Best PracticesCBP

Band-Aid or Stitches? What’s Your Compliance Approach?

posted by Jennifer Diaz September 27, 2012 4 Comments

When you get a deep cut, do you simply put on a band-aid or do you go to the hospital to get stitches that you really need? Stitches take time and are more costly – but, your bleeding will stop and your cut is less likely to re-open. With a band-aid – you’re likely to re-open your wound and/or get an infection. You get stitches if you know what’s good for you! 

Compliance is similar in that there may be a quick fix for the current issue; however, if you don’t stop the bleeding and get stitches, you will be in trouble in the long-run, and the bleeding won’t stop.

On a daily basis, different companies call me to discuss issues they are having with U.S. Customs and Border Protection (CBP). For instance, today, a company called me discussing a CBP 28 – Request for Information, and thereafter a CBP 29 – Notice of Action received from CBP. The issue was an underlying classification issue. Bottom line, they had never done any Pre-Compliance on the Harmonized Tariff Schedule’s (HTS) they were using for their imported merchandise. They said the infamous line – that’s why I hired a broker. Important to note that this just does not cut it with CBP.

CBP publishes really great Informed Compliance Publications for Importers – too few importers have read them, and too small a percentage of importers know they exist. For new importers, CBP has a great resource titled Basic Importing and Exporting. Included within these vast resources is a guide titled Importing into the U.S.: A Guide for Commercial Importers. This 211 page guide can save you hundreds of thousands of dollars if you review it, and/or hire the right expert to explain it to you and walk you through it. There is a "Reasonable Care Checklist" in this Guide, and I urge you to review it as soon as possible. If you do not know the answers, then it’s time to start asking the right questions and hiring the right experts to help you.

CBP expects importers to use "reasonable care" in reporting your HTS, value, country of origin, free trade agreement preference, etc. This is a subjective standard; however, all of the questions in the checklist provide a rough overview to get you started. You may still want to ask an expert to make sure you’re on the right track and have the right Pre-Compliance standards in place. Actually, Question #1 is whether or not you have retained an expert (lawyer, customs broker, accountant, or customs consultant) to assist you in complying with CBP requirements. If this answer is no, and you want to import, you need to get an expert, or the penalties for non-compliance can be severe. 19 U.S.C. 1592 is the statute CBP references when issuing penalties for negligence, gross negligence or fraud – depending on the degree of culpability CBP believes you had at the time of your non-compliance.

What’s the bottom line? You can try to put a band aid on your responses to CBP’s 28, and CBP’s 29, and thereafter file a Protest for your current issue; however, until you audit your current practices, the bleeding won’t stop. You can expect more CBP 28’s and 29’s until you have your Pre-Compliance plan in place, and that likely means duties or severe penalties will be owed to CBP by your company.

When you’re ready to spend the time and energy on the Pre-compliance you need, I can help you, so call me and I’ll make sure you are on the right track to protecting yourself and your company.

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