by: Brenda Custer-Espeleta
Customs duties and taxes are most often based on the value of merchandise. When you think of duty as a tax, there are ways that businesses and individuals can lower their tax liability, and importers can do the same. Identical to claiming tax deductions, though, the burden of proof is on the importer. Alba is capable of lowering entered value where eligible, but there must be proof to sustain the deduction.
Non-dutiable charges, or NDC, are items that reduce the declared entered value of a commercial entry. Most duties in the tariff are ad valorem duties, based on a flat percentage of a dollar amount.
One of the most common NDC that importers have the right to claim is for prepaid freight charges. This is most frequently seen in purchases made with a ‘C’ Incoterm, where the cost of goods includes transportation to a named point.
As an example, an importer may purchase goods under CIF (Cost, Insurance, Freight) that include the overseas inland haulage, international ocean freight and rail transportation if the bill of lading names an inland rail depot as the final destination.
The importer is permitted to lower the declared entered value by the prepaid freight amount, but only with eligible proof of the price paid for transportation. This proof can take the form of:
- A rated bill of lading
- An arrival notice showing the prepaid freight charges
- Proof of payment by the shipper to the freight forwarder or shipping line showing the amount paid.
CBP has gone so far as to produce an Informed Compliance Publication (ICP) detailing the eligibility and requirements to sustain these deductions. The ICP also goes details eligibility based on the amount of information available to the importer, including the actual costs for transportation which takes place outside the confines of a carrier’s bill of lading.
Failure to support these deductions can lead to reliquidation by CBP and having to tender additional duties, not to mention risking an adverse impact on an importer’s compliance with the agency.
For more information on what is and is not eligible and how Alba can help importers take advantage of legitimate means to lower their entered value through non-dutiable charges and other opportunities, contact Alba today.
About Brenda Custer-Espeleta
Brenda Custer-Espeleta is the new Executive Vice President of Customs and Trade Compliance at Alba Wheels Up. Ms. Espeleta is a licensed Customs Broker and NCBFAA Certified Customs Specialist with over 30 years of experience in global trade.
Ms. Espeleta is well-versed in Foreign Trade Zone operations, having set up four zones and drafted the operational and compliance procedures. She has served as a global compliance advisor for a power amplifier company, establishing their global compliance practices and facilitating product delivery into highly protectionist countries.
