CBP's Interim Rule on the U.S.-Chile FTA (Part VI (Final) - Highlights of Penalties and Goods Returned After Repair or Alteration)

CBP states that comments on this interim rule must be received by June 6, 2005.

This is Part VI, the final part of a multi-part series of summaries on this interim rule, and "highlights" Penalties (19 CFR 10.480 - 19 CFR 10.483) and Goods Returned After Repair or Alteration (19 CFR 10.490) in new Subpart H ('U.S.-Chile Free Trade Agreement').

(See ITT's Online Archives or 03/08/05, 03/09/05, 03/10/05, 03/11/05, and 03/14/05 news, 05030805, 05030905, 05031005, 05031110, and 05031425, for Parts I-V.)

Penalties May Be Imposed for Violations Relating to US-CFTA

New 19 CFR 10.480 states that except as otherwise provided in Subpart H, all criminal, civil or administrative penalties which may be imposed on U.S. importers, exporters and producers for violations of the customs and related laws and regulations will also apply to U.S. importers, exporters and producers for violations of the laws and regulations relating to the US-CFTA.

Voluntary correction of declaration by importer. According to new 19 CFR 10.481, a U.S. importer who makes a corrected declaration under new 19 CFR 10.410(b) will not be subject to civil or administrative penalties for having made an incorrect declaration, provided that the corrected declaration was voluntarily made.

Voluntary correction of certification of origin by exporter or producer. New 19 CFR 10.482 indicates that civil or administrative penalties provided for under the U.S. customs laws and regulations will not be imposed on an exporter or producer in the U.S. who voluntarily provides written notification pursuant to new 19 CFR 10.430(b) with respect to the making of an incorrect certification.

Framework for correcting declarations and certifications. New 19 CFR 10.483(a) states that for purposes of Subpart H, the making of a corrected declaration or the providing of written notification of an incorrect certification will be deemed to have been done voluntarily if a number of conditions are met.

These conditions include that such a correction is done before the commencement of a formal investigation, etc. and such correction is accompanied by a written statement containing certain specified information, and in the case of a corrected declaration, accompanied or followed by a tender of any actual loss of duties and merchandise processing fees, if applicable.

However, new 19 CFR 10.483(b) indicates that a person who acted fraudulently in making an incorrect declaration or certification may not make a voluntary correction.

Furthermore, new 19 CFR 10.483(f) states that where a person fails to meet the requirements of 19 CFR 10.483 because the correction is not considered to be done voluntarily, that person may nevertheless qualify for prior disclosure treatment under 19 USC 1592(c)(4) and 19 CFR 162.74. (See interim rule for further details.)

Goods Returned After "Repair or Alteration" Are Eligible for US-CFTA Duty-Free Treatment

New 19 CFR 10.490(a) states that goods returned after having been repaired or altered in Chile, whether or not pursuant to a warranty, are eligible for duty-free treatment under HTS 9802.00.40 or 9802.00.50, provided that the requirements of 19 CFR 10.490 are met.

For purposes of 19 CFR 10.490, "repairs or alterations" means restoration, addition, renovation, re-dyeing, cleaning, re-sterilizing, or other treatment which does not destroy the essential characteristics of, or create a new or commercially different good from, the good exported from the U.S.

However, new 19 CFR 10.490(b) indicates that US-CFTA duty-free treatment will not apply to goods which, in their condition as exported from the U.S. to Chile, are incomplete for their intended use and for which the processing operation performed in Chile constitutes an operation that is performed as a matter of course in the preparation or manufacture of finished goods.

BP has previously referred to the US-CFTA as the UCFTA or CFTA.

CBP interim rule (CBP Dec. 05-07, FR Pub 03/07/05) available at http://a257.g.akamaitech.net/7/257/2422/01jan20051800/edocket.access.gpo.gov/2005/pdf/05-4156.pdf