First 'Wave' of Section 301 CF 28s Expected in Coming Weeks, Customs Lawyer Says

A first group of CBP information requests related to imports covered by the Section 301 tariffs on goods from China is expected to go out in the next couple weeks, Baker & McKenzie lawyer Ted Murphy said in a Nov. 6 blog post. CBP has said it plans to initially focus on imported electronics and will be adding new auditors to its field offices (see 1810230022). "Our contacts in Regulatory Audit have informed us that, as part of this effort, a first 'wave' of CF-28s (Requests for Information) since the imposition of the Section 301 duties will be issued in 2-4 weeks," Murphy said.

CBP will be scrutinizing imports of goods subject to Section 301 duties, and the ability to show reasonable care must be a central feature of any tariff mitigation strategy, he said. "We understand that CBP is increasing enforcement activities on all fronts" and "companies pursuing Section 301 mitigation strategies should tread cautiously," Murphy said. A lack of reasonable care "can lead to steep penalties, in addition to owing unpaid duties," he said. CBP didn't comment.

Areas of likely focus for CBP will be reclassification, changed countries of origin and decreases in valuations, he said. "To demonstrate that a company is exercising reasonable care, we recommend having on file contemporaneously drafted documentation that substantiates the legal basis for any changes (e.g., documentation explaining that, based on changes to the supply chain, the product is no longer Chinese origin, since it is now last substantially transformed origin somewhere else). Further, any company that receives a CF-28 or CF-29 (Notice of Action) should escalate the matter to the company’s legal department before responding and/or engage outside trade counsel, if appropriate."

There are multiple reasons for an initial focus on electronics classified in chapters 84 and 85 of the HTS, Murphy said. "Given that electronics have generally been entitled to be entered duty free (or subject to very low duty rates), CBP recognizes that importers are under pressure to reduce the Section 301 impact and, therefore, may (intentionally or unintentionally) act in a manner contrary to U.S. customs laws and regulations," Murphy said. Electronics from China are also part of intellectual property rights concerns that were the basis of the Section 301 investigations, he said.