CBP Updates Frequently Asked Questions Document Regarding IIT with Residue

February 24, 2012

U.S. Customs and Border Protection (CBP) recently posted an updated version of its frequently asked questions (FAQ) document regarding containers considered to be instruments of international traffic (IIT) imported into the United States with residue. In 2009, CBP issued HQ Ruling H026715 concerning the treatment of IIT with residue entering the United States, however CBP has yet to set an enforcement date for the HQ ruling. CBP expects to establish an enforcement date once information technology issues are resolved and all rail carriers are using ACE M1 to manifest shipments. The ACE M1 Vessel and Rail Manifest system is expected to be deployed in early 2012, allowing for electronic filing of Section 321 entries in the rail environment. Such capabilities are already available for truck and air modes of transport. While CBP notes in the FAQ document that the trade community will be notified well in advance of an enforcement date, it also suggests that the trade industry use the current non-enforcement period to make any necessary changes to business practices and operations to comply with the ruling. The updated document significantly revises the information it provides on the requirements that residue in IIT be manifested, classified, and entered. The updates address multiple topics, including the responsibilities of carriers and importers of record and the procedures for manifesting and entering IIT with residual cargo. The FAQ also includes revised importer scenarios.

Significant revisions to the frequently asked questions document include the following:

• The FAQ now states that, when ACE M1 is deployed, CBP will enforce the requirement that IIT containing residual shipments (chemicals, cargo, goods, etc.) must be manifested and entered in compliance with customs law. If qualified, shipments containing residual goods will be permitted to be entered as American Goods Returned.
• Regarding the importer of record’s responsibilities, the FAQ states that, when a residue shipment reaches the U.S., the importer of record will file entry documents for the goods with the port director at the port of entry. The importer or record’s responsibilities will also include: (1) filing entry documents for the goods with the port director at the goods’ port of entry; (2) arranging for examination and release of the goods; (3) maintaining a valid CBP bond type 3A in the name of the entity requesting release for all IIT; (4) retaining documentation establishing the basis for determining the value provided for the residual commodity.
• CBP added two sections explaining the procedures for manifesting IIT with residual cargo and entry requirements for IIT with residual cargo. Entry requirements for IIT with residual cargo will be based on value, not manifested quantities or the fact that the IIT contains residue below the Manifest Threshold Limit. Therefore, an entry may be required even if the quantity of residue remaining in the IIT is below the Manifest Threshold Limit. The FAQ further states that since the exact amount of the residual goods is often unknown at the time the advance cargo information is required to be transmitted, the importer may estimate the amount when providing that information to the carrier for transmission to CBP. The determination that the shipment is below the Manifest Threshold Limit levels and qualifies for treatment as residue should be based on mathematical calculations, volume and weight readings, and historical data.
• CBP also added two sections to the FAQ for carriers. These sections explain the procedures for manifesting and entering IIT with either Section 321 residual truck cargo or Section 321 residual rail cargo.

For further information, please contact a Barnes/Richardson attorney.