U.S. Customs and Border Protection recently issued updated guidance outlining the responsibilities of importers and customs brokers when filing duty free claims under subheading 9801.00.10 for U.S. and foreign goods returned, along with the documentary requirements for such claims.
The move follows calls by stakeholders for the agency to clarify “the importer’s burden and what constitutes responsible supervision and control on the part of brokers,” according to the National Customs Brokers and Forwarders Association of America.
On April 25, 2016, a change to U.S. HTS Chapter 98 for U.S. goods returned went into effect. Specifically, section 904(b) of the Trade Facilitation and Trade Enforcement Act of 2015 (TFTEA), “Modification of Provisions Relating to Returned Property,” amended U.S. HTS Subheading 9801.00.10 to read:
“Products of the United States when returned after having been exported, or any other products when returned within 3 years after having been exported, without having been advanced in value or improved in condition by any process of manufacture or other means while abroad.”
The expansion of Subheading 9801.00.10 includes all products exported from and returned to the United States, regardless of country of origin.
- For U.S. origin products, there is no time limit on filing a claim.
- For foreign-origin products, there is a 3-year time limit.
The changes to 9801.00.10 apply to U.S. or foreign articles returned to the United States and entered, or withdrawn from warehouse, for consumption on or after April 25, 2016.
Importer & Broker Responsibilities
The importer has the burden to prove their claim for duty-free treatment under 9801.00.10. If the broker obligates themselves as the importer of record, they will assume the legal responsibility and burden to provide the required documents to substantiate the Subheading 9801.00.10 claim.
While customs brokers have a “duty of care” in the filing of entry documents on behalf of importers, according to the updated guidance, when requests are made to prove a claim for duty-free treatment under 9801.00.10, the burden of proof is on the importer and not the broker*.
Customs brokers are required to exercise “responsible supervision and control” when preparing and filing 9801.00.10 claims. An example of this cited by CBP is that of providing evidence of communication between the broker and importer concerning the requirements for making such claims. Brokers found to be deficient in exercising “responsible supervision and control” may be dealt with through the informed compliance process, CBP warns.
*Unless the broker is acting as the importer of record.
Pending a regulatory change that will align 19 CFR 10.1 with TFTEA, CBP advises that, for shipments valued over $2,500, the following documents may be requested from the importer in connection with 9801.00.10 claims.
Either U.S. manufactured goods or foreign origin goods:
- Declaration by Foreign Shipper indicating that the products were not advanced in value or improved in condition while outside the United States. A certificate from the master of a vessel stating that the products are returned without having been un-laden from the exporting vessel may be accepted in lieu of the declaration by the foreign shipper.
- Declaration by the owner, importer, consignee, or agent having knowledge of the facts regarding the duty-free claim. If the owner or ultimate consignee is a corporation, such declaration may be signed by the president, vice president, secretary, or treasurer of the corporation, or may be signed by an employee or agent of the corporation who holds a power of attorney and a certification by the corporation that such employee or other agent has or will have knowledge of the pertinent facts.
U.S. manufactured goods valued > $2,500 entered three years after export
When such goods are not clearly marked with the name and address of the U.S. manufacturer, CBP may require additional documents to those noted above, including a statement from the U.S. manufacturer verifying that the articles were made in the United States.
Proof of Export
CBP will deem one of the following documents as sufficient proof of export from the United States for U.S. manufactured goods or foreign origin goods:
- Copy of the entry into the foreign country;
- U.S. export invoice or bill of lading/airway bill; or,
- Electronic Export Information (EEI) or the Automated Export System (AES) filing exemption.
Note: No substitution of the same type of articles under an inventory management system may occur.
Aircraft & Aircraft Parts
Specific documentation requirements apply in the case of returning aircraft and aircraft parts, particularly those associated with military and defense programs, as described in Sections 5 through 7 of the updated guidance.
Need More Information?
Should you have any questions about this updated guidance, don’t hesitate to contact our Global Trade Services team.