Importing in the United states is a complicated process, there are numerous things that an importer must know and consider before he undertakes this task. Any consignment that is imported into the US via any mode of transport is subject to import laws, duty taxes and fees. Permission of the Customs and Border Protection(CBP) is mandatory for any import of goods through a process that may vary depending on the nature of goods or country of origin.
In this article, we have covered some key concepts that a beginner must understand before importing in the US.
The shipper receives the bill of lading which serves as a receipt and is also needed by the importer to register an entry with the CBP.
As per ISF (Importer Security Filing) also known as 10+2 rules, Electronic Cargo Declaration must be transmitted to CBP 24 hours before the cargo is loaded on the vessel, which helps CBP in determining whether the goods need to be examined upon arrival.
Once the shipment arrives and the CBP approves its clearance, the containers are temporarily placed in the shipyard.
The importer is notified about the containers and details of pickup are shared.
The importer or importer of record (the owner, purchaser or licensed customs broker) now has to file entry documents with CBP at the port of arrival. This is the formal request for customs release. The importer can file these documents himself as owner of the cargo or hire a customs broker. Customs Brokers are licensed by CBP and hold expertise in conducting import procedures. A list of customs brokers is available on cbp.gov.
Entry documents must be filed on the Automated Commercial Environment (ACE) System within fifteen days of the shipment’s arrival. The importer may need to present other documents for completing entry of goods depending upon the situation.
One document that may be required for customs clearance depending on the Type of Entry is the Customs Bond (required for formal entries, for goods that have a commercial value of more than 2500 USD)
If goods are selected for being examined, CBP will inspect the shipment to determine if the goods are admissible. If any inconsistencies are found, they will be detained and can be seized. However, in some cases, the importer is allowed to re-export the articles.
Once the goods are cleared for entry, Entry summary documentation is filed and estimated duties are to be deposited within 10 working days of the entry of the merchandise at a designated customhouse. The key document in this process is CBP Form 7501. Apart from this, any other documents or invoices that are necessary to assess duties or collect statistics must also be filed.
The importer now may pick up the goods at a destination which has been arranged by the shipper or himself.
In some cases, CBP can introduce a review that can result in duties refund, additional duties or a request for additional documentation depending on the review
Final leg of the process is called Liquidation. This is post finalizing of the duty assessment by the CBP.
The entry process is deemed to be complete and the importers must preserve all the documentations for at least 5 years.
For someone who is importing for the first time, it is necessary to understand the type of entries:
Formal Entries: Articles that have commercial value of 2500 USD and more. Customs bond is also required for Formal Entries.
Informal Entries: Articles that have commercial value less than 2500 USD
Articles qualifying for section 321: Articles with commercial value less than 800 USD. No fees or duties to be paid for these articles.
Duty charges on formal and informal entries are derived as per their classification in the Harmonized Tariff Schedule of the US.
Import duty assessment largely depends on arriving at the correct valuation for your shipment and then classifying it under the right HTS Code to identify the applicable import duty for your product.
In the US shipment valuation is based on FOB value of goods. Generally, the customs value of all merchandise exported to the United States will be the transaction value for the goods. But customs also has the option to look at the market value of the goods being imported if the transaction value being reported is lower than anticipated.
The HS Code or Harmonized Code is a 6 digit code that is used globally to categorize all the products. Modeled after HS Code, the US created the Harmonized Tariff Schedule (HTS) which is a 10 digit code used to categorize all the goods for their duty, quota, and statistical purposes. The first 6 digits of HTS Code are the same as the global HS Code. In order to identify the import duty of a product, the importer has to first identify the correct HTS Code of his product.
U.S. customs laws require that each article produced abroad and imported into the United States be marked with the English name of the country of origin to indicate to the ultimate purchaser in the United States what country the article was manufactured or produced in. These laws also require that marking be located in a conspicuous place as legibly, indelibly and permanently as the nature of the article permits. Different goods have different set of rules about how they should be marked.
Regulations of other Government agencies for your Import Based on the product that is being imported, there might be regulations imposed by other government agencies which need to be complied with in order to complete the importation. An importer can check with his customs broker if any other regulations are applicable for the product being imported.
Some of these agencies are:-
Custom broker assists an importer with all the important documentation and requirements for importing in the US. Whether one requires a customs broker or not depends entirely on the value of the shipment being imported.
In case of all the formal entry of the goods, an account with a Custom Broker is mandatory. All the required documents are completed by the exporter before delivering the goods to the carrier. These documents are verified by the Importer of Record (IOR) for the complete accuracy and completion. Once all the paperwork is submitted to the Custom Broker, they review it before handing over to the CBP.
An importer must check if his import is eligible for a reduced date of import duty under any Foreign Trade Agreement. The United States has 14 FTAs with 20 countries. Some of them are:-
A complete list of all US FTAs has been provided here.
Manage to get online training or learnings before reaching out to anyone for help since it is better to have some background than to reach-out people out of the blue. Refer the US CBP (Customs and Border Protection) website to have initial understanding and start the import export training.
Custom Brokers can be hired to make sure that you're compliant. With a custom broker, all the paperwork can be handled and you can sail smoothly post the articles/shipment arrives in the US.
Place the import order after the application for any required permits or licenses for importing the goods are approved. Articles like perishables, trademarked items, medication, copyrighted articles etc. require a separate permit for import.
Failing to comply with ISF (Importer Security Filing), only required for ocean shipments can result in penalties upto USD 5000 with increased inspection and delay in shipment.
Refer the CBP website to get to know about the new or updated information. Familiarize yourself with the CBP policies.
If the value of the shipment is more than US $2,500, then it requires a formal entry with all the duties and fees levied on the value of the shipment. Importer of record is responsible to pay all these fees to CBP. If the value of a shipment is less than US $2,500, then the government gives a blind eve to the same and you are allowed to enter your goods informally in the United States without paying any duty.