Issue 268, August 18, 2000
One of the most important steps for being compliant with U.S. Customs is to ensure that your foreign supplier's invoicing practices meet the requirements of U.S. law. Not only will better invoicing help your company be compliant, it also will make your customs brokerage operations run more smoothly and accurately as well as save your company money.

The requirements for commercial invoices are set forth in Subpart F of Part 141 of the Customs regulations. This space is too short to review all requirements, but experience shows that poor invoice descriptions are often the cause of problems with Customs.

Consider the following invoice description: "computer part." To the buyer and seller, this description may mean a lot (especially if coupled with a part number). Unfortunately, to a Customs inspector, import specialist, broker or attorney unfamiliar with the transaction, the description doesn?t provide sufficient information to determine the classification and admissibility of the article. These parties to the transaction don't know if the item is an unpopulated printed circuit board (HTS heading 8534), a microprocessor (HTS heading 8542), a mouse (HTS heading 8471), or something else. Put simply, if you were a Customs inspector, import specialist, broker or attorney, you would have to ask for more information to determine how the good should be classified.

The reality is that a description such as "computer part" often results in the good being classified as a "part" in HTS heading 8473. This is not illogical inasmuch as heading 8473 provides for computer "parts." Yet, if the good is any of the above examples, classification in heading 8473 is incorrect and could subject the importer to Customs penalties.

To correct invoice descriptions, importers should first review Section 141.89 in the Customs regulations to determine if the regulations state the type of information required on the invoice. This section, however, only sets forth requirements for certain types of goods, such as gloves, fur products, and certain textile articles.

For products not covered by 141.89, importers should review Customs Direct 3590-01, dated May 1, 1989. This directive sets forth, by HTS number, the type of information that should be set forth on a commercial invoice. It is not always easy to get foreign suppliers to improve their invoicing practices, but the rewards are worth it for those who can. In the end, you will achieve quicker release for your shipments, more certainty with respect to Customs duty liability and less Customs penalty exposure.

Our contributing writer for this article, Michael Roll, is an attorney at Katten, Muchin & Zavis in Chicago and can be reached via email or at 312-902-5200.

Please note that due to the complex nature of the subject matter, Danzas AEI cannot be responsible for actions taken by the reader in reliance on the information contained herein without prior consultation with Danzas AEI.