REIMBURSEMENT CERTIFICATIONS
********** IMPORTER ALERT**********
CUSTOMS CHANGES POLICY REGARDING
ANTIDUMPING REIMBURSEMENT CERTIFICATES

By Andrew B. Schroth (aschroth@gdlsk.com) &
Adam M. Dambrov (adambrov@gdlsk.com)

Importers of merchandise subject to an antidumping duty order are required to file a statement with U.S. Customs certifying that they have not entered into any agreement or understanding with the manufacturer, producer, seller, or exporter, for the payment or refund of all or any part of the antidumping duties assessed on the imported merchandise. Importers must certify, under penalty of Customs fraud, that they are not being reimbursed for any applicable antidumping duties. Customs headquarters issued a memorandum on November 18, 2005 containing new reimbursement certificate guidelines.

BASIC RULES FOR IMPORTERS

1. If imported merchandise is subject to AD deposits, importers must provide a reimbursement certificate prior to liquidation;


2. The importer can provide a separate reimbursement certificate with each individual entry or an annual "blanket" reimbursement certificate with each port;


3. Effective November 18, 2005, Customs will no longer request that importers file reimbursement certificates prior to liquidation. It is the importer's responsibility to insure the proper certificates are filed prior to liquidation;


4. If the importer fails to provide a reimbursement statement prior to liquidation, the Department of Commerce ("DOC") will instruct Customs to assess double antidumping duties on any such entry; and


5. Customs Headquarters in Washington, D.C. has instructed the ports to deny any protests contesting the double assessment of AD duties for failure to file the reimbursement certificate prior to liquidation.

ACCEPTABLE REIMBURSEMENT CERTIFICATES

Customs and the DOC recognize two types of reimbursement certificates; either may be supplied to fulfill the requirement.

Individual Certificates

Individual certificates will contain the following language:

I hereby certify that I (have) (have not) entered into any agreement or understanding for the payment or for the refunding to me, by the manufacturer, producer, seller, or exporter, of all or any part of the antidumping duties or countervailing duties assessed upon the following importations of (commodity) from (country): (List entry numbers) which have been purchased on or after (date of publication of antidumping notice suspending liquidation in the Federal Register) or purchased before (same date) but exported on or after (date of final determination of sales at less than fair value).

Blanket Certificates

These certificates must provide: 1) the specific antidumping case number(s), 2) the shipper(s), and (3) the review period covered. The blanket certificate is not a Customs form so importers can utilize almost any format provided it contains the required information listed above. The time period for which a blanket certificate of reimbursement is applicable is the longer of either 12 months or the administrative review period. Blanket certificates, currently on file at a port office, need not be replaced until the time period covered by those blankets expire. Customs has instructed ports with open blanket certificates on file (i.e., no specified end date) to request replacement certificates with a specific end date.

Please contact Andrew B. Schroth or Adam M. Dambrov at 212-557-4000 if you have any questions or if you require any assistance preparing or filing reimbursement certificates.

I. Potential Penalties for Importers and Brokers as Customs Eliminates Textile Declarations, and Adopts New MID Requirements -

On October 5, 2005, Customs and Border Protection published the following interim regulations in the Federal Register:

1. Elimination of Textile Declarations

   Effective October 5th, 2005, Customs has eliminated the requirement that a textile declaration be submitted for all importations of textile and apparel products from all countries (including China as well as non-WTO members such as Vietnam). This applies to textile and apparel products classifiable in HTS Chapters 50 through 63 as well as luggage, handbags, hats and certain footwear.

2. Changes to Manufacturer Identification Code ("MID") Requirements

   Also effective October 5, 2005, Customs is now requiring importers of textile and apparel goods to provide an MID code which is derived from the name and address of the entity (i.e., factory) performing the origin-conferring process. Trading companies, sellers other than manufacturers, etc. cannot be used to create MIDs.

   This code must be included on Form 3461 (Entry/Immediate Delivery), Form 7501 (Entry Summary), and in all electronic data transmissions that require identification of the manufacturer. In addition, if an entry is filed containing products from more than one manufacturer, the products of each manufacturer must be identified.

   Entries and entry summaries in which the first two characters of the MID do not meet the country of origin ISO code, or are created from a company that is known to be a trading house or agent and not a manufacturer, will be rejected for failure to properly construct a MID. Customs advises that repetitive errors in the construction of MIDs for entries of textile or apparel products will result in the assessment of broker and importer penalties for failure to exercise reasonable care.

   Importers should re-examine letter of credit and import documentation requirements to insure that the seller is providing the "origin conferring" factory name and address for each imported item.

3. Enforcement

   Customs began enforcing these new rules for goods entered on or after November 19, 2005. Customs expects importers and brokers to exercise reasonable care in creating and reporting correct MID numbers on textile entries on the goods described above.

   Brokers and importers must be aware of these new rules, and must document their compliance efforts to ensure that correct MID numbers are reported in the entry.

   Where incorrect MID numbers are reported, it could place the importer and the broker at risk for penalties. Realistically, MID numbers are made to reflect the information contained in the sellers invoice. Brokers and importers should put their vendors/clients on notice that they should be advised when the shipping invoice does identify the origin conferring location. Importers have an affirmative obligation to contact vendors and identify the company and location where origin is conferred. If operations occur at more than one location they may have to perform a legal analysis to identify the origin conferring location.

   Against this background brokers should adopt a system for reviewing commercial documents to identify the actual manufacturer in the documents, and for notifying their importers of goods which have been or currently are subject to quotas. The system should include a notice to each importer which should be retained by the broker. The notice should include the following concepts:

   Customs Brokers Letterhead

   To: Textile Importer by Name
   Notice: Reporting MID Numbers

   • Every Customs entry filed in the U.S. requires a manufacturer identification number (MID) to identify the source of the goods.
   
   
   • Where the goods are textiles, apparel, or other articles which are now or were previously subject to textile quotas, Customs requires the MID number to reflect the name and location of the manufacturer where the origin of the goods was conferred.
   
   
   • Articles subject to current or previous textile restraint are identified by a three digit number in parenthesis after the tariff provisions. These provisions include all textile and apparel provisions, and some textile luggage and footwear provisions).
   
   
   • In some cases, these goods could have been manufactured at more than one location. In these cases, the entry must reflect the location where country of origin was conferred.
   
   
   • As a general rule, when we prepare your entries, unless the manufacturer is identified in the shipping documents, the MID number will be made to reflect the name and address of the seller of the merchandise. (invoicing letterhead).
   
   
   • Where the origin of the goods was conferred from a different company or at a different location, you should make sure that this information is provided to us before entry.
   
   
   • While we regret that this places an additional burden on our clients, we cannot develop this information with out your assistance.
   
   
   • Finally Customs has announced that the filing of entries with incorrect MID numbers will be considered to be a violation of law, which is punishable by the assessment of substantial civil penalties. Penalties can be a multiple of loss of revenue on a substantial percentage of dutiable value.
   
   
   • Please contact the undersigned if you have any questions regarding this notice, and/or when you would like to identify shipments to us where the name and address on the invoice letterhead should not be used as a basis to prepare MID numbers.
     
     Sincerely,
     Print & Sign Name
     
     E-mail Address

II. failure to provide non reimbursement certificates on entries subject to antidumping duties "Add" are likely to result in double add assessments -

When entries are subject to ADD the importer must provide a certificate attesting to the fact that the ADD paid will not be reimbursed by the vendor. Failure to provide this certificate before entries are liquidated will result in double ADD assessments. (There are some variations in the rules based on the date of entry, but this rule applies to all entries filed on or after April 27, 1989).

In the past, Customs has issued CF 28's when ADD entries did not include the requisite certificate. This notice provided an opportunity to file missing ADD certificates. Customs has announced that it will discontinue issuing these CF 28's, and that protests contesting double ADD assessments will be denied where the add certificate was not on hand at the time of limitation.

It is recommended that brokers identify any unliquidated ADD entries and make sure that ADD certificates are on file. As usual the burden will be on the importer/broker to prove that the certificate was timely filed. If our office can be of any service in preparing your database, setting up systems, or in obtaining printouts of entries for your clients then please contact us.

If you have any questions or need additional information, please contact us at info@gdlsk.com