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/