer/broker, duties have been paid and the goods have been received. What else could be left for the importer to do? First, it is important to understand what is subject to liquidation. All entries covering imported merchandise except TIBs and transportation entries must be liquidated. In addition, the liquidation date for informal, mail and baggage entries will be

· The date of payment by the importer of duties due on the entry; or
· The date of release by CBP or postmaster when merchandise is duty free; or
· The date the free entry is accepted for articles released under special permit for immediate delivery under 19 CFR 142.

CBP will not send any special notification of the liquidation on an informal entry. It is up to the importer to keep track of liquidations and update whatever internal system is used to maintain the record of liquidations. For formal consumption entries, CBP will post the official notice in a conspicuous place in the Customhouse at the port of entry. The date of posting is the date the liquidation is effective. Brokers participating in ABI receive an electronic liquidation notice. Many brokers have systems that can transfer the liquidation data electronically to their importer clients or at least provide the data in report form. CBP will also try to provide importers with a “Courtesy Notice (CBP4333-A); however, this is an informal notice.

Liquidation normally occurs 314 days after the date of entry. Entries not liquidated within one year from the date of entry of the merchandise or date of final withdrawal of all merchandise in a warehouse, will be deemed liquidated by operation of law at the rate of duty, value, quantity and amount of duties provided by the importer at the time the entry summary was filed. As you would expect, there are exceptions to this rule. If the liquidation of the entry has been suspended or extended by CBP, liquidation will be delayed. Unless the liquidation of an entry continues to be suspended, any entry not liquidated within 4 years from the date of entry or final withdrawal of merchandise covered by a warehouse entry will be deemed liquidated by operation of law. If the liquidation continues to be suspended past the 4-year period, CBP must liquidate entries within 6 months following the suspension removed from Department of Commerce (DOC).

Why is the date of liquidation important? The date of liquidation is important because it triggers several deadlines. One of the most important deadlines is the time for filing a protest. If a protest is not filed within that 180-day window, the entry will be completely closed for review or change unless CBP suspects fraud. Now, the importer should watch for the liquidation. If the importer has flagged entries that require a protest, it becomes more important to monitor the liquidations. This can be done by a regular review of the incoming CBP 4333-A forms, reports provided by brokers and by requesting the broker to query the liquidation of the entry. Generally, the form or electronic data notifies you of the liquidation and nothing else needs to be done. If the form shows extension or suspension, you will want to find out why, unless you are already aware of the reason. If the form is pink, CBP disagreed with your estimated duty payment and requests additional funds. You may choose to accept their decision or to protest it. If you decide to protest their decision, you have 180 days from the liquidation date to do so. Payment must be submitted regardless of whether a protest is being filed. If the protest is successful, CBP will refund the money paid.

Finally, the importer may opt to file the courtesy CBP 4333-A documents with the entry. At the very least, the importer should make note of the liquidation or other status in the appropriate tracking system maintained by the broker. While importers may desire to destroy files that meet the “over 5 –year” criteria, it is important to determine the liquidation status first. If the file has not been liquidated, then the importer still faces some liability for the entry and destruction would not be the best option.

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!