General Note 1 - logisticsts.com · Chapter 32 & 33 - Video Review Session 10 © Logistics Training Systems, Inc. All Rights Reserved 5 Lts General Note 3 (g)

Chapter 32 & 33 - Video Review Session 10

© Logistics Training Systems, Inc.

All Rights Reserved 1

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Customs Brokers Exam ReviewCustoms Brokers Exam Review

Session 10

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THE GENERAL AND STATISTICAL NOTESTHE GENERAL AND STATISTICAL NOTES

Harmonized Tariff of the

United States

© Logistics Training Systems All Rights Reserved

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General Note 1General Note 1





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General Note 2General Note 2

• Customs Territory of the United States

– The States (ALL 50)

– The District of Columbia

– Puerto Rico


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General Notes 3 - 32General Notes 3 - 32


Full rate (Column 2)

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General Note 3 (a)General Note 3 (a)

• Rate of Duty Column 1

– General

• Normal Trade Relations (NTR)

– Special

• Rates of duty under one or more special tariff treatment programs





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General Note 3 (b)General Note 3 (b)

• Rate of Duty Column 2

– Highest duty rate applicable and applies to:

• Cuba

• North Korea


Full rate (Column 2)

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General Note 3 (c)General Note 3 (c)

• Special Tariff Programs List

– List of special trade programs and the special indicators for column 1 Special.

• GSP.......................A,*, A+

• APTA.....................B

• USAFTA.................AU

• Etc., etc


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General Note 3 (d)General Note 3 (d)

• Certain Motor Vehicles Manufactured in Foreign Trade Zones

– Covers rules and regulations for motor vehicles built in a foreign trade zone

• Duty

• Qualifications

• Foreign content

• Etc., etc





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General Note 3 (e)General Note 3 (e)


Corpse, casket and

flowers Telecommunications Transmissions

BusinessRecords Articles from space

Exported and returned

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General Note 3 (f)General Note 3 (f)

• Commingled Goods

– Different duty rates

– Different values

– Packed together

– Cannot be verified without segregation

• Subject to highest rate of any part unless


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Lower rate if...Lower rate if...

• Next highest rate if satisfactory proof that:

– Commercially negligible; not capable of segregation without excessive cost; will not be segregated prior to its use in a manufacturing process

– Not intended to avoid duties

• Or, rate of greater quantity present

– Value is less than the aggregate value if segregated, and

– Not capable of segregation without excessive cost; not segregated prior to manufacturing process

– Not intentional…© Logistics Training Systems

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General Note 3 (g)General Note 3 (g)

• Abbreviations

– Lists definition of all abbreviations used in the HTSUS

• $ = Dollars

• Doz. = Dozens

• D.C. = Direct Current

• No. = Number

• Etc, etc.


Also see GSN 4

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General Note 3 (h)General Note 3 (h)

• Definitions

– “entered”

– “entered for consumption”

– “withdrawn from warehouse for consumption”

– “rate of duty”

– Etc, etc.


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General Notes 3 (i) and (j)General Notes 3 (i) and (j)

• GN 3 (i)– Issuance of Rules and Regulations

• Authorizes the Secretary of the Treasury to issue

• GN 3 (j)– Methods of identifying goods

• Sect’y of Treasury authorized to prescribe methods of analyzing, testing, sampling.......

• To determine...properties or characteristics of articles...

• For purposes of and law administered by US Customs





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General Statistical NotesGeneral Statistical Notes

1. Reporting requirements

– What to put on 3461/7501

2. Statistical annotations and what they are:

– 2- digit suffix; units of quantity;

3. Statistical reporting number

4. Abbreviations; the weird ones

5. Reporting of exports


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Types of DutyTypes of Duty


Ad Valorem5% based on

NEV

Specific$0.05/Dozen

Compound5% plus

$0.05/Dozen

Free of DutyUnconditionally

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Determining Duty RateDetermining Duty Rate

• Depends on..

– Country of Origin

– Time of entry


Valuation = Country of Export

Duty Rate = Country of Origin

Time of Entry = Release by Customs, unless

the facts tell you otherwise




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Country of OriginCountry of Origin

• Substantial Transformation

– Name, use and character

• Textiles

– §102.21 rules

– Israel – §102.22

• Special Trade Programs

– Determined by the agreement


Country of Export

Sold or shipped with shipping taking precedence

Used in Valuation

No role in classification

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HTSUS ColumnsHTSUS Columns


Rates of Duty

1 2

General Special

GN 3 (a) (ii) GN 3 (a) (iii)

GN 3 (b)

Rates for MFN or

NTR nations:

Germany, France,

China, Great

Britain, etc.

Rates for

countries

qualifying for

Special Trade

Programs:

GSP, CEBRA,

AGOA, etc.

Full rate and

highest

applicable

Cuba, North

Korea

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FREE TRADE AGREEMENTSSPECIAL TRADE PROGRAMSFREE TRADE AGREEMENTSSPECIAL TRADE PROGRAMS

Preferential Trade

Agreements and Programs

Chapter 18





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Trade Agreement vs. Trade

Program

Trade Agreement vs. Trade

ProgramFree Trade Agreement

• A reciprocal agreement between two or more parties

• Israel, Jordan, NAFTA, Chile, Singapore, Australia, Morocco, CAFTA-DR, Bahrain

Special Trade Program

• A unilateral action on the part of the United States

• GSP, ATPA/ATPDEA, CBERA/CBI, CBPTA, AGOA


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OverviewOverview

• Present concepts common to all programs

– Rules of Origin

– Value Content

– Etc, etc

• Provide information for each program

– Rules of origin used

– Value content required

– Etc, etc


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Side-by-Side ComparisonSide-by-Side Comparison


http://www.cbp.gov/linkhandler/cgov/trade/trade_programs/international_agreements/fta_comparison.ctt/fta_comparison.pdf




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HTS General NoteHTS General Note

• General Note applicable to the program

– Located in the HTSUS

– Fully describes the details of the program

– Need to be read (except for the Tariff Shift tables!)


General Note 7

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CFRCFR

• The location in the 19CFR of further information concerning the trade program


In addition to GN 7, CBERA, or CBI,

information is located in 19CFR Parts 10.191 - 199

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S P IS P I

• Special Program Indicator

– Indicates goods eligible for a particular program

– Located in Column 1 Special


Nuclear reactors are free of duty under these

Trade Programs




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General Rules of OriginGeneral Rules of Origin

• Wholly obtained, 35% value added with substantial transformation


• Wholly obtained, Tariff Shift &/or Regional Value Content

Beneficiary Country

9403.90

9403.50

Furniture

Parts

Enough

Shift?

Enough

Value

Added?

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Wholly ObtainedWholly Obtained


Wholly obtained or produced in the region or country or countries covered by the trade agreement.

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Tariff ShiftTariff Shift


HTSUS heading 2007HTSUS heading 0805




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Regional Value ContentRegional Value Content

• 35% only

• 15% of US cost and value count towards 35%

• Build up, Build down

• Transaction value, net cost


Ways to calculate the beneficiary

countries contribution…

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35% Only35% Only


The sum of the cost or value of materials produced in the beneficiary country plus the direct costs of processing must equal at least 35%

of the article.

Direct costs:Actual laborDies, molds, toolingDepreciation

Not included:ProfitGeneral expensesBusiness overhead

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15% of US cost and value count

towards 35%

15% of US cost and value count

towards 35%


In this case, part of the 35% requirement can be from the United States. In addition, some programs allow the

beneficiaries part to be made up from other countries in the program or even other programs!

Direct costs:Actual laborDies, molds, toolingDepreciation

Not included:ProfitGeneral expensesBusiness overhead




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Build Down MethodBuild Down Method


Formula:

RVCAV VNM-

100X=AV

Example

RVC

AV

Regional Value Content (as a %)

Adjusted Value (for Customs purposes)

VNM Value of non-originating material acquired and used by producer

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Build Down ExampleBuild Down Example


Producer$100

$30

RVC

AV VNM-

100X=AV

$100 $30-

100X$100

= 70%

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Build Up MethodBuild Up Method


Formula:

RVCV0M

100X=AV

Example

RVC

AV

VOM


Adjusted Value (for Customs purposes)

Value of originating material acquired and used by producer




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Build Up ExampleBuild Up Example


Producer

$100$40

Originating = $60

RVC

VOM

100X=AV

$60

100X$100

= 60%

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Build Up, Build Down ReviewBuild Up, Build Down Review

• Build down– Uses value of non-originating material to

calculate

– Usually 45% regional value content

• Build up– Uses value of originating material to calculate

– Usually 35% regional value content

• Exporters or producers can choose either method


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Net Cost MethodNet Cost Method


Formula:

RVCNC VNM-

100X=NC

Example

RVC

NC

VNM


Net cost of producing the product

Value of non-originating material acquired and used by producer




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Net Cost ExampleNet Cost Example


Producer $230Foreign Parts

RVC

NC VNM-

100X=NC

$175.00 $90.00-

100X$175.00

= 49%

Regional Value Content

$175.00$90.00

Each unit sold for $230.00

Non-originating parts cost $90.00

Total cost of manufacture is $175.00

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Transaction Value MethodTransaction Value Method


Formula:

RVCTV VNM-

100X=TV

Example

RVC

TV

VNM


Transaction value or sales price

Value of non-originating material acquired and used by producer

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Transaction Value ExampleTransaction Value Example


Producer $230Foreign Parts

RVC

TV VNM-

100X=TV

$230.00 $90.00-

100X$230.00

= 61%

Regional Value Content

$175.00$90.00

Each unit sold for $230.00

Non-originating parts cost $90.00

Total cost of manufacture is $175.00




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Net Cost and Transaction Value Review

Net Cost and Transaction Value Review

• Net Cost– Uses value of non-originating material vs. total cost of

product to calculate– Usually 50% regional value content

• Transaction Value– Uses value of non-originating material vs. sale price

to calculate– Usually 60% regional value content

• Usually, exporters or producers can choose the method– exception example would be related companies


RVC = 49% with NC - Fails

RVC = 61% with TV - Passes

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Documentation & NotificationDocumentation & Notification


Level of Documentation at Importation

CBP 28

Verification Notification

CBP 29

Determination Notification

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Transit/TransshipmentTransit/Transshipment


Direct Shipment

Must be shipped directly to the US and not enter the commerce of a third country.

Transshipment, or passing

through a third country is OK.




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Merchandise Processing FeeMerchandise Processing Fee


Advises whether the merchandise eligible for the trade program preference is also exempt

or not exempt from the Merchandise Processing Fee

Remember, the MPF is that 0.21% charge based on the entered value of the goods as

described in 19CFR Part 24.23,

For this exam only…

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Not allowedNot allowed


Simple combining or packaging operations

Mere dilution with water or other substance

+ =

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The Special ProgramsThe Special Programs


And now it is time to fit the previous elements into the Special Trade

Programs…




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Watch this spaceWatch this space


For even more Special Trade Programs that will be added in the

future…

South KoreaColombia Panama

UAE

And who is next??

Thailand

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ARTICLES CONDITIONALLY FREEARTICLES CONDITIONALLY FREE

Chapter 19

19CFR, Part 10


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Temporary Importation Under BondTemporary Importation Under Bond

• Bond is required (§10.31(f))

– Two times the duty

– 110% of the duty

• Time limit (HTS, Chap 98, Sub XIII)

– One (1) year from import date

– Two (2) one year extensions (§10.37)

– Except show cars (9813.00.75)

• Six months only with NO extensions

• Subchapter XIII, U.S. 1(a)© Logistics Training Systems

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In it Comes, Out it GoesIn it Comes, Out it Goes

• Regular entry – CBP3461/CBP7501

• Attach statements

• What comes in must go out

• Can be converted to/from other entry

• TIB’s are cancelled, not liquidated

• Proof of disposal


Information located in §10.31 – 10.40 and Chapter 98, Subchapter XIII.

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Other Questions from Part 10Other Questions from Part 10


U.S. Government imports - §10.100 – .104

Articles for Institutions - §10.43 - .46

Imports < $200 and gifts – §10.151 - .153

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ADD/CVDADD/CVD

19 CFR 165





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Reimbursement CertificateReimbursement Certificate

• Provided by importer prior to liquidation of entry

• States whether importer reimbursed for ADD/CVD

• Presumption is that if no certificate filed, importer reimbursed


Complete text on next page

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Certificate Certificate


I hereby certify that I (have) (have not) entered intoany agreement or understanding for the payment orfor the refunding to me, by the manufacturer,producer, seller, or exporter, of all or any part of theantidumping duties or countervailing duties assessedupon the following importations of (commodity) from(country): (List entry numbers) which have beenpurchased on or after (date of publication ofantidumping notice suspending liquidation in theFederal Register) or purchased before (same date)but exported on or after (date of final determination ofsales at less than fair value).

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Brown Industries imported a shipment of taper roller bearings manufactured by Beijin Bearings in Shenzhen, China. The taper roller bearings are exported by Seoul Enterprise, a company incorporated in South Korea, and are used in various automotive engine parts. Taper roller bearings are specifically classified under 8482.20.00. The Department of Commerce has instructed CBP to collect antidumping duty cash deposits at a rate of 115% for all shipments of taper roller bearings manufactured by Beijin Bearings. The Department of Commerce has further instructed CBP to apply the “country-wide rate” of 45% for all shipments of taper roller bearings manufactured by Chinese companies with no established individual cash deposit rates. Further, the scope of the order excludes taper roller bearings used in the manufacture of exercise equipment and home appliances. What is the antidumping duty cash deposit rate collected for Brown Industries’ shipment of taper roller bearings?A. Do not collect antidumping duties because these taper

roller bearings were exported by a Korean companyB. 45%C. 115%D. Do not assess antidumping duties because these bearings

are excluded from the scope of the antidumping duty orderE. 160%





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CBP ExplanationCBP Explanation


Please note that CBP’s role in collecting antidumping duties and cash deposits is ministerial; therefore, we only follow Commerce instructions. Consequently, we should not cite to any Commerce regulations, such as 19 CFR 351.107, to justify how we collect cash deposits.

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19 CFR Part 16519 CFR Part 165


First appeared in the 19 CFR for 2017 Two questions appeared on the April 2017 exam but were

voided These questions are in the Workbook as Chapter

Review Questions Relevant information is in the Textbook starting on Page

34-11 Definitions Processes Time Frames

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https://www.cbp.gov/document/guidance/eapa-investigation-process-diagram




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End of Session 10

Documents

General Note 1 - logisticsts.com · Chapter 32 & 33 - Video Review Session 10 © Logistics Training Systems, Inc. All Rights Reserved 5 Lts General Note 3 (g)