CBP Sets July 17 Enforcement for Entering IIT Containers with Residue

U.S. Customs and Border Protection has posted an updated version of its frequently asked questions document regarding containers considered to be instruments of international traffic (IIT) that are imported into the U.S. with residual cargo (such as chemicals or other bulk goods¹). Among other things, the updated FAQs state that on July 17, 2011, CBP will begin enforcing the requirement that residual cargo imported in IIT be manifested, classified, and entered (i.e., formal entry, informal entry, or Section 321 entry).

(In July 2009, CBP published in the Customs Bulletin HQ H026715, which modified HQ 113129 (1994) to no longer allow containers imported with residual chemicals to be entered as empty.² HQ H026715 requires that the chemical residue imported in the containers be classified, entered, and manifested. HQ H026715 also allows the containers themselves to continue to be considered IIT.)

New Question on Enforcement Added -- Enforcement to Begin July 17

CBP has added a new question (#13) to the FAQs regarding when CBP will begin enforcing HQ Ruling H02671. Previous question #12 on what would happen if the appropriate steps under the CBP regulations could not be fully implemented by September 16, 2009 -- the original date that the ruling was to take effect -- has been removed.

(In December 2010, CBP sources said that it remained in the delayed enforcement mode, with no timeline for full enforcement, as CBP was working with the trucking associations and rail carriers on a few unresolved issues.)

CBP Says Ruling to be Enforced on July 17, Trade Had 2 Years to Prepare

CBP has identified July 17, 2011 to begin enforcing HQ Ruling H026715. The July 17, 2011 enforcement date will have allowed the trade community 24 months from the date the ruling was published to make any necessary changes to business practices and operating to comply with the ruling.

Requirements that CBP Will Enforce on July 17

CBP will enforce the following requirements effective July 17:

• IIT³ containing residual chemicals, cargo, goods, etc., must be manifested and entered in compliance with customs laws; and
• If qualified, shipments containing residual goods can be entered as American Goods Returned (AGR).

Carrier responsibilities. Carriers will be responsible for the following:

• Transmitting advance electronic cargo information for the residual cargo to CBP in advance of arrival in the U.S. (19 USC 2071 note);
• Providing CBP with a precise cargo description of the residue (e.g., “Residual cargo rail tank car/hopper car, etc. last contained…”) or the cargo’s Harmonized Tariff Schedule number to the 6-digit level in compliance with the Trade Act of 2002 implementing regulations;
• Providing CBP with an estimated quantity of the residual cargo. Since the exact amount of the residual goods may not be known 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. Mathematical calculations, volume and weight readings, and historical data may all be tools used in estimating the amount of residue within a container.
• Adhering to applicable regulations and requirements (EPA, DOT, FDA, or state/local); and
• Providing updates for the estimated quantity amounts to CBP if a more precise amount is determined.

Importer of record responsibilities. When a shipment (including IIT with residue) reaches the U.S., the importer of record (i.e., the owner, purchaser, or licensed customs broker designated by the owner, purchaser, or consignee) will be responsible for:

• Filing entry documents for the goods with the port director at the goods' port of entry. 19 CFR 141.4 provides that entry as required by 19 USC 1484(a) shall be made of every importation whether free or dutiable and regardless of value, except for intangibles and articles specifically exempted by law or regulations from the requirements for entry. Imported goods are not legally entered until after the shipment has arrived within the port of entry, and delivery of the merchandise has been authorized by CBP. Pursuant to the CBP regulations at 19 CFR 143.22, the port director may require a formal consumption or appraisement entry for any merchandise if deemed necessary for import admissibility enforcement purposes, revenue protection, or the efficient conduct of Customs business;
• Maintaining a valid CBP bond type 3A in the name of the entity requesting release for all instruments of international traffic (19 CFR 113.66); and
• Retaining documentation establishing the basis for determining the value provided for the residual commodity. A value must be declared and phrases such as “no commercial value” will not be accepted.

New Question on Rail IITs Containing Residual Cargo Valued under $200 Added

CBP has added a new question (#8) to the FAQs on the Section 321 (19 USC 1321) entry process for IITs containing residual cargo valued at less than $200. This question and answer addresses the Section 321 entry process for entries submitted via Rail Automated Manifest System (AMS).

In an earlier question (#2), CBP notes that residual cargo valued at less than $200 may be entered under 19 USC 1321 for administrative exemptions, which would eliminate the Type 1 Importer or broker bond requirement for the residue, if certain information is supplied.⁴

Rail AMS is Unable to Process, Release Under Section 321, so Trade Must Submit Certain Info to CBP

Currently, CBP’s Rail AMS is unable to process and release Section 321 entries automatically, therefore CBP will not be able to identify which Bills of Lading covering the IIT with residual cargo are being entered for release under Section 321 without performing some research.

CBP is exploring the feasibility of developing an automated process for these types of rail shipments; however, until the process is automated, the importer of record and carriers are responsible for the following:

Carriers will submit the rail consist to CBP in adherence to the current standard practice and within the existing manifest timelines. When submitting the cargo description on the rail consist to CBP through AMS, carriers must follow these guidelines in the following order:

• A statement identifying the shipment as Section 321;
• A precise commodity description stating “Residual cargo last contained…” or the cargo’s HTS number to the 6-digit level (minimum);
• The carrier’s 3A bond number; and
• The quantity, which could be an estimated and be stated as “less than 1,000 gallons” in the remarks section (Please note that this quantity should be less than 3% (for truck) and 7% (for rail) of the total capacity of the IIT).

(See FAQ for examples of acceptable cargo descriptions the carrier must provide when inputting the cargo description into AMS for Section 321 shipments.)

Carriers/Importer of Record Must Notify CBP Rail Port of Section 321 Entries

The carriers or the importer of record are responsible for providing notification to the CBP rail port of arrival identifying each BOL on the rail consist that is for an IIT containing residual cargo being entered for release under Section 321. Since hours of operation and rail volume differ significantly among rail ports of entry, each CBP port will be responsible for developing a process for the carrier in order to provide notification that IITs containing residual cargo are being entered as Section 321 entries.

Trade Should Contact Port for Local Procedures for Section 321 IIT Entries

The trade community is encouraged to contact the CBP port to obtain the local procedures for providing notification regarding the entry/release of IITs containing residual cargo entered under Section 321.

Below are possible examples of how the CBP ports may require the trade to provide notification:

• Require the carrier or importer of record to email a list of BOL numbers covering IITs with residual cargo being entered as Section 321 to a dedicated team within the CBP port for release; or
• Require the carrier or importer of record to fax a list of BOL numbers covering IITs with residual cargo being entered as Section 321 to a dedicated team within the CBP port for release.

¹In response to a question about whether CBP intends to enforce its position in HQ H026715 on just bulk and intermediate bulk containers or any container with residue, box, barrel, drum, pail, jerrican, can, bag, etc., CBP stated that to the extent that the original 1994 ruling (HQ 113129) applied to Dow Corning, and those containers at issue within the ruling, all other entities should have been transmitting advance electronic cargo information and properly entering the merchandise and containers that have been transported into the U.S.

²In HQ 113129, CBP had held that steel containers meeting the requirements of 19 CFR 10.41a as instruments of international traffic and filled with a chemical when exported from the U.S. could be entered as empty when imported back into the U.S., notwithstanding the residue of chemicals remaining in the containers. It was stated that not only was the residue a very small part of the amount of a full container, but it was virtually impossible to completely empty the containers. The residue was not discarded, rather, more chemicals were added to the containers.

³CBP states that in order to qualify as an IIT within the meaning of 19 USC 1322(a) and 19 CFR 10.41a et seq., an article must be substantial, suitable for and capable of repeated use, and used in significant numbers in international traffic. 19 CFR 10.41(a(a)(1) designates as IIT lift vans, cargo vans, shipping tanks and certain other named articles and states that other articles may be designated as IIT by the CBP Commissioner in decisions to be published in the weekly Customs Bulletin.

⁴The following information is required for merchandise that qualifies for a Section 321 entry (19 USC 1321; 19 CFR 143.23).

• Country of origin of the merchandise;
• Shipper name, address and country;
• Ultimate consignee name and address;
• Specific description of the merchandise;
• Quantity;
• Shipping weight; and
• Value.

In addition to this information, a valid type 3A bond in the name of the entity requesting release is required for IIT containing residue.

(See ITT’s Online Archives or 12/14/10 news, 10121426, for BP summary providing details of CBP’s most recent previous version of the FAQs.

See ITT’s Online Archives or 09/14/09 news, 09091405, for BP summary of CBP delaying the enforcement date of HQ Ruling H026715.

See ITT’s Online Archives or 07/21/09 news, 09072140, for BP summary of HQ Ruling H026715.)