Articles Conditionally Free. Chapter 98 Of U.S. HTS for International Shipping
There are several ways in which international shipping merchandise arriving in the United States may be entered FREE or PARTIALLY FREE OF DUTY.
References are at:
SOME TOPICS FROM Chapter 98 "Special classification provisions" for EXPORTED AND RETURNED ITEMS:
IMPORTATIONS OF FOREIGN GOVERNMENTS AND INTERNATIONAL ORGANIZATIONS
SAMPLES FOR SOLICITING ORDERS
ETC... See the Chapter 98
Always read Chapter Notes and pay extreme attention to EVERY WORD in the Chapter 98 "Special classification provisions". Otherwise it cannot be used.
American Goods Returned (9801)
U.S. HTS. Chapter 98. SUBCHAPTER II.
2 (a) ...any imported article which has been assembled abroad in whole or in part of products of the United States, shall be treated for the purposes of this Act as a foreign article, and, if subject to a duty which is wholly or partly ad valorem, shall be dutiable, except as otherwise prescribed in this part, on its full value determined in accordance with section 402 of the Tariff Act of 1930, as amended. If such product or such article is dutiable at a rate dependent upon its value, the value for the purpose of determining the rate shall be its full value under the said section 402.
ONLY THOSE ARTICLES OF U.S. ORIGIN WHICH HAVE NOT BEEN ADVANCED IN VALUE (1) or IMPROVED IN CONDITIONS (2) BY OTHER MEANS CAN BE ENTERED FREE OF DUTY.
Examples for U.S. international shipping goods sent abroad and returned:
a. Came back in worth condition (rusted, broken etc) then it IS QUALIFIED.
b. Came back improved or repaired, then it IS NOT QUALIFIED.
Tomatoes went to Mexico and came back to U.S.
a. Sorted - it IS QUALIFIED.
b. Wax removed - it IS NOT QUALIFIED.
GENERAL RULES FOR RETURNED ARTICLES:
While filing FOREIGN SHIPPER DECLARATION must be stated that international shipping articles had not been imported abroad. This statement can be stated in the invoice itself.
A. INFORMAL ENTRY AND NO BOND REQUIRE IF:
1. CBP Form 3311 (Declaration for Free Entry of Returned American Products) DOES NOT require if value of international shipping article is UNDER $250.
B. ANYTHING ELSE WOULD REQUIRE FORMAL ENTRY AND BOND.
U.S. Customs has rights ask for formal entry and bond for any entry, even though it is an exemption in HTS.
If FOREIGN SHIPPER DECLARATION is not available then you can post a bond and have 120 days to produce that FOREIGN SHIPPER DECLARATION to get free of duty.
This certain conditions are outlined in 19 CFR. In section 10.1 of 19CFR.
direct link http://a257.g.akamaitech.net/7/257/2422/12feb20041500/edocket.access.gpo.gov/cfr_2004/aprqtr/19cfr10.1.htm
If the international shipping merchandise was exported from THE SAME PORT as it is imported, verification of the export can be made based on on information on hand at those Customhouse. It can be validated export declaration.
Otherwise IF IT WAS ANOTHER PORT OF EXPORTATION, the appraising officer can send the CF 3311 for verification to the port of exportation.
EXCLUSION: Excluded from free entree are international shipping items on which manufacturing drawback has been claimed upon exportation.
Articles were Imported, duty is paid and then it Exported again (19 CFR 10.8(a)):
Duty must be paid second time.
There are two exemptions when you international shipping products for a second time and DO NOT PAY DUTY (HTS 9801).
Both of those must be:
Several other categories under 9801:
3. 9801.0040 - import assigned for educational purposes;
4. Trade fairs - the original importer must bee also the exporter;
5. 9801.0050 - circus or menagerie;
6. 9801.0060 - other miscellaneous.
International shipping item Repeated or Altered Abroad (9802)
U.S. HTS. Chapter 98. SUBCHAPTER II.
3. International shipping articles repaired, altered, processed or otherwise changed in condition abroad...
Merchandise, whether domestic or foreign origin, can be shipped abroad for repair or alternation and returned to the U.S. WITH ONLY THE REPAIR or ALTERATION COST BEING DUTIABLE. While the value of the goods themselves is entered duty free. The cost of repair or alteration is dutiable AT THE ARTICLE RATE OF DUTY.
(19 CFR 10.8)
NOTE: In this instance NO FREIGHT COSTS ARE DUTIABLE.
1. 9802.0040 - done for warranty work (IMPORTANT: Warranty work is dutiable anyway. New parts, labor etc.);
2. 9802.0050 - non warranty work or improvement;
Is those entrees formal or informal?
Example: If cost of machine $10,000 and cost of repair is $1,000 then TOTAL VALUE IS $11,000 (above $10,000) then FORMAL ENTRY IS REQUIRE.
ALTERATION is - Physical improvement of product that DOES NOT CHANGE IDENTICAL OF THAT PRODUCT. I.e. NO SUBSTANTIAL TRANSFORMATION HAD BEEN OCCURRED.
ELEMENTS OF VALUE OF REPAIR OR ALTERATION:
1. If it built an actual invoice value;
2. If it is free (warranty for example) it is FAIR MARKET VALUE. That means, that EVEN THOUGH IT HAD BEEN DONE FOR FREE YOU MUST PAY DUTY ANYWAY!; If the cost of free repair would exceed the cost of article (let's say under warranty, and they sent to you an new one), THE NEW ARTICLE IS FULLY DUTIABLE.
3. Assists do not count (mould, test equipment, etc);
4. U.S. components (parts) ARE dutiable anyway.
Example: You send a machine for repair abroad.
- Machine costs - $50,000 - FREE
- Repair (labor) costs - $ 1,000 - Dutiable
- Test equipment you sent (assists) - $ 5,000 - FREE
- U.S. parts you sent - $ 2,000 - Dutiable
Then $55,000 would be free duty free; $3,000 would be dutiable AT THE RATE OF IMPORT OF THE MACHINE (Let's say 5%).
I.e. for Customs purpose that $3,000 IS DUTIABLE VALUE OF THE IMPORTING MACHINE.
1. A FOREIGN REPAIR AFFIDAVIT.
2. COPY OF AIRBILL providing the export (1) or or foreign customs entry (2) or CBP 4455 (Certificate of Registration) BEFORE IT EXPORTED signed by U.S. Customs. Even it had not been inspected by Customs before it was exported it must be signed.
9802.0060 - U.S. Metal articles exported for processing and returned for further processing:
Applies for metal. It must have 3 processing parts:
The value is free. But value of the processing is dutiable at the value of the item itself.
Certain conditions apply:
Assembly of U.S. Components Abroad HTS 9802.00.80 (19CFR 10.11)
U.S. HTS. Chapter 98. SUBCHAPTER II.
4. Articles assembled abroad with components produced in the United States...
International shipping articles assembled abroad in whole or in part of fabricated components of U.S. origin, which were exported in CONDITIONS READY FOR ASSEMBLING are subject to duty upon the full value of the imported article LESS THE COST OF THE ASSEMBLED ARTICLES OF U.S. ORIGIN.
The determination whether or not a U.S. part becomes dutiable is complicated and must be considered.
- If the assembling require drilling a whole to fasten the piece to another, this whole CANNOT be drilled by the assembler. Otherwise it will be disqualified as an exemption from payment of duty.
- HOWEVER, if this whole was incidental to the assembly process, for lifting by cranes for example, then the part WOULD qualify for duty free treatment.
CRITERIA: Must be U.S. components exported FULLY READY FOR THE ASSEMBLING.
What is the assembly conditions? It must fitting or joining together fabricated components by welding, sewing, soldering screwing etc and must be a solid to solid (i.e. mixing gas and water is not acceptable). IT CANNOT BE IMPROVED. ASSEMBLED ONLY.
Exception: Operations that are considered as INCIDENTAL (??????????????) to the assembly such as cleaning, taking off protection film etc. (Polishing, painting etc are NOT incidental)
How to value that? Cost of the Assembly (1) plus Cost of International Freight (2) from the USA to the place of assembly. (IMPORTANT: Domestic U.S. freight to a port of exportation AND Any freight to get it back to U.S. is NOT DUTIABLE). It classifies separately.
1. Cost of U.S. international shipping parts (under 9802.00.80) - FREE
2. Transport to the USA border (under 9802.00.80) - FREE
3. International freight from U.S. port to the assembly plant - 5% DUTIABLE
4. Assembly of the product international shipping abroad - 5% DUTIABLE
5. The merchandise itself - DUTIABLE at the rate of duty
6. All freight back to the USA - FREE
Documentation required: Free entry of U.S. assembled international shipping components will only be granted if submitted with the entry(1) or bond posted for submission at a later date (2). The documentation consists of:
The importer must keep detailed records and keep them available for examination by Customs.
9804.00.20 - Non residential tool of trade. I.e. tool of trade that foreign visitors bring to the USA.
9811.00.60 - Samples valued not over $1.00 marked "NOT FOR SALE".
Must clear indicate "NOT FOR SALE". Examples: Perfume with the "NOT FOR SALE" label or T-shirt marked clear "SAMPLE".
NAFTA classifications in 9800.
Articles Exported and Returned not advanced or Improved
Chapter 98 Subchapter 1 of the HTS provides duty-free treatment for U.S. products that HAVE BEEN EXPORTED and SUBSEQUENTLY RETURNED to the USA without improvement as well as provisions for the RETURN PREVIOUSLY IMPORTED merchandise TO BE RE-ENTERED FREE OF DUTY.
A declaration from the importer, as well as one from the exporter, must be filed with the entry.
Port Director MAY WAIVE DUTY FREE ENTRY if justified.
The phrase "ON WHICH DUTY HAS BEEN PAID" is instrumental in qualifying for the free exemption.
Temporary Imported Under Bond (TIB). 9800 HTS classification and 19CFR10.31 till 40
Entries TIB cannot be liquidated. It is canceled. It can be EXPORTED or DESTROYED only.
Exportation of a TIB under Customs supervision will automatically cancel the bond given on importation. When international shipping merchandise is exported or destroyed under Customs supervision but not within the bond period, it is up to the Port Director to request payment of a reduced amount or to settle without collection of liquidated damages, if the delay in exportation was in the best interest of the United States, or was caused by circumstances beyond the control of the parties involved and which could not have been foreseen by a reasonable and prudent party.
This bond is given to guarantee the exportation of the goods, or their destruction under Customs supervision, WITHIN ONE YEAR FROM THE DATE OF IMPORTATION (not an entry). The bond may be extended twice, for periods of one additional year each, but cannot exceed three years after importation.
Statement "Not for sale in the USA" must be preformed.
The exception is: importation of professional international shipping equipment and tools of trade (1), as well as automobiles and parts or cutaways of the foregoing, and if entered for show purposes (2). The latter cases must be exported within six months from their date of importation as stated in CR 10.31. (CROSS - Customs Ruling Online Search System at http://rulings.customs.gov)
Bond amount in general is 2 times OF DUTY (not the value) unless exceptions below.
Some samples and bond requirements are shown below:
- TIB of machine value of $5,000 (say duty rate is 5%) is $250. THEN TIB BOND REQUIRE IS $500 (2 times of duty).
- For a sample of trade of jewelry value of $5,000 (say duty rate is 5%) is $250. THEN TIB BOND REQUIRE IS $275 (110% of duty).
Documents under TIB:
Entry of international shipping items under TIB, except for items covered by an ATA carnet, must be made on CF 3461 or CF 7533 followed by an entry summary (CF 7501) within the normal 10 day time period from the date of entry.
There is a special provision for handling Trade Fair Entries. They are not handled under a TIB. Trade Fair entries are discussed in CR 147.
In addition to the usual requirements on either CF 3461 or CF 7533 followed by the CF 7501, each TIB must show:
Except for some international shipping articles entered by non-residents for a period of less than 90 days, a bond or CF 7563 in an amount equal to double the normal estimated duty or a higher amount at the discretion of the Port Director must be given. The exceptions to this rule are:
These exceptions require a bond for 110% of duty rather than double the normal duty rate.
A Continuous Bond (formerly called a General Term Bond) can be used in lieu of a CF 7563. If the amount of the bond would be less than $25, surety or a cash deposit is not required and the bond will be modified accordingly.
After the entry and bond have been accepted by Customs, the articles are released to the importer. The entry will not be liquidated, since the transaction does not involve liquidated duties.
Articles internationally shipping under TIB may be exported from the port of entry or from another port. Application on CF 3495 must be filed with the Port Director sufficiently in advance of the exportation to permit examination and identification of the articles. If exported at another port, CF 3495 must be filed in triplicate, together with a certified copy of the import entry or a certified copy of the invoice used in the entry. Once examined, shipments must move under bond (T&E).
LIQUIDATED DAMAGES FOR TIB is CHARGE AGAINST THE BOND but not a fine or penalty.
Failure to export, or destroy under Customs supervision, TIB merchandise will result in a demand by the Port Director in the amount of 2 TIMES the normal duty rate (or 110% where this lower amount applies) for liquidated damages.
If there has been a default in respect to TIB merchandise and a petition for relief is filed in a timely manner, it will be forwarded to Headquarter by the District unless the Port Director has allowed it in part or in whole. In most cases the international shipping merchandise entered under TIB is exported, but problems arise when the exporter fails to have the goods examined on export and the TIB does not get canceled. In this case the Port Director will normally request a landing certificate from the port to which the international shipping merchandise was destined in order to prove exportation. The Port Director may request the payment of a lesser amount as liquidated damages or no payment if he feels this action is warranted.
Example (the exam question):
a. You bring to the USA 10 units under TIB and extended it 2 times up to 3 years.
Cost of each unit is $10,000 and total value is $100,000 with 10% duty rate on it. THEN YOUR BOND IS $20,000 (2 times of the duty).
b. 2.5 years later Customs is checks out that entry under TIB and asks you for the Proofs of Export CBP3495 or Airway bill (Bill of Lading) or Shipper's Export Declaration (1) or Proofs of Destroy CBP3499 (2). You show it for 9 units, but cannot proof 10th one.
c. Then Customs goes against FULL amount of bond of $20,000 (2 times of duty for ALL 10 UNITS). BECAUSE THE BOND CONTRACT MEETS CERTAIN CONDITIONS. AND ONE OF THOSE CONDITION SAYS: "SAME 10 UNITS IN, 10 SAME UNITS OUT"
ANTIQUE Chapter 97 in HTS
The unique thing about antique that IT CAN BE ENTERED IN CERTAIN PORTS OF THE USA ONLY. Not to all ports of the USA entries with antique can be made.
To qualify as antique it must has:
ATA stands for the combined French and English words "Admission Temporaire - Temporary Admission". An ATA carnet is an international customs document which may be used for temporary duty-free importation of certain international shipping goods into a country in lieu of the usual customs documentation required. The carnet serves as a guarantee against the payment of Customs duties which may become due on international shipping goods temporarily imported and not re-exported. Quota compliance may be required on certain types of merchandise. ATA textile carnets are subject to quota and visa requirements.
A carnet is valid for one year. The traveler or businessman, however, may make as many trips as desired during the period the carnet is valid provided he has sufficient pages on the carnet for each stop.
The United States currently allows ATA carnets to be used for the temporary admission of professional international shipping equipment, international shipping commercial samples, and advertising material. Most other countries allow the use of carnets for the temporary admission of these international shipping goods and, in some cases, other uses of the ATA carnet are permitted. ATA carnets can also be used for transit of international shipping goods (in-bond movement) in the United States.
Local carnet associations, as members of the international bureau of the Paris-based International Chamber of Commerce, issue carnets to their residents. These associations guarantee the payment of duties to local Customs authorities should the international shipping goods imported under cover of a foreign-issued carnet not be re-exported. In the United States, the U.S. Council of the International Chamber of Commerce, located at 1212 Avenue of the Americas, New York, N.Y. 10036, (212) 354-4480, has been designated by U.S. Customs as the United States issuing and guaranteeing organization. A fee is charged by the council for its service.
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