CBP Finalizes DR-CAFTA Regulations, Responds to Comments

CBP also responds to comments submitted in response to the interim final rule.

(See ITT’s Online Archives or 08/19/08 and 06/13/10 news, 08081915 and 08061305, for BP summaries of the June 2008 interim final rule.)

Highlights of CBP Responses to Comments

The following are highlights of CBP’s responses to comments received on its June 2008 interim rule:

Clarification of 4 Year Validity of Certifications for Preference Claims

An importer may make a DR-CAFTA claim based either on a certification or on the importer’s knowledge that the good qualifies as an originating good. If the certification forms the basis for the claim, 19 CFR 10.584(a)(2) requires that the certification be in the possession of the importer at the time the claim is made and not predate the claim by more than four years.

Regarding the four year validity of certifications, CBP states that a certification will not be accepted as a valid basis for a preference claim if it predates the date of the claim by more than four years. However, it may serve as the basis for a new certification that would be acceptable.

CBP adds that the four-year limitation on the validity of a certification will not be a factor in any subsequent verification by CBP of a DR-CAFTA preference claim, assuming that the claim was based on a properly completed and timely certification. For example, if CBP conducts a verification of a DR-CAFTA claim more than four years after the date of the certification upon which the claim was based, the fact that the four-year period has expired at that point will not serve as a basis for CBP to deny the claim. However, this assumes that the certification was valid in all respects at the time the claim for preferential tariff treatment was made to CBP.

Importers Must Exercise Reasonable Care, Which Includes Correcting Claims

CBP says it is the responsibility of the U.S. importer of the goods for which preference is sought to file the appropriate entry with CBP and make the claim for preferential tariff treatment for the goods. In making this claim, the importer is responsible for exercising reasonable care to ensure that the goods are entitled to such treatment.

In response to a comment that importers cannot “certify” a good is eligible for preference or attest to the truthfulness of a certification without conducting an audit of the producer’s books and records, CBP acknowledges that some producers may be reluctant to open their books to importers. However, CBP notes that an importer who has not acted fraudulently but nevertheless made an incorrect claim, is not subject to penalties if the importer promptly and voluntarily makes a corrected declaration and pays any duties owing.

CBP Not Required to Tell Importer When It Asks Governments for Exporter Verification

One commenter asked CBP to amend 19 CFR 10.617 to require that the U.S. importer be notified when a request for a verification is made by CBP to the government of an exporting Party. According to the commenter, advising U.S. importers that such a request has been made will help to ensure that the foreign producer or exporter takes the inquiry seriously and provides the appropriate information without undue delay and confusion.

CBP states that 19 CFR 10.617 implements Article 3.24 of the DR-CAFTA which sets forth detailed procedures for conducting verifications in an exporting DR-CAFTA Party at the request of the importing Party and does not require the notification requested by the commenter. However, CBP notes that 19 CFR 10.585 provides an importer the opportunity to arrange to have an exporter or producer provide to CBP any information relied upon in making a certification.

Transshipment in Regs Not Intended to Mean “Illegal” Transshipment

CBP clarifies that the word “transshipment”, as used in 19 CFR 10.588(b), 10.604, 10.609, and 10.610 is not intended to mean “illegal transshipment,” which is the meaning sometimes associated with the term “transshipment” when used in the context of textile and apparel imports.

Highlights of Changes from Interim Rule

The following are highlights of the final rule’s changes from the interim rule which has been in effect since June 13, 2008:

Addition of Costa Rica. Various provisions were revised to add Costa Rica, as DR-CAFTA entered into force with respect to Costa Rica on January 1, 2009.

Lack of documents and denial of refund. The final rule amends 19 CFR 10.592 on the processing procedures for post-importation duty refund claims in order to add a reference to 19 CFR 10.588, which is on the effect of noncompliance and failure to provide documentation regarding transshipment, in order to clarify that the failure of an importer to satisfy the requirements of 19 CFR 10.588 may be the basis for a denial of a post-importation duty refund claim.

HTS updates for nylon filament yarns. In 19 CFR 10.598, which sets forth the de minimis rules and exceptions, paragraph (c)(1)(ii) has been revised to update four of the HTS subheadings referenced in that paragraph: 5402.10.30, 5402.10.60, 5402.41.10, and 5402.41.90. These subheadings, which encompass nylon filament yarns, were replaced by subheadings 5402.11.30, 5402.11.60, 5402.45.10, and 5402.45.90, respectively on January 4, 2007.

TPL apparel updates. 19 CFR 10.606, concerning the filing of tariff preference level (TPL) claims for certain non-originating apparel goods and 19 CFR 10.607, which sets forth the goods eligible for TPL claims filed under 19 CFR 10.606, have been revised to reflect the addition of the following apparel articles eligible for TPL claims (based on various Presidential Proclamations): (i) cumulation for certain woven apparel goods of a Party; (ii) men’s wool sport coats of Nicaragua; (iii) apparel goods of Costa Rica, not knitted or crocheted; (iv) apparel goods of Costa Rica made from wool fabric; and (v) mastectomy swimsuits of Costa Rica.

Certificate of eligibility. 19 CFR 10.608, concerning the submission of a certificate of eligibility in support of a TPL claim, has been revised to clarify that the certificate is required only in connection with TPL claims for certain qualifying apparel goods from Nicaragua.

Port Director verification. In 19 CFR 10.616, concerning verifications by CBP of DR-CAFTA preference claims, the introductory text of paragraph (a) has been revised to add a reference to 19 CFR 10.591 to clarify that a post-importation duty refund claim may also be subject to a verification by the port director.

¹Also abbreviated as CAFTA-DR.

(D/N USCBP-2008-0060, FR Pub 08/17/10)