Overview
On April 19, following the issuance of an executive order by President Trump, US Customs and Border Protection (“CBP”) and the US Department of the Treasury (“Treasury”) announced a 90-day deferral of certain estimated duties, taxes, and fees that an importer of record would ordinarily be obligated to pay on merchandise imported into the United States. The temporary final rule will extend the due date of covered duties, taxes, and fees, without interest, for a period of 90 days from the date that the duty deposit would otherwise have been due. The temporary final rule includes a waiver of the regulatory requirement to deposit estimated duties, taxes, and fees for the purpose of establishing the time of entry in those instances where it would otherwise be required under 19 C.F.R. § 141.68, but otherwise does not modify existing procedures for entry. Duty deferrals will be granted only for entries, or withdrawals from warehouse, for consumption, made on or after March 1, 2020 and no later than April 30, 2020, and no deferrals will be granted in any case where payment has already been made.
Covered Merchandise
Duty deferral will only apply to merchandise subject exclusively to “normal,” most-favored-nation (“MFN”) duties, and will not apply to merchandise subject to a range of other duties identified in the temporary final rule. In particular, duty deferral will not be granted for merchandise that is subject to antidumping or countervailing duties, or duties levied under Section 232 of the Trade Expansion Act of 1962, or Sections 201 or 301 of the Trade Act of 1974. In addition, the temporary final rule specifies that eligible merchandise, in order to qualify for duty deferral, must not be comingled with non-eligible merchandise (i.e., merchandise subject to the aforementioned duties) in the same entry summary. For this reason, “CBP anticipates that importers will file separate entries when a shipment contains both merchandise that is eligible for temporary postponement and merchandise that is ineligible.” Of note, CBP has clarified that the “submission of separate entries to segregate eligible merchandise from ineligible merchandise applies to entries that have not yet been filed” and that filers “should not cancel entries previously filed in order to refile new entries in order to take advantage of the 90-day postponement.”
Financial Hardship Requirement
To be eligible for the duty deferral, importers of record must meet the established “significant financial hardship” threshold. Eligible importers are those with fully or partially suspended operations during March or April 2020 due to orders from a competent governmental authority limiting commerce, travel, or group meetings because of COVID-19 and with a 60 percent reduction in gross receipts between March 13-31, 2020 or April 2020 compared to the same period in 2019. CBP has clarified that “{a}n importer who meets the significant financial hardship criteria does not need to file documentation with CBP to be eligible for {duty deferral} relief but must maintain documentation as part of its books and records establishing that it meets the requirements for relief.” Moreover, CBP has announced that “{i}t is up to the broker if they choose to secure documentation from the importer confirming hardship.” In cases where a broker acts as the importer of record, CBP has determined that the broker itself “must meet the criteria for significant financial hardship in order to postpone payments.” It remains unclear whether CBP intends to audit documentation maintained by importers of record concerning financial hardship.
