There are a number of duty savings strategies companies can use to conserve cash, lower customs duties and tariffs, and seek refunds. These strategies are always a high priority for businesses involved in international trade, but particularly so during this difficult period.
This is the fifth in ST&R’s series of articles examining these strategies in more detail and covers the use of Section 321 duty exemptions. Previous articles addressed the first sale rule, transfer pricing, duty refunds, and downward price adjustments.
U.S. customs laws and regulations provide for a duty exemption for goods manifested at less than $800 fair retail value in the country of shipment if imported by one person on one day (so-called Section 321 shipments). This exemption applies to not only base MFN tariffs but also section 301 tariffs such as those currently in place against imports from China. Use of this exemption has skyrocketed alongside the growth of direct-to-consumer (B2C) e-commerce, which has further accelerated as more consumers shop from home due to the COVID-19 pandemic.
In addition, an ongoing U.S. Customs and Border Protection test is yielding faster clearances for Section 321 shipments, which means fewer delays and lower costs. This test allows such shipments (including those subject to partner government agency data requirements) to be entered via a new informal entry type 86 in the Automated Commercial Environment. Using this method, shipments can be cleared quicker than it may typically take for clearance via manifest.
While Section 321 shipments thus offer an opportunity to lower tariffs and other costs, in assessing this opportunity companies should carefully consider the accuracy of the information provided for such shipments to avoid cargo holds and possibly seizures due to PGA or intellectual property compliance issues. Companies should also be aware that CBP continues to consider the transmission of additional data elements, by different entities at different times throughout the supply chain, for Section 321 goods in advance of their arrival. This could eventually lead to changes in the Section 321 data submission requirements.
For more information on using the Section 321 duty exemption, please contact Lenny Feldman at (305) 894-1011.
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