Mitch Kostoulakos, Ad Hoc Logistics LLC, Licensed Customs Broker, International Logistics Consultant
Agree. Importers and consumers pay the duties or tariffs. They are simply a type of tax.
Category Archives: Nuts & Bolts
LinkedIn Comment- Gaining New Customers
Good post Mike. I agree completely. It is also a reminder to focus on existing accounts. It is much easier to keep a customer than gain a new one.
Checked your EEI lately?
Electronic Export Information (EEI) filing has become routine for exporters and it is easy to “file it and forget it” once the submission has gone through.
Auditing EEI ((also referred to as AES) filings is a good business practice. If you are a self filer is anyone checking the accuracy of your submissions? Does your freight forwarder have an audit procedure in place if they are filing for you? Here is the risk:
§ 30.71 False or fraudulent reporting on or misuse of the Automated Export System.
(1) Failure to file; submission of false or misleading information. Any person, including USPPIs, authorized agents or carriers, who knowingly fails to file or knowingly submits, directly or indirectly, to the U.S. Government, false or misleading export information through the AES, shall be subject to a fine not to exceed $10,000 or imprisonment for not more than five years, or both, for each violation.
Are you aware of this potential filing error?
A common misconception is that EEI and Commercial Invoice value should match. However, inland freight and insurance charges must be accounted for in the EEI filing whether or not they are on the commercial invoice.
For audits of your EEI filings contact mitch@52.91.45.227
Trade Like a Pro
Clients often say “we’ve used the same harmonized codes for years” and “our commodities are duty free“. As a Licensed Customs Broker and consultant this tells me that I need to do some checking on the client’s behalf. Using obsolete or invalid HTS codes is a sign of an amateurish operation. It is likely that, for these clients, commercial invoice descriptions also need updating. If they are an exporter we should check ECCNs, License Exceptions, Country of Origin, and Schedule B numbers as well.
The Harmonized Tariff Schedule code is a 10-digit import classification system for commodities imported into the United States. HTS codes or numbers are administered by the U.S. International Trade Commission (ITC). The first 6 digits, sometimes referred to as HS codes, are standard for more than 200 countries. The last 4 digits are specific to the United States. Schedeule B numbers are used for export and are often, but not always, identical to HTS codes. They are administered by the U.S. Census Bureau.
Customs brokers use the HTS, along with CBP regulations, in their day to day business. Importers and traders may also make use of the HTS in determining duty rates. Checking the validity of harmonized codes at least semi-annually is a good business practice. What may be surprising is the frequency of revisions to the HTS.
The tariff archives show that the 2022 HTS was revised 12 times. Don’t assume that your codes are valid. A little due diligence helps avoid problems down the road. Contact mitch@52.91.45.227 for a review of your HTS codes.
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How I Passed the CBLE
If you are planning to sit for the April 2023 CBLE (Customs Broker License Exam) it is best to start preparing now. I have had requests for study tips so am happy to oblige. The CBLE is difficult, with passing rates sometimes as low as 10%.
Recognizing that there are many different learning styles, here is what worked for me:
I took a prep course but, as good as it was, additional study was essential. I estimate that I spent about 50-60 hours on weekends leading up to the exam.
I downloaded 4-5 previous exams (320-400 total questions) from the CBP website and used a 3 Step process. In Step 1 I took each test for accuracy, ignoring the clock. In Step 2 I took the tests again in the same order, while timing myself to make sure I could finish within 4 hours. In Step 3 I circled all the questions I had missed in Steps 1 and 2 and created a separate “final” exam which I took several times until I answered all the questions correctly.
Good luck but don’t rely on luck.
CBLE Announcement
It’s not too early to begin preparing for the April 2023 CBLE (Customs Broker License Exam). Here is the announcement posted on the CBP website:
The next CBLE will take place on Wednesday, April 26, 2023. Registration will open on February 24, 2023 and close on March 24, 2023 late registration will not be accommodated.
The CBLE is administered on the fourth Wednesday of April and October (unless there is an insurmountable scheduling conflict or holiday).
An in-person CBLE exam option will be available for the April 2023 exam. A remotely proctored exam may be offered to a limited number of registrants.
NOTICE: Given the evolving COVID-19 situation examinees are responsible for checking the PDRI/PSI COVID-19 page (https://www.psionline.com/important-notice-update-concerning-covid-19-c…) regularly to find out if there is a vaccine or mask mandate at the registered testing site. It is THE EXAMINEE’S responsibility to stay up to date. CBP will NOT provide refunds for those who are not able to test as a result of being uninformed or noncompliant about the COVID-19 policy. CBP and PDRI/PSI recommend that the examinee checks the website regularly leading up to the exam, including the night before the CBLE.
I have had inquiries about study tips and will include some in a future post.
Contact mitch@52.91.45.227
Time for a Check Up
An annual customs review is a good business practice. Early January is a good time to get this done before day to day activity ramps up again. As part of your due diligence, check to make sure you are taking advantage of regulations that allow importing on a duty free or preferential basis. Here are a few basic items for your annual customs review:
Classification– review updates to the HTSUS (Harmonized Tariff Schedule of the United States) to make sure your codes and descriptions are accurate. Proper classification and valuation of imported goods are the first step in compliance. If you do nothing else, do this.
Duty Drawback– this is a refund of duties paid on imports that are later exported. As supply chains expand there may be new opportunities for drawback. Record keeping is key here.
Chapter 98 of the Harmonized Tariff allows duty free entry of certain categories of goods. Examples are: American Goods Returned, American Goods Repaired or Altered Abroad, and American Components Assembled Abroad.
Trade agreements– programs which allow duty free or reduced duty rate entries. There are many agreements (such as USMCA) in place.
Customs rulings– consider requesting formal customs rulings prior to large transactions. This ensures compliance and eliminates uncertainty about imports. Rulings can be requested thru the CBP website.
Correcting errors– when an entry mistake is discovered it can be corrected by a prior disclosure to CBP. The formal process is a Post-Entry Amendment/Post Summary Correction. A prior disclosure can help mitigate penalties.
Contact mitch@52.91.45.227 if you need help.
A Little Execution
C- Level executives, perhaps you have been “looking the other way” when it comes to export compliance. If you are lucky there have been no consequences for this negligence. Why not start off 2023 with a little executive action and move your organization towards compliance?
While a formal Export Compliance Program is the ideal solution, you may not be ready to commit the resources needed at this time. However, there are some steps that can be implemented immediately at little cost.
Here are a few best practices to help you get started :
1) Review and confirm correct Harmonized Tariff and Schedule B codes and maintain master list as updates occur. Proper classification follows established protocols and is the starting place for compliance.
2) Check Export Administration Regulations (EAR) for correct ECCN and license exception codes. Are you automatically using EAR99 and NLR? https://www.bis.doc.gov/ can help.
3) Confirm Country of Origin for all imports. This info is needed for your Commercial Invoice and is not always obvious, so consider consulting a Licensed Customs Broker.
4) Check common “Red Flags” such as denied parties lists, entities lists, and unverified lists. Once again, https://www.bis.doc.gov/ provides details and training.
5) Review export documentation for possible improvements.
Make export compliance a front-end process, not a last minute shipping function. Remember, while Logistics Service Providers (LSPs) are valued partners, the exporter bears primary responsibility for compliance. Finally, if exporting under ITAR you need a responsible trained officer.
Contact mitch@52.91.45.227 for immediate assistance.
Customs Brokers- Good News
CBP is eliminating district permits effective 12/19/2022. Those brokers holding only district permits will be transitioned to national permits. Those already holding national permits will not be affected.
Here is some of the info posted on the CBP website in October followed by a link to the complete announcement:
Within the new national framework, district permits will be eliminated. All customs brokers currently operating with only a district permit will be automatically transitioned to a national permit before the Final Rule effective date. CBP has diligently designed a national permit transition process that will ensure no lapse in permit activity for customs brokers impacted by this process. Licensed customs brokers who already hold a national permit will not be affected.