Introduction to Importing BasicsProcess and Requirements
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Presenter: Tekle Sebhatu, Ph.D.
Importing Basics Agenda
• Essentials for Import Success• Customs Modernization Act.• Customs Entry Process• Documents Required to Clear Customs• Classification (Harmonized System-- HS)• International Commercial Terms (Incoterms
2000)• Common Mistakes Made by Importers• Help Available!• Resources
Essentials For Import SuccessEssentials For Import Success
ImportSuccess
Knowledge
Planning
Relationship
Commitment
© PhotoDisc
Customs Modernization (Mode Act)• Two Key concepts-
– Informed compliance– Shared responsibility
• Key component “Importer responsible to use reasonable care”
• Benefits to Customs and Importers:– Customs resources saved (Customs)– Greater obligation provide information on rights and
responsibilities (Customs) – Information available at www.cbp.gov– Less likely to have shipments delayed or entries
reviewed can help avoid penalty (Importer)
Informal VS Formal EntryEntry -- filing documents with Customs at the port of entry
to get goods released.• Informal Entry
• Value < $2000 (some might not e.g quota)• Personal Shipments• Commercial Shipments• Mail shipments (Duty Paid to Postal Employee)
• Formal Entry (Entry/Entry Summary) • >$2000 including personal shipments/Goods part of $250• Exceptions (Corpses, Records, Diagrams)
• Major Differences -- Formal VS Informal• Bond requirements• Liquidation process
Customs Entry Process
15 CalendarDays
10 Working/Bus Days
One Year
Arrival
EntryEntry
Entry SummaryEntry Summary
Liquidation
- No change- Additional duty- Duty refunded
Who Can Make Entry?
• Owner of goods
• Purchaser of goods
• Custom House Brokers (Licensed)
• Individual with power of attorney
Documents Required to Make Entry
• Bill of lading or Airway bill or Carriers Certificate
• Commercial or pro-forma invoice• Entry/Entry Summary CF 3461/7501 or
Entry/Immediate Delivery• Packing list• Other agency document requirements (FDA,
FCC, DOA, ATF)
Harmonized Tariff Schedule of the US (HTSUS)
• Language of International trade (Int. standard system)
• Covers all imported merchandise (U.S.)• Customs Entry forms• Customs duties, international statistics and Rules
of origin• Over 12,000 codes recognized by over 200
countries, more than 95% of world trade• Products NOT specifically provided in the HTSUS-
Use term “Other”
Harmonized Tariff Schedule of The US
• First two digits for chapter–04
• Second two digits for heading–0409
• Third two digits for sub-heading–0409.00
• Forth two digits for duty–0409.00.00
• Fifth two digits for statistics–0409.00.00
Universal
What Incoterms Can and Can’t Do For Buyers/Sellers
• Only deal with obligations of buyers and sellers:• Packing for proper shipment• Provide appropriate documents• Identify insurance• Provide agreed documents for Customs
clearance• Do not deal :
• Transfer of property rights • Providing relief from liability for unforeseen
events
Four INCOTERM GroupsGroup E- Seller makes the goods available to the buyer at his premises (Ex-Works)
Group F- Seller to deliver the goods to a carrier appointed by the buyer (FCA, FAS, FOB)
Group C- Seller contracts for carriage at his own expenses, up to a destination (CFR, CIF, CPT, CIP)
Group D- Seller responsible to deliver goods at agreed place of destination, at the border or inside the country (DAF, DES, DEQ, DDP, DDU)
EXW--Ex Works (... named place)
Seller makes goods available to the buyer at his warehouse; buyer pays to load aboard
carrier' conveyance.
FOB--- Free On Board (... named port of shipment)
Export sale; delivered according to custom of port; risk transfers When
goods are loaded; ocean freight collect.
CFR--- Cost and Freight (... named port of destination)
Similar to FOB except that ocean freight is prepaid.
Buyer Country
CIF--- Cost, Insurance and Freight (... Named port of destination)
Buyer Country
Same as CFR, except that seller also purchases insurance for the buyer.
Buyer Country
DDP---Delivered Duty Paid (... named place destination)
Seller is like a domestic seller in destination country. Seller imports goods, pays duty, etc. bears risk and pays freight to named point. Terms can be modified to include delivery into buyer's warehouse
at seller's expense.
Role of Customs and Border ProtectionRole of Customs and Border Protection
Administer Treaties
Administer Treaties
Enforcement of Customs and
Related Laws
Enforcement of Customs and
Related Laws
Assess and Collect Duties &
Fees
Assess and Collect Duties &
Fees
Role Of Custom House Brokers
• Conduct Customs Business (valuation, classification, Admissibility & marking )
• International documentation and packaging• Carrier and routing information• Import quota information • Marine insurance rates and coverage• Warehouse and distribution services• Customs Bonds• Hazardous materials shipping compliance info.
Importers Common Mistakes
• Failure to obtain assistance from Customs or Custom House Brokers
• Several distinct articles lumped as one• Failure to comply with Marking regulations• Inaccurate information of other agency
requirements (e.g. FDA, Dept. of Agriculture)• Inaccurate Transaction Documents (e.g. Invoice)• Insufficient care when identifying product
Classification using the HTSUS• Incorrect Duty Assessment (Valuation)
Importing References
U.S. Customs and Border Protectionhttp://www.cbp.gov
Harmonized Tariff Schedule of The U.S. http://www.usitc.gov/tata/hts/bychapter/index.htm
International Chamber of Commerce (ICC)http://www.iccbooks.com
National Customs Brokers & Freight Forwarders Association http://www.ncbfaa.org/