Dear Valued Customer,

We would like to remind our customers of the importance of declaring actual (not estimated) non-dutiable charges (NDC) that are to be deducted from the commercial invoice transaction value to calculate the so-called “Entered Value” or “Dutiable Value”.

It has long been Customs position that the amount to be deducted from the price actually paid or payable for freight, insurance and other costs incident to the international shipment of merchandise, including foreign inland freight, are the actual, as opposed to estimated costs. The importer of record’s declaration of a transaction value excluding an amount for freight/shipment charges based on estimated costs may constitute a failure to exercise reasonable care.

If the importer of record does not know the actual costs for these charges, it must declare the entire value without a deduction for freight, insurance and other costs incident to international shipment and advise Customs that the entered value includes an unknown amount for freight, insurance and/or other costs incident to international shipment, at the time of importation. Thereafter, if the actual amount becomes available, the importer of record must inform Customs so that a deduction can be made from the price actually paid or payable at liquidation. However, if the actual amount is not available and/or verifiable, Customs will liquidate the entry at the declared value without taking into account a deduction for freight, insurance and other costs incident to international shipment.

For other qualified deductions other than ocean/air freight and insurance, for example CFS charges, foreign inland freight, or post-importation transportation, such deductions must also be the verifiable actual amounts. CBP has stated in ICP “Proper Deductions of Freight and Other Costs From Customs Value” that actual costs are those amounts ultimately paid to the international carrier, freight forwarder, insurance company or other appropriate provider of such services. Commercial documents to and from the service provider such as an invoice or written contract separately listing freight/insurance costs, a freight/insurance bill, a through bill of lading or proof of payment of the freight/insurance charges (i.e. letters of credit, checks, bank statements) are examples of documents which typically serve as proof of such actual costs. Other types of evidence may also be acceptable.

Therefore, it is JJB’s policy that deductions are NOT to be made for estimated ocean/air freight, insurance or other deductions without verifiable documentary evidence. We strongly encourage our clients to proactively provide documentation to support deductions from the Customs value at the time of Customs entry so that they can deducted properly.

When the actual amounts of freight, insurance and other costs incident to international shipment are included in the price actually paid or payable and are not known at the time of importation by the importer of record and this is a recurring situation, the importer of record may flag the entry for Value Reconciliation and declare an estimated amount for freight, insurance and other costs incident to international shipment. Under the reconciliation program, the importer has up to 21 months to ascertain the correct valuation, and once known, must file a reconciliation entry to close all flagged entries by the 21st month from the flagged entry summary date. In order to participate in the reconciliation program, the importer must obtain a reconciliation bond rider and contact JJB to coordinate the flagging of entries.

For more information on deductible charges and reconciliation, please contact your nearest JJB representative.

The information accompanying this newsletter contains confidential information belonging to the sender which is legally privileged. The information is intended only for the use of customers of James J. Boyle & Co. If you are not the intended recipient, you are hereby notified that any disclosure, copying, distribution or the taking of any action in reliance on the content of this information is strictly prohibited. James J. Boyle & Co. will also not be held accountable for any discrepant information. The service we provide is based on our "Terms and Conditions of Service", which is available upon request.

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