CSMS Message: 98-000840

TO : ALL ABI BROKERS.

FROM : MARIA NAVARRETE

SUBJECT : RECON - GRANDFATHER CLAUSE

ILTE : 09/23/1998

TO: ALL BROKERS

FROM: MARIA NAVARRETE

CATEGORY: ENT

TO: TRADE COMPLIANCE PROCESS OWNERS
ACCOUNT MANAGERS

FROM: DIRECTOR
TRADE COMPLIANCE

CC: STC DIRECTORS, CMC DIRECTORS, PORT DIRECTORS

PASS
TO: IMPORT SPECIALISTS, ENTRY PERSONNEL, AUDITORS, IMPORTERS,
BROKERS, OTHER INTERESTED PARTIES

SUBJ: RECONCILIATION PROTOTYPE - GRANDFATHER CLAUSE

THE ACS RECONCILIATION PROTOTYPE STARTS ON OCTOBER 1, 1998. ONE GOAL
OF THIS PROTOTYPE IS TO PROVIDE A LEGAL, FISCALLY SOUND MECHANISM OF
MAKING POST-SUMMARY VALUE ADJUSTMENTS TO ENTRIES.

LOCALLY SANCTIONED BLOCK LIQUIDATION METHODS (E.G., APPLYING A YEARS'
WORTH OF VALUE CHANGES TO A HANDFUL OF REPRESENTATIVE ENTRIES) ARE
ILLEGAL. THEY MUST CEASE, AND THEY WILL CEASE.

TO THIS END, CUSTOMS HAS TAKEN THE POLICY THAT AS OF OCTOBER 1, 1998,
THE ACS RECONCILIATION PROTOTYPE IS THE EXCLUSIVE MEANS TO MAKE EN
MASSE ADJUSTMENTS TO ENTRY SUMMARIES.

REALIZING THAT MANY IMPORTERS HAVE TRADITIONALLY OPERATED ON
CALENDAR-YEAR AND OTHER ACCOUNTING PERIODS, AND NOT WANTING TO INDUCE
UNDUE HARDSHIPS ASSOCIATED WITH MIDSTREAM TRANSITIONS, CUSTOMS HAS
DECIDED ON A GRACE PERIOD, OR GRANDFATHER CLAUSE, AS PERTAINS TO THE
OCTOBER 1ST "EXCLUSIVE MEANS" POLICY.

THE POLICY IS THIS: IF, ON OCTOBER 1, 1998, AN IMPORTER IS IN THE
MIDST OF A REPORTING PERIOD, THEY MAY FINISH THAT TERM AND REPORT
ADJUSTMENTS UNDER EXISTING PRACTICES, OUTSIDE OF THE RECONCILIATION
PROTOTYPE.

ANY NEW PERIODS, STARTING ON OR AFTER OCTOBER 1, 1998, ARE SUBJECT TO
THE "EXCLUSIVE MEANS" POLICY. ENTRIES FILED DURING THESE NEW PERIODS
MUST BE HANDLED VIA THE ACS RECONCILIATION PROTOTYPE, OR OTHER METHODS
ALLOWED BY HEADQUARTERS, SUCH AS PRIOR DISCLOSURES AND INDIVIDUAL
ADJUSTMENTS TO UNLIQUIDATED SUMMARIES.

PLEASE NOTE THAT THE GRANDFATHER CLAUSE POLICY REFERS TO A REPORTING
PERIOD, NOT NECESSARILY AN ENTIRE FISCAL YEAR. MOREOVER, CUSTOMS
APPLICATION OF THE GRANDFATHER CLAUSE IS A MATTER OF DISCRETION.
IMPORTERS WHO, WITHOUT PRECEDENT, NOW REDEFINE THEIR REPORTING PERIOD
IN ORDER TO EVADE OR DELAY THE "EXCLUSIVE MEANS" POLICY AS IT APPLIES
TO THEM, WILL NOT BE AFFORDED THE BENEFIT OF THE GRANDFATHER CLAUSE.

BASICALLY, IF AN IMPORTER HAS PREVIOUSLY RECONCILED A JANUARY THROUGH
DECEMBER PERIOD, THEY NEED NOT BE CONCERNED WITH PARTICIPATING IN THE
PROTOTYPE UNTIL JANUARY 1, 1999. A COMPANY WHICH DECIDES THIS YEAR TO
CHANGE TO A SEPTEMBER THROUGH AUGUST PERIOD MAY NOT BE ALLOWED THE
GRANDFATHER CLAUSE. OF COURSE, ANY IMPORTER WISHING TO PARTICIPATE
SOONER THAN REQUIRED BY THIS POLICY MAY DO SO.

IMPORTERS NEED NOT APPLY FOR BENEFIT OF THE GRANDFATHER CLAUSE. IF,
HOWEVER, THEY WISH TO CONVEY THEIR INTENTIONS OF USING IT TO THE
HEADQUARTERS RECONCILIATION TEAM, OR THEIR LOCAL CUSTOMS OFFICE, THEY
MAY DO SO.

SITUATIONS WHERE IMPORTERS DO NOT EVER PARTICIPATE, OR BEGIN
PARTICIPATION AT A DATE LATER THAN THIS POLICY WOULD ALLOW, WILL BE
EVALUATED IN TERMS OF GENERAL NOTIONS OF REASONABLE CARE IN IMPORT
COMPLIANCE.

QUESTIONS REGARDING THIS POLICY, OR RECONCILIATION IN GENERAL MAY BE
DIRECTED TO DON LUTHER AT (202) 927-0915, OR ERIC BATT AT
(202) 927-1106.

PHILIP METZGER