Classification is the process through which goods are categorized according to a uniform identification system for the purpose of assessing duty or taxes and/or imposing restrictions upon imports. The United States subscribes to the Harmonized System of Classification (“Harmonized System” or “HTSUS”), commonly referred to as the Harmonized Code. Most major trading countries also subscribe to the Harmonized System of Classification convention. Shayne Law Group can assist by counseling you on strategies for design and sourcing of your product to minimize duty impact.
The duty, taxes and Customs fees due on an imported article are in most instances a percentage of its dutiable value. The “dutiable value” is determined by the valuation process known as appraisement. The dutiable value is multiplied by the duty rate as determined through classification according to the Harmonized Tariff Schedules. Improper valuation of goods initially affects duty liability. Inflated value or the inclusion of non-dutiable charges can result in payment of excess duty. Conversely, under valuation or failure to declare an element of value can result in additional duty liability and in certain cases, substantial penalties, including potential criminal liability. Shayne Law Group can counsel you on structuring your international transaction to maximize duty savings.
Customs Trade Partnership Against Terrorism ( C-TPAT) is a voluntary enhanced supply chain security program which offers importers a credit against the chances of their cargo being inspected in exchange for their extra vigilance in securing their supply chain. As a result of the mutual recognition of security with other countries, this program also covers exporters. We work with our clients through our related consulting firm, EXIMDO Trade Services, to determine whether there are benefits for you in becoming a member of C-TPAT and if so we will work with you to efficiently implement it.
Country of Origin and Marking
Every article imported into the United States, unless specifically exempted, is required to be marked with at least its Country of Origin, and possibly with additional markings and labels. Virtually every imported or exported article is subject to the marking regulation of one or more agencies. Incorrect markings can result in having to mark or remark the goods and liquidated damages if the importer cannot redeliver the goods for marking because they already have been delivered. This is in addition to the costs of remarking, delays and potential loss of an order. Marking which is false, not just inaccurate or in error, can result in seizure, penalties and even criminal sanctions.
Free Trade Agreements
Various trade programs provide for duty reduction or duty exemption when goods originate from certain countries. These include bi-lateral or multilateral agreements and include the North American Free Trade Agreement (“NAFTA”), Caribbean Basin Initiative (“CBI”), Generalized System of Preferences (“GSP”), United States- Jordan Free Trade Agreement, Israeli Free Trade Agreement. Shayne Law Group counsels clients as to whether a product qualifies for a particular program and how they may adjust their sourcing and design to obtain maximum benefits.
Drawback is a program which provides for a refund of duty when most kinds of goods are exported or destroyed. Upon exportation or destruction of goods, drawback permits Customs to refund 99% of duties paid when the goods were imported. (It does not, however, cover other import fees or taxes paid on the imports). Drawback is one program to keep net duty costs down. We assist clients in identifying other programs that accomplish duty savings.
Seizures and Forfeitures
U.S. Customs and Border Protection (“CBP”) has the authority to seize goods for violations of the Customs laws as well as other Government Agency laws violations (FDA, CPCS, FWS, etc..). Seizure amounts to an arrest of a shipment. Seizures are normally authorized by the government when some paramount risk would result if the shipment was not seized. Shayne Law Group assists importers in obtaining the release of seized merchandise from Customs and mitigating penalties and/or liquidated damages that may be incurred by filing administrative petitions.
Fines and Penalties
U.S. Customs and Border Protection (“CBP”), assesses penalties for errors and issues relating to classification, valuation, or country of origin compliance. CBP may also assess liquidated damages if the required import procedures are not followed properly, or if goods are not redelivered to CBP after their release. Shayne Law Group assists clients in mitigating penalties assessed by CBP through preparation of petitions and offers in compromise.
In order to determine compliance, Customs and Border Protection (“CBP”) has shifted its emphasis from evaluating entries to auditing an importer’s books and records. A focused assessment is in essence an audit by CBP, who expects a 99% compliance rate. If a company is not found to be successfully compliant, the company will be required to put in place a compliance improvement plan and tender all monies owed to CBP. Shayne Law Group can assist by performing a pre-audit assessment, which is really the only way to know what you are getting into, how to prepare for it, and what pre-emptive options are available.
Voluntary Prior Disclosure
A Voluntary Prior Disclosure can provide an importer with an invaluable opportunity to correct a mistake and obtain significantly reduced penalties if they advise U.S. Customs and Border Protection (“CBP”) of violations before the violation is discovered by CBP. Voluntary disclosure requires complete disclosure of facts and circumstances of a violation, including full financial accounting. Shayne Law Group can assist clients in examining what the exposures there may be, what options you have and whether a prior disclosure to mitigate potential penalties is appropriate. If so, we can assist in filing such a disclosure and fulfilling its requirements.
Trade Remedies- Antidumping and Countervailing Duties
Antidumping and Countervailing duties laws are types of trade remedies that protect domestic industries against unfair practices. Antidumping duties are imposed to counter the export of goods to the United States which are sold at prices significantly lower than that at which they are sold in the country of origin or comparable third country markets. Countervailing duties are imposed when goods from the exporting country are granted significant subsidies by the exporting country. Importers commonly run into these issues because the people who do the sourcing are not always aware of the implications of the country of origin. We can help you identify whether the sourcing presents an exposure and if so what options are available.
Cross–Border Intellectual Property
U.S. Customs and Border Protection (“CBP”) protects intellectual property rights at the border which includes protecting U.S. intellectual property rights (trademarks, copyrights, Section 337 – patents, and sometimes gray market goods) from infringing or counterfeit foreign imports. CBP is able to enforce intellectual property rights through its electronic recordation system that is accessible to CBP offices throughout the country. Regardless of the Intellectual Property Right involved and whether the goods are being imported, exported, or domestically distributed, it remains your responsibility to ensure that the goods and marks are legitimate and that your possess the required authorization to use them. We can help you identify whether the marks you are using present issues and exposure and assist you determining whether you have the necessary documentation in order to comply with the required rules.
Trade Facilitation and Trade Enforcement Act
This sweeping trade legislation signed into law in 2016 imposes major changes in the customs and international trade area including providing added powers to Customs and Border Protection (“CBP”) to enforce trade remedies, requirements to verify importer identity by brokers, changes to drawback and forced labor laws. Shayne Law Group can assist your company in understanding these new changes and adjusting your business practices to minimize risks and maximize opportunities in these areas.