Customs Issues Proposed Rules Allowing Single Entry for Split Shipments

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November 2001

On November 16, 2001, the Customs Service ("Customs") issued proposed rules that would amend the Customs regulations at 19 CFR Parts 141 and 142 to allow an importer of record, under certain conditions, to submit a single entry to cover multiple portions of a single shipment which was split by the carrier, and arrives in the United States separately. The proposed rules were published in the Federal Register at 66 Fed. Reg. 57688. The public has been invited to submit written comments concerning this proposal on or before January 15, 2002.

According to Customs, the proposed rule would affect merchandise shipped by all modes of transportation (air, land or sea). In addition, Customs states that these proposed procedures are not mandatory, and that importers of record may continue to file a separate entry for each portion of a split shipment as it arrives, if they so choose.

The proposed rule has been issued pursuant to section 1460 of the Tariff Suspension and Trade Act of 2000, Pub. L. No. 106-476, which added new paragraph (j) to 19 USC 1484 to state that in the case of merchandise that is purchased and invoiced as a single entity but shipped in (a) an unassembled or disassembled condition in separate shipments due to the size or nature of the merchandise or (b) separate shipments due to the inability of the carrier to include all of the merchandise in a single shipment (at the instruction of the carrier), Customs may, upon application by an importer in advance treat such separate shipments for entry purposes as a single transaction.

The proposed rule only applies to shipments which are divided by carriers, referred to as "split shipments." Split shipments consist of merchandise that is capable of being transported on a single conveyance, and that is delivered to and accepted by a carrier in the exporting country as one shipment under one bill of lading or waybill, and is thus intended by the importer to arrive as a single shipment. Customs had already begun a project to amend the regulations to provide for one entry for such split shipments prior to the present statutory amendments and it has been determined that Customs should complete this effort. Therefore, Customs will be publishing a separate document in the near future proposing regulations concerning the entry of shipments of unassembled and disassembled merchandise that arrive on more than one conveyance.

This proposed rule adds 19 CFR 1414.57 entitled "Single entry for split shipments." Proposed 19 CFR 141.57(a) provides that at the election of the importer of record, a split shipment could be processed under a single entry according to the following procedures:

Definition of a Split Shipment - Proposed 19 CFR 141.57(b) defines a split shipment as a shipment that: (1) may be accommodated on a single conveyance, and that is delivered to and accepted by a carrier in the exporting country under one bill of lading or waybill and is thus intended by the importer to arrive in the U.S. as a single shipment; (2) is thereafter divided by the carrier, acting on its own, into different portions that are transported and consigned to the same party in the U.S.; and (3) the first portion of which and all succeeding portions arrive directly from a foreign country at the same port of importation into the U.S. and all the succeeding portions arrive within 10 calendar days of the date of the first portion.

Written Notification of Election to File a Single Entry for Split Shipment - Proposed 19 CFR 141.57(c) requires the importer of record to notify Customs in writing that the shipment has been split at the carrier's initiative, that the remainder of the shipment will arrive by subsequent conveyance(s), and that the election is being made to file a single entry for all portions. Such notice would be required as soon as the importer of record becomes aware that the shipment has been split, but in all cases notification would have to be made prior to filing of the entry summary.

Procedures for Filing Single Entry for Split Shipment - Proposed 19 CFR 141.57(d) allows the importer to follow one of two procedures when filing a single entry for split shipment: either after the arrival of the entire shipment ("Option 1") or prior to the arrival of the entire shipment ("Option 2"). Applying Option 1, following arrival of all portions of the split shipment, an importer of record can file (i) an entry or (ii) special permit for immediate delivery (provided that the merchandise is eligible for such a permit under 19 CFR 142.21(a)-(f) and (h). In either case, a CF 3461 or CF 3461 alternate, as appropriate, or electronic equivalent, must be filed with Customs indicating the total number of pieces in and the total value of the entire shipment as reflected on the invoice. Applying Option 2, an importer of record may file a special permit of immediate delivery after the arrival of the first portion of a split shipment but before the arrival of the entire shipment, thus qualifying the split shipment for incremental release as each portion arrives. In such a case, a CF 3461 or CF 3461 alternate, as appropriate, or electronic equivalent, must be filed with Customs. As each subsequent portion arrives, the importer must submit a copy of the CF 3461 adjusted to reflect the quantity of the particular portion. In the event that an entry has been prefiled with Customs in accordance with 19 CFR 142.2(b), notification to Customs by the importer of record that a single entry will be filed for shipments released incrementally would serve as a request that the prefiled entry be converted to an application for a special permit for immediate delivery. The special permit must indicate the total number of pieces in, as well as the total value of, the entire shipment as reflected on the invoice. Also, the release of each portion of the split shipment upon arrival could be limited due to Customs' need to examine the merchandise.

Carrier Requirements for Filing under Option 2 - Proposed 19 CFR 141.57(e) requires that in order to secure separate release upon arrival of each portion of a split shipment under Option 2, the carrier responsible for initially splitting the shipment must present to Customs, either on a paper manifest or through an authorized electronic data interchange system, manifest information relating to the shipment that reflects exact information for each portion of the split shipment.

E. Examination of Any or All Parts of a Split Shipment - Proposed 19 CFR 141.57(f) states that Customs' examination of any or all parts of a split shipment could be required, and that for split shipments to be subject to the immediate delivery procedure in Option 2, Customs reserves the right to deny incremental release should such examination of the merchandise be necessary, but that such denial would not preclude the use of the entry/special permit procedures in Option 1.

F. Entry Summary - Proposed 19 CFR 141.57(g) requires that an entry summary be filed within ten (10) working days from the date of entries filed under Option 1. For merchandise released under a special permit for immediate delivery under Option 1, the entry summary must be filed within ten (10) working days after the merchandise or any part of the merchandise is authorized for release under the special permit or, for quota class merchandise, within the quota period, whichever expires first. For merchandise released under a special permit for immediate delivery under Option 2, the entry summary must be filed within ten (10) working days of the date of the first release of a portion of the split shipment and would have to reflect all portions of the split shipment that have been released, including quantity, value, correct classification, and duty rate. Such an entry summary is not allowed to include any portions of the split shipment that have not been released.

Duty Payment - Under either Option 1 or 2, proposed 19 CFR 141.57(g) requires that at the time the entry summary is filed, estimated duties, taxes, and fees applicable to the released merchandise must be attached or if the entry summary is filed electronically, scheduled for payment at such time pursuant to the Automated Clearinghouse.

Classification - Proposed 19 CFR 141.57(h) provides that for purposes of 19 USC 1484(j)(2), the merchandise comprising the separate portions of a split shipment included on one entry are to be classified as though imported together.

Separate Entry Required for Portions - Proposed 19 CFR 141.57(i) requires that all portions of a split shipment that do not arrive within ten (10) calendar days of the portion that arrived first must be entered separately.

Required Importer Entry Review and Recordkeeping - Proposed 19 CFR 141.57(j) requires that the importer of record be responsible for reviewing the total manifested quantity shown on the CF 3461, alternate or electronic equivalent in relation to all portions of the split shipment that arrived within the specified ten (10) calendar day period and require the importer of record, at the conclusion of this period, make any adjustments necessary to reflect the actual amount, value, correct classification, and duty rate of the merchandise that was released incrementally under the split shipment procedures. In addition, the importer of record is required to maintain and produce to Customs as requested, sufficient documentary evidence to substantiate that the splitting of the shipment was done by the carrier acting on its own, and not at the request of the foreign shipper and/or the importer of record. Such documentation should include a copy of the originating bill of lading or waybill under which the shipment was delivered to the carrier in the country of exportation.

Exclusions from Single Entry under Incremental Release Procedures - Proposed 19 CFR 141.57(k) excludes merchandise subject to quota and/or visa requirements from incremental release under the immediate delivery procedure in Option 2 and states that if by splitting a shipment any portion of that shipment is subject to quota, no portion of the split shipment could be released incrementally. Also, 19 CFR 141.57(k) allows the port director to deny the use of the incremental release procedure in Option 2 as circumstances warrant. And for merchandise that is excluded from the immediate delivery procedure in Option 2, the importer may still file a single entry or special permit for immediate delivery under the procedure in Option 1 covering the entire split shipment of such merchandise following, and to the extent of, its arrival within the required ten (10) calendar day period.

In addition, the proposed rule amends 19 CFR Part 142.21 entitled "Merchandise eligible for special permit for immediate delivery" by redesignating paragraphs (g) and (h), and by adding a new paragraph (g) to state that merchandise subject to Option 2, which is purchased and invoiced as a single shipment, but which is shipped by the carrier in separate portions to the same port of arrival due to the carrier's inability to accommodate the merchandise on a single conveyance, may be released incrementally under a special permit for immediate delivery. Paragraph (g) also states that incremental release means releasing each portion of such shipments separately as they arrive. 19 CFR 142.21(e) has been amended to indicate that the incremental release available for split shipments under Option 2 is not available to absolute or tariff rate quota ("TRQ") merchandise.

Finally, 19 CFR Part 142.22 has been amended to state that an application for a special permit for immediate delivery is to be made on CF 3461, CF 3461 alternate, or its electronic equivalent, and supported by the documentation provided for in 19 CFR Part 142.3. Proposed 142.22 also states that a commercial invoice would not be required, except for merchandise released under the provisions of 19 USC 1484(j).