How to Meet Key Customs Recordkeeping Requirements, and ......Recordkeeping Requirements Key U.S. Customs Recordkeeping Requirements are in 19 CFR Part 163 § 163.0 — Scope. § 163.1

How to Meet Key Customs Recordkeeping Requirements, and Where Companies Get into Trouble

Washington, D.C.

November 19-20, 2013

by

Lawrence W. Hanson

The Law Office of Lawrence W. Hanson, P.C.

The Center for Global Trade Education and Compliance, Inc.

Recordkeeping Requirements

Key U.S. Customs Recordkeeping Requirements are in 19 CFR Part 163

§ 163.0 — Scope.

§ 163.1 — Definitions.

§ 163.2 — Persons required to maintain records.

§ 163.3 — Entry records.

§ 163.4 — Record retention period.

§ 163.5 — Methods for storage of records.

§ 163.6 — Production and examination of entry and other records and witnesses; penalties.

§ 163.7 — Summons.

§ 163.8 — Third-party recordkeeper summons.

§ 163.9 — Enforcement of summons.

§ 163.10 — Failure to comply with court order; penalties.

§ 163.11 — Audit procedures.

§ 163.12 — Recordkeeping Compliance Program.

§ 163.13 — Denial and removal of program certification; appeal procedures.

Appendix to Part 163 - Interim (a)(1)(A) List

Key Recordkeeping Requirements and Common Areas of Non-Compliance

© 2013 Center for Global Trade Education and Compliance Inc.

http://www.law.cornell.edu/cfr/text/19/163.0

























































































http://www.law.cornell.edu/cfr/text/19/163/appendix-lii5





§ 163.1 Definitions.

(a) Records— (1) In general. The term “records” means any information made or normally kept in the ordinary course of business that pertains to any activity listed in paragraph (a)(2) of this section. …The term includes, but is not limited to, the following: Statements; declarations; documents; electronically generated or machine readable data; electronically stored or transmitted information or data; books; papers; correspondence; accounts; financial accounting data; technical data; computer programs necessary to retrieve information in a usable form; and entry records (contained in the (a)(1)(A) list).




Activities for which records are required:

Any importation, declaration or entry;

The transportation or storage of merchandise carried or held under bond into or from the customs territory of the United States;

The filing of a drawback claim;

The collection, or payment to Customs, of duties, fees and taxes;

The completion and signature of most FTA certificates of origin and most FTA supporting documentation

Any other activity required to be undertaken pursuant to the laws or regulations administered by Customs.




§ 163.4 Record retention period.

Except as otherwise provided, any record required to be made, kept, and rendered for examination and inspection by Customs shall be kept for 5 years from the date of entry, if the record relates to an entry, or 5 years from the date of the activity which required creation of the record.




§ 163.4 Record retention period. Exceptions. Drawback claims: until the third anniversary of the date of payment of

the claim.

Packing lists: 60 calendar days from the end of the release or conditional release period, whichever is later (an additional 60 days if a demand for return to Customs custody has been issued)

Informal entries: 2 years from the date of the informal entry.

Records pertaining to articles that are admitted free of duty and tax: 2 years

Carriers' records pertaining to manifested cargo that is exempt from entry: 2 years

If another regulation sets forth a different retention period




§ 163.2 Persons required to maintain records. (1) An owner, importer, consignee, importer of record, entry filer, or other

person who:

• (i) Imports merchandise into the customs territory of the United States, files a drawback claim, or transports or stores merchandise carried or held under bond, or

• (ii) Knowingly causes the importation or transportation or storage of merchandise carried or held under bond into or from the customs territory of the United States;

(2) An agent of any person described in paragraph (a)(1) of this section; or

(3) A person whose activities require the filing of a declaration or entry, or both.




Monetary penalties applicable upon failure to comply with a lawful demand for the production of an entry record without excuse:

1. Failure to comply as a result of the willful failure of the person to maintain, store, or retrieve the demanded record: For each release of merchandise, not to exceed $100,000, or an amount equal to 75 percent of the appraised value of the merchandise, whichever amount is less; or

(

What Happens if You Don’t have the Required Records: Scope of Penalties and Loss of Duty Benefits



2. Failure to comply a result of negligence of the person in maintaining, storing, or retrieving the demanded record, such person shall be subject to a penalty, for each release of merchandise, not to exceed $10,000, or an amount equal to 40 percent of the appraised value of the merchandise, whichever amount is less.




3. Additional actions

In addition to any penalty imposed, if the demanded entry record relates to the eligibility of merchandise for a column 1 special rate of duty in the Harmonized Tariff Schedule of the United States (HTSUS), the entry of such merchandise:

If unliquidated, shall be liquidated at the applicable HTSUS column 1 general rate of duty; or

If liquidated within the 2-year period preceding the date of the demand, shall be reliquidated at the applicable HTSUS column 1 general rate of duty.

Exception. Any liquidation or reliquidation shall be at the applicable HTSUS column 2 rate of duty if Customs demonstrates that the merchandise should be dutiable at such rate.




§ 163.5 Methods for storage of records.

Original records. All persons listed in § 163.2 are required to maintain all records required by law and regulation for the required retention periods and as original records, whether paper or electronic, unless alternative storage methods have been adopted.

Who Should Keep Your Customs Records, and When to Delegate to a Broker




§ 163.5

Except for packing lists, importers must maintain original entry records for 120 days from the end of the release or conditional release period, whichever is later.

If a demand for return to CBP custody has been issued, original entry records must be maintained for 120 days after the date of redelivery or after the date in the demand if there was no redelivery.




Importers and Customhouse Brokers have independent obligations to keep Customs records.




“A(1)a” List of Required Records

Specific Records Required for Special Programs like FTAs, GSP, U.S. Goods Returned, etc.

What Types of Custom Records Should be Created



“(a)(1)(A)” List of Required Records

The (a)(1)(A) List (Appendix to 19 CFR Part 163) summarizes the records and information required for the Entry of Merchandise by Customs law and regulation for the following purposes:

Records required for most entries

Records or Information required on Customs Form (CF) 3461 or CF 7533

Records or Information required on Customs Form (CF) 7501

Records or information required for entry of special categories of merchandise




“(a)(1)(A)” List of Required Records for Most Entries

Evidence of right to make entry (airway bill/bill of lading or carrier certificate, etc.) when goods are imported on a common carrier.

Declaration of entry

Power of attorney (when required by regulations)

Consolidated shipments authority to make entry (if tilized)

Packing list (where appropriate)

Bond information (if required)

Vessel, Vehicle or Air Manifest (filed by the carrier)





Certificates of Origin and supporting records for some FTAs (e.g., NAFTA)

Certificates of Origin and supporting records for some products under some PTAs (e.g., for textiles under AGOA)





GSP Declaration and evidence of direct shipment for GSP

Shipper’s declaration and owner’s declaration for U.S. Goods Returned





Records required by other government agencies (e.g., FWS, FDA, USDA)




Customhouse brokers are no longer required to keep their records within the broker district that covers the Customs port to which they relate (19 CFR 111.23)

Identifying Where Customs Records are Kept



Original Records and alternative methods of storage (§ 163.5)

How to Retain Customs Records: Which Records?



Penalties

Denial of Benefits

Re-classification, valuation and origin

More Penalties

More Duty

More Hassle

Consequences of Inadequate Recordkeeping



The needs for systemic recordkeeping

The role of Internal Audit

Fixing recordkeeping

Now

In the future

Better Recordkeeping


Further Questions:

Larry Hanson

The Law Office of Lawrence W. Hanson, P.C.

[email protected]

713 961 8000 (telephone)

713 961 8022 (facsimile) The Center for Global Trade Education and Compliance, Inc.



mailto:[email protected]

Documents

How to Meet Key Customs Recordkeeping Requirements, and ......Recordkeeping Requirements Key U.S. Customs Recordkeeping Requirements are in 19 CFR Part 163 § 163.0 — Scope. § 163.1