CHARTER BROKERAGE CLIENT ALERT
Date: 3/24/2009
Re: CBP Increases Scrutiny of Duty Preference Claims
Customs and Border Protection (“CBP”) has recently taken the position that Certificates of Origin, alone, are not sufficient to support claims for duty-free treatment of merchandise entered under duty preference programs. CBP is increasing its scrutiny of these claims and is demanding production, inventory and value records from the foreign producer to support the specific country of origin designation made as the basis of the claim. In the absence of such records, CBP will deny the duty-free claim. A list of all duty preference programs affected by this position is set out below.
CBP has indicated this position by the following:
- a significant increase in CBP Form 28’s, Requests for Information, requesting that importers substantiate duty preference claims by providing documentation in addition to the Certificate of Origin;
- internal advice ruling (HQ H013526, 08/08/08) issued by CBP Headquarters to the Port Director in Houston explaining in detail the nature and extent of the supporting records required (see attached);
- statements by Regulatory Audit personnel at API Conferences and other recent forums explaining that CBP will require production, inventory and value documentation to support the Certificate of Origin when claiming a duty preference.
Based on the above, it is clear that CBP is increasing its scrutiny of duty preference claims. It is our understanding that this is an initiative from CBP HQ and is being implemented at ports throughout the U.S. It is reasonable to assume that CBP Form 28 responses that do not provide sufficient documentation will lead CBP to demand for payment of previously exempted duties.
NAFTA claims should be an exception to this position. The NAFTA Agreement permits claims supported solely on the basis of a NAFTA Certificate of Origin (CBP form 434) and it provides each customs agency (U.S., Canada and Mexico) authority to make verifications of the party issuing the NAFTA Certificate of Origin, rather than the importer claiming the benefit.
ACTION - Clients must ensure that they can comply with the documentary requirements for each of the different duty preference programs. Clients should determine if they have sufficient documentary support to make a duty preference claim and must communicate on an entry by entry basis to Charter whether or not they, as the importer, will be claiming a duty preference.
For any questions or concerns regarding these issues, please contact:
Matt Anderson - 281.599.1252, manderson@charterbrokerage.net
Edmund Cienava - 212.363.9300, ecienava@charterbrokerage.net
Mike Mitri - 203.840.7500, mmitri@charterbrokerage.net
Bill Phelan - 203.840.7500, wphelan@charterbrokerage.net
The following is a list of the current duty preference programs and their related SPIs:
Generalized System of Preferences . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . A, A* or A+
United States-Australia Free Trade Agreement . . . . . . . . . . . . . . . . . . . . . . . . . AU
Automotive Products Trade Act . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . B
United States-Bahrain Free Trade Agreement Implementation Act . . . . . . . . . . BH
Agreement on Trade in Civil Aircraft . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . C
North American Free Trade Agreement:
Goods of Canada, under the terms of
general note 12 to this schedule. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . CA
Goods of Mexico, under the terms of
general note 12 to this schedule . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . MX
United States-Chile Free Trade Agreement . . . . . . . . . . . . . . . . . . . . . . . . . . . . CL
African Growth and Opportunity Act . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . D
Caribbean Basin Economic Recovery Act . . . . . . . . . . . . . . . . . . . . . . . . . . . . . E or E*
United States-Israel Free Trade Area . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . IL
Andean Trade Preference Act or
Andean Trade Promotion and Drug Eradication Act . . . . . . . . . . . . . . . . J, J* or J+
United States-Jordan Free Trade Area Implementation Act . . . . . . . . . . . . . . . . JO
Agreement on Trade in Pharmaceutical Products . . . . . . . . . . . . . . . . . . . . . . . K
Dominican Republic-Central America-United States
Free Trade Agreement Implementation Act . . . . . . . . . . . . . . . . . . . . . . . P or P+
Uruguay Round Concessions on Intermediate
Chemicals for Dyes . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . L
United States-Caribbean Basin Trade Partnership Act . . . . . . . . . . . . . . . . . . . R
United States-Morocco Free Trade Agreement Implementation Act . . . . . . . . . MA
United States-Singapore Free Trade Agreement . . . . . . . . . . . . . . . . . . . . . . . . SG
United States-Oman Free Trade Agreement Implementation Act . . . . . . . . . . . OM
“United States-Peru Trade Promotion Agreement Implementation Act . . . . . . . PE
