Customs Modernization Act
Encyclopedia
The Customs Modernization Act , formally Title VI of the North American Free Trade Agreement
Implementation Act, commonly known as the "Mod Act", amended the Tariff Act of 1930 and related laws. The Mod Act has been described as the most sweeping regulatory reform legislation since the U.S. Customs Service (now Customs and Border Protection
, or "CBP") was organized in 1789 and it has become a benchmark for customs authorities around the world. The Mod Act introduced two new customs concepts known as "informed compliance" and "shared responsibility." These concepts are premised on the idea that in order to maximize voluntary compliance with Customs laws and regulations, the trade community needs to be clearly and completely informed of its legal obligations. Accordingly, the Mod Act imposes a greater obligation on Customs to provide the public with improved information concerning the trade community's responsibilities and rights under Customs and related laws. In addition, both the trade and Customs share responsibility in carrying out import requirements.
Section 637 of the Mod Act amended section 484 of the Tariff Act of 1930, and imposed on importers for the first time a statutory duty to exercise "reasonable care" in providing CBP with accurate and timely classification, appraisement
and other data upon importing cargo. CBP then establishes the final classification, appraisement and rate of duty
applicable to an imported good based on the importer's data. Importers face penalties for failing to exercise reasonable care.
The Mod Act also contained several amendments to the enforcement powers of CBP.
North American Free Trade Agreement
The North American Free Trade Agreement or NAFTA is an agreement signed by the governments of Canada, Mexico, and the United States, creating a trilateral trade bloc in North America. The agreement came into force on January 1, 1994. It superseded the Canada – United States Free Trade Agreement...
Implementation Act, commonly known as the "Mod Act", amended the Tariff Act of 1930 and related laws. The Mod Act has been described as the most sweeping regulatory reform legislation since the U.S. Customs Service (now Customs and Border Protection
U.S. Customs and Border Protection
U.S. Customs and Border Protection is a federal law enforcement agency of the United States Department of Homeland Security charged with regulating and facilitating international trade, collecting import duties, and enforcing U.S. regulations, including trade, customs and immigration. CBP is the...
, or "CBP") was organized in 1789 and it has become a benchmark for customs authorities around the world. The Mod Act introduced two new customs concepts known as "informed compliance" and "shared responsibility." These concepts are premised on the idea that in order to maximize voluntary compliance with Customs laws and regulations, the trade community needs to be clearly and completely informed of its legal obligations. Accordingly, the Mod Act imposes a greater obligation on Customs to provide the public with improved information concerning the trade community's responsibilities and rights under Customs and related laws. In addition, both the trade and Customs share responsibility in carrying out import requirements.
Features
The principal features of the Mod Act are:- improvements in customs enforcement generally;
- enhanced regulatory audit procedures;
- clarified drawbackDrawbackDrawback, in law in commerce, paying back a duty previously paid on exporting excisable articles or on re-exporting foreign goods. The object of a drawback is to let commodities which are subject to taxation be exported and sold in a foreign country on the same terms as goods from countries where...
authority and new drawback penalties for false drawback claims (previously, U.S. customs laws had no penalties for companies that filed false claims, and as such companies had no incentive to expend the effort to file the claims correctly.); - the creation of a National Customs Automation Program; and
- the acceptance of reconciliations with respect to prior entry summaries.
Section 637 of the Mod Act amended section 484 of the Tariff Act of 1930, and imposed on importers for the first time a statutory duty to exercise "reasonable care" in providing CBP with accurate and timely classification, appraisement
Customs valuation
Customs Valuation is the process where customs authorities assign a monetary value to a good or service for the purposes of import or export. Generally, authorities engage in this process as a means of protecting tariff concessions, collecting revenue for the governing authority, implementing...
and other data upon importing cargo. CBP then establishes the final classification, appraisement and rate of duty
Duty (economics)
In economics, a duty is a kind of tax, often associated with customs, a payment due to the revenue of a state, levied by force of law. It is a tax on certain items purchased abroad...
applicable to an imported good based on the importer's data. Importers face penalties for failing to exercise reasonable care.
The Mod Act also contained several amendments to the enforcement powers of CBP.
- To the extent that an importer fails to use reasonable care, Customs may impose Section 592 penalties.
- Section 615 amended section 509 of the Tariff Act, creating new recordkeeping penalties for importers up to $100,000.
- Section 621 amended section 592 to apply existing penalties for false information to information transmitted electronically and allows Customs to recover unpaid taxes and fees resulting from other section 592 violations.
See also
- U.S. Customs and Border ProtectionU.S. Customs and Border ProtectionU.S. Customs and Border Protection is a federal law enforcement agency of the United States Department of Homeland Security charged with regulating and facilitating international trade, collecting import duties, and enforcing U.S. regulations, including trade, customs and immigration. CBP is the...
- Entry visibilityEntry visibilityEntry visibility is an aspect of supply chain visibility, allowing a company to manage the proper use of trade compliance data for the importation of goods from the time they leave a foreign supplier until the time those goods reach their destination. Entry visibility aims to ensure that all...
- World Customs OrganizationWorld Customs OrganizationThe World Customs Organization is an intergovernmental organization headquartered in Brussels, Belgium. With its worldwide membership, the WCO is recognized as the voice of the global customs community...
- Customs valuationCustoms valuationCustoms Valuation is the process where customs authorities assign a monetary value to a good or service for the purposes of import or export. Generally, authorities engage in this process as a means of protecting tariff concessions, collecting revenue for the governing authority, implementing...