As a highly trained professional, a Customs brokers play a vital role in the importing process by ensuring that your goods are in compliance with government regulations and legislation. The Customs broker is primarily the agent for the importer who employs him. He is frequently the importer’s only point of contact with the U.S. Customs Service and advises on the technical requirements of importing, preparing and filing entry documents, obtaining the necessary bonds, depositing U.S. import duties, securing release of the goods and arranging delivery to the importer’s premises or warehouse. The broker often consults with Customs to determine the proper rate of duty or basis of appraisement.
Requirements for importing specific commodities depend on a wide variety of criteria. Some information, such as whether an item is subject to quota restrictions, eligible for reduced rates of duty, or restricted from entry because they originate in an embargoed country.
Other requirements depend on other agencies’ safety, energy efficiency, health standards, etc. Many of the items governed by these various rules cannot be imported without a permit from the related agency.
Your Customs Broker requires the following, at a minimum, in order to prepare an entry:
1. Power of Attorney – CEP, as a licensed customs broker is required to have a valid Customs Power of Attorney on file prior to transacting any Customs business on the behalf of the Importer of Record (19CFR 141.46). This instrument allows CEP to ONLY transact Customs business.
2. Commercial Invoice – Must be in English, which describes the product, terms of sale, and the purchase price FOB origin port. If the product originates in a country other than the one you purchase from, the actual country of origin of the merchandise should appear somewhere on the invoice. The name of the seller and the buyer and the currency of purchase should be clearly stated. Some importers think that they should include as little information as possible in the invoices they provide to their Customs Broker. This works against you! When we can’t get enough information to substantiate a lower duty classification on merchandise, we are required to use the higher classification. So, give your Customs Broker enough information to classify your shipment properly.
3. Bill of lading or Air Waybill – This is the transport document that covered the movement from origin to the port of entry.
4. Country of origin Marking – One of the most common problems that will hold up an entry is when the product or merchandise does not have any marking which indicates its origin. “Origin” does not necessarily mean where you bought it. “Origin” should be discussed with your Customs Broker so that you understand the term as it relates to U.S. Customs. Marking requirements are clearly stated in the regulations and your broker can be a valuable asset in determining what you must do.
5. Other regulatory agencies – Some products are also subject to approval by other agencies of the U.S. Government before entry is approved. Among these are: Food and Drug Administration (FDA), Department of Agriculture (USDA), Department of Transportation (DOT), Environmental Protection Agency (EPA), and others. Discuss this with your Customs Broker. He will coordinate entry with these agencies as part of his/her service.
6. Your Cooperation – CEP takes pride in providing the best service possible for its clients. In order for this to happen efficiently, the client is expected to supply any and all needed information in a timely manner.
A customs surety bond is a contract used for guaranteeing that a specific obligation will be fulfilled between customs and an importer for any given import transaction. When the bond is executed, the bond principal agrees to pay duties, taxes and charges in a timely manner, to make or complete entry, to produce documents and evidence, to redeliver merchandise etc.
If you are importing merchandise into the U.S. for commercial purposes that are valued over $2,500, or a commodity subject to other federal agencies requirements (i.e. firearms or food), you must post a Customs bond to ensure that all duties, taxes and fees owed to the federal government will be paid.
Aside from the customs bond required for the customs entry, a separate single transaction bond is required for the Importer Security Filing (ISF). Purchase of single transaction bonds would not be required if the importer of record has an annual continuous bond on file with Customs.
The Security Filing, commonly known as the “10+2” initiative, is a Customs and Border Protection (CBP) regulation requiring importers and vessel carriers to provide data electronically to CBP for in-bound ocean shipments.
(1) Manufacturer (or supplier) name and address.
Name and address of the entity that last manufactures, assembles, produces, or grows the commodity or name and address of the supplier of the finished goods in the country from which the goods are leaving. In the alternative, the name and address of the manufacturer (or supplier) that is currently required by the import laws, rules and regulations of the United States (i.e., entry procedures) may be provided (this is the information that is used to create the existing manufacturer identification (MID) number for entry purposes).
(2) Seller name and address.
Name and address of the last known entity by whom the goods are sold or agreed to be sold. If the goods are to be imported otherwise than in pursuance of a purchase, the name and address of the owner of the goods must be provided.
(3) Buyer name and address.
Name and address of the last known entity to whom the goods are sold or agreed to be sold. If the goods are to be imported otherwise than in pursuance of a purchase, the name and address of the owner of the goods must be provided.
(4) Ship to name and address.
Name and address of the first deliver-to party scheduled to physically receive the goods after the goods have been released from customs custody.
(5) Container stuffing location.
Name and address(es) of the physical location(s) where the goods were stuffed into the container. For break bulk shipments, the name and address(es) of the physical location(s) where the goods were made ‘‘ship ready’’ must be provided.
(6) Consolidator (stuffer) name and address.
Name and address of the party who stuffed the container or arranged for the stuffing of the container. For break bulk shipments, the name and address of the party who made the goods ‘‘ship ready’’ or the party who arranged for the goods to be made ‘‘ship ready’’ must be provided.
(7) Importer of record number/FTZ applicant identification number.
Internal Revenue Service (IRS) number, Employer Identification Number (EIN), Social Security Number (SSN), or CBP assigned number of the entity liable for payment of all duties and responsible for meeting all statutory and regulatory requirements incurred as a result of importation. For goods intended to be delivered to an FTZ, the IRS number, EIN, SSN, or CBP assigned number of the party filing the FTZ documentation with CBP must be provided. The importer of record number for Importer Security Filing purposes is the same as ‘‘importer number’’ on CBP Form 3461.
(8) Consignee number(s).
Internal Revenue Service (IRS) number, Employer Identification Number (EIN), Social Security Number (SSN), or CBP assigned number of the individual(s) or firm(s) in the United States on whose account the merchandise is shipped. This element is the same as the ‘‘consignee number’’ on CBP Form 3461.
(9) Country of origin.
Country of manufacture, production, or growth of the article, based upon the import laws, rules and regulations of the United States. This element is the same as the ‘‘country of origin’’ on CBP Form 3461.
(10) Commodity HTSUS number.
Duty/statistical reporting number under which the article is classified in the Harmonized Tariff Schedule of the United States (HTSUS). The HTSUS number is required to be provided to the six-digit level. The HTSUS number may be provided up to the 10-digit level. This element is the same as the ‘‘H.S. number’’ on CBP Form 3461 and can only be used for entry purposes, if it is provided at the 10-digit level or greater.
Bill of Lading Number
In addition to the 10 ISF data elements, the lowest level bill of lading number manifested by the carrier with Customs is required in order to tie the ISF to the manifest data and to the entry.
(1) Booking party name and address. Name and address of the party who is paying for the transportation of the goods.
(2) Foreign port of unlading. Port code for the foreign port of unlading at the intended final destination.
(3) Place of delivery. City code for the place of delivery.
(4) Ship to name and address. Name and address of the first deliver-to party scheduled to physically receive the goods after the goods have been released from customs custody.
(5) Commodity HTSUS number. Duty/statistical reporting number under which the article is classified in the Harmonized Tariff Schedule of the United States (HTSUS). The HTSUS number must be provided to the six digits level. The HTSUS number may be provided up to the 10-digit level.
The party causing the goods to enter the limits of a port in the United States is known as the “ISF Importer”. It could be the owner, purchaser, consignee, or agent (e.g. customs broker). For foreign cargo remaining on board (FROB), this party is the carrier (vessel operating carrier). The party filing the immediate exportation (IE), transportation and exportation (T&E), or foreign trade zone (FTZ) documentation is the ISF Importer for those types of shipments. The ISF Importer is ultimately responsible for the timely, accurate and complete submission of the ISF filing.
Under the ISF Rule, CBP could assess penalties up to $10,000 per ISF for one or more of the following violations:
1. LATE ISF: $5,000 penalty if the ISF is not filed at least 24 hours prior to lading aboard a vessel destined to the USA. This includes untimely filing of an ISF update and/or flexible ISF filing.
2. INACCURATE ISF: $5,000 per inaccurate and/or incomplete ISF filing. This includes missing and/or incorrect AMS bill of lading number representing the lowest level (e.g., HB/L).
Incomplete or inaccurate AMS bill of lading with SCAC code at the lowest bill level (AMS house bill) is a very common problem. Please ensure that the bill of lading number provided by your Carrier or Freight Forwarder is the correct and complete number that was transmitted to CBP in AMS to avoid a mismatch. IF BL used to file ISF is not an exact match to the BL manifested by the carrier in AMS, the ISF filing will show “No Bill on File” and filing will not be linked to the manifest.
Incorrect/incomplete names and/or addresses of the parties or other required data can also lead to penalties.
3. AMENDMENTS: $5,000 for inaccurate or late ISF updates including an incorrect update to a flexible ISF
Inaccurate or incomplete data requires the filing of an ISF amendment to CBP upon discovery. Importers must promptly forward any change in data or documentation to CEP that requires an ISF amendment to be filed to correct the original ISF filing. Failure to amend an incorrect ISF filing is subject to penalty.
Certain “flexible” data elements used due to unknown facts at the time of filing must be corrected and transmitted to CBP no later than 24 hours prior to arrival in the USA, or is subject to penalty.
Under the ISF final rule, ultimate responsibility for ISF and correctness of the data rests with you as the importer of record to accurately and completely submit ten (10) data elements electronically to CBP no later than 24 hours prior to lading (loading) at the foreign port of lading aboard a vessel destined to the U.S. As a business decision, an importer may designate an agent to file ISF on their behalf, but this does not relieve the importer of liability. An importer that designates CEP as their ISF filing agent agrees to CEP’s terms and conditions of service.
All ocean importers are required to obtain a bond to guarantee ISF compliance. The importer is fully responsible for liquidated damages for an ISF as the bond principal. If you currently possess a Continuous Import Bond, it will be sufficient at this time to cover both your ISF and Customs entry filings. If you do not currently possess a Continuous Import Bond, you will be required to purchase both a Single Transaction Bond (STB) to secure your ISF filings as well as a Single Entry Bond to secure your Customs entry filings. Only 5 STB’s per importer per calendar year will be permitted. After the 5th STB, a continuous bond will be required.
ISF must be filed no later than 24 hours prior to the sailing of the final vessel destined for the United States which is usually 48 hours before the ship’s departure. This term must be understood as the time limit for filing because if the merchandise is shipped without such filing, this can have serious consequences, as discussed below. ISF requests should be sent to the broker no later than 2 business days prior to sailing date in order to ensure timely filing by the broker.