Tuesday, February 13, 2007

CBP Warning Shot

Are you a textile importer? If so Customs and Border Protection is watching you.

CBP recently issued TBT-07-003 which says, effectively, that it is sick of textile importers getting their entries wrong.

Here is the meat of it:

In its review of entry summaries, US Customs and Border Protection (CBP) has found both brokers and importers to have made egregious errors in the reporting of statistical data, such that the entry documents do not correctly reflect the transactions. These errors occur in the reporting of quantity, country of origin, classification, and manufacturer identification number.

To which Customs responds:

This is to advise the trade community that CBP Headquarters will be reviewing entries to identify egregious errors. When errors are identified, the ports will be directed to pursue penalties against brokers and importers, as applicable.

What do we take from this? CBP is letting textile importers know that they better get things right. That means classification, value, country of origin, and other items need t0 be confirmed by the importer. Importers need some procedures to guide compliance personnel through to a conclusion supported by reasonable care.

The problem is that "reasonable care" is difficult to define. In many ways, we know reasonable care when we see it. The legislative history to the Customs Modernization Act focuses on the use of internal and external experts to manage compliance. Generally speaking, your obligation as an importer is to act with the same degree of care as would a reasonable importer in a similar situation.

The easier approach is to identifying what reasonable care is not. Reasonable care is not:

  • Blind reliance on a broker
  • Accepting the supplier at its word for anything
  • Looking at the commercial invoice as the only source for value information
  • Treating the country of shipment as the country of origin
  • Using duty rates as a factor in classification
  • Accepting different treatment of the same merchandise at different ports
  • Guessing at or estimating non-dutiable charges
  • Not following instructions from CBP

Rather, compliance systems need to be created that confirm value, classification, origin, duty preference, intellectual property rights, other agency requirements, and other legal requirements up front. Then, the importer should engage in internal post-entry reviews to confirm that the system is producing correct results.

Commercial enforcement is a growth business for Customs. This notice from CBP is further proof of that. Don't be the next importer who becomes an example of a failure to exercise reasonable care.


Victor said...


Your link to TBT-07-003 does not work. It appears that Customs has removed the file from their website. Interestingly, a quick search of Google’s cache ("TBT-07-003") retrieves an html version of a Microsoft Word document titled "**** INTERNAL USE ONLY ****"

Larry F. said...

Wow, that's interesting. The notice has been removed from the 2007 archive of Textile Book Transmittals.

Look here:


Victor said...


As you properly reported, TBT-07-003 warned the importing community that CBP would pursue penalties against brokers and importers who, by lack of reasonable care, have made “egregious errors in the reporting of… quantity, country of origin, classification, and manufacturer identification number.”

You hit the nail right on the head when you pointed out that reasonable care is hard to define. CBP has posted a memo explaining the retraction of TBT-07-003, citing “a great deal of confusion” over what constitutes an “egregious” error.

vail said...

Hi Larry,
I can agree that reasonable care is also not ... Treating the country of shipment as the country of origin, however, what if the textile goods where imported in the country and duties and sales taxed where paid to this country and now I wanted to re-purchase these goods and export them to the US? Goods were not just in transit, they were rightfully imported already and should be "naturalized" to this country.
This re-seller transaction ought to be between selling country and importing country rather than original manufacturing country. Or is CBP not there yet?