[Federal Register Volume 65, Number 229 (Tuesday, November 28, 2000)]
[Notices]
[Pages 70872-70876]
From the Federal Register Online via the Government Publishing Office [www.gpo.gov]
[FR Doc No: 00-30306]


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DEPARTMENT OF THE TREASURY

Customs Service


Announcement of a General Program Test Regarding Post-Entry 
Amendment Processing

AGENCY: Customs Service, Treasury.

ACTION: General notice.

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SUMMARY: This notice announces Customs plan to conduct a test program 
that allows importers to amend already filed entry summaries prior to 
liquidation by filing a post entry amendment on either an individual or 
quarterly basis, depending on the type of error being corrected. The 
notice invites public comments concerning any aspect of the test, 
informs interested members of the public how to participate in the 
test, and describes the procedure to be followed by test participants.

DATES: The test will commence no earlier than December 28, 2000 and 
will run for approximately one year. The test may be extended if 
warranted. Comments concerning this notice and all aspects of the 
announced test must be received on or before December 28, 2000.

ADDRESSES: Written comments may be submitted to and inspected at the 
Regulations Branch, Office of Regulations and Rulings, U.S. Customs 
Service, 1300 Pennsylvania Avenue,

[[Page 70873]]

N.W., 3rd Floor, Washington, D.C. 20229.

FOR FURTHER INFORMATION CONTACT: Bruce Ingalls, Office of Field 
Operations (202-927-1082).

SUPPLEMENTARY INFORMATION:

Background

Liquidation Procedure and Post Entry Amendment Filing

    Liquidation is the process by which Customs, after receiving the 
entry summary filed by the importer/broker (hereafter referred to as 
the importer or importers) relative to an entry or release of 
merchandise into the United States, fixes the final appraisement, 
classification, and assessment of duties, taxes, and fees respecting 
that entered merchandise (19 U.S.C. 1500). Under 19 U.S.C. 1514, an 
importer can challenge a liquidation by filing a protest within 90 days 
of the date of liquidation. Under 19 U.S.C. 1501, Customs has the 
authority to reliquidate an entry after liquidation within the same 90-
day period. Thus, under the Customs laws, a liquidation becomes final 
and binding on all parties after expiration of that 90-day period.
    Under 19 U.S.C. 1520(c)(1), Customs, notwithstanding the finality 
of liquidation concept, is authorized to reliquidate an entry within 
one year of the date of liquidation to correct a mistake of fact, 
clerical error, or other inadvertence in the entry or liquidation. An 
importer seeking reliquidation under the statute must file a petition 
with evidence establishing the mistake, error, or inadvertence.
    Customs has implemented a 314-day liquidation cycle, under which 
the liquidation of an entry typically occurs (approximately) 314 days 
after the date of entry. In order to allow importers to make amendments 
to entry summaries already filed but not yet liquidated, Customs 
implemented a process by which importers could submit letters for that 
purpose. These letters are called Supplementary Information Letters 
(SILs) and usually result, upon liquidation, in a refund of duties, 
taxes, and/or fees deposited or a bill for additional duties, taxes, 
and/or fees owed (if these amounts were not submitted with the letter). 
The SIL policy (for ABI users, see Administrative Message 97-0727, 
dated August 3, 1997; for non-ABI users contact the local port office), 
though effective initially, has produced an increased paperwork and 
manpower burden for both importers and Customs.
    To address these problems and other concerns, Customs is announcing 
this test of the post entry amendment procedure. The test procedure, 
which may eventually replace the SIL policy, allows importers to 
continue to make amendments to already filed entry summaries prior to 
liquidation, and it reduces the workload on importers and Customs by 
providing for quarterly reporting of some amendments. This quarterly 
tracking report frees importers from the task of immediately filing a 
SIL upon each discovery of an error and frees Customs from dealing with 
these errors as they are reported on a daily or weekly basis. Under the 
test, some errors must be reported upon discovery and are thus not 
eligible for inclusion in a quarterly report.
    (Customs notes that errors in entry summaries, depending on the 
circumstances, may be the result of simple mistake or culpable 
negligence, gross negligence, or even fraud. For purposes of this test, 
the term ``error'' will be used generically, without distinguishing 
between these concepts. (See however the ``Misconduct'' section which 
holds that all test participants are subject to the usual array of 
penalties, liquidated damages, etc., while participating in the test.))

Administrative Exemption and Errors of More Than $20

    Under 19 U.S.C. 1321(a)(1), Customs is authorized to disregard a 
minimal difference between the amount of duties, taxes, and fees 
deposited at entry and that amount (plus interest if applicable) 
actually found to be due (at liquidation). This is one of several 
statutory administrative exemptions. Section 159.6 of the Customs 
Regulations (19 CFR 159.6), which implements 19 U.S.C. 1321(a)(1), 
provides that Customs will disregard a difference in these (deposited 
and actual due) amounts of less than $20. Entry summaries processed 
under the test that evidence revenue differences of less than $20 will 
be reported on a quarterly basis rather than an individual basis. 
Differences of $20 or more will continue to be reported to Customs upon 
discovery.

The Post Entry Amendment Procedure Generally

    Customs recognizes that, in some circumstances, the 314-day 
liquidation cycle presents a problematic or undesirable suspension of 
time between the filing of the entry summary and the liquidation. While 
that suspension of time serves a beneficial purpose in most cases, an 
importer that discovers an error in the entry summary during that 
period may want or need to resolve that error sooner rather than later. 
The SIL policy has been shown to be less and less effective in handling 
the volume of pre-liquidation corrections sought by importers.
    Like the SIL policy, the post entry amendment test procedure will 
allow importers to amend entry summaries prior to liquidation. Unlike 
the SIL policy, the test procedure allows importers to report certain 
amendments on a quarterly basis, a feature that provides convenience 
and saves time and resources. Thus, a post entry amendment is reported 
in one of two ways: (1) Through the filing of an individual amendment 
letter upon discovery of the error or (2) through the quarterly 
tracking report.
    Both revenue related and non-revenue related errors may be reported 
through the test procedure. Revenue related errors are those that 
affect the amount of duties, taxes, and or fees applicable to an entry 
of merchandise. They involve two types: (1) Those of $20 or more and 
(2) those of less than $20. Non-revenue related errors are those that 
do not affect the amount of applicable duties, taxes, and or fees due; 
they pertain rather to errors in the information that must be provided 
in the entry summary, such as country of origin, quantity of the 
merchandise, and tariff number under the Harmonized Tariff Schedule of 
the United States (HTSUS). Non-revenue related errors also involve two 
types: (1) Those errors that must be reported to the Bureau of the 
Census (Census Bureau) under applicable law and Census Bureau rules and 
(2) those errors that need not be reported to the Census Bureau. 
(Guidelines for distinguishing between these kinds of errors are set 
forth under ``The Test Program'' section immediately below.)

The Test Program

    Participation in the test is voluntary. There are no application 
procedures or eligibility requirements. To participate in the test, an 
importer need only follow the procedures set forth below to amend entry 
summaries (not informal entries) prior to liquidation. Under the test, 
all amendments must be reported through either an individual amendment 
letter or a quarterly tracking report, depending on the circumstances. 
The alternative to these procedures is to continue to file individual 
SILs for each correction or wait until the entry liquidates (typically 
about 314 days after the date of entry) to file a protest under 19 
U.S.C. 1514 and Part 174 of the Customs Regulations (19 CFR Part 174) 
or, if appropriate, a petition for reliquidation under 19 U.S.C. 
1520(c)(1). It is also noted that, if appropriate under the 
circumstances, the prior disclosure procedure under 19

[[Page 70874]]

U.S.C. 1592(c)(4) (and 19 CFR 162.74) is available to both participants 
in the test and non-participants. Under the SIL policy, all letters 
must be submitted immediately upon discovery of the error regardless of 
the amount of the under or overpayment.

The Filing Requirement

    Under the test, whether filing an individual amendment letter or a 
quarterly tracking report, test participants must explain the errors 
and submit corrections of them for Customs evaluation. An individual 
amendment letter must be filed for: (1) Revenue related errors in the 
entry summary that result in either an overpayment or underpayment of 
duties, taxes, and or fees of $20 or more, or any amount relative to 
antidumping or countervailing duties, and (2) non-revenue related 
statistical information errors that must be reported to the Census 
Bureau. The quarterly tracking report must be used to report: (1) 
Revenue related errors that result in either an overpayment or 
underpayment of duties, taxes, and or fees of less than $20 and (2) 
non-revenue related statistical information errors that need not be 
reported to the Census Bureau.
    When one entry summary exhibits two or more errors but only one of 
them meets the requirements for filing an individual amendment letter, 
the test participant must file an individual amendment letter that 
covers all the errors, including those that alone would require 
reporting on a quarterly tracking report.
    A post entry amendment filed through an individual amendment 
letter, as required under the test, will contain a cover sheet obtained 
from a Customs database designed for that purpose, three copies of the 
letter describing the nature of the amendment (including the entry 
summaries and the error(s) involved) and setting forth the corrections, 
and any additional documentation needed to support the amendment, if 
appropriate. Each individual letter will be date-and time-stamped upon 
filing with Customs. (Whether the test participant (or its broker) or 
Customs personnel will perform this function will be determined by 
local port policy.)
    An individual amendment letter can be filed at any time prior to 
liquidation of the one or more entries it covers (but promptly after 
discovery of the error). Customs will accept individual amendment 
letters that are filed after liquidation but will treat them as 
protests under 19 U.S.C. 1514 or, if appropriate, as evidence 
warranting reliquidation under 19 U.S.C. 1501.
    A post entry amendment filed through the quarterly tracking report, 
as required under the test, will require the following information for 
each correction being reported: record number, entry number, filer, 
port, importer number, reason code (designating the reason for the 
change; codes are found in the Customs database), reason description, 
narrative description, duty difference, tax difference, fee difference, 
interest (if appropriate), input date, report date, and report type. 
This information must be submitted through the Customs database. The 
report must be filed within 15 calendar days from the last day of the 
quarter. The quarters are as follows: January 1-March 31; April 1-June 
30; July 1 to September 30; and October 1-December 31. Each report 
should cover all errors (other than those required to be reported on an 
individual amendment letter) discovered during that quarter unless the 
liquidation of the entry summaries containing those errors has become 
final. (Customs emphasizes that participants must file the first 
quarterly tracking report under the test within 15 days of March 31, 
2001.)
    Again, if an entry covered in an individual amendment letter or a 
quarterly tracking report has been liquidated, the filing (of that 
letter or report) relative to that entry summary will be treated under 
19 U.S.C. 1514 (protest) or 1501 (reliquidation), as appropriate.

Revenue Related Errors

    Revenue related errors of $20 or more: For revenue related errors 
of $20 or more, or any dollar amount relative to antidumping or 
countervailing duty errors, test participants must file an individual 
amendment letter with Customs upon discovery of the error. Upon 
evaluation of an individual amendment letter, Customs will determine 
whether it agrees or disagrees with the amendment. If Customs agrees 
with the amendment, it will unset the liquidation cycle and issue a 
``change liquidation.'' In that instance, Customs will issue either a 
refund or a bill in the amount it determines to be owed. If the 
participant tenders with the letter the correct amount of duties, 
taxes, fees, and/or interest due, Customs will not issue a bill. If 
Customs disagrees, determining that there is no error, it will unset 
the liquidation cycle and issue a ``no change'' liquidation without 
issuance of a refund or a bill. If Customs determines that there is 
another error, other than the one (or those) reported, it will 
liquidate accordingly. If the participant disagrees with Customs 
liquidation decision, it may file a protest under 19 U.S.C. 1514 or, if 
appropriate, a petition for reliquidation under 19 U.S.C. 1520(c)(1).
    Revenue related errors of less than $20: Revenue related errors of 
less than $20 (except those relative to antidumping or countervailing 
duties, in which case an individual amendment letter is required) must 
be reported on a quarterly tracking report filed with Customs. Upon 
evaluation of a quarterly tracking report, Customs will determine 
whether the amendments are accurate but will not unset the liquidation 
cycle. Customs will exercise its administrative exemption authority and 
disregard duties, taxes, and/or fees found owing in an amount of less 
than $20. The amendments may be taken into account when Customs, in due 
course, liquidates the reported entries. If the test participant 
disagrees with the liquidation, it may file a protest under 19 U.S.C. 
1514 or, if appropriate, a petition for reliquidation under 19 U.S.C. 
1520(c).
    Guidelines for processing revenue related errors: (a) Under $20/
underpayment of duties, taxes, and or fees:
     Importer files quarterly tracking report.
     Customs does not unset liquidation cycle and issues a ``no 
change'' liquidation in due course.
     Upon liquidation, Customs disregards underpayments of less 
than $20 per entry summary.
    (b) Under $20/overpayment of duties, taxes, and or fees:
     Importer files quarterly tracking report.
     Customs does not unset liquidation cycle and issues a ``no 
change'' liquidation in due course.
     After liquidation, importer may protest or petition for 
reliquidation.
    (c) $20 or more/underpayment of duties, taxes, and or fees:
     Importer files individual amendment letter with or without 
additional duties, taxes, fees, and interest (if applicable) owed.
     Customs unsets liquidation cycle and liquidates 
accordingly.
     Customs issues bill for payment if necessary.
     After liquidation, importer may protest or petition for 
reliquidation.
    (d) $20 or more/overpayment of duties, taxes, and or fees:
     Importer files individual amendment letter.
     Customs unsets liquidation cycle and liquidates 
accordingly.
     Customs issues refund.
     After liquidation, importer may protest or petition for 
reliquidation.

[[Page 70875]]

Non-Revenue Related Errors

    Statistical information errors: The General Statistical Notes of 
the HTSUS (19 U.S.C. 1202) require importers to provide certain 
information in entry summaries, including the country of origin of the 
entered merchandise, a description of that merchandise, its quantity, 
any quota visa number, the HTSUS number, the value of the merchandise, 
and other charges and information regarding the merchandise (see also 
19 CFR 141.61(e)). After receipt from the importer, this information is 
submitted by Customs to the Census Bureau where it is maintained as a 
source of national import data. Non-revenue related errors are those 
involving this required statistical information.
    Whether a test participant must file an individual amendment letter 
or a quarterly tracking report for statistical information errors 
depends on whether the Census Bureau, under its rules, requires the 
reporting of the corresponding corrections. Under those rules, errors 
in required statistical information that exceed a certain level must be 
reported and errors that fall below that level are not reported.
    For statistical information errors that must be reported to the 
Census Bureau, the test participant must file an individual amendment 
letter. If Customs agrees with the letter, it will unset the 
liquidation cycle and issue a ``change liquidation,'' correcting the 
erroneous information. If Customs disagrees, concluding that there has 
not been an error, it will issue a ``no change'' liquidation. After 
liquidation, the test participant may file a protest under 19 U.S.C. 
1514 or, if appropriate, a petition requesting reliquidation under 19 
U.S.C. 1520(c). For errors that do not require reporting to the Census 
Bureau, the test participant must file a quarterly tracking report. 
Customs will evaluate the report but not unset the liquidation cycle, 
whether or not it agrees that there has been error. After liquidation 
in due course, the participant may file a protest or a petition 
requesting reliquidation.
    Guidelines for determining when statistical information errors 
require the filing of an individual letter or a quarterly tracking 
report: These guidelines show, for each of four categories of 
merchandise, that a post entry amendment concerning statistical 
information errors that meet (and exceed) Census Bureau statistical 
reporting levels must be filed through an individual amendment letter 
and that a post entry amendment concerning statistical information 
errors that do not meet those levels must be filed through a quarterly 
tracking report. The statistical levels are also set forth.
    (a) Quota merchandise:
    (i) Statistical information errors that meet Census Bureau levels 
and require the filing of a post entry amendment through an individual 
amendment letter:
    (A) Any error in the country of origin of the merchandise, net 
quantity of the merchandise, visa number, and HTSUS number;
    (B) A value error when the difference between the entered and 
correct values is $10,000 or more; and
    (C) An error relative to other charges (freight, insurance, and all 
other costs and expenses incurred in bringing the merchandise from the 
port of export to the U.S. port (see General Statistical Note (a)(xiv), 
HTSUS)) when the difference between the entered and correct values is 
$10,000 or more.
    (ii) Statistical information errors that do not meet Census Bureau 
levels and require the filing of a post entry amendment through a 
quarterly tracking report:
    (A) A value error when the difference between the entered and 
correct values is less than $10,000; and
    (B) An error relative to other charges (freight, etc.) when the 
difference between the entered and correct values is less than $10,000.
    (b) Non-quota textile merchandise of Chapters 50 through 65, HTSUS, 
that is subject to a textile category number: (i) All statistical 
information errors (country of origin, quantity, HTSUS number, value, 
other charges (freight, etc.)) relative to this category of merchandise 
meet Census Bureau levels and require the filing of a post entry 
amendment through an individual amendment letter when the entered value 
of the merchandise is $3,000 or more.
    (ii) All statistical information errors relative to this category 
of merchandise do not meet Census Bureau levels and require the filing 
of a post entry amendment through a quarterly tracking report when the 
entered value of the merchandise is less than $3,000.
    (c) Merchandise subject to a Voluntary Restraint Agreement: (i) 
Statistical information errors that meet Census Bureau levels and 
require the filing of a post entry amendment through an individual 
amendment letter:
    (A) Any error in country of origin, quantity of merchandise, and 
visa or HTSUS numbers;
    (B) A value error when the difference between the entered and 
correct values is $10,000 or more; and
    (C) An error relative to other charges (freight, etc.) when the 
difference between the entered and correct values is $10,000 or more.
    (ii) Statistical information errors that do not meet Census Bureau 
levels and require the filing of a post entry amendment through a 
quarterly tracking report:
    (A) A value error when the difference between the entered and 
correct values is less than $10,000; and
    (B) An error relative to other charges (freight, etc.) when the 
difference between the entered and correct values is less than $10,000.
    (d) All other merchandise: (i) Statistical information errors that 
meet Census Bureau levels and require the filing of a post entry 
amendment through an individual letter:
    (A) An error in the country of origin when the entered value for 
the line item is $10,000 or more;
    (B) An error in the net quantity of the merchandise when the 
difference between the entered and correct quantities is at least 10% 
and the entered value for the line item is $10,000 or more;
    (C) A value error when the difference between the entered and the 
correct values is $10,000 or more;
    (D) An error in the HTSUS number when the entered value for the 
line item is $10,000 or more;
    (E) An error relative to other charges (freight, etc.) when the 
differences between the entered and corrected values is $10,000 or 
more; and
    (F) Any concentration of multiple entry summaries with erroneous 
reportable data when the accumulated total value involved is 
substantial but those entry summaries individually do not meet Census 
Bureau levels. (This reflects a Census Bureau requirement to make 
corrections to each entry summary included in the concentration of 
multiple entry summaries that meet the above description when the 
volume of entry summaries is substantial and the value level of each 
entry summary is also substantial but less than the required level. For 
example, a concentration of multiple entry summaries evidencing a 
country of origin error when the volume of those entry summaries is 
substantial and the per line item value for each entry summary is also 
substantial through less than $10,000 (the ordinarily required level). 
For guidance on the meaning of ``substantial'' in these contexts, 
contact the local Customs port office.)
    (ii) Statistical information errors that do not meet Census Bureau 
levels and require the filing of a post entry

[[Page 70876]]

amendment through a quarterly tracking report:
    (A) An error in the country of origin when the entered value for 
the line item is less than $10,000;
    (B) An error in the net quantity of the merchandise when the 
difference between the entered and correct quantities is less than 10 
percent or the entered value for the line item is less than $10,000;
    (C) A value error when the difference between the entered and 
correct values is less than $10,000;
    (D) An error in the HTSUS number when the entered value for the 
line item is less than $10,000;
    (E) An error relative to other charges (freight, etc.) when the 
difference between the entered and correct values of the merchandise is 
less than $10,000.
    Guidelines for processing non-revenue related statistical 
information errors: (a) Statistical information error requiring report 
to Census Bureau:
     Importer files individual amendment letter.
     Customs unsets liquidation cycle and issues a ``change 
liquidation''.
     After liquidation, importer may file a protest or 
petition.
    (b) Statistical information error not requiring report to Census 
Bureau:
     Importer files quarterly tracking report.
     Customs does not unset liquidation cycle and issues a ``no 
change'' liquidation in due course.
     After liquidation, importer may file a protest or 
petition.
    Importers who voluntarily participate in the test commit, by such 
participation, to report all errors through the test procedure by 
filing either individual amendment letters or quarterly tracking 
reports (as appropriate under the above procedures) for the duration of 
the test.
    Customs emphasizes that the test applies only to the described 
procedure for reporting entry summary errors prior to liquidation. The 
test procedure has no effect on Customs enforcement authority or on 
other statutory or regulatory provisions and requirements relating to 
admissibility, restricted or prohibited merchandise, other agency 
requirements, etc. It is noted that even during the test, the 
administrative exemption under which Customs disregards ordinary 
underpayments of up to $20, does not apply to antidumping and 
countervailing duties.

Authorization for the Test

    Pursuant to Customs Modernization provisions in the North American 
Free Trade Agreement Implementation Act, Pub. L. 103-182, 107 Stat. 
2057, 2170 (December 8, 1993), Customs amended its regulations (19 CFR 
chapter I), in part, to enable the Commissioner of Customs to conduct 
limited test programs or procedures designed to evaluate the 
effectiveness of new technology or operations procedures which have as 
their goal the more efficient and effective processing of passengers, 
carriers, and merchandise. Section 101.9(a) of the Customs Regulations 
(19 CFR 101.9(a)) allows for general testing for this purpose. See T.D. 
95-21. This test is established pursuant to that regulatory provision.

Misconduct

    The test is open to all importers who elect to follow the 
procedures set forth in this document for correcting already filed 
entry summaries prior to liquidation. However, a participant making and 
amending entries under the test procedures will be subject to the usual 
penalties, liquidated damages, and other administrative sanctions for 
any Customs law violations.

Evaluation of the Test

    Although by no means exclusive, the following evaluation factors 
may be used by Customs to assess the merits of the test procedure:

1. Workload impact;
2. Policy and procedure accommodations;
3. System efficiency;
4. Operational efficiency; or
5. Other issues raised by public comment or by the test participants.

    Results of the test will be formulated at the conclusion of the 
test and will be made available to the public upon request. The test 
may be extended if warranted. Additional information on the post entry 
amendment procedure can be found under ``Importing and Exporting'' at 
http://www.customs.gov.

    Dated: November 22, 2000.
John H. Heinrich,
Acting Assistant Commissioner, Office of Field Operations.
[FR Doc. 00-30306 Filed 11-27-00; 8:45 am]
BILLING CODE 4820-02-P