CBP To Begin Full Enforcement of ISF on January 26, 2010
01/26/10 11:11 PM
On
January 26, 2010, U.S. Customs and Border
Protection (CBP) began full enforcement of Importer
Security Filing (ISF), also known as 10+2. The new
policy requires maritime importers and vessel
operating ocean carriers to provide CBP with
advance notification for all U.S.-bound ocean
vessel cargo. CBP will conduct gradual enforcement
of ISF during 2010, with the beginning of new
quarter marking a new phase of enforcement.
During the first quarter of 2010, CBP will monitor the flow of ISF filings, including completeness and accuracy of the ISF filings, as well as noting which importers are not filing the 10+2. Importers that are not filing can expect their imports to be subject to deeper scrutiny, with CBP requesting document review, non-intrusive inspections or intensive examinations of the cargo. CBP will notify importers who are not filing and those that have errors in their filing and work with them to bring the imports into compliance.
During the second and third quarters of 2010, ISF enforcement will tighten. CBP intends to delay and hold for examinations those imports that have no associated ISF or those that have serious discrepancies in them. However, with the exception of fraud, smuggling, or terrorism in connection with the ocean imports or egregious violations of ISF requirements, CBP does not intend to penalize or assess liquidated damages for ISF violations during the first three quarters of 2010 or for imports that occurred prior to January 26, 2010.
CBP will begin issuing liquidated damages at the start of a fourth quarter on October 1, 2010. Ports of entry will initiate proposed assessments of liquidated damages, and will forward them on to CBP Headquarters for review. CBP Headquarters making final decisions on damages will ensure uniform enforcement across the country. CBP Headquarters are authorized to approve the proposed assessment or send it back to the originating port recommending that the matter be disposed of in a different way. Those liquidated damage assessments that are approved by CBP headquarters will be forwarded on to importers.
CBP plans to use this method of instituting penalties for at least a year, after which it will either be extended or the ports of entry will be authorized to issue final penalty decisions.
Importers must also note that, beginning 26, 2010, they are required to have a bond as security for the ISF filing.
The bond must be secured 24 hours prior to vessel departure and will terminate when goods enter the port of entry if there is no ISF violation. In case of violations, most penalties will be issued within a year, however, Customs has 6 years to assess a liquidated damages claim.
If an importer elects to secure a continuous bond, it will cover the ISF. Those ISF importers that do not have a continuous bond on file with CBP are required to secure a single entry bond (SEB) in the amount of $10,000, which is the maximum penalty that can be imposed for a late, incomplete, or inaccurate ISF. SEBs should be used by importers with single or infrequent shipments.
The SEB must be created before ISF is transmitted, because the filing requires that bond reference number be included. When the ISF transaction number is received, it must be entered on the SEB and e-mailed in a pdf file to CBP at ISF_Bond@cbp.dhs.gov.
With the exception of surety companies that have stricter rules for late filings or not filing at all, SEBs for timely submission of ISF are readily available. Surety companies require a cash deposit for the full amount of the bond for transactions deemed to be at risk because of late filing of the ISF transmission. Surety companies will hold cash deposits for six years and will refund them to the importer of record when the bond obligation terminates.
More detail on ISF and associated bond requirements can be found in ISF Program’s Frequently Asked Questions (FAQs).
During the first quarter of 2010, CBP will monitor the flow of ISF filings, including completeness and accuracy of the ISF filings, as well as noting which importers are not filing the 10+2. Importers that are not filing can expect their imports to be subject to deeper scrutiny, with CBP requesting document review, non-intrusive inspections or intensive examinations of the cargo. CBP will notify importers who are not filing and those that have errors in their filing and work with them to bring the imports into compliance.
During the second and third quarters of 2010, ISF enforcement will tighten. CBP intends to delay and hold for examinations those imports that have no associated ISF or those that have serious discrepancies in them. However, with the exception of fraud, smuggling, or terrorism in connection with the ocean imports or egregious violations of ISF requirements, CBP does not intend to penalize or assess liquidated damages for ISF violations during the first three quarters of 2010 or for imports that occurred prior to January 26, 2010.
CBP will begin issuing liquidated damages at the start of a fourth quarter on October 1, 2010. Ports of entry will initiate proposed assessments of liquidated damages, and will forward them on to CBP Headquarters for review. CBP Headquarters making final decisions on damages will ensure uniform enforcement across the country. CBP Headquarters are authorized to approve the proposed assessment or send it back to the originating port recommending that the matter be disposed of in a different way. Those liquidated damage assessments that are approved by CBP headquarters will be forwarded on to importers.
CBP plans to use this method of instituting penalties for at least a year, after which it will either be extended or the ports of entry will be authorized to issue final penalty decisions.
Importers must also note that, beginning 26, 2010, they are required to have a bond as security for the ISF filing.
The bond must be secured 24 hours prior to vessel departure and will terminate when goods enter the port of entry if there is no ISF violation. In case of violations, most penalties will be issued within a year, however, Customs has 6 years to assess a liquidated damages claim.
If an importer elects to secure a continuous bond, it will cover the ISF. Those ISF importers that do not have a continuous bond on file with CBP are required to secure a single entry bond (SEB) in the amount of $10,000, which is the maximum penalty that can be imposed for a late, incomplete, or inaccurate ISF. SEBs should be used by importers with single or infrequent shipments.
The SEB must be created before ISF is transmitted, because the filing requires that bond reference number be included. When the ISF transaction number is received, it must be entered on the SEB and e-mailed in a pdf file to CBP at ISF_Bond@cbp.dhs.gov.
With the exception of surety companies that have stricter rules for late filings or not filing at all, SEBs for timely submission of ISF are readily available. Surety companies require a cash deposit for the full amount of the bond for transactions deemed to be at risk because of late filing of the ISF transmission. Surety companies will hold cash deposits for six years and will refund them to the importer of record when the bond obligation terminates.
More detail on ISF and associated bond requirements can be found in ISF Program’s Frequently Asked Questions (FAQs).
Importer Security Filing (ISF) Progress Reports Available
10/26/09 01:22 PM
On
October 26, 2009, Customs and Border Protection
(CBP) reminded importers that
it is still accepting registation for Importer
Security Filing (ISF) Progress Reports.
CBP will begin full enforcement of the Importer Security Filing (ISF), popularly known as the “10+2” rule, on January 26, 2010. The 10+2 rule requires that importers and carriers transmit certain cargo information to CBP for imports destined to enter the U.S. or a free trade zone in the U.S., via the Automated Broker Interface (ABI) or Automated Manifest System (AMS). In preparation for the new requirements, CBP is providing all ISF filers with a progress report. CBP urges companies to review these reports with their ISF filers to address filing inaccuracies or delayed data transmissions during the flexible enforcement period currently in effect.
ISF Filers and C-TPAT Tier 2 and Tier 3 are eligible for the progress report, and may request their copy by contacting: Progress_Report@cbp.dhs.gov.
The filers’ request should include: Company Name, Filer Code, Point of Contact, Point of Contact Telephone, and E-mail address to which the report should be sent.
C-TPAT Tier 2 and 3 importers should provide the same information except they should provide their tier level and, instead of a filer code, the importer of record numbers they wish included in the report.
CBP will begin full enforcement of the Importer Security Filing (ISF), popularly known as the “10+2” rule, on January 26, 2010. The 10+2 rule requires that importers and carriers transmit certain cargo information to CBP for imports destined to enter the U.S. or a free trade zone in the U.S., via the Automated Broker Interface (ABI) or Automated Manifest System (AMS). In preparation for the new requirements, CBP is providing all ISF filers with a progress report. CBP urges companies to review these reports with their ISF filers to address filing inaccuracies or delayed data transmissions during the flexible enforcement period currently in effect.
ISF Filers and C-TPAT Tier 2 and Tier 3 are eligible for the progress report, and may request their copy by contacting: Progress_Report@cbp.dhs.gov.
The filers’ request should include: Company Name, Filer Code, Point of Contact, Point of Contact Telephone, and E-mail address to which the report should be sent.
C-TPAT Tier 2 and 3 importers should provide the same information except they should provide their tier level and, instead of a filer code, the importer of record numbers they wish included in the report.
CBP Implements Changes to 10+2 Processing Effective August 15, 2009
08/13/09 08:29 AM
On
July 12, 2009, the U.S. Customs and Border
Protection (CBP) implemented
a
number of changes to the processing of the
Importer Security Filing (ISF), also known as
10+2. Accordingly, the transaction sets on the
Security Filing page were updated to reflect
these changes.
CBP issued a reminder that beginning August 15, 2009, the following data edits in ISF were switched from “ISF ACCEPTED WITH WARNINGS” to “ISF REJECTED:”
1. Edit for missing Importer of Record
a. CATAIR / CAMIR - Error Code 302, Error Message 'Importer Required”
b. X.12 – Error Message “485 NM1 Missing Importer”
2. Edit for incorrect Action Reason Code
a. CATAIR / CAMIR – Error Code 132, Error Message “Invalid Action Reason Code”
b. X.12 – Error Message “470 M1016 Invalid Value”
On August 12, 2009 CBP added an additional data element to the list of fatal errors. Effective August 15, 2009, reporting a party using an identification number (IRS number or Social Security Number) that is not currently on file with CBP will be rejected.
Questions should be directed to your assigned Client Representative or by calling (703) 650-3500.
CBP issued a reminder that beginning August 15, 2009, the following data edits in ISF were switched from “ISF ACCEPTED WITH WARNINGS” to “ISF REJECTED:”
1. Edit for missing Importer of Record
a. CATAIR / CAMIR - Error Code 302, Error Message 'Importer Required”
b. X.12 – Error Message “485 NM1 Missing Importer”
2. Edit for incorrect Action Reason Code
a. CATAIR / CAMIR – Error Code 132, Error Message “Invalid Action Reason Code”
b. X.12 – Error Message “470 M1016 Invalid Value”
On August 12, 2009 CBP added an additional data element to the list of fatal errors. Effective August 15, 2009, reporting a party using an identification number (IRS number or Social Security Number) that is not currently on file with CBP will be rejected.
Questions should be directed to your assigned Client Representative or by calling (703) 650-3500.
CBP Publishes Liquidated Damages Guidelines for Failure to Comply with Importer Security Filing Requirements
07/18/09 10:47 PM
On
July 17, 2009, U.S. Customs and Border Protection
(CBP) published its Guidelines for the Assessment
and Cancellation of Claims for Liquidated Damages
for Failure to Comply with Importer Security Filing
Requirements. (CBP Dec. 09-26).
In addition to liquidated damages, a carrier or ISF Importer may be issued a do not load (DNL) hold, the delay or denial of a vessel carrier’s preliminary entry- permit/special license to unlade and/or the assessment of any applicable statutory penalty. CBP may also withhold the release or transfer of the cargo until CBP receives the required information and has had the opportunity to review the documentation. Liquidated damages may be assessed in the following circumstances:
Late Filing – If an ISF Importer submits a late ISF, CBP may assess a claim for liquidated damages in the amount of $5,000 per late ISF.
Inaccurate Filing – CBP may assess liquidated damages in the amount of $5000 per inaccurate ISF.
Updates – CBP may assess a claim for liquidated damages against the importer for the first inaccurate ISF update in the amount of $5000.
Withdrawals – CBP may assess a claim for liquidated damages in the amount of $5000 if an ISF importer fails to withdraw an ISF.
Additional penalties under 19 U.S.C. § 1595a(b) may be assessed for serious or repetitive violations.
The Guidelines also discuss the cancellation of liquidated damages and mitigating and aggravating factors to consider. In the case of a first time violation, the liquidated damages claim may be cancelled upon payment of an amount between $1000 and $2000 depending on the presence of mitigating and aggravating factors. Subsequent violations may be cancelled upon payment of an amount not less than $2,500 if CBP determines that law enforcement goals were not compromised.
Mitigating factors include evidence of progress in the implementation of the ISF requirement during the flexible enforcement period (January 26, 2009 to January 26, 2010); small number of violations compared to the number of shipments for which ISFs were required; an ISF Importer which is a certified Tier 2 or Tier 3 C-TPAT member; demonstrated remedial action; ISF information was filed late because of vessel diversion due to factors outside of the ISF Importer’s control; the presenting party acquired the information from another party in accordance with ordinary commercial practices and can demonstrate that it reasonably believed the information to be true and it was not reasonably able to verify the information.
Aggravating factors include lack of cooperation with CBP; evidence of smuggling or attempt to introduce merchandise contrary to law; multiple errors on the ISF; and rising error rate which is indicative of deteriorating performance in the transmission of ISF information.
In addition to liquidated damages, a carrier or ISF Importer may be issued a do not load (DNL) hold, the delay or denial of a vessel carrier’s preliminary entry- permit/special license to unlade and/or the assessment of any applicable statutory penalty. CBP may also withhold the release or transfer of the cargo until CBP receives the required information and has had the opportunity to review the documentation. Liquidated damages may be assessed in the following circumstances:
Late Filing – If an ISF Importer submits a late ISF, CBP may assess a claim for liquidated damages in the amount of $5,000 per late ISF.
Inaccurate Filing – CBP may assess liquidated damages in the amount of $5000 per inaccurate ISF.
Updates – CBP may assess a claim for liquidated damages against the importer for the first inaccurate ISF update in the amount of $5000.
Withdrawals – CBP may assess a claim for liquidated damages in the amount of $5000 if an ISF importer fails to withdraw an ISF.
Additional penalties under 19 U.S.C. § 1595a(b) may be assessed for serious or repetitive violations.
The Guidelines also discuss the cancellation of liquidated damages and mitigating and aggravating factors to consider. In the case of a first time violation, the liquidated damages claim may be cancelled upon payment of an amount between $1000 and $2000 depending on the presence of mitigating and aggravating factors. Subsequent violations may be cancelled upon payment of an amount not less than $2,500 if CBP determines that law enforcement goals were not compromised.
Mitigating factors include evidence of progress in the implementation of the ISF requirement during the flexible enforcement period (January 26, 2009 to January 26, 2010); small number of violations compared to the number of shipments for which ISFs were required; an ISF Importer which is a certified Tier 2 or Tier 3 C-TPAT member; demonstrated remedial action; ISF information was filed late because of vessel diversion due to factors outside of the ISF Importer’s control; the presenting party acquired the information from another party in accordance with ordinary commercial practices and can demonstrate that it reasonably believed the information to be true and it was not reasonably able to verify the information.
Aggravating factors include lack of cooperation with CBP; evidence of smuggling or attempt to introduce merchandise contrary to law; multiple errors on the ISF; and rising error rate which is indicative of deteriorating performance in the transmission of ISF information.
CBP Issues Correcting Amendments to 10+2 Rule
07/15/09 10:41 PM
On
July 14, 2009, the Bureau of Customs and Border
Protection (CBP) issued correcting amendments
to
the interim final rule entitled “Importer
Security Filing and Additional Carrier
Requirements” originally published in the
Federal Register on November 25, 2008.
Pursuant to the interim final rule, commonly known as the 10+2 rule, an Importer Security Filing (ISF) must be filed for cargo arriving into a U.S. port generally no later than 24 hours before the cargo is laden aboard a vessel at a foreign port.
The new correcting amendment added a new paragraph (b)(5) to 19 C.F.R. §149.2 to clarify that ISFs for shipments intended to be transported in-bond as immediate exportations (I&Es) or transportation and exportations (T&Es) must be transmitted no later than 24 hours before the cargo is laden aboard a vessel that is destined to the U.S.
With respect to the obligation to amend the ISF, CBP specified that the ISF must be updated if there is a change to any of the ISF data elements before the goods enter the boundaries of the first port of arrival in the U.S. Amendments to the ISF are accepted at any time after the goods arrive in a U.S. port.
Pursuant to the interim final rule, commonly known as the 10+2 rule, an Importer Security Filing (ISF) must be filed for cargo arriving into a U.S. port generally no later than 24 hours before the cargo is laden aboard a vessel at a foreign port.
The new correcting amendment added a new paragraph (b)(5) to 19 C.F.R. §149.2 to clarify that ISFs for shipments intended to be transported in-bond as immediate exportations (I&Es) or transportation and exportations (T&Es) must be transmitted no later than 24 hours before the cargo is laden aboard a vessel that is destined to the U.S.
With respect to the obligation to amend the ISF, CBP specified that the ISF must be updated if there is a change to any of the ISF data elements before the goods enter the boundaries of the first port of arrival in the U.S. Amendments to the ISF are accepted at any time after the goods arrive in a U.S. port.
New Importer Security Filing Rule ("10+2") Goes Into Effect
01/27/09 05:34 PM
On
January 26, 2009, the
new importer security filing rule
(commonly known as
"10+2" due to the additional 10 data elements that
importers must provide to the government and 2
additional data elements that carriers must
provide) went into effect. The
rule was implemented as
scheduled despite the new administrations request
to delay any new or pending regulations for 60
days.
The new rule is subject to a "structured review and flexible enforcement period" of one year. As such, bonds for the importer security filing (ISF) will not be required and liquidated damages or do not load messages will not be issued for the simple failure to file the ISF until after January 26, 2010.
Customs and Border Protection (CBP) has provided outreach informational sessions to importers across the country and has posted a 36 page FAQ document, as well as other helpful information, on its website.
The new rule is subject to a "structured review and flexible enforcement period" of one year. As such, bonds for the importer security filing (ISF) will not be required and liquidated damages or do not load messages will not be issued for the simple failure to file the ISF until after January 26, 2010.
Customs and Border Protection (CBP) has provided outreach informational sessions to importers across the country and has posted a 36 page FAQ document, as well as other helpful information, on its website.
First Sale Valuation to Remain Permissible Through At Least 2010 & "10+2" Rule May Be Finalized by End of Summer
06/26/08 04:36 PM
On
June 24, 2008, U.S. Customs and Border Protection
(CBP) Commissioner Ralph Basham testified before
the Senate Finance Committee regarding CBP's trade
functions and enforcement actions. (Basham's
written testimony can be found here.) Of great
interest to the trade community was Basham's
remarks regarding first sale valuation.
Specifically, Basham stated that in January of this year, CBP published in the Federal Register a Notice of Proposed Interpretation seeking public comment of the phrase "sold for exportation to the United States" for purposes of applying the transaction value method of valuation in a series of sales scenario. Under the proposed interpretation, transaction value would be based on the price paid by the buyer in the U.S. to the foreign manufacturer, which is a departure from the current application of the valuation statute, which allows importers to use the price paid by an intermediary to the foreign manufacturer as the basis for transaction value. Basham noted that the proposed re-interpretation of the valuation statute that would disallow "first sale" valuation has been "controversial."
Basham noted that the recently passed Farm Bill (Food, Conservation and Energy Act of 2008 (Pub. L. No. 110-246)) requires CBP to collect valuation information from importers and included a sense of Congress that CBP should not publish a final interpretative rule on this issue before January 1, 2011. He then stated that, "CBP does not intend to proceed further on the proposal on first sale before January 1, 2011. Nor will we change the current interpretation with respect to first sale without consulting with Congress and the private sector, or without the explicit approval of the Secretary of Treasury." With respect to first sale, Basham stated:
Other items of interest include the status of the proposed "10+2" rule or Importer Security Filing, which requires importers to provide CBP with 10 data elements plus 2 data elements from carriers electronically at least 24 hours prior to vessel loading at foreign ports of origin. The proposed ten data elements are:
The two additional elements required from carriers are: (1) a vessel stow plan used to transmit information about the physical location of cargo loaded aboard a vessel bound for the United States; and (2) container status messages, which report container movements and changes in status (e.g., empty or full).
It has been reported that in response to questioning by the committee, Basham stated that CBP hopes to submit the rule to the Office of Management and Budget (OMB) by the end of the week and have it ready for publication by the end of the summer.
Specifically, Basham stated that in January of this year, CBP published in the Federal Register a Notice of Proposed Interpretation seeking public comment of the phrase "sold for exportation to the United States" for purposes of applying the transaction value method of valuation in a series of sales scenario. Under the proposed interpretation, transaction value would be based on the price paid by the buyer in the U.S. to the foreign manufacturer, which is a departure from the current application of the valuation statute, which allows importers to use the price paid by an intermediary to the foreign manufacturer as the basis for transaction value. Basham noted that the proposed re-interpretation of the valuation statute that would disallow "first sale" valuation has been "controversial."
Basham noted that the recently passed Farm Bill (Food, Conservation and Energy Act of 2008 (Pub. L. No. 110-246)) requires CBP to collect valuation information from importers and included a sense of Congress that CBP should not publish a final interpretative rule on this issue before January 1, 2011. He then stated that, "CBP does not intend to proceed further on the proposal on first sale before January 1, 2011. Nor will we change the current interpretation with respect to first sale without consulting with Congress and the private sector, or without the explicit approval of the Secretary of Treasury." With respect to first sale, Basham stated:
-
The Farm Bill instructs CBP to require each importer of merchandise to declare whether the transaction value of the imported merchandise has been determined on the basis of a first or earlier sale.
-
CBP is required to submit a report that includes the number of importers that declare transaction value on the basis of first sale, the tariff classification of such merchandise and the value of the merchandise, on a monthly basis to the United States International Trade Commission (USITC).
-
We have had preliminary discussions with the trade and are examining the most efficient means of collecting the required information while minimizing the impact on the trade.
-
The Farm Bill also includes a sense of Congress that CBP should not proceed with its proposed interpretative rule until January 1, 2011 and upon certain coordination and consultation with Congress, the Commercial Operations Advisory Committee, the International Trade Commission, the Secretary of Treasury, and the trade. CBP does not intend to proceed further on the proposal on first sale before January 1, 2011. Nor will we change the current interpretation with respect to first sale without consulting with the Congress and the private sector, or without the explicit approval of the Secretary of Treasury.
Other items of interest include the status of the proposed "10+2" rule or Importer Security Filing, which requires importers to provide CBP with 10 data elements plus 2 data elements from carriers electronically at least 24 hours prior to vessel loading at foreign ports of origin. The proposed ten data elements are:
- Manufacturer (or supplier) name and address
- Seller (or owner) name and address
- Buyer (or owner) name and address
- Ship-to name and address
- Container stuffing location
- Consolidator (stuffer) name and address
- Importer of Record number/foreign trade zone (FTZ) applicant identification number
- Consignee number(s)
- Country of origin
- Commodity Harmonized Tariff Schedule number
The two additional elements required from carriers are: (1) a vessel stow plan used to transmit information about the physical location of cargo loaded aboard a vessel bound for the United States; and (2) container status messages, which report container movements and changes in status (e.g., empty or full).
It has been reported that in response to questioning by the committee, Basham stated that CBP hopes to submit the rule to the Office of Management and Budget (OMB) by the end of the week and have it ready for publication by the end of the summer.