cargo damage, cargo claims, C-TPAT/CTPAT, customs law,

 
cargo damage, cargo claims, C-TPAT/CTPAT, customs law,
cargo damage, cargo claims, C-TPAT/CTPAT, customs law,

CUSTOMS AND INTERNATIONAL TRADE

AUDITS

CAT AUDIT MATERIALITY DEFINED
4/98

Another area of fruitful disagreement between importers and Customs has been when does an erRodriguez O’Donnell become material rather than something clerical in nature? Customs has now issued information to its personnel about how to decide this question.

Auditors will make note of all errors found in the areas of classification, quantity and value. If the level of compliance is below a specific percentage, a materiality compliance rate will be calculated. In the classification context, errors in the 9th or 10th digit will be counted only if there is a loss of revenue. Errors through the 8th digit are considered material. If the resulting compliance rate is at least 95%, nothing further will be done unless internal controls are lacking, in which case the company becomes a moderate or high risk, depending on other factors.

With quantity problems, small errors addressed through local port procedures will be honored. In the quantity and value context, the value of the discrepancies is calculated into a percentage. So long as the compliance rate is 95%, nothing further will be done. However, anything lower may lead to higher examination rates and written improvement plans.


MORE TEXTILE PROBLEMS

As part of its continuing effort to insure accuracy of import declarations, Customs has extended its audits of major importers to include transhipment issues. As a result, 18 importers of textiles and wearing apparel which are large in size and import from Macao and Hong Kong are rumored to be selected for Customs audits. It is understood that Customs will include in its audit questions about whether the importer has visited the factory. If so, how often? What special training regarding textile rules of origin does the importer provide to its employees? Another area of inquiry has to do with agents. How are agent payments handled? What sort of background and factory investigations are conducted? Is there a written agency agreement? Does it include language prohibiting transhipment?

Can importing textiles or wearing apparel get any more difficult?

cargo damage, cargo claims, C-TPAT/CTPAT, customs law,