The Role of Customs Agencies
The Role of Customs Agencies
When importing goods into any country, a firm must be totally familiar with the governmental customs operations. The primary duties of the U.S. Customs Service, for example, "include the assessment and collection of all duties, taxes, and fees on imported merchandise, the enforcement of customs and related laws, and the administration of certain navigation laws and treaties." As a major enforcement organization, it "combats smuggling and frauds on the revenue and enforces the regulations of numerous other Federal agencies at ports of entry and along the land and sea borders of the United States."12 The importer needs to know how to clear goods, what duties must be paid, and what special laws exist.
On the procedural side, when merchandise reaches the port of entry— Sea-Tac Airport, in the case of Sunset Flowers—the importer needs to file documents with Customs in which a tentative value and tariff classification are assigned to the merchandise. There are over 10,000 different tariff classifications, and approximately 60 percent of them are subject to interpretation; that is, more than one classification could be chosen for a particular piece of merchandise. Then Customs examines the merchandise to determine if there are any restrictions on the import of the items. After the examination, the duty can be paid and the merchandise released. The amount of the duty to be paid depends on the product's country of origin, the type of product, and other factors.13
The broker or other import consultant can help an importer minimize import duties by:
■ Valuing products to qualify for more favorable duty treatment. Different product categories have different duties. For example, finished goods typically have a higher duty than do parts and components.
■ Qualifying for duty refunds through "drawback" provisions. Some exporters use imported parts and components on which they paid an import duty in their manufacturing process. The "drawback" provision allows them to apply for a refund of 99 percent of the duty paid on the imported goods, as long as they are used in the manufacture of goods that are exported.
■ Deferring duties by using bonded warehouses and foreign trade zones. Companies do not have to pay duties on imports stored in bonded warehouses and foreign trade zones until they are removed for sale or use in a manufacturing process. That allows the companies to store the goods but not have to pay the duties right away.
■ Limiting liability by properly marking an import's country of origin. Since governments attach duties on imports based on the nature of the product as well as the country of origin, it is possible to get a lower duty on an import by ensuring that the country of origin of the import is accurate.14
Sometimes goods are imported and immediately exported or assembled into an intermediate or final product and exported. Such action may allow the firm to get a total or partial refund (drawback) of any import duties.
When importing goods into any country, a firm must be totally familiar with the governmental customs operations. The primary duties of the U.S. Customs Service, for example, "include the assessment and collection of all duties, taxes, and fees on imported merchandise, the enforcement of customs and related laws, and the administration of certain navigation laws and treaties." As a major enforcement organization, it "combats smuggling and frauds on the revenue and enforces the regulations of numerous other Federal agencies at ports of entry and along the land and sea borders of the United States."12 The importer needs to know how to clear goods, what duties must be paid, and what special laws exist.
On the procedural side, when merchandise reaches the port of entry— Sea-Tac Airport, in the case of Sunset Flowers—the importer needs to file documents with Customs in which a tentative value and tariff classification are assigned to the merchandise. There are over 10,000 different tariff classifications, and approximately 60 percent of them are subject to interpretation; that is, more than one classification could be chosen for a particular piece of merchandise. Then Customs examines the merchandise to determine if there are any restrictions on the import of the items. After the examination, the duty can be paid and the merchandise released. The amount of the duty to be paid depends on the product's country of origin, the type of product, and other factors.13
The broker or other import consultant can help an importer minimize import duties by:
■ Valuing products to qualify for more favorable duty treatment. Different product categories have different duties. For example, finished goods typically have a higher duty than do parts and components.
■ Qualifying for duty refunds through "drawback" provisions. Some exporters use imported parts and components on which they paid an import duty in their manufacturing process. The "drawback" provision allows them to apply for a refund of 99 percent of the duty paid on the imported goods, as long as they are used in the manufacture of goods that are exported.
■ Deferring duties by using bonded warehouses and foreign trade zones. Companies do not have to pay duties on imports stored in bonded warehouses and foreign trade zones until they are removed for sale or use in a manufacturing process. That allows the companies to store the goods but not have to pay the duties right away.
■ Limiting liability by properly marking an import's country of origin. Since governments attach duties on imports based on the nature of the product as well as the country of origin, it is possible to get a lower duty on an import by ensuring that the country of origin of the import is accurate.14
Sometimes goods are imported and immediately exported or assembled into an intermediate or final product and exported. Such action may allow the firm to get a total or partial refund (drawback) of any import duties.
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