by M. Sigmund Shapiro
May 1, 2000
The recent Treasury Decision 00-20 issued by Customs, regarding
the declaration of freight amounts on Customs entries, points up the
futility of over-regulation, as well as the public’s apprehension
about Customs’ definition of “reasonable care”.
The directive would seem to compel brokers and importers to
submit a written statement on each entry when the freight amount is
unknown. So much for paperless documentation! Even more ridiculous
is the requirement that a subsequent statement be given to Customs
if the information cannot later be obtained. Customs headquarters is
pleading with the trade community not submit reams of paper at each
port of entry. But importers may have no alternative unless Customs
simplifies compliance.
In the meantime, foreign shippers are being innovative. Recently,
a shipper created an FOB invoice to his customer. But the terms of
the shipment were really DDP. To get around it, the shipper had a
freight forwarder arrange a “route code” movement, and instruct the
U.S. Customs broker to bill the forwarder for duty and charges. The
forwarder then billed the shipper for everything.
Years ago, CIF shipments were simple. Sellers had to show on the
Customs or commercial invoice, the charges included in the CIF
price. Customs took this information at face value, as they normally
did at the time. Absent any suspicion of fraud, the importers simply
deducted those non-dutiable charges at time of entry. It was
simplicity itself. It could work again.
The problem, of course is the new Ocean Shipping Reform Act which
permits confidential agreements. Shippers don’t want to reveal their
arrangements. But, with parties other than sellers offering rates,
it’s virtually impossible to determine who benefits from the markup.
And besides, with duty rates so low, it hardly matters in revenue
collection by the government.
It’s to be hoped that this confusion will finally convince
importers that FOB purchases are preferable, and cheaper in the long
run. But, in the meantime, Customs owes it to itself and to the
public to rewrite Treasury Decision 00-20 to make it workable.
