Recovering Section 301 Duties

Posted by Jim Conrad

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As we continue to see challenges in the news with international trade, I must remind you that along with the darkness, there is some light for importers. While the United States Section 301 China duties remain in place, the US Trade Representative has published more than 40 exclusion lists, impacting the vast majority of both large and small importers.

I suspect that we will continue to see additional exclusions granted for the foreseeable future.

These duty exclusions bring great opportunity as well as significant compliance risk.

Opportunity

Section 301 duty exclusions are primarily based on the product description and specifications for goods that were produced in China and imported into the United States.

In most cases, a granted exclusion is based both on the Harmonized Tariff Code at the time of import and an exact match of the product specifications noted in the exclusion language which is published in Heading 9903 of the United States Harmonized Tariff Schedule (HTS). The mechanism to secure duty refunds takes two basic post entry submission formats.

Post Summary Correction (PSC)

An import entry is normally scheduled for finalization (liquidation) by Customs and Border Protection (CBP), 314 days from the date of import.

An importer may request a change to the declared tariff classification for up to 300 days after the import date but at least 15 days prior to liquidation through the submission of a PSC.

The PSC must include the requested changes, product specifications and a convincing argument detailing why the use of the Section 301 exclusion should be granted to the importer’s product. A PSC must be prepared and submitted for each individual entry.

What if the entry has been finalized (liquidated) by CBP?

A protest may be submitted to CBP up to 180 days from the date of liquidation.

Similar to the PSC, a protest must include the requested entry changes, product specifications and a convincing argument detailing why the use of the Section 301 exclusion should be granted to the importer’s product(s).

Protests are highly scrutinized by CBP and so the argument must be rock solid both in the narrative and in the technical aspects, detailing the regulatory citations involved that support the importer’s claim.  A protest may be prepared for multiple entries in a single submission.

A few words of caution

Post entry submissions may affect duty drawback claims causing issues with those filings if you are not careful. You will need to steadfastly coordinate the effort with your Section 301 post entry and drawback filers.  

We have seen huge, unexpected, additional duty bills generated by CBP for importers claiming NAFTA reconciliation or who are adjusting declared value through the entry reconciliation program.

It will take a significant amount of effort to recover Section 301 duties through the use of these exclusions, however, Tradewin has successfully recovered duties in the tens of millions of dollars for our clients.

And lastly, CBP is very good with big data. Spurious claims by importers are treated harshly.

Do your homework. There are great opportunities to compliantly recover duties that were already paid with the right partner.

In normal times, I’d end with “safe travels” but for today, I’ll just say, stay safe.

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Jim Conrad

Written by Jim Conrad

Jim joined Tradewin in 2009, continuing a successful career in international logistics and trade compliance that began in 1980. He has spent more than three decades in leadership roles overseeing international trade compliance including the positions of corporate Director of Operations and as Chairman of the Board of Directors for a large U.S. shipper’s association. Jim’s technical background covers a wide range of international trade areas including harmonized tariff classification, valuation, anti-dumping and risk analysis. Jim is a graduate of North Shore Community College and majored in Business Administration at Salem State University. He is a member of the International Compliance Professionals Association and a U.S. Licensed Customs House Broker.