[Federal Register Volume 63, Number 25 (Friday, February 6, 1998)]
[Notices]
[Pages 6257-6264]
From the Federal Register Online via the Government Publishing Office [www.gpo.gov]
[FR Doc No: 98-3069]
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DEPARTMENT OF THE TREASURY
Customs Service
Revised National Customs Automation Program Test Regarding
Reconciliation
AGENCY: Customs Service, Treasury.
ACTION: General notice.
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SUMMARY: On February 6, 1997, a notice was published in the Federal
Register announcing a Customs prototype test of reconciliation. A
subsequent notice, published in the Federal Register on September 30,
1997, announced modifications to the originally planned test. In
response to comments received pursuant to that notice and discussions
with the trade community, Customs has made further enhancements to the
reconciliation prototype. These enhancements include a blanket
application option to entry-by-entry flagging and, for Reconciliations
involving duties, taxes, or fees due, the option of filing aggregate
data for the Reconciliation in lieu of entry-by-entry data. This
document serves as a replacement for all previous notices for this
prototype, which is known as the ACS Reconciliation Prototype. The
changes to the prototype detailed herein do not affect the previously
announced start date of October 1, 1998, nor do they affect the policy
which makes this prototype the exclusive means to reconcile entries,
pursuant to 19 U.S.C. 1484(b).
This document invites public comments concerning any aspect of the
planned test, informs interested members of the public of the
requirements for voluntary participation, and establishes the process
for developing evaluation criteria. This document also serves to open
the application period. Certain information, as outlined in this
notice, must be filed in an application with Customs prior to an
applicant being approved for participation. It is important to note
that certain aspects of this prototype may be modified prior to
implementation of the final reconciliation program.
EFFECTIVE DATES: The testing period of this prototype will commence no
earlier than October 1, 1998, will run for approximately two years, and
may be extended. The prototype will be limited to consumption entries
filed on or after October 1, 1998, through September 30, 2000. Comments
concerning this notice and applications to participate in the prototype
are requested by March 31, 1998.
[[Page 6258]]
ADDRESSES: Written comments regarding this notice and/or applications
to participate in this prototype should be addressed to Ms. Shari
McCann, Reconciliation Team, U.S. Customs Service, 1300 Pennsylvania
Ave, NW, Room 5.2A, Washington, DC, 20229-0001.
FOR FURTHER INFORMATION CONTACT: Ms. Shari McCann, at (202) 927-1106,
or Mr. Don Luther at (202) 927-0915.
SUPPLEMENTARY INFORMATION:
Background
Title VI of the North American Free Trade Agreement Implementation
Act (the Act), Pub.L. 103-182, 107 Stat. 2057 (December 8, 1993),
contains provisions pertaining to Customs Modernization (107 Stat.
2170). Subtitle B of Title VI establishes the National Customs
Automation Program (NCAP)--an automated and electronic system for the
processing of commercial importations. Section 637 of the Act amended
Section 484 of the Tariff Act of 1930 to establish a new subsection
(b), entitled ``Reconciliation'', a planned component of the NCAP.
Section 101.9(b) of the Customs Regulations (19 CFR 101.9(b)) provides
for the testing of NCAP components. See, TD 95-21. This test is
established pursuant to those regulations. This document replaces
earlier notices concerning the reconciliation prototype test, published
in the Federal Register on February 6, 1997 (62 FR 5673), announcing
the initial Customs prototype test of reconciliation, and on September
30, 1997 (62 FR 51181), modifying the initial prototype).
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.
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.
Reconciliation also refers to the entry on which the outstanding
information is provided.
2. Underlying Entry Summary: A consumption entry summary flagged
for reconciliation.
3. Flagging an entry for reconciliation: Identifying 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. Entry-by-entry flagging: The importer electronically via ABI
inputs an indicator on all entries which are subject to reconciliation.
This indicator identifies the issue(s) subject to reconciliation.
b. Blanket application: Prior to filing entries subject to
reconciliation, the importer provides Customs a letter which contains
the importer of record number, the time period in which entries are
subject to reconciliation, and the issue(s) subject to reconciliation.
Customs will input an electronic indicator on ALL entries for that
importer for that time period, which will identify them as being
subject to reconciliation for the issue(s) indicated.
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 entries 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 on the increased/reconciled adjustment.
6. Absolute increase: Each and every 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 entries A and B are both covered by a
Reconciliation, the Reconciliation would have an Absolute Increase
if the changes to both entries 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
b. Divide the Reconciliation into two pieces: An Aggregate
Reconciliation for the increase and an Entry-By-Entry Reconciliation
for the decrease.
Description of the ACS Reconciliation Prototype
Customs goals in the design of this prototype are to (1) make
progress under this key component of the Mod Act, (2) establish
uniformity in an area which has traditionally operated under a variety
of procedures, (3) provide financial safeguards, and (4) institute a
legal mechanism for reconciling entries.
A. Exclusive Means
Concurrent with this Automated Commercial System (ACS)
Reconciliation Prototype, Customs is designing a reconciliation
component under the National Customs Automation Program Prototype
(NCAP/P) in the Automated Commercial Environment (see, 62 FR 14731,
dated March 27, 1997).
Thus, except for participation in the NCAP/P and upon
implementation of this prototype, any party who elects to reconcile
entries pursuant to 19 U.S.C. 1484(b) may only do so through this
prototype. This prototype will serve as
[[Page 6259]]
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). All practices with respect to block liquidation/
block appraisement (liquidating one entry summary or some entry
summaries with a periodic adjustment affecting many entry summaries)
will cease and such post-entry adjustments will only take place via the
ACS Reconciliation Prototype. All importers may apply for this
prototype. Details on the application process are explained below.
Outside of reconciliation, the only alternative post-entry 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).
B. 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 entries pertains only
to those issues not identified by the importer on the Notice of Intent.
The underlying entries flagged for a Reconciliation may be filed at
any port, including any combination of ports. The following entries
types are eligible for reconciliation under this prototype:
1. Entry type 01: Free and dutiable formal consumption entries;
2. Entry type 02*: Quota/visa consumption entries;
3. Entry type 03*: Antidumping/Countervailing duty (AD/CVD)
consumption entries;
4. Entry type 06: Foreign Trade Zone consumption entries; and
5. Entry type 07*: Quota/visa and AD/CVD combination consumption
entries.
* Quota and AD/CVD entries may not be reconciled for
classification; they may only be reconciled for HTSUS heading 9802,
value and/or NAFTA. The issues of AD/CVD final rate and scope
determination, quota category or any admissibility issue are likewise
not eligible reconciliation issues under this prototype.
(1) Option: Entry-by-Entry Flag
During this prototype, the importer may ``flag'' the underlying
entries at time of filing via an ABI indicator, which will serve as the
Notice of Intent.
(2) Option: Blanket Application Flag
Those importers who find that a large majority of their entry
summaries require flagging may provide their Notice of Intent by filing
a ``blanket application'' in lieu of entry-by-entry flags. The blanket
application will consist of written notice by the importer showing the
Importer of Record number, range of dates in which the underlying entry
summaries will be subject to reconciliation, and a list of the issues
subject to reconciliation. This application must be received by Customs
no later than seven working days prior to transmission of the first
entry subject to the Reconciliation. Upon receipt of the blanket
application, Customs will automatically apply the above-mentioned
electronic flag to all entry summaries filed by the importer during the
specified time period.
C. Issues To Be Reconciled
The ACS Reconciliation Prototype will allow the following issues to
be flagged for reconciliation: value, HTSUS heading 9802, NAFTA, and
classification on a limited basis.
1. Value--The ACS Reconciliation Prototype is open to
reconciliation of all value issues.
2. HTSUS heading 9802--The issue of 9802 includes only the value
aspect involved with this HTSUS provision, e.g., reconciling the
estimated to actual costs.
3. 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 a1A list (19
U.S.C. 1508(a)(1)(A)), and covered by the recordkeeping provisions of
the Customs laws. 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.
4. Classification--Classification issues will be eligible for
reconciliation only when such issues have been formally established as
the subject of a pending administrative ruling (including
preclassification rulings), protest, or court action.
Reconciliation for classification issues other than those listed
above is not permitted. Reconciliation for quantity is also not
permitted. These issues are very closely linked to admissibility, and
therefore are not eligible for reconciliation. Post-entry adjustments
for these issues may still be made however, using the Supplemental
Information Letter process. (For information on this process, see ABI
administrative message #97-0727, 8/4/97.)
D. Reconciliation--Menu Approach
By this notice, Customs is offering a variety of choices in
reconciliation to meet a variety of business needs. Importers may find
it helpful to view these alternatives as a ``menu'' approach. It should
be noted that the following menu choices are for the type of
Reconciliation filed. They are not conditioned on the method of
flagging used. In other words, an importer can flag entries either
individually or via a blanket application, and reconcile those entries
via an Aggregate or Entry-By-Entry Reconciliation.
1. Entry-by-Entry Reconciliation
a. This option can be used for all reconciliation adjustments,
including refunds of duties, taxes, and fees.
b. The continuous bond on the underlying entries will be used to
cover the Reconciliation.
c. Customs will accept no drawback claims on the underlying entries
until
[[Page 6260]]
the Reconciliation is filed with duties, taxes, and fees deposited.
d. The revenue adjustment will be broken down to entry-by-entry
detail for all underlying entry summaries.
e. After the Reconciliation has been filed, drawback may be claimed
against the underlying entries and, if appropriate, the reconciled
increase.
f. Reconciliation of any issue which covers Antidumping and/or
Countervailing duty entries must be submitted as an Entry-By-Entry
Reconciliation.
2. Aggregate Reconciliation
a. This option applies only to those situations which involve an
absolute increase, i.e., each and every 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 of this notice 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.
b. The continuous bond on the underlying entries will be used to
cover the Reconciliation.
c. Customs will accept no drawback claims on the underlying entries
until the Reconciliation is filed with duties, taxes, and fees
deposited.
d. The Reconciliation will include a list of all underlying
entries, but will not require the revenue adjustment to be broken down
by entry.
e. After the Reconciliation has been filed, drawback may be claimed
against the underlying entries, but may NOT be claimed against the
reconciled increase. All parties are hereby notified that no drawback
refunds will be issued on the reconciled adjustment, e.g., if the duty
paid on the underlying entry summary is $10,000, and the overall
reconciliation increase adjustment is $1,000, the $10,000 is eligible
for a drawback refund. The $1,000 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.
E. Filing of Reconciliation--Grouping, Timeliness and Location
Reconciliation is to be used to group entries together for a
common, outstanding issue. Entries flagged for reconciliation which
have the same outstanding information should all be grouped on one
Reconciliation, e.g., entries 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.
The Reconciliation and supporting documentation may be filed at any
port location. Certain ports will be established as reconciliation
processing ports. The ABI transmission of the Reconciliation must
reflect the appropriate Customs-identified processing port, and
respective commodity team, on the header record. Customs will notify
participants of the appropriate processing ports and commodity teams.
Please note that entries filed in Puerto Rico or the Virgin Islands
must be reconciled on separate Reconciliations. Reconciliations cannot
combine underlying entries filed in Puerto Rico with underlying entries
filed at any other port, or entries filed in the Virgin Islands with
entries filed at any other port. This limitation is due to the fact
that revenue deposited on or refunded from entries filed in the Virgin
Islands and Puerto Rico are attributed to separate accounts for those
territories than entries filed at other ports.
F. 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 entries 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 entries, 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).
G. 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, importer No.,--------------------------------------------
and,-------------------------------------------------------------------
as surety , code No.,--------------------------------------------------
which is effective on,-------------------------------------------------
the principal 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 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.
[[Page 6261]]
All underlying entries subject to one Reconciliation must be
covered by one surety and one continuous bond. Each Reconciliation must
be covered by one surety, i.e., two sureties cannot cover the same
Reconciliation. Termination of the continuous bond, either by Customs,
the bond principal or surety will result in the closing of the
Reconciliation to the addition of further underlying entries.
H. ACS Reconciliation Prototype--Chain of Events
1. Initial Application
As part of an importer's application to participate in the ACS
Reconciliation Prototype, the importer will provide information
including descriptions of the specific issues to be reconciled, the
merchandise and corresponding Harmonized Tariff Schedule (HTS)
classification, and which ports the importer uses or intends to use.
Customs will notify the applicant in writing of their acceptance or
denial into the prototype. (See ``Application to Participate in ACS
Reconciliation Prototype'' below.)
2. Entries flagged for Reconciliation
a. Any entry summary that is flagged for reconciliation must be
filed via ABI. An electronic indicator, or ``flag'', signifying that
these entries 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.
b. As mentioned above, there is also a ``blanket application''
option, in which ACS will automatically set the flag for all of an
importer's entries for a given period for a given issue(s). The same
responsibilities and liabilities apply to these entries as those
flagged individually.
c. 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.
d. 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 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.
e. Entry summaries may be flagged for reconciliation until the
close of the test period.
3. 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 entries, any decisions of the
Customs Service 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 can, but does not necessarily, precede the
filing of the Reconciliation.
4. Importer Electronically Transmits the Reconciliation via ABI
a. When the importer has finalized the outstanding information, and
has the answer to the issue in question, the filer, using reasonable
care, will electronically (via ABI) transmit the Reconciliation to
Customs. The Reconciliation will be a new entry type 09.
b. 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.
c. Each Reconciliation will be limited to one importer of record,
i.e., the underlying entries and the Reconciliation must have the same
importer of record.
d. This prototype will allow up to 9,999 underlying entries per
Reconciliation.
e. 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:
i. CF 247--Cost Submission;
ii. Detailed line-level spreadsheets;
iii. Landed cost analysis sheets;
iv. Invoices, purchase orders, and contracts; and
v. Documents supporting apportionment of assists in accordance with
19 CFR 152.103(e).
The recordkeeping provisions of the Customs laws apply to the
Reconciliation and all supporting documentation as described above.
f. While 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.
g. 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. Where there are
differences in the type of Reconciliation, they are noted below. Upon
request, Customs will provide applicants and other interested parties
with sample Reconciliations of each type. Customs will provide
participants with instructions for reconciliation programming.
Importers are encouraged not to begin programming until that time.
i. Header--The Reconciliation header will include the following
data elements:
(a) Reconciliation entry number;
(b) Port of entry code (= processing port);
(c) Responsible commodity team;
(d) Reconciliation type (Entry-By-Entry or Aggregate);
(e) Reconciliation date (date of filing);
(f) Issue(s) being reconciled;
(g) IRS number;
(h) Surety code;
(i) Summary date of oldest underlying entry summary (if the
reconciliation issue is value, HTSUS heading 9802 or classification);
(j) Date of import of oldest underlying entry (if the
reconciliation issue is NAFTA);
(k) The total of the original duties, taxes, and fees (fees broken
out by ``class code'') which were deposited on the underlying entries;
(l) The total of the reconciled duties, taxes, and fees (fees
broken out by ``class code'');
(m) The total amount of interest deposited on filing of the
Reconciliation. Please note: Customs is in the process of analyzing
business-realistic options for interest calculation which are revenue-
neutral and do not link to every underlying entry. 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; and
(n) Comment field: This field is to be used to explain any details
of the Reconciliation, e.g., assist declaration
[[Page 6262]]
on part XYZ for the period 10/1/1998 -9/30/1999.
ii. Association file--For both Entry-By-Entry and Aggregate
Reconciliations, the association file will contain:
(a) The underlying entry numbers, and ports of entry, which were
previously flagged and grouped on the Reconciliation.
For Entry-By-Entry Reconciliations only, the following elements are
also required:
(b) The actual amount of duties, taxes and fees (fees broken out by
``class code'') deposited per underlying entry summary;
(c) The reconciled amount of duties, taxes, and fees (fees broken
out by ``class code'') which should have been paid for each of the
underlying entries had the complete information been available to the
importer at the time of filing the underlying entry summaries; and
(d) If the Reconciliation results in additional duties or fees due
Customs, the filer must deposit interest at time of filing the
Reconciliation. Interest must be calculated in accordance with 19
U.S.C. 1505.
iii. Line item data--The line item data for both the Entry-By-Entry
and Aggregate Reconciliations will NOT be filed via ABI. For both types
of Reconciliation, this data will be submitted both in hard copy and in
commercial spreadsheet format via diskette. The data elements shown
below will be required for this portion of all Reconciliations. Each
reconciliation line item will be consolidated for all of the underlying
entries 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. This line item data shall be
presented in the format shown in the sample spreadsheet below:
BILLING CODE 4820-02-P
[GRAPHIC] [TIFF OMITTED] TN06FE98.018
BILLING CODE 4820-02-C
(a) The Bureau of the Census has certain requirements for specific
reconcilable issues:
(i) Classification: Reconciliations for classification must include
the data elements of quantity and port(s). (The port(s) may be reported
at the first two digit level, e.g., Port 4601 = 46.) If ``ALL'' is
indicated in the ``Port'' column, Census will understand that the
change provided by that line applies to all ports in which the importer
entered the subject merchandise.
A Reconciliation of a classification change requires that the
summarized data lines must be connected to illustrate the shift from
one HTS classification to another. In the spreadsheet which appears
above, an example is included in which a ruling determined that a
portion of the merchandise entered under HTSUS subheading 4011.10.5000
should have been classified under HTSUS subheading 4011.10.1000 (lines
11a and 11b of the spreadsheet). The data
[[Page 6263]]
provided in the Reconciliation must show Customs and Census which
portion shifted from the original HTS classification to the reconciled
HTS classification, and which portion did not change.
The classification change illustrated in lines 11a and 11b of the
spreadsheet resulted in an increase in duties due Customs, i.e., the
portion of the merchandise that changed classification went from a 3.6%
to a 4% duty rate. This example could be filed as an Entry-by-Entry or
Aggregate Reconciliation. Remember: should the classification change
result in a decrease in duties, taxes, and fees, the Reconciliation
must be filed as an Entry-By-Entry Reconciliation.
(ii) HTSUS heading 9802: Similar to classification, a
Reconciliation of HTSUS heading 9802 must also provide the port(s)
covered (port(s) at the first two digits), and a link between the
original data submitted and the reconciled data. Census needs to be
able to capture the shift in value, in order to know how to adjust the
statistics for both the HTSUS Chapter 1-97 provision and for the HTSUS
heading 9802 provision. An example of a 9802 change is also provided in
the spreadsheet above.
Should the HTSUS heading 9802 change result in a decrease in
duties, taxes, and fees, the Reconciliation must be filed as an Entry-
By-Entry Reconciliation.
h. Payment--If the Reconciliation results in a revenue change,
Customs will issue one bill or refund per Reconciliation. If the
Reconciliation results in additional duties, taxes, or fees due
Customs, payment must be made via check or Automated Clearing House at
the time of filing the Reconciliation. In such cases, the filer must
deposit interest at time of Reconciliation filing. If the
Reconciliation results in a refund due the importer, Customs will issue
the refund within 30 days of liquidation of the Reconciliation. Final
interest will be assessed or refunded as appropriate pursuant to 19
U.S.C. 1505.
i. Liquidation of Reconciliation--
i. The Reconciliation will be reviewed and liquidated, and one bill
or refund issued if a revenue change is appropriate. Importers will
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. The liquidation of the Reconciliation will be posted to the
Bulletin Notice of Liquidation.
ii. 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.
Eligibility Criteria
1. Participants must be capable of filing the underlying entry
summary and Reconciliation information electronically, via ABI.
2. Adequate bond coverage must exist for the Reconciliation.
Participants must have on file a rider and a continuous bond, which
will be obligated on the underlying entries and used to cover the
Reconciliation.
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 this
prototype, including the filing and flagging of the underlying entries
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
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.
Application To Participate in the ACS Reconciliation Prototype
This prototype is open to all importers. As stated above, this
prototype will serve as the exclusive means to reconcile entries,
outside of any other Customs-designated prototypes. This notice
requests importers to apply for participation in this prototype by
submitting the following information:
1. Importer name and IRS number;
2. Broker name(s) and filer code(s);
3. Surety name(s) and surety code(s);
4. Bond coverage (reconciliation rider mentioned above); A copy of
the rider and identification of the port in which the continuous bond
and rider are filed must be included in the application.
5. Commodities (description and HTS no.)covered under the
Reconciliation;
6. Port(s) at which underlying entries and Reconciliation will be
filed;
7. Port location from where ABI transmission will be sent (may be
same as #6);
8. Number of entries anticipated to be covered by the
Reconciliation;
9. Detailed description of specific issue(s) to be reconciled; and
10. Point of contact and telephone number.
The application may be submitted by the importer's broker and/or
attorney, if duly authorized. This information should be submitted by
March 31, 1998 to Ms. Shari McCann, Reconciliation Team, U.S. Customs
Service, 1300 Pennsylvania Ave, NW, Room 5.2A, Washington, DC 20229-
0001. By applying to participate in this test, the importer is agreeing
to participate pursuant to the terms of the test as defined in this
notice.
Applications may be submitted until the start of the prototype and
throughout the duration of the prototype. Priority review will be given
to applications received by March 31, 1998. Applicants will be notified
in writing of their acceptance or denial into the prototype. Applicants
are reminded that they cannot begin participation in the prototype
until they have received acceptance from Customs. An applicant who has
been denied participation in the prototype may re-apply after 30 days
of the notice of denial. An applicant may appeal a denial within 30
days of the notice of denial to the Director, Trade Compliance.
Interested candidates should note that participation in this test
will not constitute confidential information, and that lists of
participants will be made available. All laws and regulations
concerning commercial confidential information apply.
Misconduct Under Prototype
If a filer attempts to submit data relating to prohibited
merchandise, abuses reconciliation by using it when the reconciliation
issue is not truly undeterminable at time of entry summary; fails to
exercise reasonable care in filing underlying entries or
[[Page 6264]]
Reconciliations; fails to abide by the terms and conditions of this
notice; submits entry types not authorized for reconciliation; is
consistently late in filing the Reconciliation or depositing duties,
taxes, and fees; fails to supply Customs with sufficient supporting
documentation for the Reconciliation; is habitually delinquent in the
payment of bills from Customs; or otherwise fails to follow the
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. Any action commenced by Customs for misconduct may
be appealed through existing procedures or, if none exist, to the
Director, Trade Compliance, within 30 days of the action.
Regulatory Provisions Suspended
Certain requirements of Sec. 113.62 of the Customs Regulations (19
CFR 113.62), pertaining to basic importation and entry bond conditions,
will be suspended during this prototype. Certain provisions in Parts
141 and 142 of the Customs Regulations (19 CFR 141 and 19 CFR 142),
pertaining to entry, in Part 159 of the Customs Regulations (19 CFR
Part 159), pertaining to liquidation of duties, and in Part 181 of the
Customs Regulations (19 CFR 181), pertaining to the North American Free
Trade Agreement, will also be suspended during this prototype.
Absent any specified alternate procedure, the current regulations
apply.
Test Evaluation Criteria
Participants are strongly encouraged to participate in the
evaluation of the ACS Reconciliation Prototype. Interim evaluations of
the prototype will be published on the Customs Electronic Bulletin
Board, and the results of the final prototype evaluation will be
published in the Federal Register as required by 19 CFR 101.9(b). The
following evaluation methods and criteria have been suggested:
1. Baseline measurements to be established through data analysis
and questionnaires;
2. Reports to be run through use of data analysis throughout the
prototype; and
3. Questionnaires from both trade participants and Customs to be
used before, during and after the prototype period.
Customs may assess any or all of the following evaluation criteria
from both Customs and the trade participants:
1. Workload impact (workload shifts/volume, cycle times, etc.);
2. Cost savings (staff, interest, issuance of fewer checks or
bills, tracking refunds/bills, reduction in contingent liabilities,
etc.);
3. Policy and procedure accommodation;
4. Trade compliance impact;
5. Problem resolution;
6. System efficiency;
7. Operational efficiency;
8. Statistical needs; and
9. Other issues identified by the participant group. Customs will
request that test participants be active in the evaluation, identifying
costs and savings experienced in this prototype.
Dated: February 3, 1998.
Audrey Adams,
Acting Assistant Commissioner, Office of Field Operations.
[FR Doc. 98-3069 Filed 2-5-98; 8:45 am]
BILLING CODE 4820-02-P
