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If the invoice value of
your goods is less than $2,000, then you can clear it as an Informal
Entry. If your goods are over $2,000 invoiced value, then you’ll have to
file a Formal Entry.
Even though in theory
you are allowed to fill out all of the pertinent documentation for
Formal Entry yourself, it’s best to hire a customs broker to do it for
you.
Customs Brokers are
licensed by the US Customs and trained to prepare the entries the way US
Customs wants them to be prepared. In other words, US Customs will not
likely assist you much in the process of the preparation of the entry
documents and make sure you have them filled out correctly. Having
mistakes in your paperwork will only delay your entry process and
possibly target all of your future shipments for extra scrutiny if not
delays. The extra expense that hiring a customs broker will entail is
well worth the peace of mind and speedy and professional entry process.
To start the entry
process, you or your broker must have all the documents necessary to
clear the US Customs. If, for example, you are bringing in ‘pillow
cases,’ your shipment must be accompanied by a textile visa. If this
document is missing, you won’t be able to clear US Customs until you or
your broker will procure this document from your shipper or directly
from the trade authority in the country of origin. The waiting process
will result in your shipment being assessed storage charges and thus
inherently increase the landed cost of your goods and diminish your
profit.
If all the documents are
present, then the only other thing you’ll need to be able to start an
entry process is an evidence of a bond being posted.
Typically, you must buy
a bond or your broker will automatically post the bond for you and bill
you for the use of it.
The minimum bond that
must be posted is 2% of the invoice value of your goods or $50,000 bond
minimum.
The bond is required to
assure that damages, if any, duties, taxes, or penalties can be covered
in the event that the importer wouldn’t have the funds.
As part of the entry
process, your broker will fill out many documents, from an Entry
Manifest, Form 7533, to an Entry Summary, Form 7501. If customs agree to
the classifications used in the entry process, they’ll stamp the
documents Passed Customs and you can go ahead and pick up your
goods.
If customs, however,
doesn’t agree with the classifications used by your broker, they’ll send
the paperwork back to your broker for reclassification. This can
constitute further delay in the clearing process which can be made even
more time consuming if customs once again won’t agree to the
classification used based on the invoice description of the goods. Often
in such a case US Customs orders a physical inspection. Another reason,
as already noted above, that may trigger an inspection is when your
invoice and packing list show discrepancies - your invoice is not
corresponding with the packing list.
US Customs inspection
is performed in a bonded warehouse or requires a move to a special
inspection site. In essence, the inspection results in a proper
classification of goods. In any case, the inspection constitutes delays
in the clearing process as well as results in inspection charges being
assessed to be paid by you, the importer; typically those charges are
billed as Move to an Inspection Site and you’ll see it on your broker’s
bill. Often, the inspection process can also entail damages incurred in
the process of the inspection. Customs stipulates that you should pack
in such a way so as to facilitate an inspection. Beware, if damages to
your goods occur during the inspection, you won’t be reimbursed as
Customs is not liable for damages sustained during inspection.
Once the inspection is
completed and/or the customs is satisfied with the Entry Summary
as presented by your broker, a Release Form, stamped Passed
Customs, is issued by the Customs; at this point you can pick up your
goods.
Dutiable Status of Goods
The customs clearing
process, in a nutshell, amounts to clearing the arriving goods under a
certain customs category. For this purpose, US Customs uses the
Harmonized Tariff Schedule, a bible of product categorization or
more properly, product classification.
This publication is
frequently updated and amended. It dissects each and every category of
products into minute details based on product materials, composition,
workmanship and other factors.
For your purposes, as an
importer, you better learn what product category or rather
classification you or your broker will eventually use to clear your
goods through the US Customs and do so before you buy.
In short, you must be
familiar with the classification under which your goods will enter the
United States Customs for the description on your invoice must be
as close to that of the classification from the Harmonized Tariff
Schedule as possible to justify its use/selection.
If so, you will be able
to use such a classification. If Customs decides that yet another
category best fits the product your are importing, they will reclassify
it and it, the new category they chose entails higher duty as oppose to
no duty or lower duty you calculated your landed cost based on, then you
shall diminish your profit as a result of this unexpected
reclassification.
The bottom line is -
before you buy, consult your broker and get his/her input as to the
classification you’ll have to use. Let the broker fill you in on all the
potential problems, special documents needed (textile visa, quota
documentation), if any, as well as any pertinent duties you will have to
pay, if any. This way you’ll have a better idea as to what you’ll face
once you enter the goods through the US Customs.
Marking Requirements on
Goods
All merchandise entering
the United Sates must be clearly marked with a sticker indicating the
country of origin. The protocol is to have all items clearly marked,
thus if you happen to be importing 2,000 pieces of hand carved masks,
each item must have a sticker attached, Made in Indonesia.
Merchandise without
appropriate markings may be ceased or Customs may require that your
broker attaches the sticker for you since you don’t have an access to
the bonded warehouse where your cargo may be waiting to clear the
customs. Such a task will certainly constitute a delay as well an
additional charge from the broker, once again resulting in increased
landed costs. Thus before you give a go ahead for your goods to be
packed at the shipper’s warehouse in the country of origin, make sure
that all of your items are properly marked.
Department of Fish and
Wildlife
Needless to say, you
don’t want to engage in importation of endangered species of any kind.
You can pick up a pamphlet from the US Customs Service as to which
species are currently on the endangered list and thus steer away from
dealing in them.
On the other hand, many
other species products that you may have thought as being perfectly fine
to import still may be so, but provided that you really know what you
are buying.
Please note, all
products that fall into category of species of any kind must be properly
labeled on the invoice with a Latin term.
That includes all sea
shells and bone products. Thus if you’re importing wooden decorative
boxes inlaid with some kind of sea shells, your invoice better shows the
exact Latin name for the species. Same goes for brass bangles inlaid
with bone, a snake skin covered wooden earrings from Indonesia, feather
dusters from Philippines etc.
In short, you better
know your Latin terminology and if you’re not certain that such an such
bone inlay or snake skin earring is not the species you think it is,
then you better not buy it. In Indonesia they may tell you, that the
snake skin you’re looking at to buy is that of a garden snake from Bali
but in fact it may be a skin of an endangered species from Timor or
another island.
If your goods will not
have the proper Latin terms attached, chances are that the Customs will
forward your shipment to the Fish and Wildlife Department for
classification. Often you may be able to get away with them
attaching a quick term to your invoice and nothing will stop you from
receiving your goods. Another time, however, the Fish and Wildlife
Department may want to take a closer look at your goods and not only
that you will experience a delay in receiving your goods, you could also
incur additional inspection and classification charges.
Textiles
When it comes to
textiles in general, there are two things you should be at least aware
of. One is that if you will be importing products such as pillow cases
or blankets, you can not any longer get by clearing customs with just a
paper sticker attached to your items. You will need to have a cloth
label stitched to the items and the label will have to show not only
the country of origin but also give an exact fiber composition of the
product as well as suggested washing instructions. Without these you
will not be able to clear customs.
On the other hand,
should you import items such a ceremonial tapestries, product clearly
used for decorative purposes, perhaps a wall decor, you can get by with
only a paper sticker. Anytime you should be in doubt as to what
treatment your product may be subjected to, you should check with your
broker and the instructions in the Harmonized Tariff Schedule.
Dealing with Customhouse
Brokers
As it’s been already
said, customs brokers are licensed by the US Customs. They all charge
about the same but you should check before you engage them in the entry
process on your behalf.
The two charges that
each and every bill from your broker will contain are the Entry Fee
and the Bond Fee.
The entry fees today run
about $150 - 175 per shipment.
Bond fees are about $75
per a $50,000 bond. As an option you can purchase what’s called a
continuous bond which can be used on a number of shipments being entered
through the US Customs by you in a single calendar year; it may be wise
to buy a continuous bond if you plan on importing several shipment.
Other customary charges
on your broker’s bill will be ABI Processing, the so called
Automated Brokerage Interface charges which permit importers and brokers
to electronically file preliminary entry data in advance of the arrival
of cargo. The charge is but a nominal fee of a few dollars.
You can be also charged
for each classification your broker must use, again a nominal charge of
a few dollars. On the other hand, should you have a great assortment of
goods these charges can add up. Typically, each broker will give 2-3
classifications free of charge and charge you $3-5 for each
additional classification.
Your broker may pay for
the move of your cargo to the customs exam site and bill you.
Communications,
long distance calls, faxes etc. your broker had to make on your behalf
will be also be billed to you accordingly by the broker.
And last, you may also
see messenger fees on your broker’s invoice. Those are typically
charged to your broker by the messengers who carry the finished
paperwork from your broker’s office to the US Customs office and back,
if necessary in the event that your broker must make some changes in the
entry documents.
All in all, the very
minimum charges that services of a broker will cost you amount to
roughly about $200 plus per shipment.
If you have a good
working relationship with your broker, your broker could also pay for
your freight collect charges on shipments that were shipped freight
collect as oppose to pre-paid freight, which is about 15% cheaper.
Your broker could also
pay your duties, if any, and then bill you. This kind of service
provided by your broker can greatly expedite your shipment’s entry
process as compared to the scenario where you would have to make special
trips to pay freight charges and duties first, each time delaying the
clearing process, before your broker could continue and finish the entry
process and you could pick up your goods.
So much for the
introduction into the subject of importing into the United States. For a
more detailed information on the topic, please consider purchasing the
intensive course on Homepage.
Good Luck!
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