[Federal Register: February 25, 2003 (Volume 68, Number 37)]
[Rules and Regulations]
[Page 8713-8721]
From the Federal Register Online via GPO Access [wais.access.gpo.gov]
[DOCID:fr25fe03-9]
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DEPARTMENT OF THE TREASURY
Customs Service
19 CFR Parts 141 and 142
[T.D. 03-09]
RIN 1515-AC91
Single Entry for Split Shipments
AGENCY: Customs Service, Department of the Treasury.
ACTION: Final rule.
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SUMMARY: This document amends the Customs Regulations to allow an
importer of record, under certain conditions, to submit a single entry
to cover a single shipment which was split by the carrier into multiple
portions which arrive in the United States separately. These amendments
implement statutory changes made to the merchandise entry laws by the
Tariff Suspension and Trade Act of 2000.
EFFECTIVE DATE: March 27, 2003.
FOR FURTHER INFORMATION CONTACT: For operational or policy matters:
Robert Watt, Office of Field Operations, (202) 927-0279.
For legal matters: Gina Grier, Office of Regulations and Rulings,
(202) 572-8730.
SUPPLEMENTARY INFORMATION:
[[Page 8714]]
Background
Section 1460 of Public Law 106-476, popularly known as the Tariff
Suspension and Trade Act of 2000, amended section 484 of the Tariff Act
of 1930 (19 U.S.C. 1484) by adding a new paragraph (j) in order to
provide for the treatment of certain multiple shipments of merchandise
as a single entry.
The new paragraph (j) involves two scenarios. First, section
1484(j)(1) addresses a problem long encountered by the importing
community in entering merchandise whose size or nature necessitates
that the merchandise be shipped in an unassembled or disassembled
condition on more than one conveyance. Second, section 1484(j)(2)
offers relief to importers whose shipments which they intended to be
carried on a single conveyance are divided at the initiative of the
carrier. As to both these matters, the legislation is silent as to the
affected modes of transportation, thus indicating that the new law is
to apply to merchandise shipped by air, land or sea.
By a document published in the Federal Register (66 FR 57688) on
November 16, 2001, Customs proposed regulations to implement 19 U.S.C.
1484(j)(2) relating to shipments which are divided by carriers; these
shipments are referred to as ``split shipments''. These final
regulations today concern such split shipments.
It is noted that by a separate document published in the Federal
Register (67 FR 16664) on April 8, 2002, Customs proposed regulations
to implement 19 U.S.C. 1484(j)(1) concerning the entry of shipments of
unassembled or disassembled entities that arrive on more than one
conveyance. This latter proposed rule will be the subject of a final
rule document that should be published in the Federal Register in the
near future.
Split Shipment Defined
Generally speaking, a split shipment consists 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. However, the shipment is
thereafter divided by the carrier into different parts which arrive in
the United States at different times, often days apart.
In practice, shipments often become split after being delivered
intact to a carrier. The movement of cargo as a split shipment on
multiple conveyances appears to be a regular and routine industry
practice when shipped by air. There are various reasons for a shipment
to be split by a carrier, such as limited space, the need to balance
weight distribution on a conveyance, and offloading for safety
concerns.
The Customs Regulations ordinarily require, with certain exceptions
not here relevant, that all merchandise arriving on one conveyance and
consigned to one consignee be included on one entry (see Sec. 141.51,
Customs Regulations (19 CFR 141.51)). While today's final regulations
permit the acceptance of a single entry in the case of such a split
shipment, importers may, of course, continue to file a separate entry
for each portion of a split shipment as it arrives, if they so choose.
Filing of Single Entry for Split Shipment Under Proposed Rule
In principal part, the November 16, 2001, Federal Register document
proposed to permit the filing of a single entry to cover a split
shipment provided that: (1) The subject shipment was capable of being
transported on a single conveyance, and was delivered to and accepted
by a carrier in the exporting country under one bill of lading or
waybill and was thus intended by the importer to be a single shipment;
(2) the shipment was thereafter split or deconsolidated by the carrier,
acting on its own; (3) the split-portions of the shipment remain
consigned to the same party in the United States to whom they were
destined in the original bill of lading or waybill; and (4) those
portions of the split shipment that could be covered under the entry
arrived directly from abroad at the same port of importation in the
United States within 10 calendar days of the date of the portion that
arrived first.
Specifically, to implement 19 U.S.C. 1484(j)(2) under which an
importer could make a single entry for a split shipment, it was
proposed to add a new Sec. 141.57 to the Customs Regulations (19 CFR
141.57), in addition to making certain amendments to Sec. 142.21 of
the Customs Regulations (19 CFR 142.21). Also, a minor conforming
change was to be made as well to Sec. 141.51 of the Customs
Regulations (19 CFR 141.51).
By a document published in the Federal Register (67 FR 3135) on
January 23, 2002, the period of time within which public comments could
be submitted in response to the proposed rule was re-opened until
February 14, 2002.
Discussion of Comments
A total of twenty-two commenters responded to the notice of
proposed rulemaking. A description of the issues raised by these
commenters, together with Customs response to these issues is set forth
below.
General Comments on the Proposed Rule
Comment: It is improper for Customs to propose regulations for
split shipments and for unassembled and disassembled entities in two
separate regulation packages.
Customs Response: Although 19 U.S.C. 1484(j)(1) and (j)(2) allow
for the filing of a single entry for shipments which arrive at
different times, sections 1484(j)(1) and 1484(j)(2) ultimately address
two very different situations. As a result, and to minimize confusion
between the two provisions, Customs decided to address each provision
in separate rulemakings.
Comment: The proposed regulations providing for a single entry for
shipments split by the carrier do not reflect an agreement that Customs
reached prior to the enactment of 19 U.S.C. 1484(j)(2) on the manner in
which such split shipments would be regulated.
Customs Response: The legislation supersedes any informal
agreements that Customs and the trade may have made prior to its
enactment. In the proposed rule, Customs endeavored to reflect the
intent of Congress in enacting 19 U.S.C. 1484(j)(2). Customs thoroughly
reviewed the comments that were received in response to the proposed
rule and, in this final rule, has made a number of changes to the
regulations as initially proposed for split shipments.
Comment: The split shipment procedures followed by Customs at Los
Angeles International Airport and at John F. Kennedy Airport in New
York are preferable to those reflected in the proposed rule.
Customs Response: Customs reviewed the split shipment procedures at
these airports. In developing the proposed regulations, Customs
included the most operationally feasible features of the procedures for
handling split shipments at those locations.
Comment: It was asked whether entries of split shipments may be
processed through the Pre-Arrival Processing System (PAPS). The PAPS
system allows electronic entries to be submitted prior to the time a
truck arrives at the United States border.
Customs Response: Customs plans to issue a Federal Register notice
on PAPS shortly and will address this comment then.
Comment: It is contended that, by allowing for a single entry for
merchandise arriving on separate
[[Page 8715]]
conveyances at different times, 19 U.S.C. 1484(j) will enable the
circumvention of laws restricting the importation of softwood lumber.
Customs Response: Customs does not believe that 19 U.S.C.
1484(j)(2) will have an adverse impact on United States lumber
interests; section 1484(j)(2) merely allows an importer to file one
entry to cover a single shipment which is split by the carrier and
which arrives in the United States separately.
Comment: The proposed rule will interfere with the Government's
collection of waterborne commerce statistics, because the ability to
match arriving commodities with the actual transporting vessel will be
compromised. For this reason, it is recommended that vessel shipments
be eliminated from the proposed rule.
Customs Response: This comment appears to address the fact that
statistical information is collected on the CF 7501 entry summary,
which currently can accommodate data pertaining to only one conveyance.
Customs will endeavor to design future information collection systems
which capture more comprehensive data. As 19 U.S.C. 1484(j)(2) is
silent as to the modes of transportation involved, Customs concluded
that the legislation implicitly intended to include within its scope
all modes of transportation. Thus, vessel shipments may not be excluded
from the split shipment rulemaking. However, Customs anticipates that
split shipments should occur infrequently in the vessel environment,
because it is unlikely that oceangoing carriers, most of which have
large cargo capacities, will need to split shipments due to space,
weight or other logistical concerns.
Comment: The proposed split shipments program may compromise the
quality of statistics, particularly with respect to freight charges,
which will be obtained from Customs Form (CF) 7501. As such, Customs
should develop a means of collecting multiple carrier information under
ACE (Automated Commercial Environment). Furthermore, in this same vein,
it is remarked that numerous, albeit unidentified, issues relating to
automation exist in connection with split shipments that warrant
further discussion prior to implementation of final regulations
concerning such shipments.
Customs Response: Customs is aware of the concerns relating to the
collection of statistics under the ACE and will address these issues in
developing and refining the ACE system. In this regard, however, the
collection of statistics under the ACE system as well as any issues
related to automation fall outside the scope of this rulemaking.
Comment: Customs should utilize a new type of entry for handling
split shipments. It is recommended in this context that the importer
enter the entire value of the shipment when the first portion arrives,
and then flag the entry for reconciliation following the arrival of all
portions of the shipment that are covered under the entry.
Customs Response: Customs disagrees. The introduction of a new type
of entry to handle split shipments is unnecessary for the successful
implementation of the split shipment program. Resort to the
reconciliation method for processing split shipments would defeat the
purpose of the legislation, which is to allow the filing of a single
entry for a shipment whose portions arrive separately. Under the
suggested reconciliation approach, a minimum of two entries would have
to be filed--a consumption entry and a reconciliation entry. Of course,
importers who file single entries for shipments which have been split
may flag those entries for reconciliation if the entries have
unresolved issues of the kind which are entitled to be resolved under
the established entry reconciliation program.
Comment: Customs should adopt an alternative procedure under which
it would grant blanket permission to importers to file the entry
summary for an air split shipment in its entirety at the time of the
arrival of the first portion; then allow incremental release for that
portion and all portions that thereafter arrive; followed by the
submission of a final accounting or report by the importer. Any total
quantity variances would be reported through standard reconciliation
procedures.
Customs Response: Customs lacks the operational ability at the
present time to implement the type of procedure described. Also, as
indicated in the response to the previous comment, Customs disagrees
with the general use of the reconciliation procedure as a method for
processing split shipments.
Comment: Customs should eliminate the three-year restriction on the
reuse of air waybill numbers and should allow the unique identifier for
the bill of lading to be composed of six elements rather than two.
Also, Customs should allow the air waybill number to be used as the in-
bond control record for each arrival of a shipment.
Customs Response: These suggestions are outside the scope of this
rulemaking. However, it is noted that Customs in a recently published
rulemaking amended its regulations to allow air waybill numbers to be
reused after one year.
Comment: It is asked whether Customs will post the release of each
part of a split shipment in the Air Automated Manifest System (AMS).
Customs Response: To enable Customs to post release information for
each part of a split shipment, the entry filer will need to inform the
appropriate Customs personnel where the entry is filed in order for
such personnel to make the necessary corrections and manually enter the
relevant information for each arrival in the Air AMS. Customs Office of
Information and Technology (OIT) intends to implement programming
changes so that release information may be posted in the AMS system
automatically.
Comment: A question is posed as to how split shipments would be
processed if they require inspection by the U.S. Department of
Agriculture (USDA).
Customs Response: Split shipments requiring inspection by other
Government agencies will be processed in the same manner as regular
(non-split) shipments that require such inspection.
Comment: The proposed split shipment regulations should provide for
the amendment of certificates of origin that are used in preferential
trade programs so as to eliminate the need to obtain revised
certificates from the importer or producer covering each portion of a
split shipment that arrives.
Customs Response: Customs does not believe this is necessary. Most
certificates of origin are blanket certificates, designed to cover
merchandise appearing on many entries. When a certificate of origin
covering a single entry pertains to merchandise in a shipment which is
split, and separate entries covering different portions of the shipment
are filed (either by choice or because a portion of the shipment
arrives too late to be covered under the split-shipment entry), copies
of the certificate may be made to apply to any additional entries.
General Rule--Amendment of Sec. 141.51
Comment: Given that importers prefer filing a single entry when a
split shipment occurs, Sec. 141.51 should be revised to treat separate
entries in such circumstances as the exception rather than the rule.
Customs Response: Customs disagrees. Allowing an importer to file
one entry for shipments which arrive at different times is an exception
to the longstanding general rule that all merchandise consigned to one
consignee which arrives on one vessel,
[[Page 8716]]
aircraft or vehicle must be included in one entry. The exception carved
out for split shipments is simply one of several exceptions to this
general rule, and applies only to a limited number of entries. The
general rule itself has not been changed as the result of the enactment
of 19 U.S.C. 1484(j).
Definition of Split Shipment--Proposed Sec. 141.57(b)
Comment: Customs should broaden the types of split shipments which
are eligible for single entry treatment. It is advocated, for example,
that the proposed rule cover shipments that are split at the port of
arrival for transportation separately to the port where entry is to be
made. It is stated that this situation can result when merchandise
which arrives in the United States on a single conveyance is split at
the port of arrival into separate portions because an insufficient
number of vehicles are available at the time of arrival to
simultaneously transport the entire shipment to the port where entry is
made.
Customs Response: Customs disagrees. The purpose of 19 U.S.C.
1484(j)(2) is to furnish a mechanism by which one entry may be filed
for a shipment that is split by the original carrier to which the
shipment was delivered at the foreign port for transportation to the
United States. To expand coverage under the law to shipments that are
split after importation into the United States would exceed the purview
of the statute.
Comment: It is a distortion of the intent of the statute to define
a split shipment as being a shipment which is delivered to and accepted
by the carrier as a single shipment under one bill of lading. It is
contended that the definition of a split shipment to this effect fails
to take into account situations in which the importer delivers goods to
the carrier as a single shipment, but the carrier then informs the
importer that the shipment must be carried on several conveyances due
to insufficient cargo space remaining on currently available ships.
Under the proposed rule, such a shipment would not qualify as a split
shipment because it would not have been accepted by the carrier as a
single shipment.
Customs Response: Customs does not believe that the definition of a
split shipment under Sec. 141.57(b) distorts the intent of the
statute. Rather, it is Customs' view that the purpose of 19 U.S.C.
1484(j)(2) is to offer relief to importers whose shipments have been
split by the carrier after the carrier has accepted the shipment with
the importer's understanding that the shipment would be transported on
a single conveyance. Under those circumstances, the importer would have
a realistic expectation that the shipment would arrive at one time and
that the importer would thus be able to file one entry. However, as
described in the comment, the importer would already know prior to
concluding shipping arrangements with the carrier that the shipment
would be transported on different conveyances and would arrive in the
United States at different times.
Comment: The proposed requirement that all portions of a split
shipment arrive within 10 calendar days of the date of arrival of the
first portion does not square with modern shipping realities. The 10
calendar day arrival time should be extended to 30 or 90 days, in order
to more accurately reflect the Congressional intent that split
shipments can occur over a period of time. In the alternative, if the
portions of a split shipment are to be limited to arriving within 10
calendar days of one another, Customs should change 10 calendar days to
10 business days.
Customs Response: Customs believes that the overwhelming majority
of split shipment transactions which may occur may be easily
accommodated within the 10 calendar day period as originally proposed.
Furthermore, the use of a 10 calendar day arrival window affords an
importer sufficient time to file an entry summary within 10 working
days from the time the first portion of the split shipment is released,
given that a 10 working day period will always be longer than a 10
calendar day period.
Comment: A question is raised as to whether there is a limit to the
number of portions into which a carrier may split a master shipment.
Customs Response: There is no limit to the number of portions into
which a carrier may split a shipment.
Comment: The proposed requirement that all conveyances carrying a
split shipment initially arrive at the same port of importation in the
United States should be eliminated because routing merchandise from one
United States port to another is a standard business practice exercised
by carriers.
Customs Response: Customs agrees. Accordingly, proposed Sec.
141.57(b)(3) is revised in this final rule by eliminating the
requirement that all portions of a split shipment arrive at the same
port of importation in the United States. Instead, all portions of the
split shipment must timely arrive at the same port of entry in the
United States, as listed on the original bill of lading. Any portion of
a split shipment that arrives at a different port must be transported
in-bond to the port of destination where entry will be made; and such
in-bond transportation to the port of destination must occur before the
transported merchandise may be released by Customs. In conformance with
this requirement, proposed Sec. Sec. 141.57(d)(1), (d)(2), (e), (i),
(j)(1), and 142.21(g) are appropriately changed in this final rule.
Notice to Customs That Shipment Has Been Split--Proposed Sec.
141.57(c)
Comment: It is asked how the importer would know whether the
carrier has informed Customs of a split shipment.
Customs Response: Under Sec. 141.57(c), it is expressly the
responsibility of the importer, not the carrier, to notify Customs that
the importer's shipment has been split by the carrier. To this end, the
adequacy of communication between the importer and the carrier is a
private matter between those parties.
Comment: Proposed Sec. 141.57(c) should be revised to simply
require that the importer notify Customs of a split shipment prior to
the filing of the entry summary, in recognition that the importer's
knowledge of the circumstances may be limited or nonexistent.
Customs Response: Customs disagrees. Section 141.57(c) requires
that notification be given as soon as the importer becomes aware that
the shipment has been split, but that in all cases such notification
must be made before the entry summary is filed. This requirement is
specifically designed to give an importer maximum flexibility in
informing Customs of the intention to file a single entry for a split
shipment, in recognition of the fact that an importer may learn of a
split shipment at different times.
Comment: Further details are requested concerning the form of the
notification. It is asked whether an electronic message (e-mail) would
be sufficient.
Customs Response: Section 141.57(c) requires that such notification
be given to Customs in writing. To this end, Customs would prefer that
the notice be written on the front of Customs Form (CF) 3461 or that
notice be submitted in the form of a letter if an electronic CF 3461 is
filed. The letter could also be faxed to the applicable port.
Customs is currently incapable of accepting e-mail at all ports.
Provision for electronic notification will be made in the Automated
Commercial Environment (ACE) system.
Comment: Under the current systems for handling split shipments
employed at Los Angeles International Airport and at John F. Kennedy
Airport in New
[[Page 8717]]
York, the carrier is required to include each split portion on the
manifest. Hence, it is asserted that the manifest should constitute the
advance notification to Customs that the shipment has been split. If
the importer does not file a separate entry for each arriving portion,
it should be understood that the importer intends to file a single
entry for the entire split shipment.
Customs Response: Customs disagrees. The advance notice is a
statutory requirement which lets Customs know that the importer has
elected to file a single entry for all portions of the split shipment.
Mere notification that the shipment has been split is not notification
by the importer that a single entry will be filed for the shipment.
Entry or Permit for Immediate Delivery--Proposed Sec. 141.57(d)
Comment: It appears that the immediate delivery procedures for a
split shipment require that the merchandise in the shipment be
delivered to the carrier in the foreign country under one invoice.
However, it is a common business practice for a shipment to contain
merchandise covered by multiple invoices. As long as the merchandise is
tendered to the carrier at the same time, there should be no limitation
on the number of invoices involved.
Customs Response: Customs agrees. Provided the merchandise is
delivered to the carrier as set forth in proposed Sec. 141.57(b)(1),
there should be no limitation on the number of invoices involved.
Paragraphs (d)(1) and (d)(2) of proposed Sec. 141.57 are amended
accordingly in this final rule; and a conforming change to proposed
Sec. 142.21(g) is made as well in this final rule.
Comment: The release procedures in proposed Sec. 141.57(d)(1) and
(d)(2) should allow for one Customs Form (CF) 3461 to be filed and
applied against all portions of the shipment. Then, if any portion of
the shipment still has not arrived within the prescribed 10 day period,
such portion would be deducted from the invoice(s) used on the entry
summary for the shipment, and that portion would then be entered
separately. In the alternative, should Customs determine that adjusted
CF 3461 copies are necessary, it is suggested that Customs allow the
electronic filing of the adjusted CF 3461s.
Customs Response: It is initially noted that under the release
procedure in Sec. 141.57(d)(1), only one CF 3461 will need to be
filed. By contrast, under the procedure in Sec. 141.57(d)(2) which
provides for the separate release of each portion of a split shipment
as it arrives, Customs finds that requiring an adjusted copy of the CF
3461 to be submitted for each portion of the shipment is necessary in
order to afford a mechanism by which the importer and Customs may
easily and effectively keep track of the specific merchandise contained
in any given portion of the shipment. However, Customs agrees that
multiple CF 3461 copies are unnecessary when both the carrier and the
importer are automated. In the case of such automation, adjustments may
be made electronically to show the quantity of merchandise contained in
each portion of the shipment as it arrives. Proposed Sec. 141.57(d)(2)
is thus amended in this final rule to reflect that if both the carrier
and the importer are automated, such adjustments may be made
electronically through the Customs ACS (Automated Commercial System).
Comment: Under the incremental release procedure in proposed Sec.
141.57(d)(2), clarification is needed as to what is meant by the
quantity of merchandise that must be reflected on the adjusted Customs
Form (CF) 3461 that is submitted to Customs upon the arrival of each
portion of a split shipment.
Customs Response: The quantity means the number of pieces, boxes,
cartons, and the like, which are contained in the particular portion of
the split shipment as it arrives, relative to the total number
delivered by the shipper to the foreign carrier. To minimize confusion
in this regard, proposed Sec. 141.57(d)(2) is revised in this final
rule to make clear that the adjusted quantity will reflect the quantity
in that particular portion relative to the quantity contained in the
entire shipment as delivered to and accepted by the carrier in the
exporting country.
Comment: It is contended that 19 U.S.C. 1484(j)(2) represents a
statutory exception to the well established principle that entry may
only be made after merchandise has been imported. As such, instead of
the procedure in proposed Sec. 141.57(d)(2), which requires a special
permit for immediate delivery for portions of a split shipment that are
released incrementally following their arrival, Customs should allow
the entire shipment to be entered at the time that the first portion of
the shipment is imported.
Customs Response: Customs disagrees. Section 1484(j)(2) is not an
exception to the general rule that importation must precede entry.
Rather, the law simply allows one shipment which is split by the
carrier and which arrives in the United States at different times to be
covered under one entry. Previously, each portion would have required a
separate entry. Under section 1484(j)(2), however, importers of
merchandise whose shipments have been split by the carrier may either
continue to file a separate entry for each portion, or they may file a
single entry for all of the portions which arrive within a prescribed
period of time.
Nevertheless, resort to the immediate delivery procedure of Sec.
141.57(d)(2) is only necessary when the importer wishes to file one
entry, but wants each portion to be released as it arrives. Under this
immediate delivery procedure, since the time of entry occurs, not upon
release, but upon the filing of the entry summary, Sec. 141.57(d)(2)
ensures that all portions of the split shipment are imported prior to
the entry being filed. Importers who want to file one entry but who
object to using the immediate delivery procedure in Sec. 141.57(d)(2)
may instead opt to use the procedure in Sec. 141.57(d)(1), under which
one entry may be filed but release of the merchandise is delayed until
all portions of the shipment have arrived.
Necessary Manifest Data to Secure Release of Shipment--Proposed Sec.
141.57(e)
Comment: Further elaboration is requested concerning the process by
which a carrier would make adjustments to the quantity set forth in the
manifest as necessary to secure the incremental release of the shipment
under proposed Sec. 141.57(d)(2). It is specifically asked how such
adjustments would be administered.
Customs Response: Carriers are required under Sec. 141.57(e) to
present manifest information to Customs which reflects exact
information for each portion of a split shipment in order to qualify
the split shipment for incremental release, pursuant to Sec.
141.57(d)(2), as each portion of the shipment arrives. Carriers may
accomplish the presentation of this adjusted manifest information
either on a paper manifest or electronically if both the carrier and
the importer are operational on the Customs Automated Commercial System
(ACS), as noted above.
Filing of Entry Summary for Split Shipment--Proposed Sec. 141.57(g)
Comment: Proposed Sec. 141.57(g)(2)(ii) contains a technical
contradiction in requiring the entry summary to be filed no later than
10 working days after the first cargo release, while in effect not
[[Page 8718]]
allowing summary filing before the arrival of the last portion of the
split shipment which is to be included on the entry.
Customs Response: There is no contradiction. Since all portions of
the shipment must arrive within 10 calendar days of the portion that
arrives first, and the entry summary must be filed under Sec.
141.57(g)(2)(ii) within 10 working days from the date of first release
of a portion of the shipment, there should be sufficient time for all
portions of the split shipment to arrive before the entry summary is
required to be filed. However, should any portions not arrive within 10
calendar days of the portion that arrived first, such late-arriving
portions would need to be separately entered, as prescribed in Sec.
141.57(i).
Separate Entries Required--Proposed Sec. 141.57(i)
Comment: Regarding portions of a shipment that do not arrive within
the required 10 calendar day period, it was asked whether the consignee
or agent would be responsible for paying full duty on the entire
shipment before it is complete.
Customs Response: The importer of record will only be responsible
for paying duty based on the value and/or quantity of merchandise
contained in those portions of the split shipment that arrive within
the required 10 calendar day time frame and are thus included in the
split-shipment entry. As such, when a portion of a split shipment does
not arrive within the prescribed 10 calendar day period, that portion
will not be included on the entry, and thus no duty will yet be due on
that portion. Duty on any delayed portion will become due when the
portion does arrive and a separate entry for that portion is filed.
Comment: Merchandise classifiable under the same subheading of the
Harmonized Tariff Schedule of the United States (HTSUS) may
nevertheless be subject to different rates of duty if the applicable
rate already applied against one portion of a split shipment changes
and the changed rate is thereafter assessed against a second portion.
It is stated in particular that this problem could arise where a change
in the duty rate occurs after any portion of the split shipment is
accepted for transportation in-bond to the port of destination.
Customs Response: Customs agrees. Under 19 CFR 141.69(b), the duty
rate applied to merchandise in any portion of a split shipment that is
transported in-bond to the port of destination would be the duty rate
in effect for such merchandise when Customs accepts the in-bond
transportation entry; merchandise in any other portion of the shipment,
however, would thereafter generally be subject to the rate of duty in
effect at the time of entry pursuant to 19 CFR 141.68(a)(1) or (c), as
applicable. As a result, if merchandise classifiable under the same
subheading of the HTSUS arrives in the United States at different times
as part of a split shipment, a change in the rate of duty that occurs
during this time with respect to such merchandise could result in two
different rates of duty being assessed against the merchandise on the
same split shipment entry.
This would present an administrative/operational problem for
Customs because current Customs systems are incapable of accepting
different duty rates on one entry for merchandise that is classifiable
under the same HTSUS subheading. Hence, a separate entry will be
required for any portion of a split shipment in those rare instances
where necessary to preclude the application of different rates of duty
on a split shipment entry for merchandise that is identically
classifiable under the HTSUS. Proposed Sec. 141.57(i) is changed in
this final rule to add a provision to this effect.
Importer Review of Entry; Evidence of Split Shipment--Proposed Sec.
141.57(j)
Comment: Under proposed Sec. 141.57(j)(1), Customs should rely
primarily upon carriers, rather than importers, to obtain timely and
accurate split shipment information because it is the carriers'
decision to split the shipments in the first place.
Customs Response: Customs disagrees. While it is the case that
shipments are split at the initiative of the carrier, it is the
importer, not the carrier, who elects to file a single entry for all
portions of a split shipment. Since the importer files the entry, it is
properly the responsibility of the importer to ensure that the entry is
correct and that it accurately reflects the actual amount, value,
correct classification and rate of duty of the merchandise covered
under the entry, as required in Sec. 141.57(j)(1).
Comment: It is unnecessary to require in proposed Sec.
141.57(j)(2) that the importer maintain sufficient documentary evidence
to substantiate that the splitting of a shipment was done by the
carrier acting on its own. Importers do not want their shipments to be
split because this causes their shipments to be delayed.
Customs Response: Customs disagrees. Under 19 U.S.C. 1484(j)(2),
the use of the single entry procedure for separate portions of a split
shipment is contingent upon the shipment having been split at the
instruction of the carrier. The importer must therefore maintain
suitable documentary evidence to substantiate that the shipment was
split by the carrier on its own initiative.
Comment: In proposed Sec. 141.57(j)(2), the requirement that an
importer maintain a copy of the originating bill of lading or air
waybill is essentially impossible as carriers by law do not make
documents of this nature available to the importer due to the fact that
such documents contain confidential freight rate information. An
importer should not even be required to obtain a letter from the
carrier as proof that the carrier split the shipment on its own
initiative because carriers would generally not be timely in providing
such letters. It is contended that the carrier should be the party
responsible for keeping records of the shipments which they have chosen
to split.
Customs Response: It is again emphasized that since the importer is
the party who elects to file a single entry covering multiple portions
of a split shipment, it is properly the responsibility of the importer
to substantiate its right to do so. However, Customs agrees that an
importer who elects to file a single entry for a split shipment but who
never receives a copy of the originating bill of lading or air waybill
cannot be required to maintain or produce what he does not receive.
However, Customs does need evidence that the splitting of the shipment
was done at the carrier's initiative. Accordingly, proposed Sec.
141.57(j)(2) is amended in this final rule to provide that the importer
must keep a copy of the originating bill of lading or air waybill or,
in the absence of such document, any other supporting documentary
evidence, such as a letter, from the carrier confirming that the
splitting of the shipment was done by the carrier on its own
initiative. An importer will have to insist that a carrier provide the
necessary documentary evidence.
Denial of Incremental Release; Quota; Other Goods--Proposed Sec.
141.57(k)
Comment: Proposed Sec. 141.57(k)(1) wrongly excludes merchandise
subject to quota and/or visa requirements from the incremental release
procedure in proposed Sec. 141.57(d)(2).
Customs Response: Customs finds that quota and/or visa merchandise
is of such a sensitive nature as to warrant its exclusion from the
incremental release procedure of Sec. 141.57(d)(2). Nevertheless, by
precluding the use of the incremental release procedure in
[[Page 8719]]
Sec. 141.57(d)(2), Customs is not preventing importers of merchandise
subject to quota or visa requirements from availing themselves of the
benefits of the law. Under the procedure in Sec. 141.57(d)(1),
importers may still file a single entry under 19 U.S.C. 1484(j)(2) for
a shipment of quota/visa merchandise which has been split by the
incoming carrier. The procedure in Sec. 141.57(d)(1) provides for the
filing of a single entry after all portions of a split shipment have
arrived. Under this procedure, the portions of the split shipment are
not released incrementally, as each portion arrives, but are held until
all portions have arrived and the single entry covering those portions
has been filed.
Comment: With respect to proposed Sec. 141.57(k)(2), a port
director should not have the unfettered discretion to deny incremental
release under proposed Sec. 141.57(d)(2) as circumstances warrant.
Also, the port director should not have the discretion to deny
incremental release for purposes of examination, as provided in
proposed Sec. 141.57(f). In the alternative, an importer whose
shipment is denied incremental release should be able to appeal such a
denial.
Customs Response: Customs believes that there may be circumstances
under which the incremental release procedure is inappropriate and
should not be allowed. In such circumstances, Customs has the authority
to examine all of the merchandise included on an entry before allowing
the release of any portion of the shipment.
In addition, Customs does not believe that an appeals process for a
denial of incremental release is practicable, for two reasons. First,
most of the portions of a split shipment will have arrived before an
appeals process could be completed. Second, importers who are denied
the use of incremental release under Sec. 141.57(d)(2) for a
particular split shipment are not deprived of the benefit conferred by
the statute, that is, they may still file one entry for portions of a
shipment which arrive separately in accordance with the release
procedure set forth in Sec. 141.57(d)(1).
Additional Change
In addition, proposed Sec. 141.57(e) is clarified in this final
rule to provide that the carrier responsible for splitting a shipment
must notify any other obligated entities (such as another carrier or a
freight forwarder) that have submitted electronic manifest information
to Customs about the shipment that was split so that these parties can
update their manifest information to Customs.
Conclusion
After careful consideration of the comments received and further
review of the matter, Customs has concluded that the proposed
amendments should be adopted with the modifications discussed above.
Regulatory Flexibility Act and Executive Order 12886
This final rule implements the statutory law and engenders cost
savings by reducing paperwork for importers, and by reducing the number
of entries required for split shipments. As such, pursuant to the
provisions of the Regulatory Flexibility Act (5 U.S.C. 601 et seq.), it
is certified that this final rule will not have a significant economic
impact on a substantial number of small entities. Accordingly, it is
not subject to the regulatory analysis or other requirements of 5
U.S.C. 603 and 604. Nor do these final regulations result in a
``significant regulatory action'' under E.O. 12866.
Paperwork Reduction Act
The collections of information encompassed within this final rule
have already been reviewed and approved by the Office of Management and
Budget (OMB) in accordance with the Paperwork Reduction Act of 1995 (44
U.S.C. 3507) and assigned OMB Control Numbers 1515-0065 (Requirement to
make entry unless specifically exempt; Requirement to file entry
summary form); 1515-0167 (Statement processing and Automated
Clearinghouse); 1515-0214 (General recordkeeping and record production
requirements); and 1515-0001 (Transportation manifest; cargo
declaration). This rule does not make any material change to the
existing approved information collections. An agency may not conduct,
and a person is not required to respond to, a collection of information
unless the collection of information displays a valid control number
assigned by OMB.
List of Subjects
19 CFR Part 141
Customs duties and inspection, Entry of merchandise, Release of
merchandise, Reporting and recordkeeping requirements.
19 CFR Part 142
Computer technology, Customs duties and inspection, Entry of
merchandise, Reporting and recordkeeping requirements.
Amendments to the Regulations
Parts 141 and 142, Customs Regulations (19 CFR parts 141 and 142),
are amended as set forth below.
PART 141--ENTRY OF MERCHANDISE
1. The general authority citation for part 141 continues to read as
follows:
Authority: 19 U.S.C. 66, 1448, 1484, 1624.
* * * * *
2. Section 141.51 is revised to read as follows:
Sec. 141.51 Quantity usually required to be in one entry.
All merchandise arriving on one conveyance and consigned to one
consignee must be included on one entry, except as provided in Sec.
141.52. In addition, a shipment of merchandise that arrives by separate
conveyances at the same port of entry in multiple portions, as a split
shipment, may be processed under a single entry, as prescribed in Sec.
141.57.
3. Subpart D of part 141 is amended by adding a new Sec. 141.57 to
read as follows:
Sec. 141.57 Single entry for split shipments.
(a) At election of importer of record. At the election of the
importer of record, Customs may process a split shipment, pursuant to
section 484(j)(2), Tariff Act of 1930 (19 U.S.C. 1484(j)(2)), under a
single entry, as prescribed under the procedures set forth in this
section.
(b) Split shipment defined. A ``split shipment'', for purposes of
this section, means a shipment:
(1) Which may be accommodated on a single conveyance, and which 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 of
record to arrive in the United States as a single shipment;
(2) Which is thereafter divided by the carrier, acting on its own,
into different portions which are transported and consigned to the same
party in the United States; and
(3) Of which the first portion and all succeeding portions arrive
at the same port of entry in the United States, as listed in the
original bill of lading or waybill; and all the succeeding portions
arrive at the port of entry within 10 calendar days of the date of the
first portion. If any portion of the shipment arrives at a different
port, such portion must be transported in-bond to the port of
destination where entry of the shipment is made.
(c) Notification by importer of record. The importer of record must
notify Customs, in writing, that the shipment
[[Page 8720]]
has been split at the carrier's initiative, that the remainder of the
shipment will arrive by subsequent conveyance(s), and that an election
is being made to file a single entry for all portions. The required
notification must be given as soon as the importer of record becomes
aware that the shipment has been split, but in all cases notification
must be made before the entry summary is filed.
(d) Entry or special permit for immediate delivery. In order to
make a single entry for a split shipment or obtain a special permit for
the release of a split shipment under immediate delivery, an importer
of record may follow the procedure prescribed in paragraph (d)(1) or
(d)(2) of this section, as applicable.
(1) Entry or special permit after arrival of entire shipment. An
importer of record may file an entry at such time as all portions of
the split shipment have arrived at the port of entry (see paragraph
(b)(3) of this section). In the alternative, again after the arrival of
all portions of a split shipment at the port of entry, the importer of
record may instead file a special permit for immediate delivery
provided that the merchandise is eligible for such a permit under Sec.
142.21(a)--(f) and (h) of this chapter. In either case, the importer of
record must file Customs Form (CF) 3461 or CF 3461 alternate (CF 3461
ALT) as appropriate, or electronic equivalent, with Customs. The entry
or 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(s) covering the shipment.
(2) Special permit prior to arrival of entire shipment. As provided
in Sec. 142.21(g) of this chapter, an importer of record may also file
a special permit for immediate delivery after the arrival of the first
portion of a split shipment at the port of entry (see paragraph (b)(3)
of this section), but before the arrival of the entire shipment at such
port, thus qualifying the split shipment for incremental release, under
paragraph (e) of this section, as each portion of the shipment arrives
at the port of entry (see paragraph (g)(2)(ii) of this section). In
such case, a CF 3461 or CF 3461 ALT as appropriate, or electronic
equivalent, must be filed with Customs. As each portion arrives at the
port of entry, the importer of record must submit a copy of the CF
3461/CF 3461 ALT, adjusted to reflect the quantity of that particular
portion relative to the quantity contained in the entire split shipment
(see paragraph (b)(1) of this section); however, if both the carrier
and the importer of record are automated, such adjustments may instead
be made electronically through the Customs ACS (Automated Commercial
System). In the event that an entry has been pre-filed with Customs
(see Sec. 142.2(b) of this chapter), notification to Customs by the
importer of record that a single entry will be filed for shipments
released incrementally will serve as a request that the pre-filed entry
be converted to an application for a special permit for immediate
delivery (see Sec. 142.21(g) of this chapter). 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(s) covering the
shipment. Customs may limit the release of each portion of the split
shipment upon arrival at the port of entry, as permitted under this
paragraph, due to the need to examine the merchandise in accordance
with paragraph (f) of this section.
(e) Release. To secure the separate release upon arrival of each
portion of a split shipment at the port of destination under paragraph
(d)(2) of this section, 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. The carrier responsible for
splitting the shipment must notify other obligated entities (such as
another carrier or freight forwarder) that have submitted electronic
manifest information to Customs about the shipment that was split so
that these parties can update their manifest information to Customs.
(f) Examination. Customs may require examination of any or all
parts of the split shipment. For split shipments subject to the
immediate delivery procedure of paragraph (d)(2) of this section,
Customs reserves the right to deny incremental release should such an
examination of the merchandise be necessary. The denial of incremental
release does not preclude the use of the procedures specified in
paragraph (d)(1) of this section.
(g) Entry summary.-- (1) Entry. For merchandise entered under
paragraph (d)(1) of this section, the importer of record must file an
entry summary within 10 working days from the time of entry.
(2) Release for immediate delivery.-- (i) Release under paragraph
(d)(1) of this section. For merchandise released under a special permit
for immediate delivery pursuant to paragraph (d)(1) of this section,
the importer of record must file the entry summary, which serves as
both the entry and the entry summary, within 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 (see Sec. 142.23 of this
chapter).
(ii) Release under paragraph (d)(2) of this section. For
merchandise released under a special permit for immediate delivery
pursuant to paragraph (d)(2) of this section, the importer of record
must file the entry summary, which serves as both the entry and the
entry summary, within 10 working days from the date of the first
release of a portion of the split shipment. The filed entry summary
must reflect all portions of the split shipment which have been
released, to include quantity, value, correct classification and rate
of duty. The entry summary cannot include any portions of the split
shipment which have not been released.
(3) Duty payment. With the entry summary filed under paragraphs
(g)(1) and (g)(2)(i) and (g)(2)(ii) of this section, the importer of
record must attach estimated duties, taxes and fees applicable to the
released merchandise. If the entry summary is filed electronically, the
estimated duties, taxes and fees must be scheduled for payment at such
time pursuant to the Automated Clearinghouse (see Sec. 24.25 of this
chapter).
(h) Classification. For purposes of section 484(j)(2), Tariff Act
of 1930 (19 U.S.C. 1484(j)(2)), the merchandise comprising the separate
portions of a split shipment included on one entry will be classified
as though imported together.
(i) Separate entry required.-- (1) Untimely arrival. The importer
of record must enter separately those portions of a split shipment that
do not arrive at the port of entry within 10 calendar days of the
portion that arrived there first (see paragraph (b)(3) of this
section).
(2) Different rates of duty for identically classified merchandise.
An importer of record will be required to file a separate entry for any
portion of a split shipment if necessary to preclude the application of
different rates of duty on a split shipment entry for merchandise that
is classifiable under the same subheading of the Harmonized Tariff
Schedule of the United States (HTSUS).
(j) Requirement of importer of record to review entry and maintain
evidence substantiating splitting of shipment.-- (1) Review of entry.
The importer of record will be responsible for reviewing the total
manifested quantity shown on the CF 3461/CF 3461 ALT, or electronic
equivalent, in relation to all portions of the split shipment that
arrived at the
[[Page 8721]]
port of entry under paragraph (b)(3) of this section within the
specified 10 calendar day period. At the conclusion of the specified 10
calendar day period, the importer of record must make any adjustments
necessary to reflect the actual amount, value, correct classification
and rate of duty of the merchandise that was released incrementally
under the split shipment procedures. If all portions of the split
shipment do not arrive within the required 10 calendar day period, the
importer of record must file an additional entry or entries as
appropriate to cover any remaining portions of the split shipment that
subsequently arrive (see paragraph (i)(1) of this section).
(2) Evidence for splitting of shipment; recordkeeping. The importer
of record must maintain 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. This 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 or other
supporting documentary evidence, such as a letter from the carrier
confirming that the splitting of the shipment was done by the carrier
on its own initiative. This documentary evidence as well as all other
necessary records received or generated by or on behalf of the importer
of record under this section must be maintained and produced, if
requested, in accordance with part 163 of this chapter.
(k) Single entry limited; exclusions from single entry under
incremental release procedure.
(1) Quota/visa merchandise. Merchandise subject to quota and/or
visa requirements is excluded from incremental release under the
immediate delivery procedure set forth in paragraph (d)(2) of this
section and Sec. 142.21(g) of this chapter. Additionally, if by
splitting a shipment any portion of it is subject to quota, no portion
of the split shipment may be released incrementally.
(2) Other merchandise. In addition, the port director may deny the
use of the incremental release procedure set forth in paragraph (d)(2)
of this section and Sec. 142.21(g) of this chapter, as circumstances
warrant.
(3) Limited single entry available. For merchandise described in
paragraphs (k)(1) and (k)(2) of this section, that is excluded from the
immediate delivery procedure of paragraph (d)(2) of this section and
Sec. 142.21(g) of this chapter, the importer of record may still file
a single entry or special permit for immediate delivery under paragraph
(d)(1) of this section covering the entire split shipment of such
merchandise following, and to the extent of, its arrival within the
required 10 calendar day period.
PART 142--ENTRY PROCESS
1. The authority citation for part 142 continues to read as
follows:
Authority: 19 U.S.C. 66, 1448, 1484, 1624.
2. Section 142.21 is amended as follows:
a. By removing the second sentence in paragraph (e)(1) and adding
in its place two new sentences;
b. By removing the second sentence in paragraph (e)(2) and adding
in its place two new sentences;
c. By redesignating paragraph (g) as paragraph (h) and adding a new
paragraph (g); and
d. By revising newly redesignated paragraph (h).
The additions and revision read as follows:
Sec. 142. 21 Merchandise eligible for special permit for immediate
delivery.
* * * * *
(e) Quota-class merchandise. (1) Tariff rate. * * * However,
merchandise subject to a tariff-rate quota may not be incrementally
released under a special permit for immediate delivery as provided in
paragraph (g) of this section. Where a special permit is authorized, an
entry summary will be properly presented pursuant to Sec. 132.1 of
this chapter within the time specified in Sec. 142.23, or within the
quota period, whichever expires first. * * *
(2) Absolute. * * * However, merchandise subject to an absolute
quota under this paragraph may not be incrementally released under a
special permit for immediate delivery as provided in paragraph (g) of
this section. Where a special permit is authorized, a proper entry
summary must be presented for merchandise so released within the time
specified in Sec. 142.23, or within the quota period, whichever
expires first. * * *
* * * * *
(g) Incremental release of split shipments. Merchandise subject to
Sec. 141.57(d)(2) of this chapter, which is purchased and delivered to
the carrier as a single shipment, but which is shipped by the carrier
in separate portions to the same port of entry as provided in Sec.
141.57(b)(3), may be released incrementally under a special permit.
Incremental release means releasing each portion of such shipments
separately as they arrive.
(h) When authorized by Headquarters. Headquarters may authorize the
release of merchandise under the immediate delivery procedure in
circumstances other than those described in paragraphs (a), (b), (c),
(d), (e), (f) and (g) of this section provided a bond on Customs Form
301 containing the bond conditions set forth in Sec. 113.62 of this
chapter is on file.
3. Section 142.22 is amended by removing the first sentence of
paragraph (a) and adding in its place two sentences to read as follows:
Sec. 142.22 Application for special permit for immediate delivery.
(a) Form. An application for a special permit for immediate
delivery will be made on Customs Form 3461, Form 3461 ALT, or its
electronic equivalent, supported by the documentation provided for in
Sec. 142.3. A commercial invoice will not be required, except for
merchandise released under the provisions of 19 U.S.C. 1484(j). * * *
* * * * *
Robert C. Bonner,
Commissioner of Customs.
Approved: February 19, 2003.
Timothy E. Skud,
Deputy Assistant Secretary of the Treasury.
[FR Doc. 03-4318 Filed 2-24-03; 8:45 am]
BILLING CODE 4820-02-P