[Federal Register Volume 69, Number 170 (Thursday, September 2, 2004)]
[Notices]
[Pages 53730-53732]
From the Federal Register Online via the Government Publishing Office [www.gpo.gov]
[FR Doc No: 04-19977]


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DEPARTMENT OF HOMELAND SECURITY

Customs and Border Protection


Modification of the National Customs Automation Program Test 
Regarding Reconciliation

AGENCY: Customs and Border Protection, Homeland Security.

ACTION: General notice.

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SUMMARY: This document modifies the Customs and Border Protection 
Automated Commercial System (ACS) Reconciliation prototype test by: 
Adding to the kinds of issues that may be subject to Reconciliation 
post-entry importation claims arising under the United States-Chile 
Free Trade Agreement; requiring the use of compact disks (CDs) instead 
of floppy disks for submitting Reconciliation spreadsheets; requiring 
that the name identifying the spreadsheet on the CD be the 
Reconciliation entry number; and requiring use of .txt or .xls format 
for the spreadsheet. Other than these modifications, the test remains 
the same as set forth in previously published Federal Register notices. 
The document also announces the new addresses for the Reconciliation 
team (e-mail) and for Reconciliation submissions for the port of NY/
Newark.

DATES: The test modifications set forth in this document are effective 
on October 4, 2004. The two-year testing period of this Reconciliation 
prototype commenced on October 1, 1998, and was extended indefinitely 
starting October 1, 2000. Applications to participate in the test will 
be accepted throughout the duration of the test.

ADDRESSES: Written inquiries regarding participation in the 
Reconciliation prototype test and/or applications to participate should 
be addressed to Mr. Richard Wallio, Reconciliation Team, Customs and 
Border Protection, 1300 Pennsylvania Ave., NW., Room 5.2A, Washington, 
DC 20229-0001. The e-mail address for inquiries regarding the

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test is also available at [email protected].

FOR FURTHER INFORMATION CONTACT: Mr. Richard Wallio at (202) 344-2556.

SUPPLEMENTARY INFORMATION:

Background

    Initially, it is noted that on November 25, 2002, the President 
signed the Homeland Security Act of 2002, 6 U.S.C. 101 et seq., Pub. L. 
107-296 (the HS Act), establishing the Department of Homeland Security 
and, under section 403(1) (6 U.S.C. 203(1)), transferring the U.S. 
Customs Service, including functions of the Secretary of the Treasury 
relating to the Customs Service, to the new department, effective on 
March 1, 2003. Most of the elements that comprised the U.S. Customs 
Service are now collectively known as U.S. Customs and Border 
Protection (CBP). The agency will be referred to by that name in this 
document, unless reference to the Customs Service (or Customs) is 
appropriate in a given context.
    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 (Pub. L. 
103-182, 107 Stat. 2057 (December 8, 1993)), is currently being tested 
by CBP under the CBP Automated Commercial System (ACS) Prototype Test. 
Customs initially announced and explained the test in a general notice 
document published in the Federal Register (63 FR 6257) on February 6, 
1998. Clarifications and operational changes were announced in six 
subsequent Federal Register notices: 63 FR 44303, published on August 
18, 1998; 64 FR 39187, published on July 21, 1999; 64 FR 73121, 
published on December 29, 1999; 66 FR 14619, published on March 13, 
2001, 67 FR 61200, published on September 27, 2002, and 67 FR 68238, 
published on November 8, 2002. A Federal Register (65 FR 55326) notice 
published on September 13, 2000, extended the prototype indefinitely. 
This document modifies the Reconciliation test by: (1) Expanding the 
issues subject to Reconciliation to include post-entry importation 
claims arising under the United States-Chile Free Trade Agreement; (2) 
requiring the use of compact disks (CDs) instead of floppy disks for 
submitting Reconciliation spreadsheets; (3) requiring that the name 
identifying the spreadsheet on the CD be the Reconciliation entry 
number; and (4) requiring use of .txt or .xls format for the 
spreadsheet. Aside from these modifications, the test remains as set 
forth in the previously published Federal Register notices.
    The document also sets forth the new address for submitting 
Reconciliation entries for the port of NY/Newark and the new e-mail 
address for the Reconciliation team.
    For application requirements, see the Federal Register notices 
published on February 6, 1998, and August 18, 1998. Additional 
information regarding the test can be found at http://www.cbp.gov/xp/cgov/import/cargo_summary/reconciliation/.

Reconciliation Generally

    Reconciliation is the process that allows an importer, at the time 
an entry summary is filed, to identify undeterminable information 
(other than that affecting admissibility) to CBP and to provide that 
outstanding information at a later date. The importer identifies the 
outstanding information by means of an electronic ``flag'' which is 
placed on the entry summary at the time the entry summary is filed. The 
issues for which an entry summary may be ``flagged'' (for the purpose 
of later reconciliation) are limited and relate to: (1) Value issues; 
(2) classification issues, on a limited basis; (3) issues concerning 
value aspects of entries filed under heading 9802, Harmonized Tariff 
Schedule of the United States (HTSUS); (9802 issues); and (4) post-
entry claims under 19 U.S.C. 1520(d) for the benefits of the North 
American Free Trade Agreement (NAFTA) for merchandise as to which such 
claims were not made at the time of entry.
    The flagged entry summary (the underlying entry summary) is 
liquidated for all aspects of the entry except those issues that were 
flagged. The means of providing the outstanding information at a later 
date relative to the flagged issues is through the filing of a 
Reconciliation entry. The flagged issues will be liquidated at the time 
the Reconciliation entry is liquidated. Any adjustments in duties, 
taxes, and/or fees owed will be made at that time. (The Reconciliation 
test procedure for making post-entry NAFTA claims is explained in the 
February 6, 1998, and December 29, 1999, Federal Register notices.)

Test Modification

Use of Reconciliation To Make a Post-Entry US-CFTA Claim

    On June 6, 2003, the United States and the Republic of Chile 
(Chile) entered into an agreement, the United States-Chile Free Trade 
Agreement (US-CFTA), which provides for, among other things, 
preferential tariff treatment (including duty free treatment) for goods 
that qualify as goods originating in the United States or Chile. The 
provisions of the US-CFTA were adopted by the United States with 
enactment of the United States--Chile Free Trade Agreement 
Implementation Act, Pub. L. 108-78, 117 Stat. 909 (19 U.S.C. 3805 note) 
(the Implementation Act).
    Ordinarily, a claim for preferential tariff treatment under the US-
CFTA is made at the time of entry, in accordance with the terms of the 
US-CFTA, the Implementation Act, and any applicable regulations. 
However, in some instances an importer is unable to make the claim at 
that time. In that instance, an importer can make a post-entry US-CFTA 
claim under 19 U.S.C. 1520(d) (section 1520(d)), pursuant to an 
amendment to that statute made by the Implementation Act. Under this 
amendment to section 1520(d), entries of goods qualifying under US-CFTA 
rules of origin were made eligible for liquidation or reliquidation 
when preferential tariff treatment under the US-CFTA was not claimed at 
the time of entry, notwithstanding that a protest under 19 U.S.C. 1514 
(section 1514) was not filed. A claimant must file a claim under 
section 1520(d) within one year of the applicable importation and meet 
other requirements, such as documentary requirements. CBP has accepted 
post-entry 1520(d) US-CFTA claims before liquidation; these claims do 
not require reliquidation.
    This notice announces that a post-entry 1520(d) claim for 
preferential tariff treatment under the US-CFTA also can be made under 
the Reconciliation test, in the same way as can a post-entry NAFTA 
claim. This alternative requires that an importer follow the 
Reconciliation test procedure which, in contrast to the ordinary 
section 1520(d) procedure described above, requires action at the time 
of entry. That action is to flag the entry summary for Reconciliation 
and later file a Reconciliation entry within one year of the applicable 
importation. As programming for US-CFTA Reconciliations is not yet 
complete, for the time being, a participant wishing to file a US-CFTA 
Reconciliation must follow the NAFTA Reconciliation process by flagging 
the entry summary for NAFTA. When programming is complete, participants 
will be notified with instructions on how to make a post-entry US-CFTA 
Reconciliation claim.
    CBP emphasizes that once an importer flags an entry summary for US-
CFTA issues (by, for the time being, actually flagging the entry 
summary for NAFTA), indicating that it is pursuing

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the post-entry section 1520(d) claim through the Reconciliation 
process, the only means of perfecting the US-CFTA claim is by 
completing the Reconciliation process by filing a timely Reconciliation 
entry. (See the September 27, 2002, Federal Register notice for an 
explanation of this same limitation relative to NAFTA issues.) In this 
way, the flagging of an entry summary constitutes a commitment by the 
importer to perfect the US-CFTA 1520(d) claim through the 
Reconciliation process. Thus, once a Reconciliation program participant 
flags an entry summary to make a US-CFTA 1520(d) claim under the 
Reconciliation process, CBP will not accept a claim filed under the 
ordinary section 1520(d) procedure.
    CBP notes that a NAFTA 1520(d) claim and a US-CFTA 1520(d) claim 
cannot be made together on the same Reconciliation entry. They must be 
filed as separate Reconciliation entries.
    CBP recommends the use of the Reconciliation test for making post-
entry US-CFTA claims because the test procedure provides the importer 
with several benefits. First, using the test procedure is a simpler 
means of filing claims: i.e., the importer is able to make potentially 
thousands of US-CFTA claims on one Reconciliation entry. Second, the 
importer can receive one check from CBP rather than many (even up to 
thousands) upon CBP's liquidation of a Reconciliation entry and 
issuance of a refund. Third, because processing US-CFTA claims under 
Reconciliation is simpler for CBP, the refund delivery system is more 
efficient.
    The test modification discussed above will be effective 30 days 
from the date this notice is published in the Federal Register. (The 
Reconciliation test procedure for making post-NAFTA claims is explained 
in the February 6, 1998, and the December 29, 1999, Federal Register 
notices.)

Other Changes

    This notice also announces other changes to the Reconciliation test 
program procedure relative to submission of the Reconciliation 
spreadsheets. Because floppy disks are destroyed by X-ray and 
irradiation applications now used to screen government mail, 
participants must use CDs for submitting Reconciliation spreadsheets. 
CBP will upload the spreadsheet information on the CD to a secure Web 
site where it will be identified according to the Reconciliation entry 
number. Therefore, participants must save the spreadsheet on the CD 
according to the Reconciliation entry number in .txt or .xls format. 
Use of these formats is required to better protect the information from 
computer viruses. Finally, the CDs must be labeled as previously 
required (see the ACS Reconciliation Prototype: A Guide to Compliance 
at http://www.cbp.gov/xp/cgov/import/cargo_summary/reconciliation).
    These modifications to the test are effective 30 days from the date 
this notice is published in the Federal Register.

Change of Addresses

    Finally, this notice announces the new mailing address for 
Reconciliation submissions for importers assigned to the port of NY/
Newark (port 1001) and the new e-mail address for Recon.Help. The new 
mailing address is: U.S. Customs and Border Protection, 1100 Raymond 
Blvd., Newark, NJ 07201. Participants may still transmit the ABI 
portion of their Reconciliations to port 1001. The new e-mail address 
is [email protected].

    Dated: August 27, 2004.
Jason P. Ahern,
Assistant Commissioner, Office of Field Operations.
[FR Doc. 04-19977 Filed 9-1-04; 8:45 am]
BILLING CODE 4820-02-P