3550-071 "Change" and "No Change" Liquidation Notations

Published CBP guidance; operative status and applicability must be assessed from the retained publisher edition.

CUSTOMS DIRECTIVE

ORIGINATING OFFICE: CO:TO:I:O DISTRIBUTION: SEE SIGNATURE PAGE
CUSTOMS DIRECTIVE NO. 3550-071
ISSUE DATE: JULY 27, 1994

SUBJECT: "CHANGE" AND "NO CHANGE" LIQUIDATION NOTATIONS

1. PURPOSE:

To establish a uniform system of "Change" and "No Change" liquidation notations
on entry summaries and associated invoices.

2. BACKGROUND:

Liquidation is the final determination of admissibility and computation of duties,
taxes, fees and/or drawback accruing on an entry. It is essential that entry
summaries, and their invoices when appropriate, be notated with or be
associated with clear and explicit liquidation instructions to ensure that the
entries are liquidated accurately and according to the regulations.

This directive provides the notations to be used for "No Change" and "Change"
liquidations on entry summaries and invoices except for AII paperless entry
summaries. For "No Change" and "Change" notations on AII paperless entry
summaries, see Headquarters memorandum MAN-1-CO:T:I:P LL, dated
October 8, 1993, "Standard Operating Procedures for the Review and
Processing of Electronic Summaries/Invoices."

These notations will be recorded by Import Specialists and/or Entry Specialists
(IS/ES) on invoices and entry summaries. The notations will be subject to review
by Supervisors and other concerned parties as appropriate. Duties, fees and
taxes will be calculated and notated on the CF 7501 by entry personnel or
liquidators. Import Specialists will perform calculations on an as-needed basis.

3. ACTION:

All notations recorded on an entry or invoice by an IS/ES must be in red ink,
legibly written or stamped, and initialed. No report or notation made by an IS/ES
on the invoice should be erased, blotted out or otherwise eradicated. If a
correction must be made, a single red line should be drawn through the original
notation. The new notation should be dated and initialed by the person making
the change.

Notations made by brokers or importers on invoices should never be erased,
lined out or obliterated. Worksheets or other attachments are acceptable for the

required IS/ES notations provided that: (1) notations are in red ink as they would
normally appear on the invoice or entry summary; (2) attachments are securely
affixed to the entry summary package; and (3) there are clear references on the
invoice and entry summary to the attachments.

An exception to the above procedures may be made where the same appraisal
or classification action is required on a large number of entries, e.g., anti-
dumping/countervailing. When this is the case, an appraisal or classification
action may be written or printed out by computer and signed, then associated
with each entry or batch of entries. However, this exception or any other
exceptions determined to be necessary by a field office must be fully
documented and submitted to Headquarters for approval before any action is
taken on the entries.

Once an entry has been liquidated it should not be altered in any manner, except
in the case of stipulations where green ink is appropriate. When an entry is
reliquidated, a form or worksheet (see Attachment #1) should be filled out in red
ink and attached to the entry summary showing the reliquidated amounts.

Please note: The amount provided for in 19 CFR 159.6 is currently $10 but is
subject to regulatory revision due to Title VI - Customs Modernization of the
NAFTA Implementation Act of December 8, 1993.

A. No Change

A "No Change" entry summary is one in which there have been no
changes reported in entered quantities, values, classification, or any other
factor up to a net difference of less than $10 (except Antidumping/
Countervailing (AD/CVD)) between the total liquidated duties and the total
estimated duties deposited. When the IS/ES reviews an entry summary
and agrees with the entered values and rates of duty, or there is a net
difference of less than $10 between the total estimated duties and total
liquidated duties (except for AD/CVD), he/she shall notate the entry
summary by placing check marks in the bottom of Columns 33 and 34 (or
a NO CHANGE/AS ENTERED stamp may be used) and writing the
appropriate liquidator code in the space provided. No notations are
required on by-passed entries.

For AD/CVD purposes, when the Department of Commerce, International
Trade Administration, instructs Customs to "liquidate at the rate required
at the time of entry," the result is not necessarily a "No Change" liquidation
because a bond may have been accepted in lieu of a cash deposit, etc.

B. Changes:

A "Change" entry is one for which there is a difference of $10 (except for
AD/CVD) or more between the total liquidated duties and the total
estimated duties deposited. The change can result in either an increase
or decrease in duty. There are many reasons why liquidated duties may
be different from estimated duties. The most common are changes in the
entered value, classification, quantities and foreign currency exchange
rates. Differences may also be the result of changes in AD/CVD rates of
duty, for additional or special rates of duties or fees, or the assessment of
marking duties.

Whenever an IS/ES determines that a change is in order, he/she must
notate the change on the invoice, worksheet, attachments, and the entry
summary, depending on the type of change being made. If the IS/ES
determines that additional fees are due, the fees are to be listed
separately on the entry summary.

Where an increase in duty due exceeds $15 (C.R. 152.2), or when
transaction value is rejected and this increases the duty liability (C.R.
152.103(m)), Customs must send a notice of the change to the importer
on a CF 29 "Notice of Action". The CF 29 should clearly specify the
nature of the difference. The CF 29 should also specify whether the
action is proposed or already taken. When the action is proposed, the
importer should be given 20 days to respond in writing if in disagreement.
"CF 29 (date)" should be entered in the blank space below block A of the
entry summary.

The liquidation reason code shall be shown in block A of the entry
summary in front of the liquidator code, e.g., 01/999. See Attachment #2
for list of reason codes.

(1) Classification and Rate of Duty If the IS/ES disagrees with one or
more of the tariff classification numbers or rates, he/she shall
write on the invoice the proper tariff number or rate opposite the
item to which the change applies and initial and date the change.
In addition, he/she shall write an "RR" or "RA" in the right-hand
margin of the invoice opposite the item to which the change
applies. "RR" indicates that the rate of duty has been reduced.
"RA" indicates that the rate of duty has been advanced. "RA" or
"RR" shall also be written on the bottom of Column 34 and a check
mark should be noted on the bottom of Column 33 (if in agreement
with the value) on the entry summary. See Attachment #3 and #4.

(2) Value If the IS/ES disagrees with one or more of the entered
values, he/she shall write a statement of appraisement on the
invoice and initial and date the changes. The notation "ADV" or
"RED" shall be written in the right-hand margin of the invoice

opposite the items to which the changes apply. "ADV" indicates
that a higher value than the entered value applies. "RED"
indicates a lower value than the entered value applies.

The statement may be expressed in terms of unit value or it may be
expressed as a total invoice value. If expressed as a total
invoice value and if more than one rate of duty applies to the total
invoice value, a separate value must be shown for each
different rate of duty.

The purpose of the statement of appraisement is to communicate
clearly, concisely and in proper sequence the formula for arriving at
the liquidated value.

There are four elements to consider in a statement of
appraisement:

(a) determination of the unit price and quantity

e.g., appraised at invoice unit price of $5.94 per dozen

(b) any adjustments to that price, expressed as "plus" or "less"

e.g., appraised at invoice unit price of $5.94 per dozen plus
$6.00/per dozen for proceeds

(c) statement as to packing costs, whether included ("packed")
or to be added ("plus packing")

e.g., appraised at invoice unit price of $5.94 per dozen plus
$6.00/per dozen for proceeds, packed

(d) statement as to transportation charges included in terms of
sale, ocean freight, air freight, insurance, etc.

e.g., appraised at invoice unit price of $5.94 per dozen plus
$6.00/per dozen for proceeds, packed, less ocean freight
and insurance.

Following are some examples of statements of appraisement:

 Appraised at invoice unit values plus, (or less) items marked X, packed, less
freight and insurance.

 Appraised at U.S. dollars, plus 5 percent packing.

 Appraised at invoice total of $55,000, packed.

 Appraised at U.S. dollars at $1 for 240 Yen at invoiced unit values, packed.

 Appraised at 6 Francs per dozen less 5 percent commission, packed.

See Attachment #5 and #6.

(3) Currency Conversion If the merchandise is appraised in a foreign
currency, the foreign currency must be converted into U.S. dollars
in order to determine the liquidated duties. The exchange rate to
be used is the certified rate in effect on the date of exportation
except where an agreed upon rate or date has been established by
the buyer and seller.

The currency rates can be viewed in ACS using function code
CYAL. The currency conversion shall be noted on the invoice and
the correct value shown in Column 33 and "Currency Conversion
(invoice number)" noted in the blank space below block A on the
entry summary. See Attachment #7.

(4) Merchandise Not Legally Marked Certain merchandise is required
to be marked or labeled pursuant to Customs Regulations. If such
merchandise is found after release not to be legally marked, the
District Director may demand its return to Customs custody
using CF 4647 "Notice to Mark and/or Notice to Redeliver" for the
purpose of requiring it to be properly marked or labeled.

A statement of the facts shall be made on the face of the invoice as
to any items or containers not legally marked. The notation "NLM"
shall be placed on the right-hand margin of the invoice opposite the
item. Once the disposition of the marking violation has been
determined, the IS/ES shall write on the invoice: (1) that the items
have been satisfactorily marked; (2) that marking has been waived
in accordance with C.R. 134.32; or (3)that the articles have entered
the commerce without being legally marked or excepted from
marking requirements. If the latter has occurred, the IS/ES shall
indicate on the invoice the items assessed with a 10 percent
marking duty and shall note on the entry summary that 10%
marking duty is being assessed. "NLM (line number)" should be
shown in the blank space below block A. See Attachment #8.

(5) Clerical Errors Clerical errors usually involve mathematical errors in
addition, duty extensions or when reading information from the
invoice to the entry summary. The statement "clerical error" should
not be used on the entry summary and invoice because of legal

connotations in protest and court proceedings. Instead, the clerical
error should be briefly described on the entry summary and invoice.
For example, error in duty rate, incorrect duty extension in line 001,
etc., should be notated on the entry summary and the incorrect
information lined out and the correct information entered. See
Attachment #9.

(6) Antidumping and Countervailing Duties When an antidumping or
countervailing duty final determination is made by the Department
of Commerce, the IS/ES shall notate the invoice, worksheet, or
attachment and the entry summary with the proper assessment,
indicating whether duties are to be increased or refunded. In
addition, the E-mail message number or C.I.E. number providing
the authority to liquidate should be noted on the entry summary.
See Attachment #10.

The IS/ES must review the entry summary to compare the deposit
amount to the required amount. If there is a difference, a "Change"
liquidation results. Additionally, if a bond was provided in lieu of a
cash deposit at the time of entry summary, a "Change" liquidation
is required in order to recover the required assessment. There are
no de minimis limits for AD/CVD change liquidations. ACS has
been modified to accept change liquidations for less than $10 for
entry summaries subject to AD/CVD.

(7) Shortage and Excess If the IS/ES learns of a manifest
discrepancy, a notation of the discrepancy shall be written on the
invoice. In addition, the word "Shortage" or "Excess" shall be
written on the entry summary, a line drawn through the incorrect
quantity and the correct quantity shown.

(8) Damaged and Defective Merchandise If the merchandise is found
to be damaged or defective at the time of importation, an
allowance shall be made according to C.R. 158.12 when the
invoice price does not reflect the reduced value. The notations on
the invoice and entry summary should be those for value reduction.

(9) Merchandise Entirely Without Commercial Value If a shipment or
any portion of the shipment is found to be entirely without
commercial value by reason of damage or deterioration, the IS/ES
shall note "NCV" opposite the invoice description of the affected
item. In addition, the Customs Officer should note "NCV" for the
affected item on the entry summary.

(10) Prohibited Merchandise A statement of the facts shall be made on
the face of the invoice of all prohibited merchandise, including

those violating the laws and regulations concerning trademarks,
trade names, and copyrights, and the FP&F or OE case number, if
known. The notation "Prohibited Merchandise" shall be shown on
the entry summary, and no duty assessed provided the
merchandise is exported or destroyed in accordance with
19 CFR 158.45(c).

(11) Supplemental Duty Supplemental duty deposits (payments
deposited by the importer/broker after estimated duties have been
paid but prior to liquidation of the entry (C.R. 141.105)) or a refund
prior to liquidation (C.R. 173.4a) shall be shown on the face of the
entry. A copy of the supplemental duty letter or the request for
refund shall be attached to the entry package.

(12) The IS/ES is responsible for ensuring the totals in Column 35 and
blocks 37 through 40 on the entry summary are correct.

5. RESPONSIBILITIES

Regional Commissioners, District, Area and Port Directors of Customs will
ensure that the procedures stated in this Directive are implemented and followed
accordingly.

4. SUPERSEDED MATERIAL

None

Assistant Commissioner
Office of Commercial Operations

Attachments

Distribution:
R-01 Regional Commissioners
R-04 ARCs (Operations)
R-10 Deputy Assistants Regional Commissioners (Com'l Ops)
F-01 District/Area Directors
F-02 Port Directors
F-07 Asst. Dist. Directors (CO)
G-20 All Import Specialists
G-26 Entry Officers