How to Import into the US

Question

What is a Line Release?

Answer

The answer to this question lies in 19CFR142.41, subpart D which states:

Sec. 142.41 Line Release.

Line Release is an automated system designed to release and tract repetitive shipments. It is a method of entry or immediate delivery extended to importers of merchandise which Customs deems to be repetitive and high volume. Line Release may be used only at locations approved by Customs for handling Line Release. At certain high-risk locations along the land borders of the United States (the locations to be published in the Federal Register), which are approved by Customs for handling Line Release, the use of Line Release for particular shipments may be denied by Customs unless the imported merchandise is transported by carriers that participate in the Land Border Carrier Initiative Program (see, subpart H of part 123 of this chapter).

Please note: This article is intended for informational purposes only and is not specific legal advice. As an importer, it is your responsibility to meet all the legal requirements for importing goods.

Transshipment is the act of shipping goods to an intermediate destination prior to reaching their ultimate end-use. Transshipment is a common practice with logistic benefits, but can be used to illegitimately to disguise country of origin or intent of the goods.

Transshipment is commonly used by smugglers and terrorists seeking to disguise the point of origin of their goods from Customs officials. Certain countries like Libya, North Korea, and Syria are considered higher risk for security threats while countries like China and Taiwan are likely sources for counterfeit goods. Importers can transship goods both intentionally and accidentally. Intentional transshipments are done to avoid higher duty rates levied on certain countries, avoid import restrictions like visa and quota restrictions, or make use of a special trade program to drastically lower duty rates.

Accidental transshipments are usually caused by miscommunication between foreign vendors or US buyers. Too often, US importers do not recognize the need for properly declaring country of origin and see reduced duty rates as smart business. Foreign vendors typically do not have the in-depth knowledge of US Customs regulations to advise against the practice.

Penalties

In addition to the loss of import privileges and seizure of imported merchandise, importers practicing transshipment may also be subject to an array of civil penalties under 19 U.S.C. 1592.

Maximum penalties for transshipment are:

• Fraud: An amount not exceeding the domestic value of the merchandise.
• Gross Negligence: The lesser of
  • the domestic value of the merchandise, or
  • four times the lawful duties, taxes, and fees, or
  • if the violation did not affect the assessment of duties, 40 percent of the dutiable value of the merchandise.
• Negligence: The lesser of
  • the domestic value of the merchandise, or
  • two times the lawful duties, taxes, and fees, or
  • if the violation did not affect the assessment of duties, 20 percent of the dutiable value of the merchandise.

Normally when freight arrives in the US, a Customs entry is filed at the port of arrival. If it comes into Los Angeles, it is Customs cleared in Los Angeles (all import freight must be approved by US Customs before it can be released into the commerce of the US).

Sometimes however, it is beneficial for importers to move freight to another Customs port and to file a Customs entry there. In that case, Customs assigns an IT number to grant permission to the importing carrier to move the freight prior to clearance to another Customs approved, bonded warehouse in another port. IT numbers or (Inbond Transit) numbers come in several formats – they can be nine numerical digits, they can start with a V for ocean shipments, or they can be the same number used on an air shipment master bill.

The IT number must be properly reported to US Customs when the import broker files the entry. Freight said to be “moving on an IT” is traveling inbond from the port of entry to another port for clearance.

Importers bringing merchandise into the United States for consumption must place their goods in a bonded facility while entry is filed with Customs. Goods remaining in a bonded facility for fifteen calendar days without an entry filed will be moved to a Customs approved, GO (General Order) bonded warehouse. There the goods will remain for six months from the date of import. If after six months, the goods have not been documented and duties/fees paid, they will be sold at auction, donated to charity or retained by the Government. Bonded warehouses must notify Customs of un-entered goods not later than 20 calendar days from the date of arrival in the port of import. Warehouse/vessel operators failing to report un-entered merchandise are subject to a penalty of up to one thousand dollars per bill of lading.

A common mistake made by new importers is the assumption that they’ll need a special license to import goods into the United States. There is a great deal of confusion over this issue for several reasons:

In some cases and with certain types of goods, an import license is required. Examples include alcohol, tobacco, firearms, animals, copyrighted materials, food and more. These items are regulated by the individual agencies governing that type of good. US Customs does not create the regulations, they simply enforce them for other agencies. In addition to the licensing of certain types of goods, the US Department of Homeland Security also regulates the licensing of Customs Brokers. A Customs Broker is an individual authorized by US Customs and the Dept. of Homeland security to transact Customs business on someone else’s behalf. Customs Brokers are extremely useful for first-time and experienced importers because they often have access to systems and knowledge to file Customs entries in an efficient manner and utilize importer best-practices to speed import clearances and reduce import duties.

The General Rules of Interpretation can be found online here.

General Rules of Interpretation

The General Rules of Interpretation (GRIs) outline the method used to determine a products classification. They also address special scenarios wherein a final classification may be difficult to determine. The General Rules of Interpretation below have been taken verbatim from the HTS (current as of 11/1/04).

Classification of goods in the tariff schedule shall be governed by the following principles:

1. The table of contents, alphabetical index, and titles of sections, chapters and sub-chapters are provided for ease of reference only; for legal purposes, classification shall be determined according to the terms of the headings and any relative section or chapter notes and, provided such headings or notes do not otherwise require, according to the following provisions:

2. (a) Any reference in a heading to an article shall be taken to include a reference to that article incomplete or unfinished, provided that, as entered, the incomplete or unfinished article has the essential character of the complete or finished article. It shall also include a reference to that article complete or finished (or falling to be classified as complete or finished by virtue of this rule), entered unassembled or disassembled. (b) Any reference in a heading to a material or substance shall be taken to include a reference to mixtures or combinations of that material or substance with other materials or substances. Any reference to goods of a given material or substance shall be taken to include a reference to goods consisting wholly or partly of such material or substance. The classification of goods consisting of more than one material or substance shall be according to the principles of rule 3.

3. When, by application of rule 2(b) or for any other reason, goods are, prima facie, classifiable under two or more headings, classification shall be effected as follows: (a) The heading which provides the most specific description shall be preferred to headings providing a more general description. However, when two or more headings each refer to part only of the materials or substances contained in mixed or composite goods or to part only of the items in a set put up for retail sale, those headings are to be regarded as equally specific in relation to those goods, even if one of them gives a more complete or precise description of the goods. (b) Mixtures, composite goods consisting of different materials or made up of different components, and goods put up in sets for retail sale, which cannot be classified by reference to 3(a), shall be classified as if they consisted of the material or component which gives them their essential character, insofar as this criterion is applicable. (c) When goods cannot be classified by reference to 3(a) or 3(b), they shall be classified under the heading which occurs last in numerical order among those which equally merit consideration.

4. Goods which cannot be classified in accordance with the above rules shall be classified under the heading appropriate to the goods to which they are most akin.

5. In addition to the foregoing provisions, the following rules shall apply in respect of the goods referred to therein: (a) Camera cases, musical instrument cases, gun cases, drawing instrument cases, necklace cases and similar containers, specially shaped or fitted to contain a specific article or set of articles, suitable for long-term use and entered with the articles for which they are intended, shall be classified with such articles when of a kind normally sold therewith. This rule does not, however, apply to containers which give the whole its essential character; (b) Subject to the provisions of rule 5(a) above, packing materials and packing containers entered with the goods therein shall be classified with the goods if they are of a kind normally used for packing such goods. However, this provision is not binding when such packing materials or packing containers are clearly suitable for repetitive use.

6. For legal purposes, the classification of goods in the subheadings of a heading shall be determined according to the terms of those subheadings and any related subheading notes and, mutatis mutandis, to the above rules, on the understanding that only subheadings at the same level are comparable. For the purposes of this rule, the relative section, chapter and subchapter notes also apply, unless the context otherwise requires.

Final Note

This article is intended to provide a general understanding of the structure of the Harmonized Tariff Schedule and the method used to determine a products classification. By nature of an introductory article, it does not cover special and extenuating circumstances that often arise when determining a products final classification. The authors of this article recommend that you consult with a licensed Customs broker or member of the US Customs Service should there be any question as to the classification of your product. As the importer of record for your product, it is your responsibility to ensure that the classification presented to Customs for the import of your shipment is the most accurate and legitimate classification. It is important to understand the process of classifying your product because as the importer of record you can be held ultimately responsible for mistakes made in classification.

Choosing an attorney to represent you on matters of international trade can be a difficult decision. When choosing a lawyer to represent you, it can be difficult to subjectively rank them according to specific criteria. The following questions are designed to assist you in choosing an International Trade Attorney.

General

“How many years of experience do you have? Experience helps, but is not always crucial. An aggressive young lawyer may be more suited than an older lawyer exhausted by years of courtroom battle. On the other hand, you probably don’t want to hire somebody fresh out of law school on a complex matter. Be sure to look for an attorney that has some experience working with the specific government agency that is most applicable to your bussiness.

How many cases or transactions like this have you handled? Again, experience counts. You don’t want to be paying a young lawyer to learn at your expense. If the lawyer is unfamiliar with your type of problem, get a commitment for how long it will take for the lawyer to become conversant with the legal issues involved?

How much legal research do you expect to do on this case, and why? Doing legal research is a good thing, but not to learn the subject matter. A well-qualified lawyer can give you an estimate in your first conversation about what he or she thinks the legal issues are, and any lawyer who’s worth hiring will tell you what he or she doesn’t know. But if the issues aren’t that complex but the lawyer is expecting to do a lot of research, that may be an indication that this lawyer hasn’t handled enough of this kind of cases.

Would you be comfortable handling my case? Most lawyers want to handle whatever they can bring in if it interests them. Yet the lawyer may not have the right skills to handle this case. Don’t be afraid to ask this question.

Can you give me the names of a couple of clients who have had cases similar to mine? Most lawyers will want to check with prior clients to see if they would mind speaking with you (lawyers are, after all supposed to be discrete and expert at maintaining confidences, and you probably wouldn’t want to have your name given out without your permission). But a former client may give you lots more information about the lawyer than you can get yourself.

Can you give me the names of a couple of lawyers who represented other parties in cases like mine? Same as above, except the lawyers probably can evaluate the lawyer better than the client can. Neither is fool-proof, since the lawyer will be selecting what names he or she give you. But you may get some valuable information.

Have you written anything about any case similar to mine? Lawyers interviewing for law jobs are invariably asked for writing samples. Clients should as well. Good writing is often important, and the client should see early on whether the lawyer can write simply, directly, and persuasively.

Background

What law school did you go to? Harvard may be the best school in the country, or it may not. It’s subjective. Someone from a “good” school who hasn’t been practicing for years probably is not as good as somebody who has practiced regularly and well since graduation from a “lesser” school. The ranking of schools is subjective, and anyway, you want a lawyer, not a pedigree. Graduation from a given law school simply does not insure that this lawyer can handle your legal matter.

How many cases have you won? Any lawyer who claims never to have lost a case simply hasn’t tried enough of them. This kind of statistic is meaningless unless you get deeply into the facts of each case. As a client, you don’t have time to do this.

What organizations do you belong to? Most lawyers belong to many organizations with highfalutin names. Why join an organization that sounds cheesy? But nearly all the organizations that a lawyer belongs do will accept as members anyone who can pay the membership fee, so membership doesn’t guarantee anything. A few organizations do, such as the American Board of Trial Advocates (ABOTA) or the California Academy of Appellate Lawyers. Yet requiring a lawyer to be members of these invitational bodies doesn’t solve the problem, either, because they usually require a greater amount of trial or appellate experience than most lawyers can get these days, and you may be shortchanging yourself.

What awards have you won? Many fine lawyers have never won an award because they’ve been too busy representing their clients and raising their families to devote the kind of networking necessary to win such awards. Many–not all, to be sure–are popularity contests. As a client, you don’t have the time to investigate the backgrounds of the awards to determine if they really mean anything.

Myth:

95-percent of the containers that come into the ports are not inspected.

Summary of Reality:

The 95-percent figure is misleading and falsely implies that we do nothing to inspect cargo containers arriving at our seaports. We use intelligence to review information on 100 % of cargo entering our ports, and all cargo that presents a risk to our country is inspected using large x-ray and radiation detection equipment. Following 9/11, the Administration developed and implemented a smarter strategy to identify, target, and inspect cargo containers before they reach U.S. ports. While it is possible to secure a nation by closing its borders and inspecting everything and everybody that enters, doing so would render us obsolete.

None of the security measures implemented as a result of this strategy existed before 9/11.

Our strategy is to rule out potential threats before they arrive at our borders and ports. In fact, the security measures now in place allow us to rule out 94 % of the cargo as potential threats prior to its arrival into the United States. Six percent (6 %) of total cargo containers were identified this year as potential threats and were physically inspected immediately upon arrival. (The percentage will change annually because the inspections are based upon identified risk following intensive screening.) Dramatically increasing physical inspections after arrival is a waste of resources that will not appreciably increase our national security. In fact, the type of increase in physical inspections implied by this allegation would cost billions of dollars in resources and cripple not only the U.S. economy, but the global economy as well.

Key Facts Which Did Not Exist Before 9-11:

The 95-percent figure is misleading and falsely implies that we do nothing to inspect cargo containers arriving at our seaports. We use intelligence to review information on 100 % of all cargo information entering U.S. ports, and all cargo that presents a risk to our country is inspected using large x-ray and radiation detection equipment.

Following 9/11, under the leadership of President Bush we developed and implemented a smart cargo container security strategy to identify, target, and inspect cargo containers before they reach U.S. ports. Under this strategy:

100 % of all containers identified as posing a terrorist risk are inspected using x-ray scans and radiation detection equipment. (i.e. anything identified as having the potential for concealment of terrorist weapons or terrorists.)

The Administration requires that advance information be given to our border agency, U.S. Customs and Border Protection (CBP), about all containers well before they arrive. In fact, the information is required 24 hours before they are loaded on to vessels at foreign seaports (24-Hour Rule).

Containers posing a potential terrorist threat are identified and targeted before they arrive at U.S. seaports by the National Targeting Center (NTC). The NTC was established as the centralized coordination point for all of CBPs anti-terrorism efforts. Prior to 9/11, no national-level targeting of people or goods crossing our borders existed.

NTC uses intelligence and terrorist indicators to review advance information for all cargo, passengers, and imported food shipments before arrival into the U.S. NTC coordinates with other federal agencies such as U.S. Coast Guard, Federal Air Marshals, FBI, Transportation Security Administration, and the Departments of Energy and Agriculture, as well as the intelligence community.

The Administration works with our foreign partners to allow U.S. officers working at major international seaports, currently 26, to identify and inspect containers prior to being loaded onto ships destined for the U.S. Container Security Initiative (CSI)

The Administration created a public-private and international partnership with over 7,000 businesses, including most of the largest U.S. importers — the Customs-Trade Partnership Against Terrorism (C-TPAT). Under this program, legitimate companies that do regular business with the U.S. have increased their own security to prevent terrorists from infiltrating their shipments. (We check not only the company shipping the goods, but also the companies that provided them with any services.)

Approximately 40 % of all cargo headed for the U.S. is transported by C-TPAT partners and is therefore better secured.

Additional technology has been added, including Radiation Portal Monitors, Isotope Identifiers, and Personal Radiation Monitors. For the first time CBP is also using chemical and explosive detector dogs to inspect cargo.

Within 90 days after the date of liquidation or other decision, an importer or consignee may protest the decision and receive an administrative review. The protest is filed with the port director whose decision is being protested. At the time the initial protest is filed, the importer or consignee must make a request for further review if one is desired. Review of the port director’s decision by the Customs Service Center or Headquarters is then automatic. Notice of the denial of all or part of the protest will be mailed to the person filing the protest or to his agent. Any person whose protest has been denied may contest the denial by filing a civil action in the United States Court of International Trade.

In simple cases involving small shipments or certain classes of goods such as bulk shipments, examination may be made on the docks, at container stations, cargo terminals, or the importer’s premises. The goods are then released to the importer. In other shipments, sample packages of the merchandise may be retained by Customs for appraisal or classification purposes and the remainder of the shipment released. These sample packages will also be released to the importer after examination.

Examination of goods is necessary to determine:
The value of the goods for Customs purposes and their dutiable status.

Whether the goods are properly marked with the country of their origin. Special marking or labeling may apply. Generally, imported merchandise must be legibly marked in a conspicuous place and with the English name of the country of origin. Certain specific articles are exempt from this requirement. (For further information see Customs Publication No. 539 Marking of Country of Origin on U.S. Imports.)

• Whether the goods have been correctly invoiced.
• Whether the shipment contains prohibited articles.
• Whether the requirements of other federal agencies have been met.
• Whether the amount of goods listed on the invoice is correct, and no shortage or overage exists.

If necessary, goods may be analyzed by a Customs laboratory to determine proper classification and appraisal, to determine that the goods meet safety requirements, or to ensure that they are not counterfeit or otherwise in violation of U.S. laws.

If Customs determines that the goods are different from the entered descriptions in quantity or value, that the classification of the goods is incorrect, or that a different rate of duty than the one indicated by the importer applies, an increase in duties may be assessed. If Customs determines that the importer has deliberately failed to properly classify and value his goods, he may be liable for a fine, or other penalty.

When all the information has been acquired, including the report of the Customs import specialist as to the customs value of the goods, and the laboratory report, if required, a final determination of duty is made and the entry is liquidated. At this time, any overpayment of duty is returned or under-payments billed.