[Federal Register Volume 63, Number 159 (Tuesday, August 18, 1998)]
[Notices]
[Pages 44303-44305]
From the Federal Register Online via the Government Publishing Office [www.gpo.gov]
[FR Doc No: 98-22148]


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DEPARTMENT OF THE TREASURY

Customs Service


Modification of National Customs Automation Program Test 
Regarding Reconciliation

AGENCY: Customs Service, Treasury.

ACTION: General notice.

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SUMMARY: A notice was published in the Federal Register on February 6, 
1998, announcing the U.S. Customs ACS Reconciliation Prototype. This 
document serves to announce certain operational changes to the 
prototype, as well as to provide clarification on some

[[Page 44304]]

items. Most aspects of the prototype are unchanged, including the 
Customs Service policy that the prototype will serve, until 
implementation of the Reconciliation component of NCAP/P, as the 
exclusive means to reconcile entry summaries.

EFFECTIVE DATE: The starting date announced in the February 6, 1998 
notice is unchanged. This prototype will commence no earlier than 
October 1, 1998, will run for approximately two years, and may be 
extended. Applications to participate in the prototype will be accepted 
throughout the duration of the prototype.

ADDRESSES: Written comments regarding this notice should be addressed 
to Mr. Don Luther, Reconciliation Team, U.S. Customs Service, 1300 
Pennsylvania Ave. N.W., Mailstop 5.2A, Washington, DC, 20229-0001.

FOR FURTHER INFORMATION CONTACT: Mr. Don Luther at (202) 927-0915.

SUPPLEMENTARY INFORMATION:

Changes and Clarifications

    The following items are changes and clarifications to the February 
6, 1998 Federal Register notice on the Reconciliation Prototype. Unless 
specifically addressed in this notice, all elements of the earlier 
notice still apply.

A. Additional Information on the Prototype

    Additional information on the prototype is available on the U.S. 
Customs Internet Web Site. The address for this site is: 
www.customs.ustreas.gov/imp-exp2/comm-imp/recon/index.htm

B. Bond Issues

1. Bond Rider
    The specific language in the bond rider has been changed to more 
adequately address coverage for Aggregate Reconciliations. The rider 
must be filed with the bond prior to any entry summaries being flagged 
for reconciliation. Because the new bond rider is different, applicants 
who already have provided the earlier bond rider must provide the new 
bond rider prior to flagging entries for reconciliation.
    The rider shall read as follows:
    By this rider to the Customs Form 301 No. __________, executed on 
__________, by __________ as principal(s), importer no(s). __________, 
and __________, as surety, code no. __________, which is effective on 
__________, the principal(s) and surety agree that this bond covers all 
Reconciliations pursuant to 19 U.S.C. 1484(b) that are elected on any 
entries secured by this bond, and that all conditions set out in 
Section 113.62, Customs Regulations, are applicable thereto. The 
principal(s) and surety also agree that, when an Aggregate 
Reconciliation under this rider lists entries occurring in more than 
one bond period, any liabilities to Customs reflected in that Aggregate 
Reconciliation shall be attributable (up to the full available bond 
amount) to any or all of those bond periods.
2. Termination of Bond Rider
    Termination of the Reconciliation Bond Rider by either the 
principal or the surety may be affected in accordance with procedures 
set forth in Sec. 113.27, Customs Regulations. Termination of the 
Reconciliation Bond Rider will not serve to terminate the underlying 
bond. Moreover, it should be noted that Customs will not terminate 
bonds or riders filed pursuant to this prototype.
3. Bond Coverage to be Evaluated
    In addition to the test evaluation criteria listed in the February 
6, 1998 notice, adequacy of bond coverage for participating importers 
will also be evaluated for this prototype.

C. Changes in Terminology

    The previous notice described two methods for flagging entry 
summaries for reconciliation, and two methods for reconciling flagged 
entry summaries. The method of flagging does not dictate the method of 
reconciling. Due to some confusion caused by similar terms, Customs is 
changing the terminology of the flagging methods. The methods 
themselves are unchanged, but are shown here for clarification.
    Individual entry flag (Previously called entry-by-entry flagging): 
The importer electronically via ABI inputs an indicator on all entries 
which are subject to reconciliation. This indicator identifies the 
issue(s) subject to reconciliation.
    Blanket flag (Previously called blanket application): Prior to 
filing entries subject to reconciliation, the importer provides Customs 
a letter which contains the importer of record number, the time period 
in which entries are subject to reconciliation, and the issue(s) 
subject to reconciliation. Customs will input an electronic indicator 
on ALL entries for that importer for that time period, which will 
identify them as being subject to reconciliation for the issue(s) 
indicated. The flag that results is the same as the individual entry 
flag, except that it is applied by Customs to all entries filed for a 
given importer of record.

D. Designated Processing Ports

    The previous notice stated that Reconciliations may be filed at any 
Customs port, but would be processed at a processing port assigned to 
the importer by Customs. Due to intricacies relating to financial 
collections and routing of documents, Customs has changed this aspect 
of the prototype. While the underlying entries may still be filed at 
any port, the Reconciliation must be filed at the processing port 
assigned to the importer by Customs. For purposes of filing the 
Reconciliation at the processing port, the broker permit requirement is 
waived (See below).
    The Reconciliation Processing Ports are:

Boston, MA
Champlain, NY
Detroit, MI
El Paso, TX
Laredo, TX
Miami, FL
Minneapolis, MN
New York, NY/Newark, NJ
Nogales, AZ
Pharr, TX
Portland, OR
San Diego/Otay Mesa, CA

    Other ports may be added at a later date, at which time affected 
participants would be notified.

E. Entry Types Eligible for Reconciliation

    The notice of February 6, 1998 stated that the following entry 
types would be eligible for the ACS Reconciliation Prototype: 01, 02, 
03, 06 and 07. During the course of program development, it became 
apparent that Customs would not be able to include entry types 03 and 
07 in this initial phase of the prototype. These entry types are those 
subject to Antidumping/Countervailing duty cases, which due to their 
inherent complexity, cannot be incorporated into reconciliation at this 
time. The entry types covered by the prototype will be types 01, 02, 
and 06. (Type 06 Foreign Trade Zone entries are allowed only when no 
Antidumping/Countervailing duty merchandise is included on them.)
    Entry summaries subject to Antidumping/Countervailing duty cases 
may be adjusted via existing procedures for individually adjusting 
entry summaries prior to liquidation.

F. Taxes and Fees

    For Entry-by-entry Reconciliations, all taxes and fees on each 
entry summary must be adjusted to show the correct amount appropriate 
to that entry summary had the complete information for the transaction 
been known at the time of entry summary filing.

[[Page 44305]]

    On Aggregate Reconciliations, since monetary changes to individual 
entry summaries are not reported, adjustments to taxes and fees will be 
reported on the Summarized Line Item Data Spreadsheet, as follows:
    Taxes and Fees applied to individual commodities, such as Cotton 
Fee, Beef Fee and the like, will be adjusted by multiplying any 
increase in dutiable value by the rate associated with the tariff 
number for the product in question.
    For Harbor Maintenance Tax (HMT), the importer is responsible for 
determining and declaring the amount owed, based on any increase in 
dutiable value, for those products which had been subject to HMT at the 
time of original entry summary.
    Merchandise Processing Fee (MPF) will be determined and declared in 
a similar fashion. The importer is responsible for determining and 
declaring the proper amount of MPF due based on any increase in 
dutiable value, at the MPF rate applied to the product at time of 
filing the underlying entry summary. Because there is a maximum 
assessment of MPF for entry summaries, Customs will use the following 
formula to set the maximum MPF to be paid on an Aggregate 
Reconciliation: [($485  x  number of entries covered by the 
Reconciliation which were subject to MPF), less the amount of MPF 
already paid on those same entries.]

G. Regulatory Provisions

    The February 6, 1998 Federal Register notice included a section on 
regulatory provisions suspended. That section is hereby modified by 
removing all references to Part 113.62, Customs Regulations, and adding 
the following statement: Certain provisions in Part 111, and Part 141 
of the Customs Regulations will be suspended during this prototype 
test. This will allow brokers to file Reconciliations on behalf of 
importers at the designated Reconciliation Processing Port, without 
holding a permit in that port. The suspension provided in this notice 
pertains only to filing type ``09'' Reconciliation entries, and not to 
any other Customs business transacted by brokers.

H. Handbook

    A Reconciliation procedures handbook is currently under development 
by Customs. Participants in the prototype will receive a copy of this 
handbook, which will contain specific operational information, 
including instructions on how to file and flag underlying entries, and 
how to file Reconciliations. The publication will be made available to 
the general public via the web site listed above, and a version of it 
will be distributed to Customs officers.

I. Interest

    Interest accrues on all Reconciliations where monetary adjustments 
take place, whether they are increases or decreases in duties, taxes, 
and fees. If interest is due Customs, the filer will make payment of 
the interest upon filing the Reconciliation, along with duties, taxes, 
and fees. Interest due the importer will be paid upon liquidation of 
the Reconciliation. Customs is currently seeking a statutory amendment 
to 19 U.S.C. 1505 which would allow an alternate interest accounting 
methodology, such as the following, which will be used if the required 
statutory change is obtained:
    Interest will be calculated on the entire amount of adjusted 
duties, taxes, and fees, as if they had been due on the midpoint date 
of the period covered by the Reconciliation. For example, if a 
Reconciliation covers January 1, 1999 through December 31, 1999, and 
results in $20,000 in increased revenue, the interest would be 
calculated for the $20,000 from the midpoint date of July 1, 1999.
    If no such statutory amendment occurs: Importers will be required 
to determine the appropriate amount of interest due for each entry 
summary, and report such adjustment for each entry summary, either via 
the Association File for Entry-by-Entry Reconciliations, or as a total 
amount of interest due for Aggregate Reconciliations.

J. Components of the Reconciliation

    Reconciliations will consist of three parts. This is true of both 
Entry-by-entry and Aggregate Reconciliations: The Header, Association 
File, and Summarized Line Data Spreadsheet. The characteristics of 
these three components are unchanged from those described in the 
Federal Register notice of February 6, 1998. In cases where a 
Reconciliation is filed with no adjustments to value or other elements 
of the underlying transactions, that is, merely to satisfy the 
obligation to file a Reconciliation initiated by flagging entry 
summaries, the spreadsheet need not be provided, as it would be a 
spreadsheet containing no data. Importers should be aware of the 
distinction between this situation and one where there are adjustments 
to value but no revenue implications, in which a spreadsheet would be 
required.

K. Summarized Line Item Data Spreadsheet

    The spreadsheet shown in the February notice is correct except that 
the title reads ``Aggregate Reconciliation'' when it should read 
``Reconciliation Summarized Line Data Spreadsheet,'' since the 
spreadsheet is used both for Entry-by-entry and Aggregate 
Reconciliations. Also, it was brought to Customs attention that totals 
on certain columns were incorrect. These were typographical errors not 
intended to represent calculations other than those described in the 
notice or on the face of the spreadsheet.

L. Application to Participate in the Prototype

    Importers interested in participating in the prototype must apply 
to Customs in writing. Policies from the earlier notice regarding 
applications remain in effect. Applications will be accepted throughout 
the duration of the prototype. The application requirements from the 
earlier notice are unchanged, except that applicants are no longer 
required to specify the port where the Reconciliations will be filed, 
as Customs will instruct the importer on where they must be filed.
    Applications should be submitted to Mr. Don Luther, Reconciliation 
Team, U.S. Customs Service, 1300 Pennsylvania Ave, NW, Mailstop 5.2A, 
Washington, DC, 20229-0001. Applications may be submitted until the 
start of the prototype and throughout the duration of the prototype. 
Parties interested in the ACS Reconciliation Prototype should consult 
the Federal Register notice (63 FR 6257) of February 6, 1998. All terms 
and conditions set forth in that notice remain in effect except to the 
extent they are specifically modified by this notice.

    Dated: August 12, 1998.
Robert S. Trotter,
Assistant Commissioner, Office of Field Operations.
[FR Doc. 98-22148 Filed 8-17-98; 8:45 am]
BILLING CODE 4820-02-P