Modification of the National Customs Automation Program (NCAP) Test Regarding Reconciliation for Filing Post-Importation Claims Arising Under the Agreement Between the United States of America, the United Mexican States, and Canada (USMCA)
| Citation | 85 FR 39576 |
| Record Number | 2020-14200 |
| Published date | 01 July 2020 |
| Section | Notices |
| Court | Homeland Security Department,U.s. Customs And Border Protection |
Federal Register, Volume 85 Issue 127 (Wednesday, July 1, 2020)
[Federal Register Volume 85, Number 127 (Wednesday, July 1, 2020)]
[Notices]
[Pages 39576-39579]
From the Federal Register Online via the Government Publishing Office [www.gpo.gov]
[FR Doc No: 2020-14200]
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DEPARTMENT OF HOMELAND SECURITY
U.S. Customs and Border Protection
Modification of the National Customs Automation Program (NCAP)
Test Regarding Reconciliation for Filing Post-Importation Claims
Arising Under the Agreement Between the United States of America, the
United Mexican States, and Canada (USMCA)
AGENCY: U.S. Customs and Border Protection, Department of Homeland
Security.
ACTION: General notice.
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SUMMARY: This document announces a modification to the Automated
Commercial Environment (ACE) National Customs Automation Program (NCAP)
reconciliation prototype test to include the flagging for filing of
post-importation preferential treatment claims arising under the
Agreement Between the United States of America, the United Mexican
States, and Canada (the USMCA) as implemented pursuant to the United
States-Mexico-Canada Agreement Implementation Act (the USMCA Act).
Importers may file USMCA post-importation claims for refunds of certain
duties assessed on merchandise that both qualifies for preferential
tariff treatment under the USMCA and was entered for consumption, or
withdrawn from warehouse for consumption, on or after July 1, 2020.
Unless and until the USMCA Act is subsequently amended, refunds for
merchandise processing fees (MPF) are excluded from USMCA post-
importation claims. Except to the extent expressly announced or
modified by this document, all aspects, rules, terms and conditions
announced in previously published Federal Register notices regarding
the test remain in effect.
DATES: The test is modified to allow reconciliation of post-importation
preferential tariff treatment claims to be filed on or after July 1,
2020, for refunds of certain duties assessed on merchandise that both
qualifies for preferential tariff treatment under the USMCA and was
entered for consumption, or withdrawn from warehouse for consumption,
on or after July 1, 2020.
ADDRESSES: Comments concerning the reconciliation prototype test may be
submitted via email to Randy Mitchell, Director, Commercial Operations,
Revenue & Entry (CORE) Division, Office of Trade, U.S. Customs and
Border Protection at [email protected]hs.gov, with a subject line
identifier reading, ``Modification of Reconciliation Test-USMCA''.
FOR FURTHER INFORMATION CONTACT: For policy-related questions, contact
Randy Mitchell, Director, Commercial Operations, Revenue & Entry (CORE)
Division, Office of Trade, U.S. Customs and Border Protection, at (202)
325-6532 or via email at [email protected], with a subject line
identifier reading ``Modification of Reconciliation Test-USMCA''. For
technical questions related to ACE or Automated Broker Interface (ABI)
transmissions, contact your assigned client representative. Interested
parties without an assigned client representative should direct their
questions to Tonya Perez, Director, Client Services Division, Office of
Trade, U.S. Customs and Border Protection, at (571) 421-7477 or via
email at [email protected].
SUPPLEMENTARY INFORMATION:
Background
This document announces a modification to U.S. Customs and Border
Protection's (CBP's) Automated Commercial Environment (ACE)
reconciliation prototype test (hereinafter ``reconciliation test'') by
adding the processing of post-importation claims arising under the
United States-Mexico-Canada Agreement Implementation Act (the USMCA
Act), Public Law 116-113, 134 Stat. 11 (January 29, 2020) (19 U.S.C.
chapter 29), to permit an importer, who did not claim preferential
tariff treatment at the time of importation, to file a claim, at any
time within one year after the date of importation of qualifying
merchandise, to receive a refund of certain excess duties paid on that
merchandise at the time of importation. As is further explained below,
although the USMCA eliminates the assessment of the merchandise
processing fee (MPF) on qualifying goods from Canada and Mexico, the
USMCA Act excluded the refund of MPF under 19 U.S.C. 1520(d) post-
importation claims for USMCA preferential treatment.
Purpose of the Reconciliation Test
Reconciliation, a planned component of the National Customs
Automation Program (NCAP), is provided for in Title VI (Subtitle B) of
the North American Free Trade Agreement Implementation Act (the NAFTA
Implementation Act; Pub. L. 103-182, 107 Stat. 2057 (December 8, 1993))
(19 U.S.C. 1411).
Section 637 of the Customs Modernization Act amended section 484 of
the Tariff Act of 1930 to establish a
[[Page 39577]]
new section (b), entitled ``Reconciliation'', and a planned component
of the NCAP. (19 U.S.C. 1484(b)). Reconciliation is the process that
allows an importer, at the time an entry summary is filed, to identify
indeterminable information (other than that affecting admissibility) to
CBP and to provide that outstanding information at a later date. The
importer identifies the outstanding information by means of an
electronic ``flag'' which is placed on the entry summary at the time
the entry summary is filed and payment of the applicable estimated
duties is deposited.
Section 101.9(b) of title 19 of the Code of Federal Regulations (19
CFR 101.9(b)) provides for the testing of NCAP components. See T.D. 95-
21, 60 FR 14211 (March 16, 1995). The NCAP reconciliation test was
announced in a general notice document published in the Federal
Register (63 FR 6257) on February 6, 1998. Clarifications and
operational changes were announced in subsequent Federal Register
notices: 63 FR 44303 (August 18, 1998); 64 FR 39187 (July 21, 1999); 64
FR 73121 (December 29, 1999); 66 FR 14619 (March 13, 2001); 67 FR 61200
(September 27, 2002) (with a correction document published at 67 FR
68238 (November 8, 2002)); 69 FR 53730 (September 2, 2004); 70 FR 1730
(January 10, 2005); 70 FR 46882 (August 11, 2005); and 71 FR 37596
(June 30, 2006). On September 13, 2000, CBP extended the test
indefinitely in a notice published in the Federal Register (65 FR
55326). On July 23, 2016, the NCAP test regarding reconciliation
transitioned from the Automated Commercial System (ACS) to ACE. (83 FR
2645). This document announces a modification to the reconciliation
test to expand reconciliation to include post-importation preferential
tariff treatment claims arising under the USMCA Act, which is permitted
under 19 U.S.C. 1520(d). Aside from this modification, the test remains
as set forth in the previously published Federal Register notices.
Reconciliation Generally
Reconciliation is the process that allows an importer, at the time
an entry summary is filed, to identify undeterminable information
(other than that affecting admissibility) to CBP and to provide that
outstanding information at a later date. The importer identifies the
outstanding information by means of an electronic ``flag'' which is
placed on the entry summary at the time the entry summary is filed and
payment of the applicable estimated duties is deposited.
The flagged entry summary (the underlying entry summary) is
liquidated by CBP for all aspects of the entry except those issues that
were flagged. Upon liquidation of an underlying entry summary, any
decision by CBP entering into that liquidation, e.g., classification,
may be protested pursuant to 19 U.S.C. 1514. The means of providing the
outstanding information flagged on the underlying entry summary to be
reconciled is through the filing of a reconciliation entry. A
reconciliation entry is treated as an entry for purposes of
liquidation, reliquidation, and protest.
When the outstanding information, e.g., value as determined by the
actual costs, is later furnished in the reconciliation entry, CBP will
liquidate the reconciliation entry as to the flagged issues. Any
adjustments in duties owed will be made at that time. (See February 6,
1998 Federal Register notice (63 FR 6257) for a more detailed
presentation of the basic reconciliation process.) The liquidation of
the reconciliation entry will be posted in the same manner and place as
the notices of liquidation of other entries. Liquidation of a
reconciliation entry may be protested pursuant to 19 U.S.C. 1514, but
the protest may only pertain to the issue(s) flagged for and contained
in the reconciliation entry (i.e., the protest may not address issues
previously liquidated on the underlying entry summary).
Previously published Federal Register notices have set forth that
the issues for which an entry summary may be ``flagged'' (for the
purpose of later reconciliation) are limited and relate to: (1) Value
issues other than claims based on latent manufacturing defects; (2)
classification issues, on a limited basis; (3) issues concerning value
aspects of entries filed under heading 9802, Harmonized Tariff Schedule
of the United States (HTSUS) (9802 issues); and (4) issues concerning
post-importation claims, under 19 U.S.C. 1520(d), for preferential
tariff treatment for merchandise entered under the acts implementing
the North American Free Trade Agreement (NAFTA), the United States-
Chile Free Trade Agreement, the Dominican Republic-Central America-
United States Free Trade Agreement, the United States-Oman Free Trade
Agreement, the United States-Peru Trade Promotion Agreement, the United
States-Korea Free Trade Agreement, the United States-Colombia Trade
Promotion Agreement, and the United States-Panama Trade Promotion
Agreement.
The filing of a reconciliation entry, like the filing of a regular
consumption entry, is governed by 19 U.S.C. 1484 and can be done only
by an importer of record, who is required to exercise reasonable care
in filing the underlying entry summary, flagging issues for later
reconciliation, and filing the reconciliation entry. Importers are also
reminded of the distinction between prior disclosure and
reconciliation. A prior disclosure exists when a person discloses the
circumstances of a violation of 19 U.S.C. 1592 pursuant to CBP
regulations. The person disclosing this information must do so before,
or without knowledge of, the commencement of a formal investigation of
that violation. Under reconciliation, the importer is not disclosing a
violation, but rather identifying information which is indeterminable
and will be provided at a later time when the reconciliation entry is
filed.
Modification of the Reconciliation Test
The Agreement Between the United States of America, the United
Mexican States, and Canada (the USMCA) was entered into by the
governments of the United States of America (United States), the United
Mexican States (Mexico), and Canada on November 30, 2018. The USMCA was
signed on December 10, 2019, and ratified by all three countries, with
final ratification on April 24, 2020. The USMCA covers all merchandise
entered for consumption, or withdrawn from warehouse for consumption,
on or after July 1, 2020.
Section 103 of the USMCA Act authorizes the President to proclaim
the tariff modifications and to promulgate the regulations for
preferential tariff treatment and other customs related provisions of
the USMCA. This notice announces that a post-importation claim under 19
U.S.C. 1520(d) for preferential tariff treatment pursuant to the USMCA
may be made under the reconciliation test, but without a refund of
merchandise processing fees (MPF) at this time.
1. Use of Current FTA Flag for USMCA Post-Importation Claims
Importers that file an entry for USMCA preferential treatment under
the reconciliation test must use the existing Free Trade Agreement
(FTA) flag, as authorized in this notice.
Section 205(a) of the USMCA Act provides for the reliquidation of
entries. The USMCA Act repealed the NAFTA Implementation Act. Section
205(a) of the USMCA Act amends section 520(d) of the Tariff Act of 1930
(19 U.S.C. 1520(d)) by removing the reference to ``section 202 North
American Free
[[Page 39578]]
Trade Agreement Implementation Act'' and replacing it with ``section
202 of the United States-Mexico-Canada Agreement Implementation Act
(except with respect to any merchandise processing fees)''.
Additionally, Section 205(a) amends the certification of origin
requirement in 19 U.S.C. 1520(d) by removing ``(2) copies of all
applicable NAFTA Certificates of Origin (as defined in section
1508(b)(1) of this title), or other certificates or certifications of
origin, as the case may be; and'' and replacing it with ``(2) copies of
all applicable certificates or certifications of origin; and''.
Accordingly, Section 205 of the USMCA Act effectively replaces
reliquidation of entries under NAFTA with the reliquidation of entries
under the USMCA, eliminates the refund of MPF under USMCA post-
importation preferential treatment claims, and replaces the requirement
to submit a NAFTA certificate of origin with the requirement to submit
any applicable certificate or certification of origin as part of a
post-importation preferential treatment claim (as discussed in Section
204 of the USMCA Act). Consistent with Section 205 of the USMCA Act,
the importer must make a post-importation preference claim pursuant to
19 U.S.C. 1520(d), within one year from the date of importation. Post-
importation claims for reconciliation are made electronically in ACE
and must include the following:
(1) A declaration stating that the good qualified as an originating
good at the time of importation and the number and date of the entry or
entries covering the good (this is provided as part of the electronic
submission of the claim containing the special program indicator for
the USMCA);
(2) A statement indicating whether the entry summary or equivalent
documentation was provided to any other person; and
(3) A statement indicating whether a protest, petition, or request
for re-liquidation has been filed relating to the good and
identification of such filing(s).
Claims for preferential treatment under the USMCA may be made as of
July 1, 2020. CBP is publishing an interim final rule (IFR) in the
Federal Register (CBP Dec. 20-11) amending part 181 and adding a new
part 182 containing several USMCA provisions, including an appendix
that contains the trilaterally negotiated and agreed upon Uniform
Regulations Regarding the Interpretation, Application, and
Administration of Chapter 4 (Rules of Origin) and Related Provisions in
Chapter 6 (Textile and Apparel Goods) (Uniform Regulations regarding
rules of origin) (Appendix A to part 182).
In addition to the IFR, persons intending to make USMCA preference
claims as of July 1, 2020, may refer to the CBP website at https://www.cbp.gov/trade/priority-issues/trade-agreements/free-trade-agreements/USMCA for further guidance (including the U.S. USMCA
Implementing Instructions). The United States International Trade
Commission has also modified the HTSUS to add a new General Note 11,
incorporating the USMCA rules of origin for claiming preferential
treatment and providing for the special program indicators ``S or S+''
for the USMCA in the HTSUS ``special'' rate of duty subcolumn.\1\ For
ACE, please note that CBP will update the information on USMCA post-
importation claims submitted via reconciliation in the Reconciliation
Entry Summary Create/Update chapter of the CBP and Trade Automated
Interface Requirements (CATAIR) posted on https://www.cbp.gov/trade/ace/catair.
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\1\ The S+ indicator is used for certain agricultural goods and
textile tariff preference levels (TPLs).
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2. Entry Into Force of USMCA and Import Eligibility for Reconciliation
Section 205(a) of the USMCA Act further provides that these
amendments (replacement of NAFTA preference from 19 U.S.C. 1520(d) with
USMCA preference) will take place on the date on which the USMCA enters
into force on July 1, 2020. Therefore, importers may file USMCA post-
importation claims for refunds of certain duties assessed on
merchandise that both qualifies for preferential tariff treatment under
the USMCA and was entered for consumption, or withdrawn from warehouse
for consumption, on or after July 1, 2020.
This notice does not modify the current reconciliation test, which
waive the requirement to file a certification of origin for post-
importation claims, under 19 U.S.C. 1520(d), for preferential tariff
treatment for merchandise qualifying under the other agreements covered
by the FTA flag. For reconciliation entries making a post-importation
claim, under 19 U.S.C. 1520(d), for preferential tariff treatment for
qualifying merchandise entered under the USMCA, a certification of
origin is not required to be presented at the time of filing the
reconciliation entry, but must be in the importer's possession at that
time and must be presented if requested by CBP. The failure to present
the certification of origin when requested by CBP may result in the
denial of the post-importation claim for preferential tariff treatment
under the USMCA, the reliquidation of the reconciliation entry, and/or
administrative and judicial sanctions including, but not limited to,
liquidated damages and recordkeeping or other penalties and may be
considered misconduct under the rules, terms and conditions of this
test.
Importers filing a reconciliation entry making a USMCA post-
importation claim for preferential tariff treatment for a covered
vehicle, as defined in the Appendix to Annex 4-B of Chapter 4 of the
USMCA, are reminded that the following certifications must be filed
with CBP in order to receive preferential tariff treatment: (1) A
certification providing that the labor value content requirements are
met; and, (2) a certification that the steel and aluminum content
requirements are met. These certifications are not filed with the
reconciliation entry, but would be separately submitted; and, this
notice does not waive any requirements related to these certifications
for purposes of the reconciliation test.
3. Transition From NAFTA Treatment-Reliquidation
Section 205 provides for a transition from NAFTA treatment.
Consistent with this section, the amendments to 19 U.S.C. 1520(d), as
discussed above, do not apply in the case of a good entered for
consumption, or withdrawn from warehouse for consumption, before the
date in which the USMCA enters into force, which is July 1, 2020. This
section further provides that the section 1520(d), as it is in effect
(on June 30, 2020) will apply, and shall continue to apply on or after
that date with respect to the good. Therefore, importers may submit
post-importation claims for NAFTA preference only for those goods
entered for consumption, or withdrawn from warehouse for consumption,
prior to July 1, 2020. Since importers may file post-importation claims
at any time within one year after the date of importation, no post-
importation claims for NAFTA preference will be accepted after June 30,
2021.
4. Ineligibility for Post-Importation Refunds of Merchandise Processing
Fees
Section 203 of the USMCA Act, which amends Section 13031(b)(10) of
the Omnibus Budget Reconciliation Act of 1985 (19 U.S.C. 58c(b)(10)),
eliminates the refund of merchandise processing fees (MPF) for USMCA
post-importation claims. That section also disallows the use of the
Customs User Fee Account to refund MPF. Accordingly, not only are
refunds of MPF not allowed, but there is also no mechanism available
for CBP
[[Page 39579]]
to refund MPF for goods that qualify for preferential treatment under
the USMCA. Importers may, however, wish to flag USMCA entries for the
possibility of MPF refunds for a post-importation USMCA claim, as CBP
will provide for refunds consistent with any legislative changes to 19
U.S.C. 1520(d). Importers are reminded that FTA reconciliation entries
must be filed within 12 months of the earliest import date and that the
FTA flag expires after 12 months.
Dated: June 26, 2020.
Brenda B. Smith,
Executive Assistant Commissioner, Office of Trade.
[FR Doc. 2020-14200 Filed 6-30-20; 8:45 am]
BILLING CODE 9111-14-P
