[Federal Register Volume 63, Number 64 (Friday, April 3, 1998)]
[Rules and Regulations]
[Pages 16414-16417]
From the Federal Register Online via the Government Publishing Office [www.gpo.gov]
[FR Doc No: 98-8832]
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DEPARTMENT OF THE TREASURY CUSTOMS SERVICE
19 CFR Parts 10, 123, 128, 141, 143, 145 and 148
[T.D. 98-28]
RIN 1515-AC11
Increase of Maximum Amount for Informal Entries to $2,000
AGENCY: U.S. Customs Service, Department of the Treasury.
ACTION: Final rule.
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SUMMARY: This document adopts as a final rule a proposal to increase,
from $1,250 to $2,000, the maximum dollar value prescribed for most
informal entries of merchandise under the Customs Regulations. Section
662 of the Customs Modernization provisions of the North American Free
Trade Agreement Implementation Act raised the statutory limit
applicable to informal entries to $2,500, and it has been determined
that a raise to the intermediate level of $2,000 is appropriate at the
present time. This regulatory change will have the effect of reducing
the overall regulatory burden on importers and other entry filers by
expanding the availability of the simplified informal entry procedures.
EFFECTIVE DATE: July 2, 1998.
FOR FURTHER INFORMATION CONTACT: Operational Aspects: Linda Walfish,
Office of Field Operations (202-927-0042).
Legal Aspects: Jerry Laderberg, Office of Regulations and Rulings
(202-927-2320).
SUPPLEMENTARY INFORMATION:
Background
All merchandise imported into the customs territory of the United
States is subject to entry and clearance procedures. Section 484(a),
Tariff Act of 1930, as amended (19 U.S.C. 1484(a)), provides that the
``importer of record'' or his authorized agent shall: (1) Make entry
for imported merchandise by filing such documentation or information as
is necessary to enable Customs to determine whether the merchandise may
be released from Customs custody; and (2) complete the entry by filing
with Customs the declared value, classification and rate of duty
applicable to the merchandise and such other documentation or other
information as is necessary to enable Customs to properly assess duties
on the merchandise and collect accurate statistics with respect to the
merchandise and determine whether any other applicable requirement of
law is met. Part 142, Customs Regulations (19 CFR Part 142), implements
section 484 and prescribes procedures applicable to most Customs entry
transactions. These procedures are referred to as formal entry
procedures and generally involve the completion and filing of one or
more Customs forms (such as Customs Form 7501, Entry/Entry Summary,
which contains detailed information regarding the import transaction)
as well as the filing of commercial documents pertaining to the
transaction.
As originally enacted, section 498, Tariff Act of 1930
(subsequently codified at 19 U.S.C. 1498), authorized the Secretary of
the Treasury to prescribe rules and regulations for the declaration and
entry of, among other things, imported merchandise when the aggregate
value of the shipment did not exceed such amount, but not greater than
$250, as the Secretary shall specify in the regulations. Regulations
implementing this aspect of section 498 are contained in Subpart C of
Part 143, Customs Regulations (19 CFR Part 143) which is entitled
``Informal Entry''. The informal entry procedures set forth in Subpart
C of Part 143 are less burdensome than the formal entry procedures
prescribed in Part 142 of the regulations. For example, if authorized
by the port director, informal entry may be effected by the filing of a
commercial invoice setting forth a declaration signed by the importer
or his agent attesting to the accuracy of the information on the
invoice.
Section 206 of the Trade and Tariff Act of 1984 (Public Law 98-573,
98 Stat. 2948) amended section 498 by increasing to $1,250 (but with
some exceptions) the maximum dollar amount that the Secretary could
prescribe by regulation for purposes of the declaration and entry of
imported merchandise. On July 23, 1985, T.D. 85-123 was published in
the Federal Register (50 FR 29949) to, among other things, increase to
$1,000 the regulatory limit for which informal entries could be filed.
The regulatory amendments in this regard involved changes to Subpart C
of Part 143 and various other provisions of the Customs Regulations
that reflected the $250 informal entry dollar limit, and Customs
explained in the background portion of T.D. 85-123 that the new limit
would be set initially in the regulations at $1,000, with the option to
increase it to $1,250 in the future. On August 31, 1989, Customs
published in the Federal Register (54 FR 36025) T.D. 89-82 which
amended the Customs Regulations by increasing the limit for which
informal entries could be filed to the maximum $1,250 permitted under
section 498 as amended by section 206 of the Trade and Tariff Act of
1984.
Section 662 of the North American Free Trade Agreement
Implementation Act (Public Law 103-182, 107 Stat. 2057) amended section
498 by increasing to $2,500 the maximum dollar amount that the
Secretary could prescribe by regulation for purposes of the declaration
and entry of merchandise. As a result of this further increase in the
statutory maximum, and in consideration of the fact that the regulatory
limit for informal entries had not been increased since 1989, on June
9, 1997, Customs published in the Federal Register (62 FR 31383) a
notice setting forth proposed amendments to the Customs Regulations to
again increase the regulatory limit for informal entries.
[[Page 16415]]
Similar to the approach taken in 1985 and noting that the new
statutory maximum still represented a ceiling but did not preclude
adoption of a lower regulatory limit, Customs expressed the view in the
June 9, 1997, notice of proposed rulemaking that it would be preferable
to take an intermediate step by establishing a new informal entry limit
of $2,000 which Customs believed would result in the best balance
between the revenue and statistical collection and enforcement
responsibilities of Customs and the interest of the importing public in
having an expanded opportunity to use the less burdensome informal
entry procedures. In addition, even if the proposed new $2,000 informal
entry limit were to be adopted in a final rulemaking action, the notice
pointed out that Customs would still retain the option of proposing a
further upward adjustment of the regulatory limit at an appropriate
future date, subject to the statutory maximum, after evaluating the
operational effect of the new $2,000 limit and any other intervening
change in circumstances having an impact on the entry process. The
notice of proposed rulemaking made provision for the submission of
public comments on the proposed regulatory changes for consideration
before adoption of those changes as a final rule, and the prescribed
public comment period closed on August 8, 1997.
Discussion of Comments
A total of fifteen commenters responded to the June 9, 1997, notice
of proposed rulemaking.
Nine commenters supported the basic principle of increasing the
informal entry limit. In addition to expressing support for that basic
principle, these nine commenters made the following specific points:
1. Eight commenters favored increasing the informal entry limit to
the $2,500 statutory maximum rather than only to $2,000 as proposed.
2. One commenter expressed concern that Customs would not be able
to provide in a timely fashion the necessary changes to the Automated
Commercial System (ACS) to reflect any increase in the informal entry
limit.
While Customs, of course, has no reason to take issue with the
general support expressed by the nine commenters, Customs notes the
following with regard to the specific points made by these commenters:
1. For the reasons outlined in the notice of proposed rulemaking
and summarized above, Customs remains of the opinion that any increase
in the informal entry limit beyond the proposed $2,000 level would not
be appropriate at the present time.
2. This document prescribes a 90-day (rather than the usual 30-day)
delayed effective date in order to give Customs additional time to make
the necessary changes to ACS.
Six commenters expressed opposition to the basic principle of
increasing the informal entry limit. The following specific points were
made by these commenters in this regard:
1. One commenter stated that the informal entry limit should be
lowered instead of raised.
2. Two commenters were concerned that the increase in the informal
entry limit would lead to products regulated by other agencies, for
example, food and medical devices regulated by the Food and Drug
Administration (FDA), being more readily admitted if they are in fact
unsafe. One of these commenters noted that although Customs can require
formal entry under 19 CFR 143.22, there should be a formal Customs
policy requiring formal entry for products, regardless of value,
sampled by the FDA.
3. Similar to the concern expressed in the comment immediately
above, two commenters claimed that an increase in the informal entry
limit will allow more importations to be made without a bond being
filed, thereby making it more difficult for Customs to protect the
revenue or to demand redelivery, especially in the case of unsafe food
and medical devices.
4. Four commenters were concerned that there would be a significant
loss of statistical data, collected by both the United States and other
countries, if the informal entry limit is increased. A major concern
expressed was that loss of such data could adversely affect trade
policy. It was argued that this loss of data could be significant since
there has been a large increase in small and medium size businesses
which make small shipments.
5. One commenter proposed that, instead of raising the informal
entry limit, Customs should eliminate informal entries for all
commercial transactions.
6. One commenter stated that most informal entries under the
proposed limit would arrive by courier and, because of the volume and
repetition of the shipments, would present opportunities to evade the
law and regulations.
7. One commenter argued that an increase in the informal entry
limit will add to the burdens on Customs personnel, especially
inspectors.
8. One commenter stated that there would be an appreciable loss of
merchandise processing fee (MPF) collections, since the MPF for
informal entries is less than that for formal entries.
9. One commenter claimed that the requirement to exercise
reasonable care contained in 19 U.S.C. 1484 would be removed for a
large number of entries because it only applies to formal entries.
10. Finally, one commenter expressed concern that an increase in
the informal entry limit would remove entries from the recordkeeping
requirements of 19 U.S.C. 1509(a)(1)(a).
The following are the Customs responses to the above points made in
opposition to the proposal to increase the informal entry limit:
1. Since Congress was aware of the likely consequence of the
amendment to 19 U.S.C. Sec. 1498(a)(1), that is, that the maximum
regulatory limit for informal entry would be raised, Customs believes
that lowering the informal entry limit would clearly be in conflict
with what Congress had in mind.
2. As already noted by one of these commenters, there is a
safeguard in place in that Customs can require a formal entry,
regardless of value. Moreover, coordination between the FDA and Customs
in the case of entries of merchandise sampled or otherwise regulated by
the FDA will continue in order to ensure that unsafe merchandise is not
admitted; however, this is an interagency operational issue that
Customs does not believe is appropriate for regulatory text. Finally,
Customs notes that setting a policy to require importers to make formal
entry for all merchandise regulated by the FDA is beyond the scope of
the published proposal.
3. As regards revenue protection, since goods that are informally
entered are not released prior to Customs determining and collecting
duties, taxes and fees, Customs disagrees with this aspect of the
comment. Moreover, while it is more difficult to secure redelivery of
informally entered noncommercial goods subsequent to their release
because such transactions are normally not covered by a Customs bond,
Customs notes that most importations involving FDA-controlled goods are
commercial transactions which are handled through the Automated Broker
Interface (ABI) and thus are covered by a Customs bond even if
informally entered; Customs will reiterate and enforce its policy of
requiring a bond on all ABI/statement entries, whether formal or
informal.
4. While some statistical data will be lost, Congress raised the
informal entry limit in order to streamline the entry process and
increase efficiency for
[[Page 16416]]
informal entries. Thus, it appears these benefits outweigh any loss in
statistical data. In addition, Customs notes that the informal entry
limit has not been raised since 1989, and raising the informal entry
limit takes that factor and the effects of inflation into account.
Customs will continue its policy of making available to the U.S. Bureau
of the Census as much statistical information as possible, and Customs
will also work with Census to develop statistical sampling methods for
use in trade program areas.
5. Customs notes that 19 U.S.C. 1498 provides no exclusion for
commercial merchandise from being entered informally. This comment
raises a policy issue that is beyond the scope of the published
proposal.
6. Customs believes that the provisions in Part 128 of the Customs
Regulations (19 CFR Part 128) covering express consignments provide
adequate safeguards in this regard.
7. An increase in the informal entry limit might result in an
increased burden on Customs inspectors or other personnel at some, but
certainly not all, locations. Appropriate steps will be explored by
Customs to address any such resulting workload increases.
8. Customs projects that the proposed increase in the informal
entry limit would result in a loss of approximately $20 million per
year in MPF collections. However, it must be assumed that Congress took
the potential loss of MPF collections into account when it decided to
raise the statutory ceiling which controls the maximum informal entry
limit.
9. Although a party making an informal entry would not have to
comply with the requirements for making formal entry under 19 U.S.C.
1484, 19 CFR 143.26 requires an eligible party making an informal entry
to use reasonable care in doing so.
10. Although there is a lesser recordkeeping burden for informal
entries because fewer records are prescribed by law or regulation in
connection with the informal entry process, Customs notes that 19
U.S.C. 1509(a)(1)(A) does not per se make a distinction between formal
and informal entries (the statute merely refers to ``entry'' records).
Customs believes that the issue of whether a distinction should be made
between formal and informal entries for recordkeeping purposes would be
more appropriately addressed in the regulations that specifically deal
with recordkeeping requirements.
Conclusion
Accordingly, based on the comments received and the analysis of
those comments as set forth above, and after further review of this
matter, Customs believes that the proposed regulatory amendments should
be adopted as a final rule without change.
Executive Order 12866
This document does not meet the criteria for a ``significant
regulatory action'' as specified in E.O. 12866.
Regulatory Flexibility Act
Pursuant to the provisions of the Regulatory Flexibility Act (5
U.S.C. 601 et seq.), it is certified that the regulatory amendments
will not have a significant economic impact on a substantial number of
small entities. The amendments are in response to a statutory change
and will have the effect of reducing the regulatory burden on the
public. Accordingly, the amendments are not subject to the regulatory
analysis or other requirements of 5 U.S.C. 603 and 604.
Drafting Information
The principal author of this document was Francis W. Foote, Office
of Regulations and Rulings, U.S. Customs Service. However, personnel
from other offices participated in its development.
List of Subjects
19 CFR Part 10
Customs duties and inspection, Imports, Reporting and recordkeeping
requirements.
19 CFR Part 123
Aircraft, Canada, Customs duties and inspection, Imports, Mexico,
Motor carriers, Railroads, Reporting and recordkeeping requirements,
Vehicles, Vessels.
19 CFR Part 128
Carriers, Couriers, Customs duties and inspection, Entry, Express
consignments, Freight, Imports, Informal entry procedures, Manifests,
Reporting and recordkeeping requirements.
19 CFR Part 141
Bonds, Customs duties and inspection, Entry of merchandise,
Invoices, Release of merchandise, Reporting and recordkeeping
requirements.
19 CFR Part 143
Customs duties and inspection, Entry of merchandise, Invoice
requirements, Reporting and recordkeeping requirements.
19 CFR Part 145
Customs duties and inspection, Imports, Mail, Postal service,
Reporting and recordkeeping requirements.
19 CFR Part 148
Customs duties and inspection, Imports, Personal exemptions,
Reporting and recordkeeping requirements.
Amendments to the Regulations
For the reasons stated in the preamble, Parts 10, 123, 128, 141,
143, 145 and 148 of the Customs Regulations (19 CFR Parts 10, 123, 128,
141, 143, 145 and 148), are amended as set forth below.
PART 10--ARTICLES CONDITIONALLY FREE, SUBJECT TO A REDUCED RATE,
ETC.
1. The authority citation for Part 10 continues to read in part as
follows:
Authority: 19 U.S.C. 66, 1202 (General Note 20, Harmonized
Tariff Schedule of the United States), 1321, 1481, 1484, 1498, 1508,
1623, 1624, 3314.
* * * * *
Sec. 10.1 [Amended]
2. In Sec. 10.1, the introductory text of paragraph (a) and the
first sentence of paragraph (b) are amended by removing the reference
``$1,250'' and adding, in its place, the reference ``$2,000''.
PART 123--CUSTOMS RELATIONS WITH CANADA AND MEXICO
1. The general authority citation for Part 123 is revised to read,
and the specific authority citation for Sec. 123.4 continues to read,
as follows:
Authority: 19 U.S.C. 66, 1202 (General Note 20, Harmonized
Tariff Schedule of the United States (HTSUS)), 1431, 1433, 1436,
1448, 1624.
* * * * *
Section 123.4 also issued under 19 U.S.C. 1484, 1498;
* * * * *
Sec. 123.4 [Amended]
2. In Sec. 123.4, the first sentence of paragraph (b) is amended by
removing the reference ``$1,250'' and adding, in its place, the
reference ``$2,000''.
PART 128--EXPRESS CONSIGNMENTS
1. The authority citation for Part 128 continues to read as
follows:
Authority: 19 U.S.C. 66, 1202 (General Note 20, Harmonized
Tariff Schedule of the United States), 1321, 1484, 1498, 1551, 1555,
1556, 1565, 1624.
[[Page 16417]]
Sec. 128.24 [Amended]
2. In Sec. 128.24, paragraph (a) is amended by removing the
reference ``$1,250'' wherever it appears and adding, in its place, the
reference ``$2,000''.
PART 141--ENTRY OF MERCHANDISE
1. The authority citation for Part 141 continues to read in part as
follows:
Authority: 19 U.S.C. 66, 1448, 1484, 1624.
* * * * *
Subpart F also issued under 19 U.S.C. 1481;
* * * * *
Sec. 141.82 [Amended]
2. In Sec. 141.82, paragraph (d) is amended by removing the
reference ``$1,250'' and adding, in its place, the reference
``$2,000''.
PART 143--SPECIAL ENTRY PROCEDURES
1. The authority citation for Part 141 continues to read as
follows:
Authority: 19 U.S.C. 66, 1481, 1484, 1498, 1624.
Sec. 143.21 [Amended]
2. In Sec. 143.21, paragraphs (a), (b), (c), (f) and (g) are
amended by removing the reference ``$1,250'' and adding, in its place,
the reference ``$2,000''.
Sec. 143.22 [Amended]
3. In Sec. 143.22, the second sentence is amended by removing the
reference ``$1,250'' and adding, in its place, the reference
``$2,000''.
Sec. 143.23 [Amended]
4. In Sec. 143.23, paragraphs (d) and (i) are amended by removing
the reference ``$1,250'' and adding, in its place, the reference
``$2,000''.
Sec. 143.26 [Amended]
5. In Sec. 143.26, the heading and text of paragraph (a) are
amended by removing the reference ``$1,250'' and adding, in its place,
the reference ``$2,000''.
PART 145--MAIL IMPORTATIONS
1. The authority citation for Part 145 continues to read in part as
follows:
Authority: 19 U.S.C. 66, 1202 (General Note 20, Harmonized
Tariff Schedule of the United States), 1624.
Section 145.4 also issued under 18 U.S.C. 545, 19 U.S.C. 1618;
* * * * *
Section 145.12 also issued under 19 U.S.C. 1315, 1484, 1498;
* * * * *
Section 145.35 through 145.38, 145.41, also issued under 19
U.S.C. 1498;
* * * * *
Sec. 145.4 [Amended]
2. In Sec. 145.4, paragraph (c) is amended by removing the
reference ``$1,250'' and adding, in its place, the reference
``$2,000''.
Sec. 145.12 [Amended]
3. In Sec. 145.12, paragraphs (a)(2), (a)(3) and (b)(1) and the
heading and text of paragraph (c) are amended by removing the reference
``$1,250'' wherever it appears and adding, in its place, the reference
``$2,000''.
Sec. 145.35 [Amended]
4. Section 145.35 is amended by removing the reference ``$1,250''
and adding, in its place, the reference ``$2,000''.
Sec. 145.41 [Amended]
5. Section 145.41 is amended by removing the reference ``$1,250''
and adding, in its place, the reference ``$2,000''.
PART 148--PERSONAL DECLARATIONS AND EXEMPTIONS
1. The authority citation for Part 148 continues to read in part as
follows:
Authority: 19 U.S.C. 66, 1496, 1498, 1624. The provisions of
this part, except for subpart C, are also issued under 19 U.S.C.
1202 (General Note 20, Harmonized Tariff Schedule of the United
States).
* * * * *
Sec. 148.23 [Amended]
2. In Sec. 148.23, the heading and text of paragraph (c)(1) and the
heading and introductory text of paragraph (c)(2) are amended by
removing the reference ``$1,250'' and adding, in its place, the
reference ``$2,000''.
Approved: March 18, 1998.
Robert S. Trotter,
Acting Commissioner of Customs.
John P. Simpson,
Deputy Assistant Secretary of the Treasury.
[FR Doc. 98-8832 Filed 4-2-98; 8:45 am]
BILLING CODE 4820-02-P