[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