Automated Commercial Environment (ACE): Elimination of Bond Rider Requirement for Participation in Periodic Monthly Statement Payment Process

AGENCY:

Customs and Border Protection; Department of Homeland Security.

ACTION:

General notice.

SUMMARY:

This notice announces changes in the Bureau of Customs and Border Protection's (CBP) National Customs Automation Program (NCAP) test concerning periodic monthly deposit of estimated duties and fees. Participants in the Periodic Monthly Statement test are no longer required to provide a bond rider covering the periodic payment of estimated duties and fees. Nonpayment or untimely payment of estimated duties and fees, however, may result in action by CBP to impose sanctions on the delinquent importer of record or to allow the surety to terminate its basic importation bond. If the bond principal is a participant in the Periodic Monthly Statement test, sureties will now be allowed, under certain conditions, to terminate bonds with 3 business days notice to the bond principal and CBP.

EFFECTIVE DATES:

The elimination of the requirement to provide a bond rider covering the periodic payment of estimated duties is effective immediately.

ADDRESSES:

Comments concerning this notice should be submitted to Robert B. Hamilton via e-mail at Robert.B.Hamilton@dhs.gov.

SUPPLEMENTARY INFORMATION:

Background

On February 4, 2004, the Bureau of Customs and Border Protection (CBP) published a General Notice in the Federal Register (69 FR 5362) announcing the National Customs Automation Program (NCAP) test for Periodic Monthly Payment Statement Process. The test, which is part of CBP's Automated Commercial Environment (ACE), benefits participants by giving them access to operational data through the ACE Secured Data Portal (“ACE Portal”), which provides them the capability to interact electronically with CBP, and by allowing them to deposit estimated duties and fees on a monthly basis based on a Periodic Monthly Statement generated by CBP.

When the test started, only importers were eligible to apply for the test. Eligibility was later expanded to allow brokers to apply if they were specifically designated by an ACE importer.

On September 8, 2004, CBP published a General Notice in the Federal Register (69 FR 54302) which invited customs brokers, regardless of whether they were designated by participating importers to make Periodic Monthly Statement payments on their behalf, to apply to participate in the test. That notice set forth eligibility requirements for both importers and brokers.

On February 1, 2005, CBP published a General Notice in the Federal Register (70 FR 5199) announcing that applicants seeking to establish importer or broker accounts so as to access the ACE Portal, or to participate in any ACE test (including the test for Periodic Monthly Payment Statement Process), are no longer required to provide a statement certifying participation in the Customs Trade Partnership Against Terrorism (C-TPAT).

On August 8, 2005, CBP published a General Notice in the Federal Register (70 FR 45736) changing the time period allowed for the deposit of the duties and fees from the 15th calendar day to the 15th working day of the month following the month in which the goods are either entered or released. That change was made in order to comply with the provisions of section 2004 of the Miscellaneous Trade and Technical Corrections Act of 2004, Public Law 108-429, which extended the time of deposit of those estimated duties and fees. The document also advised that entries containing Census errors are eligible to be placed on a Periodic Daily Statement and designated for monthly payment. Finally, the document described those situations where liquidated damages would be imposed for failing to pay estimated duties in a timely manner.

As provided in the February 4, 2004 General Notice announcing the test, participants in the Periodic Monthly Statement test are required to schedule entries for monthly payment. A Periodic Monthly Statement will list Periodic Daily Statements that have been designated for monthly payment. The Periodic Monthly Statement can be created on a port basis by the importer or broker, as was the case with existing daily statements in the Automated Commercial System (ACS) (ACE is the successor to ACS). The Periodic Monthly Statement can be created on a national basis by an Automated Broker Interface (ABI) filer. If an importer chooses to file the Periodic Monthly Statement on a national basis he must use his filer code and schedule and pay the monthly statements timely. The Periodic Monthly Statement will be routed under existing CBP procedures. Brokers will only view/receive information that they have filed on an importer's behalf. ACE will not route a Periodic Monthly Statement to a broker through ABI if that statement lists information filed by another broker.

The February 4, 2004, Notice also stated that, in addition to other responsibilities, test participants are required to provide a bond rider covering the periodic payment of estimated duties.

Elimination of the Periodic Monthly Statement Payment Bond Rider

In order to open participation in the Periodic Monthly Statement test to the widest number of importers, CBP will no longer require that an applicant, in order to participate in the test, submit a bond rider as required by the Federal Register Notice of February 4, 2004. CBP has determined that the rider is not necessary, inasmuch as the terms and conditions of the basic importation bond under section 113.62 of the CBP Regulations (title 19 Code of Federal Regulations (CFR), section 113.62) require the bond obligors to deposit, in the time period prescribed by law or regulation, any duties, taxes, and charges imposed, or estimated to be due, at the time of merchandise release or withdrawal.

Submission of the bond rider does have the effect of alerting the surety guaranteeing performance that the bond principal is participating in the Periodic Monthly Statement test. CBP agrees that, as a result of elimination of the rider submission requirement, it will notify sureties, electronically, of a bond principal's participation in the test.

Failure To Pay, or To Timely Pay, Estimated Duties and Fees

A bond principal who fails to meet its obligation to pay estimated duties and fees under the test should not continue to enjoy the benefits of the deferred payment of estimated duties and fees. Such an allowance would further stress the bond amount and place the revenue in jeopardy. As such, CBP, through this notice, suspends those regulations in Part 142 relating to the delinquent payment of CBP bills as they relate to non-payment or late payment of estimated duties and fees made under the Periodic Monthly Statement test. Any bond principal who is late with an estimated monthly statement estimated duty payment by more than 2 business days will be notified by CBP, either electronically or by paper notification, that immediately it shall be required to file entry summary documentation with estimated duties and fees attached before its merchandise may be released from any CBP port. The surety on the affected bond will also be notified. The bond principal will only be released from such a requirement upon full payment of any unpaid estimated duties and fees that have come due under the Periodic Monthly Statement test.

During the test, CBP will retain the right to deny Periodic Monthly Statement payment privileges to any importer that is repeatedly delinquent in the payment of estimated duties and fees due.

Termination of Bonds

For purposes of the test, the provisions of 19 CFR part 113 relating to termination of bonds will be suspended, in certain situations, insofar as sureties will be permitted to terminate bonds with 3 business days notice to the bond principal and CBP. Section 113.27(b) of the CBP Regulations (19 CFR 113.27(b)) generally requires a 30-day notice (with exceptions) for surety termination of a bond. Sureties may now terminate bonds with 3 business days notice when termination by the surety occurs because the surety does not accept the risk relating to participation by the bond principal in the Periodic Monthly Statement test. Sureties may also terminate bonds with 3 business days notice when termination is a result of the failure of the bond principal to perform obligations arising as a result of participation in the test; however, a termination under these circumstances can only take place after the surety has satisfied its obligations which have arisen as a result of the principal's failure to perform. The importer whose bond is terminated by a surety will be suspended from participation in the test unless a new surety is obtained. Notification of termination to CBP shall be provided to the Revenue Division, Office of Finance, 6650 Telecom Dr., Suite 100, Attn: Bond Team, Indianapolis, Indiana 46278. Notice of termination to CBP must be in writing and must be delivered by overnight mail, other express delivery service, or fax. Notice of termination to the bond principal must be in writing and must be delivered by overnight mail or other express delivery service. Any notice of termination provided to CBP must include a declaration that the bond principal has been notified of termination.

Suspension of the Regulations

During the testing of the Periodic Monthly Statement process, CBP will suspend provisions in Parts 24, 141, 142, and 143 of the Customs and Border Protection Regulations (Title 19 Code of Federal Regulations) pertaining to financial, accounting, entry procedures, deposit of estimated duties and fees, and the delinquent payment of CBP bills. CBP will also suspend the provisions of Part 113 of the Customs and Border Protection Regulations with regard to surety termination of bonds only in the manner and for the reasons discussed in this Notice. All other provisions of Part 113 of the Customs and Border Protection Regulations remain in effect during this test. All of the terms of the test and criteria for participation therein, as announced in the previous notices identified above, continue to be applicable unless changed by this notice.