[Federal Register Volume 59, Number 60 (Tuesday, March 29, 1994)]
[Unknown Section]
[Page 0]
From the Federal Register Online via the Government Publishing Office [www.gpo.gov]
[FR Doc No: 94-7261]


[[Page Unknown]]

[Federal Register: March 29, 1994]


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DEPARTMENT OF THE TREASURY
19 CFR Part 152

 

Notification to Importer of Increased Duties

AGENCY: U.S. Customs Service, Department of the Treasury.

ACTION: Withdrawal of proposed rule.

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SUMMARY: This document withdraws a proposal to amend the Customs 
Regulations to provide that the district director of Customs shall 
notify the importer on Customs Form (CF) 29, Notice of Action, when the 
estimated aggregate of the increase of duties on an entry exceeds $100. 
The regulations now provide that the importer shall be notified if the 
increase exceeds $15. Most of the commenters were opposed to the 
proposal and cited reasons why the proposed rule would not be in the 
best interests of importers, brokers or the Customs Service. Customs 
has concluded that the proposed rule would result in more time, effort 
and cost for the government, importers and brokers.

DATES: Withdrawal effective on March 29, 1994.

FOR FURTHER INFORMATION CONTACT: Joanne Roman Stump, Office of 
Regulations and Rulings, 202-482-7040.

SUPPLEMENTARY INFORMATION:

Background

    On October 23, 1992, Customs published a notice in the Federal 
Register (57 FR 48347), proposing to amend Sec. 152.2 of the Customs 
Regulations (19 CFR 152.2) to provide that the district director would 
notify the importer on Customs Form (CF) 29, Notice of Action, when the 
estimated aggregate of the increase of duties on an entry exceeded 
$100.
    The notice proposed that in lieu of the current requirement of 
preparing a CF 29 when the increase in duties is $15 or more, the 
estimated increase which would trigger the sending of a CF 29 would be 
raised to $100.
    The reasons given for the proposed change were that it would lessen 
the administrative burden and costs associated with notifying the 
importer of minimal increases while it would not result in a 
significant reduction of services provided to importers.

Discussion of Comments

    Twelve comments were received in response to the notice of proposed 
rulemaking. Ten of the twelve commenters objected to the proposed 
amendment to Sec. 152.2 of the Customs Regulations. All ten of these 
commenters believe that the proposed change would result in an increase 
rather than a decrease in the administrative burden and costs to 
Customs associated with notifying the importer of minimal increases in 
duties.
    Specifically, they point out that it would increase the demand to 
review entry summaries after liquidation to determine the basis of the 
duty increase (i.e., entered value, trade preference eligibility or 
tariff classification), rather than during the initial entry stage when 
the entry summary is processed by the import specialist. This change 
would place an added burden upon Customs to locate and produce the 
liquidated entry package and to research the reason for the increase, 
since the liquidation generally follows the change by a certain time 
period.
    Most commenters thought it far more efficient to resolve a duty 
difference on the basis of one entry, at the initial stages of 
liquidation, rather than to wait several months until liquidation, by 
which time numerous entries of the same merchandise may have been made 
and by which time significant purchase orders may have been placed by 
the importer based on the initial false impression that lower duties 
would be due.
    Moreover, they state that the absence of early notification of 
increased duties will deprive the broker or importer of the opportunity 
to receive valuable information from Customs necessary to modify future 
importations to avoid repeating the same error and causing additional 
increases. Two commenters stated that the size of the duty increase is 
not a measure of the severity or complexity of the issue which is 
causing the duty increase, and that a CF 29 involving one entry and a 
minor duty increase could be the means for resolving a potentially 
contentious matter involving many similarly entered entries and a much 
greater increase in aggregate duties due.
    Another factor militating against the proposed regulation change 
which was mentioned by most commenters is that instead of seeking 
resolution of a dispute in the assessment of increased duties prior to 
liquidation through such methods as discussions with an import 
specialist, use of the internal advice procedure or obtaining a binding 
ruling, the number of protests filed under 19 U.S.C. 1514 would 
increase on many entries involving the same issue. If the proposed 
amendment to the regulations became effective, several areas of the 
Customs Service (e.g., the import specialist teams, the protest 
section, the liquidation section and the National Finance Center) would 
have to expend considerable time and effort in processing more 
protests.
    Several commenters are brokers along the northern border handling 
truck and rail shipments. These commenters said that the CF 29 is 
essential to their business, citing the fact that they are usually the 
importer of record on the entries for their clients, who import in high 
volume and low value, and that approximately 25 percent of increased 
duty bills are less than $100 per entry. The northern border brokers 
assert that the preponderance of their customers will not pay the 
increased duties without knowing why and how the duties are calculated.
    These brokers reject the argument that by raising the $15 limit, 
the inquiries between Customs and brokers or importers would decrease. 
They observe that while many importers would not question an increase 
in duty for $12 without notification and explanation, most importers 
would challenge an increase of $50, $75 or $100 upon receipt of a 
Customs bill.
    Some commenters suggested further automating the liquidation 
procedures so that comments or explanations pertinent to the duty 
increase could be incorporated in the liquidation information 
distributed via the Automated Commercial System to reduce the clerical 
burden on the Customs Service.
    The two commenters who supported the adoption of the proposal 
stated--without elaboration--that it would reduce the overall cost of 
importing into the United States and that it would relieve Customs of 
repetitive minor administrative tasks. However, one did note that the 
importer would not have knowledge of a value or classification change 
causing a duty increase simply by viewing the liquidation notice.
    The majority of the commenters point out that by using the CF 29 to 
provide a clear explanation of its action regarding an entry before it 
is liquidated, the Customs Service will avoid extra administrative 
costs and burdens after the entry is liquidated.

Conclusion

    Taking all of the factors and comments mentioned above into 
consideration, Customs has determined that it should not proceed with 
the proposal at this time. After further consideration and review of 
the comments, Customs now believes that the proposed change would not 
reduce cost, effort or time for Customs or for importers or brokers. 
Given the validity of the comments and the fact that the majority of 
the commenters were opposed to the changes, Customs believes that the 
current regulation is preferable to the proposed regulation.
    Accordingly, Customs has concluded that the proposal be withdrawn 
at this time.

    Approved: March 15, 1994.
George J. Weise,
Commissioner of Customs.
John P. Simpson,
Deputy Assistant Secretary (Regulatory, Tariff and Trade Enforcement).
[FR Doc. 94-7261 Filed 3-28-94; 8:45 am]
BILLING CODE 4820-02-P