Will CBP’s Proposed New Rules for In-Bond Transportation Affect Your Operations?

5 min

In 2011, in-bond shipments represented at least 30% and up to 60% of all imports that moved through U.S. ports. So, regulatory changes affecting these shipments, which were recently proposed by U.S. Customs and Border Protection ("CBP"), will likely impact the operations of many importers and carriers. Careful review of CBP’s February 22nd Notice of Proposed Rulemaking may be in order for your operations.

Under current in-bond transportation regulations, imported merchandise may be entered at one U.S. port of entry – without appraisement or payment of duties – and transported in-bond to another U.S. port, where the goods are officially “entered.” At that point, duties are paid and the goods are entered for consumption or the goods are exported, provided all statutory and regulatory conditions are met. The regulations permit several types of in-bond transportation; the most common of which are: (1) Immediate Transportation (IT), (2) Transportation and Exportation (T&E), and (3) Immediate Exportation (IE).

  • An IT bond allows merchandise, upon its arrival and without payment of duties, to be transported to another U.S. port where the merchandise is then entered and duties are paid.
  • A T&E bond allows merchandise to be entered at a U.S. port for transit through the U.S. to another U.S. port for export without the payment of duties.
  • An IE bond covers goods that have arrived at a U.S. port, which are then immediately exported therefrom without payment of duties.

Key Proposed Changes to In-Bond Rule

In the Notice, CBP has proposed five key changes to the in-bond transportation rules. These changes are intended to enhance CBP’s ability to regulate and track in-bond merchandise. The changes also seek to ensure that in-bond goods are either properly entered with duties paid, or that the goods are promptly exported from the United States. Key aspects of the current and proposed changes follow:

 

Current In-Bond Rule Proposed New Rule
Entry Document Requires the filing of a paper in-bond application (CBP Form 7512) Eliminates the paper in-bond application and requires carriers or their agents to electronically file the in-bond application through a CBP-approved electronic data interchange (EDI)
Information in Entry Document Requires basic description and quantity of merchandise (except for an IT entry which requires a sufficiently detailed description to estimate duties and taxes) Requires additional information on the in-bond application, including the six-digit Harmonized Tariff Schedule number, if available, and information relevant to the safety and security of the in-bond merchandise
Transit Time By truck – 30-day maximum
By air – 15-day maximum
By sea – 60-day maximum
Establishes a 30-day maximum time to transport in-bond merchandise between U.S. ports for all modes of transportation (except pipeline shipments, which will continue to have no time limit)
Diversion of In-bond Cargo Prior application and CBP approval not required Requires carriers to electronically request permission from CBP before diverting the in-bond merchandise from its intended destination to another port
Report of Arrival Requires report of arrival of any portion of the in-bond shipment promptly, but no later than two working days after arrival Requires carriers to report the arrival and specific physical location within the port of the in-bond merchandise within 24 hours of arrival at the port of destination or port of export

These proposed changes are generally not applicable to in-bond procedures for air commerce, with the exception of the time limitation. Other proposed changes to the air commerce regulations will be presented in a separate proposed rulemaking.

Two Additional Important Changes

In addition to the five key proposed changes above, there are two other changes importers and carriers should be aware of which affect the existing IE rules and current options for permissibly sealing conveyances.

Changes to the IE Rules. For shipments arriving at a U.S. port by truck for which an IE entry is presented as the sole means of entry, the new rules would require those shipments be denied a permit to proceed and the trucks turned back. Alternatively, at the discretion of the port director, a truck may be allowed to file new entry. This change is being proposed to ease congestion at certain ports and thwart the use of IE entries to engage in fraudulent activities.

Options to Seal Conveyances. CBP also proposes to clarify the rules concerning the sealing of conveyances. Specifically, the new rules would: (1) require the carrier to seal the containers with seals authorized under the regulations and ensure the seals remain intact; (2) require the carrier to transmit the container seal numbers as part of the in-bond application; (3) provide for the assessment of liquidated damages for the unauthorized removal of the seals; and, (4) specify that only CBP may waive the seal requirement. Note that these additional sealing requirements may likely impact similar requirements under the C-TPAT program and other security-based regulations.

If these changes affect your operations, you may consider filing public comments on or by April 23, 2012. For a full review of these and other proposed changes, please see the Notice of Proposed Rulemaking available here (Link to PDF file hosted by gpo.gov).

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Venable is available to provide further information or to assist in submitting comments. Please contact Lindsay B. Meyer at 202.344.4829 ([email protected]) or Ashley W. Craig at 202.344.4351 ([email protected]) for further information and assistance.