Shipping Solutions News
  November 2003
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In This Month's Newsletter:

Changes to Export Regs Mean New Fines and Penalties for Errors on the SED

NAFTA Documentation: Commercial Invoice


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Changes to Export Regs Mean New Fines and Penalties for Errors on the SED

By Catherine J. Petersen email | bio

I hate reading regulations. They are confusing and easily misinterpreted. But they are important. That’s why I’m paying attention to the changes in the Foreign Trade Statistical Regulations (FTSR) related to penalties. They are straightforward in at least one respect: the penalties for filing an SED late or with false or misleading information (either in paper or electronic format) will be increasing!

Of course, no one wants to receive a penalty notice. So let me give you the good news before I give you the bad: Census cannot assign or collect higher penalties until authority is delegated by them in the Code of Federal Regulations Title 13 to the:

  • Bureau of Immigration & Customs Enforcement,
  • Customs & Border Protection (CBP), and
  • Office of Export Enforcement of the Bureau of Industry & Security (BIS).

Next, Census needs to write and publish the supporting regulations or the changes to the FTSR to make all of this happen. It is estimated that these two activities will not be completed until early 2005. This gives you time to adjust to the new level of responsibility and accuracy in filing your Shipper’s Export Declaration (SED).

Now for the bad news: there are significantly increased civil and criminal penalties for failing to file or even filing your SED information late. These penalties were adopted in Public Law 107–228—September 30, 2002, Foreign Relations Authorization Act, Fiscal Year 2003 and update Title 15—Commerce And Foreign Trade, Chapter I—Bureau Of The Census, Department Of Commerce, Part 30—Foreign Trade Statistics.

Here’s a quick list of the old penalties as written in the Foreign Trade Regulations, Section 30.24 and 30.95, and the new penalties as adopted in the regulations in the previous paragraph, which cannot yet be enforced:

Reason for Penalty
Existing Penalties
New Penalty Adopted, Not Yet Effective
Parties Affected
Delayed Filing $100/day, not to exceed $1,000. $1,000/day, not to exceed $10,000 per violation. Carriers including motor, rail, ocean and air.
Failure to File or Filing with False or Misleading Information Not to exceed $1,000 per violation. Not to exceed $10,000 per violation or imprisonment for not more than five years, or both. Any person who fails to file or knowingly submits false or misleading information.
Futherance of Illegal Activities None. A fine not to exceed $10,000 per violation or imprisonment for not more than five years, or both. Any person who fails to file or knowingly submits false or misleading information.
Civil Penalties None. Civil penalty not to exceed $10,000 per violation; this is a penalty that may be in addition to any other penalty imposed by law. Any person violating the provisions of the Census rules or any rule, regulation, or order issued, except as provided in section 304, which affects carriers.

BIS Update 2003

The BIS Update held in Washington, D.C. included some other information related to filing the SED information in either paper or electronic format.

First, here is some updated information about the implementation of the new SED and mandatory use of AES:

  1. Exporters who are not required to file the SED electronically through AES have a grace period to use the October 18, 2003, version of the paper SED. Census issued a notice on November 14 that to facilitate the transition to the new SED form, all CBP ports will accept the old and new versions of the form through January 17, 2004. After that date, all previous versions of the SED will be rejected, and the exporter will be advised of their failure to submit an SED.
  2. The target date for mandatory filing of SEDs electronically in AES for all exporters is projected to be April 24, 2004. I have some hesitancy in saying that this date is fixed since changes to the system may not occur as quickly as expected.
  3. The ITAR regulations for AES have not been published yet so exporters who ship under a State Department License must continue to submit one copy of the SED, which will be forwarded to the State Department. The exporter should include the AES XTN or ITN number on the SED as proof that they filed electronically.

Here is some miscellaneous information about the data required on the SED or when filing through AES:

  1. According to Census, there are only two reasons a Freight Forwarder should appear as the USPPI: (a)
    the reexport of imported goods, in which case an in bond code should be included, and (b) goods that entered the U.S. under a carnet.
  2. AES Option 2 is being renamed "pre-departure filing" and Option 4 is being renamed "post-departure filing."
  3. The new term that Census wants everyone to use when referring to data on the paper SED or included when filing through AES is "Electronic Export Information (EEI)."
  4. Census is not currently pursuing a certification test for AES filers beyond the initial registration examination, because they have determined that they don’t have the legal authority to do so. However, they will be pursuing legislation that will give them this ability.

NAFTA Documentation: Commercial Invoice

By Susan Senger email | bio

In my next series of articles, I will address what documents are required for NAFTA countries along with some helpful hints to smooth the entry process into Canada and Mexico. I’ll start this series with the commercial invoice.

The commercial invoice is a statement of charges given by a seller to a buyer covering a specific transaction. Most countries require specific details for customs clearance and statistical purposes.

The commercial invoice is one of the most important documents in international trade and is reviewed by customs, freight forwarders, international bankers, and transport and insurance companies. This document reflects the complete details evidencing fulfillment of the sales contract and provides necessary information for third parties, listed above, of the transaction.

The Bureau of National Affairs (BNA), Export Shipping Manual, and Exporter’s Encyclopedia are all excellent references that provide specific document content required by destination country.

Invoices commonly include the following information:

Invoice number and date: The exporter provides the invoice number for ease of reference.

Name and address of buyer: This is required for customs purposes.

Buyer’s reference number: Provided for ease of reference.

Method of payment: Tells the buyer when payment is due.

Term of sale: Incoterms specify which party has responsibility for the cargo and at what point that responsibility transfers from the buyer to the seller. The Incoterms provide thirteen terms of sale established to create a common set of rules to govern the basic buy/sell transaction.

Product number, description of merchandise, unit price and total price: When shipping products to Mexico, the customs process should be expedited by providing your product description in both English and Spanish. Always include the product number and correct calculation of the per unit price and total price.

Harmonized System Classification Number (HTS): You should include the first six digits of the HTS number on the invoice.

Country of origin of products: Custom duties are assessed based on the product’s country of origin.

Mode of transportation: Provides the buyer with shipping information.

Currency of invoice: When invoicing in United States dollars, USD should clearly be stated on the invoice next to the amount. When using a currency other than USD, use the ISO code for that currency.

Type of insurance coverage and party insuring: In case of damage or loss, this information provides the buyer with which party is responsible.

Signature: Most companies sign the commercial invoice. The signatory should be someone with responsibility and knowledge of the shipment.

The commercial invoice is a bill or record of transaction between the seller and buyer. It is the basis for foreign customs' identification, classification, duty/tax assessment, and final approval of entry of the goods. Accurate descriptions help expedite the clearance process for the border brokers to make customs entry, and help Customs quickly identify your commodity.

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