CSMS Message: 96-001001

TO : ALL ABI BROKERS.

FROM : ERIN ZZ-STOKES

SUBJECT : ENT - TIB ANTICIPATORY BREACH

DATE : 11/15/96

6320021

TO : ALL PORT DIRECTORS AND ENTRY FILERS

FROM : DIRECTOR, TRADE COMPLIANCE

SUBJECT : ANTICIPATORY BREACHES OF TIB'S

PASS TO : NATIONAL IMPORT SPECIALIST(S), IMPORT SPECIALISTS
CUSTOMS OFFICERS SUCH AS INSPECTORS, ENTRY
SUPERVISORS AND OTHER INTERESTED PARTIES SUCH AS
BROKERS AND IMPORTERS.

BACKGROUND

UNDER THE PROVISIONS OF CHAPTER 98, SUBCHAPTER XIII, HARMONIZED
TARIFF SCHEDULE OF THE UNITED STATES (HTSUS), MERCHANDISE MAY BE
ENTERED UNDER THE TERMS OF A TEMPORARY IMPORTATION BOND (TIB)
WITHOUT THE PAYMENT OF DUTIES IF THE MERCHANDISE IS ENTERED FOR A
SPECIFIC PURPOSE ENUMERATED IN SUBCHAPTER XIII, HTSUS. PER
UNITED STATES NOTE 1 TO SUBCHAPTER XIII, THE MERCHANDISE IS
PERMITTED TO REMAIN IN THE UNITED STATES FOR A ONE-YEAR PERIOD
SUBSEQUENT TO THE DATE OF IMPORTATION (WITH A MAXIMUM OF TWO
1-YEAR EXTENSIONS ALLOWED). THERE ARE TWO EXCEPTIONS TO THE TIME
PERIOD: (1) ARTICLES UNDER SUBHEADING 9813.00.75 (AUTOS AND
PARTS FOR SHOW PURPOSES) MAY NOT EXCEED SIX MONTHS FROM THE DATE
OF IMPORTATION AND MAY NOT BE EXTENDED AND (2) ARTICLES UNDER
SUBHEADING 9813.00.50 (TOOLS OF TRADE), IF SEIZED OTHER THAN BY
SUIT OF PRIVATE PERSONS HAVE THE REQUIREMENT OF EXPORTATION
SUSPENDED DURING THE PERIOD OF THE SEIZURE. PRIOR TO THE
EXPIRATION OF THE BOND PERIOD OR ANY PROPERLY APPROVED EXTENSION
THEREOF, THE MERCHANDISE MUST BE EXPORTED OR DESTROYED UNDER
CUSTOMS SUPERVISION. FAILURE TO EXPORT OR DESTROY IN A TIMELY
MANNER RESULTS IN THE ASSESSMENT OF LIQUIDATED DAMAGES AGAINST
THE IMPORTER.

INSTANCES ARISE, WHEREIN AFTER INITIATION OF A TIB ENTRY, THE
IMPORTER FINDS THAT THE MERCHANDISE WILL REMAIN IN THE
UNITED STATES. MANY TIMES, RATHER THAN WAITING FOR THE 1-YEAR
PERIOD TO END, IMPORTERS WOULD REQUEST FOR EARLY PAYMENT OF THE
LIQUIDATED DAMAGES FOR THE BREACH OF BOND, I.E., ANTICIPATORY
BREACH. CUSTOMS REGULATIONS, 19 CFR 10.31, DID NOT PROVIDE FOR
THE ANTICIPATORY BREACH OF THE BOND. IN RESPONSE TO REQUESTS,
REGULATORY CHANGES WERE MADE, SUBMITTED UNDER T.D. 95-22 AND
PUBLISHED IN THE MARCH 20, 1995, FEDERAL REGISTER. REGULATORY
CHANGES COVERED IN THIS NOTICE INCLUDE ANTICIPATORY BREACHES,
BOND AMOUNTS AND LIQUIDATED DAMAGES.
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ACTION - ANTICIPATORY BREACH PROCEDURES

PRIOR TO THE BOND PERIOD EXPIRING, THE IMPORTER MUST SUBMIT
WRITTEN NOTIFICATION OF HIS INTENT TO RETAIN THE MERCHANDISE IN
THE UNITED STATES, ALONG WITH PAYMENT OF THE LIQUIDATED DAMAGE
AMOUNT. THE ANTICIPATORY BREACH WILL NOT BE ACCEPTED IF IT IS
FOR A PARTIAL EXPORTATION AND THE REMAINING MERCHANDISE HAS NOT
BEEN EXPORTED. UPON SUBMISSION OF PAYMENT OF THE ANTICIPATORY
BREACH, THE IMPORTER HAS WAIVED HIS RIGHT TO RECEIVE A NOTICE OF
CLAIM FOR LIQUIDATED DAMAGES AND WILL NOT HAVE THE RIGHT TO
PETITION FOR A MITIGATED AMOUNT. UNDER 19 CFR 10.39(G), THE
IMPORTER HAS THE RESPONSIBILITY FOR NOTIFYING THE SURETY FOR THE
BREACH OF BOND.

A LIQUIDATED DAMAGE CASE MUST BE INITIATED UPON RECEIVING PAYMENT
OF THE ANTICIPATORY BREACH AND THEN CLOSED IMMEDIATELY. THE CASE
WILL INCLUDE THE LIQUIDATED DAMAGES AMOUNT AND IN THE COMMENTS
SECTION, A NOTATION OF THE ANTICIPATORY BREACH. THE NOTATION OF
AN ANTICIPATORY BREACH WILL DOCUMENT THE REASON THAT THE
LIQUIDATED DAMAGES MAY NOT BE FOR THE TOTAL AMOUNT OF THE ENTRY.
THE CALCULATION OF LIQUIDATED DAMAGES FOR AN ANTICIPATORY BREACH,
NOW INCLUDES THE DUTIES PLUS THE MERCHANDISE PROCESSING FEES.
THESE FEES, HOWEVER, DO NOT INCLUDE THE HARBOR MAINTENANCE FEE.
THE LIQUIDATED DAMAGES AMOUNT IS TWO TIMES WHAT WOULD HAVE BEEN
APPLICABLE TO THE ENTRY HAD AN ENTRY FOR CONSUMPTION BEEN FILED,
PER 19 CFR 10.31(F). THE AMOUNT FOR AN ANTICIPATORY BREACH IS
THE SAME AS REGULAR LIQUIDATED DAMAGES, 110 PERCENT OR DOUBLE THE
DUTIES, DEPENDING ON THE CLASSIFICATION.

CHANGES TO SETTING THE BOND AMOUNT

ACCORDING TO MODIFIED REGULATIONS, AS NOTATED UNDER T.D. 95-22,
". . . THE DISTRICT DIRECTOR (NOW PORT DIRECTOR) SHALL MAKE A
DEMAND IN WRITING UNDER THE BOND FOR PAYMENT OF LIQUIDATED
DAMAGES EQUAL TO DOUBLE THE ESTIMATED DUTIES APPLICABLE TO
SUCH ENTRY, UNLESS A DIFFERENT AMOUNT IS PRESCRIBED BY 10.31(F).
. . ." THE TERM "DIFFERENT" REPLACES THE TERM OF "LOWER" IN 19
CFR 10.39(D)(1). THIS ALLOWS FOR THE ASSESSMENT OF LIQUIDATED
DAMAGES TO BE GREATER THAN TWO TIMES THE BOND AMOUNT
CORRESPONDING WITH THE BOND REQUIREMENTS IN 10.31(F).

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ADDITIONAL INFORMATION

FOR ADDITIONAL INFORMATION OR QUESTIONS ON THIS NOTICE PLEASE
CONTACT ERIN K. RILEY AT (202) 927-0292.

PHILIP METZGER