[Federal Register Volume 64, Number 139 (Wednesday, July 21, 1999)]
[Notices]
[Pages 39187-39190]
From the Federal Register Online via the Government Publishing Office [www.gpo.gov]
[FR Doc No: 99-18560]
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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: On February 6, 1998 and August 18, 1998, general notice
documents were published in the Federal Register regarding the Customs
Automated Commercial System (ACS) Reconciliation Prototype test. These
documents announced, explained, and modified the prototype test. This
notice serves to notify interested parties of two additional
modifications to the prototype. The first allows downward adjustments
on Aggregate Reconciliations, subject to certain conditions, and the
second authorizes the use of a midpoint interest calculation method for
Aggregate Reconciliations. All other aspects of the prototype remain
the same.
EFFECTIVE DATES: The prototype testing period started on October 1,
1998. It will run for approximately two years from that date and may be
extended. Applications to participate in the prototype will be accepted
throughout the duration of the prototype. The effective date for use of
the downward adjustment reporting option for Aggregate Reconciliations
is July 21, 1999. Prototype participants may use that option for
Aggregate Reconciliations filed on or after that date. The effective
date for use of the midpoint interest calculation method is July 25,
1999. Prototype participants will use that method for Aggregate
Reconciliations filed on or after that date.
ADDRESSES: Written inquiries regarding participation in the prototype
test should be addressed to Ms. Shari McCann, Reconciliation Team, U.S.
Customs Service, 1300 Pennsylvania Ave. NW, Mailstop 5.2A, Washington,
DC, 20229-0001.
FOR FURTHER INFORMATION CONTACT: Mr. Don Luther at (202) 927-0915 or
Ms. Shari McCann at (202) 927-1106.
SUPPLEMENTARY INFORMATION:
Background
Reconciliation is the process which allows an importer, at the time
of entry summary, to identify undeterminable information (other than
that affecting admissibility) to Customs and provide that outstanding
information at a later date. Reconciliation, a planned component of the
National Customs Automation Program (NCAP), as provided for in Title VI
(Subtitle B) of the North American Free Trade Agreement Implementation
Act (the NAFTA Implementation Act; Pub. L. 103-182, 107 Stat. 2057
(December 8, 1993)), is currently being tested by Customs under the
Customs Automated Commercial System (ACS) Prototype test.
Customs announced and explained the ACS Prototype test of
reconciliation in a general notice document published in the Federal
Register (63 FR 6257) on February 6, 1998. A notice published in the
Federal Register (63 FR 44303) on August 18, 1998, announced
clarifications and operational changes. This notice modifies the test
by providing a downward adjustment option and a midpoint interest
calculation method for Aggregate Reconciliations. Except for these
particular modifications, all other aspects of the test remain the
same.
The downward adjustment modification is an enhancement to the
prototype test. The midpoint interest modification is authorized under
the Miscellaneous Trade and Technical Corrections Act of 1999 (Pub. L.
106-36 (June 25, 1999)), which amended 19 U.S.C. 1505(c) (see section
further below pertaining to the midpoint interest calculation method).
Prototype participants should note that these modifications have
different effective dates (see ``Effective Dates'' section) and both
apply only to Aggregate Reconciliations. The Entry-by-Entry
Reconciliation aspect of the prototype remains unchanged.
Aggregate Reconciliation for Decrease in Duties, Taxes, and Fees
As set forth in the Federal Register notice published on February
6, 1998
[[Page 39188]]
(63 FR 6257), there are two types of Reconciliations that may be filed:
(1) Entry-by-Entry Reconciliations, where adjustments for duties,
taxes, and fees are shown for every entry being reconciled. Such
Reconciliations may be used to report increases, decreases, or no
change to the duties, taxes, and fees determined on the underlying
entry summary (ies); and
(2) Aggregate Reconciliations for reporting absolute increases in
duties, taxes, and fees, where reconciled adjustments are shown on an
aggregate basis, rather than on an entry-by-entry basis.
The same Federal Register notice (63 FR 6257) described the term
``absolute increase'' to encompass only entry summaries that result in
either an increase or no change in duties, taxes, and fees. Thus, prior
to publication of this notice, only increases and no changes have been
eligible for Aggregate Reconciliations.
In this notice, Customs announces an enhancement to the Aggregate
Reconciliation option that has the effect of altering this limitation.
Upon publication of this notice, participants in the prototype may now
also use the Aggregate Reconciliation to report changes resulting in a
decrease in duties, taxes, and fees (referred to as downward
adjustments), provided that the participant waives any claim for a
refund (of duties, taxes, and fees) and releases Customs from any such
liability.
While upward and downward adjustments will be allowed on a single
Aggregate Reconciliation, they will be reported in separate sections of
the line item data spreadsheet. Importers and other interested parties
must be aware that the prohibition against netting remains in effect:
decreases may NOT be netted against increases. For example, if a given
product has two value issues, one resulting in an increase in value
(and corresponding duties) and one resulting in a decrease in value
(and corresponding duties), these two adjustments may not be offset
against each other and reported as one line on the spreadsheet. They
must be reported in separate sections of the spreadsheet, the increase
adjustment as an increase for which additional duties will be tendered
upon filing the Reconciliation and the downward adjustment as a
decrease for which a refund is waived.
Downward adjustments, while reported on the spreadsheet, will not
be reported on the Aggregate Reconciliation Header File in ACS. The
Header File will be prepared without regard to decrease items,
reflecting only increases in duties, taxes, and fees. In the event
there are only decreases on the Aggregate Reconciliation, the Header
File will be prepared as if the Reconciliation resulted in no change in
duties, taxes, and fees.
Aggregate Reconciliations showing a decrease in duties, taxes, and
fees will be liquidated as appropriate but without refund or reduction
in duties, taxes, and fees otherwise due, since participants waive all
claims for refunds due to downward adjustments.
The following certification must be included in the line item data
spreadsheet of all Aggregate Reconciliations that report decreases. It
contains the waiver, the release from liability, and a pledge that the
changes reported do not reflect netting:
The tariff items shown below are items for which the
reconciliation adjustment resulted in a decrease in duties, taxes,
and/or fees. On this Aggregate Reconciliation, we hereby declare
these changes and acknowledge that we waive any claims for a refund
of any monies due us as a result of these changes, release Customs
of any liability for the refund, and certify that the changes shown
below are not included elsewhere in the Reconciliation or netted
against increases.
This certification must appear immediately before the listing of
tariff items for which decreases are reported. It will separate the
sections of the data spreadsheet, with absolute increases listed above
and decreases listed below (see sample spreadsheet further below,
showing increases, decreases, and the required certification).
The downward adjustment modification described above serves only to
add another voluntary option for importers participating in the
prototype test. It does not remove any other options. Importers wishing
to obtain refunds for monies due them pursuant to reconciled
information (downward adjustments that result in monies owed to the
importer) may still do so via the Entry-by-Entry Reconciliation method.
Sample Spreadsheet
Below is an example of an Aggregate Reconciliation spreadsheet
where increases and decreases are reported in separate sections. The
downward adjustments are reported but not calculated in the
Reconciliation Adjustment.
BILLING CODE 4820-02-P
[[Page 39189]]
[GRAPHIC] [TIFF OMITTED] TN21JY99.002
BILLING CODE 4820-02-C
Midpoint Interest Calculation for Aggregate Reconciliations
Section 1505(c) of Title 19, United States Code, provides for the
accrual of interest on underpayments and excess deposits applicable to
ordinary entries and Reconciliations (19 U.S.C. 1505(c)). Under the
statute, interest accrues for underpayments of duties, fees, and
interest from the date the importer of record is required to deposit
estimated duties, fees, and interest to the date of liquidation or
reliquidation of the entry or Reconciliation. Interest accrues on
excess deposits from the date the importer of record deposits estimated
duties, fees, and interest to the date of liquidation or reliquidation
of the entry or Reconciliation. Thus, under the prototype test,
interest accrues on all Reconciliations where monetary adjustments take
place, whether the adjustments are increases (Entry-by-Entry or
Aggregate Reconciliations) or decreases (Entry-by-Entry
Reconciliations) in duties, taxes, and fees. If interest is due to
Customs, the filer will pay the interest, along with duties, taxes, and
fees, upon filing the Reconciliation.
The previously mentioned Federal Register notice of August 18, 1998
(63 FR 44303) indicated that Customs was seeking a statutory amendment
to 19 U.S.C. 1505(c) to authorize use of an alternative midpoint
interest calculation method, an alternative to the entry-by-entry
interest calculation method described in the previous paragraph. On
June 25, 1999, the Miscellaneous Trade and Technical Corrections Act of
1999 was signed into law (the Act) (Pub. L. 106-36, 113 Stat. 127 (June
25, 1999)). Under section 2418(e) of the Act (Title II, Subtitle B),
section 1505(c) was amended to authorize, for purposes of the prototype
test, an alternative midpoint interest calculation method based upon
aggregate data. This amendment predicates this modification of the
prototype test.
Under the midpoint interest calculation method, interest is
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 an Aggregate Reconciliation covers
January 1, 1999, through December 31, 1999, and results in $20,000 in
increased revenue due to Customs, the interest would be calculated on
that amount from the midpoint date of July 1, 1999. Interest would
accrue from the midpoint date until the date the Reconciliation is
filed with payment. The midpoint interest method will be used for
Aggregate Reconciliations filed on or after July 25, 1999. Such
Aggregate Reconciliations may cover underlying entries filed during the
period from October 1, 1998, through October 1, 2000, or the end of the
prototype, whichever occurs first.
Prototype participants are reminded that they have the option of
filing either an Aggregate Reconciliation or an Entry-by-Entry
Reconciliation. As above, the midpoint interest calculation method will
be used for Aggregate Reconciliations, and the entry-by-entry interest
calculation method will be used for Entry-by-Entry Reconciliations.
Under the entry-by-entry method, interest is calculated based on the
monetary changes and dates associated with each underlying entry
summary.
Prototype participants also are reminded that where a refund is
claimed (on Entry-by-Entry Reconciliations), no interest calculations
are required of the filer. Customs will calculate the interest due on
the refund using the entry-by-entry method of calculation. For NAFTA
Reconciliations, interest runs from the date the Reconciliation is
filed until the date the Reconciliation is liquidated by Customs.
Conclusion
Regarding the prototype test generally, interested parties should
[[Page 39190]]
consult the Federal Register notices of February 6, 1998 (63 FR 6257)
and August 18, 1998 (63 FR 44303). All terms and conditions set forth
in those notices remain in effect, except as specifically modified by
this notice.
Dated: July 16, 1999.
Charles W. Winwood,
Assistant Commissioner, Office of Field Operations.
[FR Doc. 99-18560 Filed 7-20-99; 8:45 am]
BILLING CODE 4820-02-P