[Federal Register Volume 61, Number 92 (Friday, May 10, 1996)]
[Notices]
[Pages 21534-21537]
From the Federal Register Online via the Government Publishing Office [www.gpo.gov]
[FR Doc No: 96-11734]



-----------------------------------------------------------------------

DEPARTMENT OF THE TREASURY
Customs Service


Announcement of National Customs Automation Program Test 
Regarding Reconciliation

AGENCY: U.S. Customs Service, Department of the Treasury.

ACTION: General notice.

-----------------------------------------------------------------------

SUMMARY: This notice announces Customs plan to conduct a voluntary 
prototype test regarding reconciliation. This reconciliation test will 
cover entries to which antidumping and countervailing duties apply. 
This notice invites public comments concerning any aspect of the 
planned test, informs interested members of the public of the 
eligibility requirements for voluntary participation in the testing of 
this prototype, and describes the basis on which Customs will select 
participants.

EFFECTIVE DATES: The test of this prototype will commence no earlier 
than July 9, 1996. This test will end when liquidation or reliquidation 
of all Reconciliations has become final. Comments concerning the 
methodology of this prototype must be received on or before June 10, 
1996. To participate in this prototype test, the necessary information, 
as outlined in this notice, must be filed with Customs on or before 
June 10, 1996.

ADDRESSES: Written comments regarding this notice, and information 
submitted to be considered for voluntary participation in this 
prototype should be addressed to Reconciliation Prototype Team, U.S. 
Customs Service, 1301 Constitution Avenue, N.W., Room 1322, Washington, 
D.C. 20229-0001.

FOR FURTHER INFORMATION CONTACT: For questions on reconciliation: 
Rychelle Ingram (202) 927-1131.
    For questions on Antidumping and Countervailing duties: Frank Crowe 
(202) 927-0402.

SUPPLEMENTARY INFORMATION:

Background

    Title VI of the North American Free Trade Agreement Implementation 
Act (the Act), Public Law 103-182, 107 Stat. 2057 (December 8, 1993), 
contains provisions pertaining to Customs Modernization (107 Stat. 
2170). Subtitle B of Title VI establishes the National Customs 
Automation Program (NCAP)--an automated and electronic system for the 
processing of commercial importations. Section 637 of the Act amends 
Section 484 of the Tariff Act of 1930 by establishing a new subsection 
(b) entitled ``Reconciliation.'' Reconciliation is a planned component 
of the NCAP. Section 631 authorizes tests of planned NCAP components. 
Section 101.9(b) of the Customs Regulations (19 CFR 101.9(b)), 
implements the testing of NCAP components. See T.D. 95-21 (60 FR 14211, 
March 16, 1995). This test is established pursuant to those 
regulations.
    Previous NCAP initiatives include Customs prototype of remote 
location filing (60 FR 17605), and the announcement of a reconciliation 
prototype for related party importers making upward adjustments to the 
price of imported merchandise, pursuant to 26 U.S.C. 482. (60 FR 46141 
and 60 FR 64470.)

I. Description of Proposed Test

The Concept of Reconciliation
    Reconciliation will allow an importer to provide Customs with 
information (other than that related to the admissibility of 
merchandise), which is not available at the time of entry summary 
filing, at a subsequent time. A notice of intention to file a 
Reconciliation (``Notice of Intent'') permits the liquidation of an 
entry as to all issues other than those which are transferred to the 
Reconciliation. By filing a Notice of Intent, an importer is requesting 
that a certain issue be separated from the entry. The importer 
voluntarily requests and accepts that the issue identified in the 
Notice of Intent remains open and outstanding and is transferred to the 
Reconciliation. In this prototype, the issue of liability for 
antidumping and countervailing duties (AD/CVD) will be transferred to 
the Reconciliation. This permits Customs to liquidate the underlying 
entry as to the other issues, e.g., classification, but the issue of 
liability for AD/CVD is held open at the request of the importer, and 
is transferred to the Reconciliation.
    Upon liquidation of the entry, any decision by Customs entering 
into that liquidation, e.g., classification, may be protested pursuant 
to 19 U.S.C. 1514. When the outstanding information, e.g., final 
antidumping duty owed as per the assessed rate, is later furnished in 
the Reconciliation, the Reconciliation may be liquidated. The 
Reconciliation will operate as an entry for purposes of liquidation and 
protest of the issue in the Reconciliation. The liquidation of the 
Reconciliation may be protested but

[[Page 21535]]

the protest may only pertain to elements contained in the liquidated 
Reconciliation, i.e., the protest may not re-visit elements previously 
liquidated in the entry.
    The Reconciliation shall be filed within 90 days of posting of 
liquidation instructions by the Customs Service. Customs posting of the 
liquidation instructions will serve as the notice to the importer by 
the Customs Service that a period of review for antidumping or 
countervailing duty purposes has been completed. Consequently, because 
the Reconciliation is filed after the suspension of liquidation has 
been lifted, the liquidation of the Reconciliation is subject to 19 
U.S.C. 1504(a), but not subject to 19 U.S.C. 1504(d).
Description of the Reconciliation Prototype
    This prototype will commence no sooner than July 9, 1996. Customs 
would like to afford the opportunity to participate to all those who 
volunteer for this test. However, the number of participants may be 
limited in view of the fact that this prototype will be conducted with 
minimal computer changes, requiring Customs to manually intervene in 
tracking and processing. While all interested parties are encouraged to 
apply for participation, Customs, in conjunction with the Department of 
Commerce (DOC), will specifically be targeting those AD/CVD cases for 
which liquidation instructions will be issued in the short term. All 
procedures and processes will be closely coordinated with the selected 
and affected parties. The purpose of this prototype is to test such 
operational issues as establishment of the Notice of Intent, 
liquidation of the underlying entry summaries, and processing and 
liquidation of the Reconciliation.
    This prototype will cover entries to which antidumping and 
countervailing duties apply. As required by Section 637 of the Act, 
Customs has coordinated with the DOC in the development of this test, 
and will continue to consult with the DOC throughout the test.
    There are several reasons Customs has selected AD/CVD for this 
reconciliation prototype. First, this test can be initiated prior to 
having full computer mainframe programming, partially due to the fact 
that drawback cannot be claimed on AD/CVD duties. In addition, Customs 
will no longer have to suspend liquidation as to all issues affecting 
the entry until final instructions have been issued for all AD/CVD 
cases on the entry. Faster processing of refunds will result in a cash-
flow benefit to importers. Should the AD/CVD assessment result in an 
increase due Customs, faster processing will enable the government to 
collect duties more timely. As intended by the Act, liquidation of the 
non-reconciliation issues on the subject entries will result in a 
reduction of contingent liabilities for the importer. Finally, this 
prototype will result in a workload savings for the government. Of all 
entries currently being withheld from liquidation, 75% are suspended 
for pending AD/CVD cases. Reconciliation provides Customs with the 
authority to liquidate the underlying entries as to all issues other 
than the liability for the AD/CVD case, which is identified by the 
importer in the Notice of Intent, and at his request, transferred to 
the Reconciliation. By submitting a Notice of Intent, an importer is 
requesting that the issue of liability for AD/CVD remain open and be 
transferred to the Reconciliation.
    There are various situations which lend themselves to this 
prototype, including (1) entries having one AD/CVD case, for which the 
importer wants to reduce its contingent liabilities and leave only the 
AD/CVD case open on the Reconciliation, and (2) entries having multiple 
AD/CVD cases, one or more of which has been terminated, or one or more 
of which has had liquidation instructions issued. Also, parties who 
have drawback claims against import entries that are suspended for AD/
CVD will expedite the liquidation of their drawback entries if they use 
this prototype to transfer the AD/CVD issue off the import entries.
    The following is an example of a situation which would benefit from 
this prototype. Importer X has 800 entries filed in the port of 
Cleveland, all of which have merchandise which is subject to three 
antidumping cases. The DOC has previously provided Customs with 
liquidation instructions on two of the cases, each having an assessed 
rate lower than the deposit rate. As a result, Customs owes importer X 
refunds based on the results of the two cases. However, the 800 entries 
presently must continue to be suspended from liquidation, pending 
instructions on the third case. No money is refunded until the entries 
can be liquidated. In the case of a separate Notice of Intent being 
filed for each of the three cases, Customs is capable of isolating each 
case on a single Reconciliation and liquidating the underlying entries 
as to the other issues. As the DOC provides instructions, each case can 
be liquidated individually. In this example, this prototype provides 
for more efficient processing by Customs and quicker refunds to the 
importer. Additionally, Customs would issue one check for each 
Reconciliation, as opposed to the current obligation of issuing 800 
separate checks.
    Customs posting of the AD/CVD liquidation instructions on the 
Customs Electronic Bulletin Board and the Administrative Message System 
will initiate the 90 days in which the participant has to file the 
Reconciliation. Customs posting of the liquidation instructions will 
serve as the notice to the importer by the Customs Service that a 
period of review for antidumping or countervailing duty purposes has 
been completed. The publication in the Federal Register by the 
International Trade Administration (DOC) does not constitute Commerce's 
instructions to Customs to liquidate, and as such, will NOT trigger the 
90 day period for submission of the Reconciliation.
Prerequisites for Reconciliation Under this Prototype
    The following are the prerequisites for this prototype covering AD/
CVD transactions:
    A. Common Elements: Each Reconciliation under this prototype will 
be limited to entries filed by one importer and one filer, and in one 
port location. Importers who file entries at more than one port may 
participate if the other prerequisites are met; however, they will have 
to file one Notice of Intent/Reconciliation for each port. Each 
Reconciliation is limited to one Antidumping or Countervailing duty 
case (the individual ten digit case number), and will cover only one 
manufacturer/shipper/grower. Each Reconciliation will cover only one 
review period, as defined in 19 CFR 353.22 and 19 CFR 355.22.
    B. Bonding: Adequate bonding will be required for each 
Reconciliation. Since there is no additional liability created on the 
Reconciliation, the bond filed on the underlying entries will in most 
cases be used to cover the Reconciliation. However, Customs will 
analyze each participant's individual situation, and take action to 
ensure sufficient bond coverage exists. While Customs prefers to have 
one common set of legally responsible parties for each Reconciliation, 
importers with entries filed within one review period which were 
secured by more than one surety will not be excluded from participation 
in this prototype.
    C. Eligible Entries: The following types of entries will be 
eligible for this prototype: (1) Entry type 03--Antidumping and 
Countervailing duty consumption entries, (2) Entry type 06--Foreign 
trade zone consumption entries, and (3) Entry type 07--Quota/Visa and

[[Page 21536]]

Antidumping/Countervailing duty consumption entries.
    Customs is developing a system to accommodate the details involved 
on Reconciliations covering warehouse withdrawals. Importers interested 
in filing a Reconciliation on warehouse withdrawals (Entry type 34--
Antidumping/Countervailing duty warehouse withdrawal, and Entry type 
38--Quota/Visa and Antidumping/Countervailing duty warehouse 
withdrawal) are encouraged to submit comments and apply for 
participation, if interested.
    D. Time frame: Those entries filed via ABI between February 1, 1990 
and the start of this test will be considered eligible for this 
prototype. (Entries filed prior to February 1, 1990 are not eligible 
for this test because prior to such date, Customs did not track AD/CVD 
case information by entry summary line within the Automated Commercial 
System.)
    E. Notice of Intent/Reconciliation: Once a participant is selected, 
a Notice of Intent must be filed. The Notice of Intent is irrevocable. 
The Notice of Intent must contain the Reconciliation number and the 
common elements of the Reconciliation, (i.e., importer/filer/AD-CVD 
case/review period/manufacturer/Port).
    The Reconciliation will be due within 90 days of Customs' posting 
of the liquidation instructions. For AD/CVD cases which have had 
liquidation instructions previously posted by Customs, the filing of 
the Notice of Intent will trigger the 90 days for submission of the 
Reconciliation. For purposes of this prototype, the Reconciliation will 
be submitted to Customs in an ASCII text, tab-delimited file format, 
both on hard copy and diskette, and will contain the following 
information for each entry line subject to the Reconciliation:
    (1) Entry number;
    (2) Date of entry;
    (3) Date of export from foreign country (if Reconciliation pertains 
to CVD case);
    (4) Entered value;
    (5) AD/CVD duty deposited (Indicate ``B'' if bonded);
    (6) Amount of supplemental AD/CVD duty payment(s), if any;
    (7) Date(s) of supplemental payment(s), if any;
    (8) Total quantity (only if liquidation instructions provide 
specific rate of duty);
    (9) AD/CVD duty due as per assessed rate; and
    (10) Net difference in duty.
    Participants will be provided with a sample Reconciliation.
    F. Liquidation: Importers who chose to participate in this 
prototype will recognize that the liquidation of the underlying entries 
pertains only to those issues not identified by the importer on the 
Notice of Intent. Upon liquidation of the underlying entries, any 
decisions of the Customs Service entering into that liquidation can be 
protested pursuant to 19 U.S.C. 1514. The liquidation of the 
Reconciliation will be posted to the Bulletin Notice of Liquidation. 
The liquidation of the Reconciliation may also be protested, but the 
protest may only pertain to elements contained in the liquidated 
Reconciliation, i.e. the protest may not re-visit elements previously 
liquidated in the entry.
    Under this prototype, once the participant files the Notice of 
Intent, the referenced entries will be liquidated as to all issues 
other than that identified in the Notice of Intent, barring any 
outstanding non-reconciliation issue. The AD/CVD liability issue is 
transferred to the Reconciliation. The liquidation of tariff 
classification/rate of duty and/or the appraised value under 19 U.S.C. 
1401a shall not preclude the assessment on the Reconciliation of AD/CVD 
duties according to the instructions issued by the DOC to Customs.
Regulatory Provisions Suspended
    Section 113.62 of the Customs Regulations (19 CFR 113.62), 
pertaining to basic importation and entry bond conditions, will be 
suspended during this prototype test. Certain provisions in Part 159 of 
the Customs Regulations (19 CFR Part 159), pertaining to liquidation of 
duties, will also be suspended during this prototype test.

II. Eligibility Criteria

    The following requirements must be met to be considered for 
selection in this prototype:
    (1) All entries and entry summaries subject to the Reconciliation 
must have been filed via ABI on or after February 1, 1990 and before 
the start of this test.
    (2) There can be no more than 1,000 entries subject to a single 
Reconciliation.
    (3) Adequate bond coverage must exist for the Reconciliation.
    (4) Participants may not be the subject of a current audit or 
investigation by the Customs Service. Closed audits/investigations will 
not necessarily preclude an importer from participating. However, the 
findings will be taken into consideration, as will the importer's 
demonstrated efforts to correct past problems.
    (5) Participants must be willing and able to supply the information 
identified above in the Reconciliation in the specified text, tab-
delimited file format.
    (6) Participants must agree to participate in the evaluation of 
this test.
    Note that participation in this test will not constitute 
confidential information and that lists of participants will be made 
available on the Customs Electronic Bulletin Board and the 
Administrative Message System.
Reconciliation Prototype Application
    This notice requests importers, or brokers or attorneys on behalf 
of importers, to voluntarily apply for participation in this prototype 
by submitting to the Reconciliation Prototype Team, U.S. Customs 
Service, 1301 Constitution Avenue, N.W., Room 1322, Washington, D.C. 
20229-0001, on or before the date set forth in the effective date 
paragraph at the beginning of this notice, the following information:
    (1) Importer name and IR number;
    (2) Broker name and filer code;
    (3) Surety name(s) and surety code(s);
    (4) Bond coverage, i.e., whether a continuous bond and/or single 
entry bonds were used for coverage on the subject entries;
    (5) Supplier name, address, and manufacturer's number;
    (6) AD/CVD case number at the 10 digit level and the review period 
being reconciled;
    (7) Commodities covered under the Reconciliation;
    (8) Port(s) at which entries have been filed and at which the 
Notice(s) of Intent will be filed;
    (9) Number of entries covered under the Reconciliation;
    (10) Any supplemental payments made on the subject entries;
    (11) Main contact person and telephone number for participation 
questions; and
    (12) Any comments on prototype participation.
    By applying to participate in this test, the importer is agreeing 
to participate pursuant to the terms of the test as defined in this 
notice.
Basis for Participant Selection
    Eligible importers or importers with brokers will be considered for 
selection as participants in this prototype. Selection will be based on 
electronic capabilities and volume of entries within the designated 
criteria. In addition, Customs will work with the DOC to identify those 
cases which lend themselves to this prototype. The amount and timing of 
supplemental payments made for an AD/CVD case may have impact on 
participant selection. Customs is looking for a variety of 
circumstances and

[[Page 21537]]

participants in this prototype; however, a limited number of 
participants will be selected. This prototype will be limited to 25 
Reconciliations, due to the minimal automated programming available to 
support this test. We stress that those applicants not selected for 
participation, and any interested parties, are invited to comment on 
the design, conduct, and evaluation of this prototype. Participants 
selected will be notified in writing. The list of participants will be 
made available on the Customs Electronic Bulletin Board and the 
Administrative Message System.

III. Test Evaluation Criteria

    Once participants are selected, Customs and the participants will 
meet to review all public comments received concerning any aspect of 
the test program or procedures, finalize procedures in light of those 
comments, form problem-solving teams, and establish baseline measures 
and evaluation methods and criteria. Interim evaluations of the 
prototype will be published on the Customs Electronic Bulletin Board, 
and the results of the final prototype evaluation will be published in 
the Federal Register as required by 19 CFR 101.9(b). The following 
evaluation methods and criteria have been suggested:
    1. Baseline measurements to be established through dataqueries and 
questionnaires;
    2. Reports to be run through use of dataquery throughout the 
prototype; and
    3. Questionnaires from both trade and Customs participants to be 
used before, during, and after the prototype period. Preliminary 
suggestions for evaluation criteria are workload impact (workload 
shifts, cycle time, etc.), cost savings (staff, interest, issuance of 
fewer checks or bills, tracking refunds or bills, reduction in 
contingent liabilities, etc.), policy and procedural accommodation, 
trade compliance impact, problem solving and system efficiency.
    Customs will request that test participants be active in the 
evaluation, identifying costs and savings experienced in this 
prototype.
    Customs intends to conduct several prototypes of the reconciliation 
component of the NCAP. These tests will determine the system and 
operational design of reconciliation which will allow all filers to 
participate in this type of entry process at a national level. At this 
time, how the final reconciliation program will operate is unknown. 
Prototype participants must recognize that these are true prototypes to 
test the benefits and potential problems of reconciliation for Customs, 
the trade community, and other parties impacted by this program. It is 
important to note that time and money spent on these prototypes may not 
carry forward to the final program.
    The next reconciliation prototype is tentatively scheduled to 
commence no sooner than January, 1997. This subsequent prototype will 
continue to address operational impact and procedures, and begin 
addressing additional systemic needs. This prototype is intended to 
include AD/CVD, as well as other issues which lend themselves to 
processing by reconciliation. The experience gained from the 
reconciliation prototype for AD/CVD transactions will be incorporated 
into subsequent prototypes.

    Dated: May 6, 1996.
Samuel H. Banks,
Assistant Commissioner, Office of Field Operations.
[FR Doc. 96-11734 Filed 5-9-96; 8:45 am]
BILLING CODE 4820-02-P