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Client Alert: U.S. Customs Restricts Chemical Residues in Shipping Containers

Date: Mar 06, 2012

U.S. Customs has published new information about the treatment of product residues returning to the United States in shipping containers, such as chemicals in containers not cleaned abroad. Customs now requires that imported residues comply with all existing import requirements. This issue arose from a 2009 Customs ruling that held residues in returning "instruments of international transportation" must be treated as imported goods. Customs has just issued new FAQs on how it will enforce its 2009 ruling. The FAQs discuss the following key points:

 

  1. Who is the importer of record?
    The importer of record is responsible for filing a Customs entry and satisfying attendant import obligations, e.g. determining the residue's HTS classification, quantity and value. Who serves as the residue's importer of record is now an open question because residue ownership and rights typically are not addressed in transactions.

  2. Shipping carriers must fulfill manifest requirements for residues.
    Shipping carriers will be required to account for residues in the manifest submissions they make to Customs before arrival.

  3. No enforcement date yet.
    Although Customs' 2009 ruling establishes legal obligations, Customs has yet to set an enforcement date. Customs will likely announce the date after completing upgrades to its e-filing system to account for imports of residues.

  4. Much ado about de minimus residue?
    Whichever entity fulfills the Customs filing obligations for imported residues will need to establish a reliable method to calculate their value and volume. That entity must also confirm the residue's HTS code. These tasks could be complex. Filing exceptions could apply based, for example, on low values involved. Importers can only conclude, however, that they are relieved from some burdensome obligations after going through a potentially complicated process to calculate residue value. Some residues may also qualify as duty-free imports of U.S. goods returned.

We expect companies that ship chemicals and similar substances will begin allocating Customs responsibilities through contracts with foreign customers and carriers to clarify in advance who must satisfy these new obligations. Incorporating standard charges to clean all containers overseas before their return may be the simplest option.