[Webinar] What to do When You Receive a CF-28 and a CF-29
Trade Risk Guaranty hosts a new installment in our webinar series with Strix covering the topic of what to do when you receive a CF-28 and a CF-29.
As a United States Importer, the situation may arise in which you receive a CF-28 and a CF-29, but what are they and what should you do when they arrive? These forms are Customs and Border Protection’s way of informing an importer that more information is required or that an action has been taken on their entry. In this presentation, the two are defined and examples are provided to illustrate what these notices look like.
In TRG’s latest webinar, we were joined by Gregg Cummings, a Licensed Customs Broker from our sister company Strix, LLC. During the presentation, Greg covered the following topics:
- ACE Overview Recap
- Introduction to CF-28 & CF-29
- Key Takeaways & Tips from the Experts
Watch the Full Webinar About What to do When You Receive a CF-28 and a CF-29
Read the Full Transcript from the Webinar
CF-28 and a CF-29 Webinar Introduction
00:21 – We love putting them together and I hope you guys all enjoy them. Joining me today is Gregg Cummings, Managing Partner and a Licensed Customs Broker from our sister company, Strix.
00:30 – This webinar is being presented by Strix and Trade Risk Guaranty. We’re located in the heart of downtown Bozeman, Montana which, for any of our winter enthusiasts out there, is having a killer snow year. Bridger Bowl, our local ski hill, has received 240 inches of snow since November. So if you love the snow and playing outside, this winter is a good year to check out Bozeman.
00:54 – If you do make it to Bozeman, don’t forget to stop by our shared office space on the second floor of the historic Rockin’ ‘R’ Bar building. Both of our companies operate on a direct-to-importer business model that is unique to the international trade community.
01:05 – As an important disclaimer, the information presented in this webinar is for information purposes only and is not intended and does not constitute legal advice.
01:14 – We will be recording this webinar and it’ll be available on YouTube for future reference. To be notified the moment it releases and to keep a pulse on TRG’s educational videos, I highly recommend that you subscribe to our YouTube channel. You can find this by searching ‘Trade Risk Guaranty’ on YouTube or by reaching out to us.
01:35 – If you have any questions during the presentation, submit it via the questions section of the webinar interface. The questions will be reviewed and answered by Gregg or our team of Licensed Customs Brokers at the end of or shortly after the webinar. If you have any additional questions outside the webinar, or you would like to be a part of our community of trade professionals, join our Facebook group ‘International Trade Professionals’.
02:00 – Without further ado, here’s Gregg to kick off the webinar.
An Overview of the New ACE Environment
02:15 – We’re gonna cover some important topics today, we won’t take up too much of your time given the late start, but we’ve got some good things to cover and I’m also going to talk a little bit about some industry news that’s out there as well.
02:26 – So we’ll talk a little bit on a little overview and recap, some of you probably heard that from our previous webinar, and today, in particular, we’re going to talk a little bit about Requests for Information. What’s CBP doing today in our current ACE environment and what does it mean to you? What will happen if you see Requests for Information, Notices of Action? What should you do? And then we’ll talk about a couple of key takeaways, some tips and some ideas, that we have and helping you with your import program.
02:55 – So first let’s talk a little bit about ACE. What ACE is? What’s going on out there? Of course ACE, most of us know, is the updated system that Customs now uses to process your data, process your documentation. The acronym, of course something that CBP is very good at, is ACE or the Automated Commercial Environment.
03:19 – And what it really is, it’s a dramatic improvement. I mean we were living in a system that was in place for many years and customs as we had all hoped moved to what’s called the single window single window system that now all imports and exports are processed through so in the past we had a lot of manual processes and we had a lot of paper and what this system is designed to do is to streamline that.
03:48 – Make it more automated and try to eliminate some of the things that were friction in the past or created time delays and hopefully, in the end, it’s going to allow the trade community to more easily and efficiently comply with all of the U.S. laws and regulations around importation. You know, some of which seem to be increasing as the years go by.
04:10 – It’s always important to start by talking about Informed Compliance. And, in the U.S. in particular, you the importer have a relatively large burden because Customs expects you to understand all the regulations about your documentation, about your importation so that it’s done in a regulatory compliant way. So we as importers, we get kind of used to hearing that term ‘compliance’ because it’s important that we are compliant as an importer because you the importer expected to understand all these components and exercise them in what’s called a ‘reasonable care’. Because at the end of the day, of course, you are the one who’s liable for the accuracy of your import documentation.
05:07 – So while you may use a third party to assist you; a freight forwarder, a Customs broker, in the end the accuracy of that data and everything that’s done is your responsibility.
05:14 – So Customs puts out a lot of informed compliance information so that you’ll understand the regulations and then you have to put policies and procedures in place to exercise what’s called reasonable care.
05:32 – Now what’s the current state of ACE? Okay and so many of us know that this has been a very expensive endeavor, four billion of our tax dollars at work over eighteen years, but the good news is that ACE is now nearing full deployment from a Customs point-of-view.
05:48 – From a CBP data point-of-view we can say that it is fully deployed. So for those of you who are not involved with any agency documentation, ACE has been in place for a number of years which has been very good. What’s been even more difficult to kind of finalize and get across that line or the final mile, if you will, is the Partnering Government Agencies.
06:12 – And what we saw is when ACE began to set up for programming all of the agencies to bring them into that single window, the agencies kind of took a little time to. You know we’ve been getting this set of data for a long time, but what we’d really like is to get this additional set of data too. So they changed a couple of the data requirements depending on which agencies you’re dealing with and each of the agencies has been in charge of their own programming and getting things finalized through ACE.
06:47 – So now of course the question is how does it how is it going to affect us how is it infecting you the importer with these new systems and, of course, whenever the government has access to more data and they’ve got access to people who can write algorithms to look at that data, you can be assured that they’re going to look a little bit more closely and be able to look more closely at what you’re doing.
07:18 – So the ability to target mistakes and inconsistencies in your entry data has improved to levels that have never before been seen in the industry. So what you’re seeing are more exams you’re seeing more Requests for Information and this is because Customs Import Specialists are looking at your data in ways that they couldn’t look at it before. They’ve really got access to important levels to cross-check and look at not just what you’re doing, but look at what you’re doing in comparison to what other people who are importing similar goods in similar industries from the same suppliers.
07:58 – So you can expect that Customs is not going to decrease this scrutiny, they’re going to increase it. And one thing that, of course, is coming out of that is those Requests for Information. And what we’re seeing as a Customs Broker, as well as a software provider, is that it’s happening at different levels. And Customs is kind of working themselves through how they’re going to do this best in the future as well.
08:27 – But we see things starting with emails coming from an Import Specialist, getting a phone call from an Import Specialist, moving up to more formal Request for Information. which are CF-28s which may or may not lead to a CF-29 which is a Notice of Action.
What Are CF-28s and What To Do When You Get One?
09:16 – Okay, the first and most prevalent one is classification. What HTS codes are you using for the goods that you’re bringing in? And Customs has a point of view on this and they are going to take a look at what you’re bringing in and, again, be able to cross look, cross-check, that against other industries and other suppliers. And if they’ve got a question and they’re not sure, you might get a Request for Information.
09:42 – Another important thing that’s out there is Intellectual Property Rights. Trade names, copyrights, brands. Are you bringing in goods that you’ve got branded as a trade name associated with it? This is a big deal for Customs because that’s monetary value for the companies who have those brands and own those copyrights.
10:08 – So look very closely at that what’s the valuation, okay, what are you showing Customs as you’re entered value? Either at the line value, in a total value because that’s where your duties and fees are processed against. Are you doing business with a related party? Are you part of a subsidiary combo that’s global in nature? And are you bringing goods from factories that are related? Customs cares about that because of the accounting.
10:33 – There’s a perception that accounting could be fudged and, of course, that’s historically been the case in some cases. And so Customs looks at that because internal accounting could be a way for you to avoid valuation and certain pricing which again the duties and fees are based on.
10:50 – And, of course, we all know anti-dumping. A big deal, it’s in the news, more industries more products are becoming subject to that as we try to, you know, perhaps equal the playing field as far as products are concerned.
11:08 – So again, the most prevalent thing that we see is a Request for Information regarding a classification, regarding a tariff code. And, of course, we know that these codes are used to determine the classifications for goods. Those have a duty rate, you know, or they might be duty-free.
11:27 – That classification is determined on a pretty straightforward basis. What’s the name they use, the material used for construction, and what we’d like you to think about, is how are you classifying your goods? Because it’s so important and it is being reviewed by Customs.
11:46 – How are you doing it? An age-old way for smaller, perhaps less resource oriented importers, is you use your Customs Broker. And being a Customs Broker we’ve got a team of people who are expert in classifying goods and it’s something that we become expert in.
12:06 – When you get licensed it’s a very big part of the test so you must know how to classify goods. And so using your Customs Broker to do that is very much understood by Customs to be a good practice, we might suggest though that, especially if your imports are increasing if you can bring that in-house. The best practice is to have an internal team at your company.
12:30 – You always say, you know, who knows your products better than you. Which means that you ought to be able to classify those goods as good as any broker out there.
12:39 – So what happens, let’s say we get Requests for Information? It’s a CF-28. What’s that stand for? Well in an all their ability to be creative, its Customs Form 28. So pretty straightforward there. But it’s a Request for Information and what it’s really saying is that if Customs finds that the information that’s given to them during the normal entry process is incomplete, it’s inaccurate, insufficient, they have some kind of a question that doesn’t allow them to make a quick decision or agreement with what’s been put in then they’re going to send out a form asking you to clarify.
13:20 – You know, give us additional information so we can be certain that what you did was correct. If, as is usually the case, they’ve got a question that it’s not they can overcome that okay when you get this report where you get this form you’ve got 30 days after the issue date to respond in writing to Customs this is very important because if that response is not received within that time frame then Customs going to keep moving forward they’re going to make a determination on their own with the information that they have available so oftentimes you might find that that’s not the most favorable interpretation of what you believe the correct facts are.
14:07 – Okay and that might leave you with the financial disadvantage. You might get a duty bill, you might get a fine or a penalty, so it’s very important that you take these forms seriously and respond to them in that time period. If that means you need to talk to your broker about it, we do this in conjunction with importers all day long.
14:30 – And that’s what you do, but you want to be complete, you want to get that out to them as quickly as you can.
14:34 – Now this is a quick look at what a CF-28 looks like. Pretty official looking form and it’s going to ask you to fill out a series of check boxes and to essentially describe or improve on the detail Customs is looking for and here’s a very important part of the CF-28. Okay and you can see this kind of near the bottom here, and it says “I hereby certify its information is correct, it’s true, and correct” and it’s going to be a person, usually an officer of the company, that’s going to sign this.
15:15 – So you know, you’re stating to Customs that all these facts are true and complete. So when Customs goes back and they take a look at this information, if they’ve got an alternative point of view, you’re the one who’s going to be liable. So it’s very important to really take these things seriously.
15:33 – So what’s the process, you know, when you get, at the time of entry or shortly thereafter. What happens is Customs continues to review your data and if they feel that it’s been misclassified, uncertain of the details, they’re going to issue a 28 asking you for that additional information. Again, if they don’t receive that information timely, or if you do it kind of marginally so that the information is not modular and complete, then they may move directly to a determination on their own, informing you the importer of that action to be taken.
16:12 – So depending on what that CF-29, that Notice of Action, may state; you might receive a supplemental duty bill. It’s going to change the duty rate on the goods that you brought in and you might get a bill for that.
What Are CF-29s and What To Do When You Get One?
16:41 – Okay, so Customs has said, you know, kind of ‘Thank you for that information however good or not that it was and here is what we think about that. Here is our notice of action to be taken’. So when, in particular, let’s say Customs believes there should be a change in the classification. Then they might move you from the classification you put in that might be duty-free and they might move you to a classification that has a duty rate on that.
17:16 – So very important to understand that these Notices of Action are kind of difficult to get past. We’ve kind of moved past the information stage. We’ve received that action by Customs and that signifies their intention to change the way that that entry was classified, or valued, etc. Or whatever that change might be and it dictates to you how all your future shipments will be treated. So the Notice of Action, it’s not singular in nature, it’s going to affect how all of your entries are going to need to look from there.
17:56 – So again, when you get that CF-29 you actually might get ‘Action Taken’ or ‘Action Proposed’. The Action Proposed is kind of like that final ‘alright we’ve gotten information, We’re gonna give you kind of one last shot here’. You got twenty days to respond and try to overcome what Customs believes the Action Taken is or should be.
18:21 – If you received a direct Action Taken then Customs, again, they’re indicating that this action has been taken. Could be an increase, could even be a decrease in duties because, at the end of the day, Customs is looking for correct classifications and it could be up, could be down. You know, as you might imagine, most of them are up but from there, you know, you’ve kind of moved past your ability to, you know, really have that discussion with Customs anymore.
18:53 – It can only be addressed from a protest from there. So here’s what a CF-29 is going to look like, again, fairly straightforward official looking form. We’ve got some highlights there that are kind of difficult to read so I’ll move to this next slide and there are some things on here that, you know, that are kind of important. And in this particular one Customs is highlighting and saying, you know, we sent you a 28, you sent us some information back, and we’re telling you that, you know, one or two-word description on this product is inadequate, wasn’t adequate to describe the merchandise.
19:35 – So we kind of took the information that you gave us and in the end, you can see highlighted on the second line there, CBP does not agree with the classification. That’s declared at the time of entry for these particular lines in that entry and so as such, they’re going to give you what the correct classification is and in this case we moved from a no duty rate to 4.2 percent. Now you can imagine, you know, if you have brought your goods in, you have sold them into commerce at a particular expected price point and margin.
20:15 – If you receive this back and you have 4.2% shaved off that, well, you know, we’re in a skinny economic environment out there. That could take either a very large portion, if not all the portion of your profit, out so this is really important to get the kind of information in as full as you can to Customs.
20:30 – Now let’s also take a look at the last highlighted note down there, ‘Please note future shipments are identical or similar merchandise should be entered accordingly to the findings above’. Is what they’re referring to in an order for you to be in compliance with these instructions. any future entries not in conformity with these instructions will be rejected. So that, again, says if you get a Notice of Action, Customs expects you to, if you’re a self filer, classify those goods according, in the future, or if you’re using third-party resources the Customs Broker or brokers, that you let them know what those classifications have been put into action.
21:16 – So it’s very important you know it’s kind of like Customs says okay you were wrong here’s the right classification and here’s your duty amount and you know there may not be a fine or penalty involved with that, it’s just here’s what the duties should have been in the first place you need to pay it now. If you go back and you misclassify it again as you did in the past, they’re going to lose their sense of humor on that. A fine and penalty will probably also become part of that.
Key Takeaways And Tips From the Experts
21:48 – And the first easy one is ‘Review your HTS classifications today’. Take a look, hopefully, you’ve got a parts list, you’ve got a Parts Master, where you’ve got a part number and a classification associated with it. If you’re not that formal, however, you’re classifying your goods, you know, take a look at it again it’s always good to do that at the beginning of the year and make sure that the classifications that perhaps have been in place are correct.
22:18 – And you might, you know, again take a look at some third-party resources to help you in that, but you know one point that we think is very important. Don’t let a foreign supplier classify your goods, and we see this all too often especially in the brokerage side, where we talk to an importer usually you know smaller volume or someone who’s new and they’re like ‘oh no, I got the classification from my supplier, you know, its duty-free’. Well, of course, it is because that’s what they want it to be for you to be happy with the purchase that you’ve made.
22:53 – It gets even worse if you get into a tariff code that may be subject anti-dumping. We’ve seen several very painful examples where goods were ordered they came in the tariff code could be subject to anti-dumping. Of course, when you ask the supplier they’re, of course, not subject to it but under further scrutiny they were. And so that can be a very ugly outcome that you don’t want to happen.
23:19 – If you get a CF-28 or if you get a Request for Information, what is your SOP? What’s your operating protocol? Have a very clear action plan in place. Okay, if you get that talk with a team internally, if you’ve got a good solid compliance team, you know, have a discussion with your broker about what it is what they’re asking for, how you should reply because those 28 and 29’s are date specific.
23:44 – If you want to elevate that quickly and you want to get with whatever expert team you can as quickly as possible to get the information set up and back to Customs as quickly as possible.
23:56 – Of course, you know, not all your 28 and 29’s are setting around classification. So what we’re suggesting is you should be auditing your broker. We get audited all the time by our clients and by third-party resources. Why? Because it’s a good best practice.
24:13 – Is the information that you’re giving us, as a broker, being utilized correctly as you expect it to be? Are those entries reflecting the information from classification to valuation, to property rights? Is your broker doing what you expect them to do? Because at the end of the day, if they’re not, then Customs comes to you for fines and penalties and for the action of those mistakes.
24:45 – So you know it’s important to ensure through an audit that the broker is submitting that information and it’s also important for you, internally, to make sure that we get that information accurately and timely so it’s part of that entry and its part of the import process.
About Strix Customs Brokerage
25:22 – For those of you who don’t know us, we kind of occupy a very interesting place in the trade because we are both a software provider to allow you to self-file your ISF or your Customs entry, but we’re also a full-service Customshouse Brokerage. So we do full-service brokerage and ISF all day long and we do a full menu of partnership with clients who self-file some of their business and they outsource some of it to us.
25:50 – One thing I would like to say that’s out there in the trade, that’s kind of timely, that is for those of you who are involved either via your freight forwarder or directly with the shipping line. For a shipping line contract coming up here in the next couple of months, there have been some interesting developments on the drayage side and that’s the container offloading, what we’re seeing is that there’s been a tremendous amount of pressure at the ports in getting containers and getting the product that the last mile out.
26:31 – So what we’re seeing is that many ocean carriers are looking to limit the number of their stored or contracts that rollover on May 1st in a large part the ocean carriers are declining to offer the door service because of this capacity shortage. So carriers that agreed to door rates in the past with customers have found that finding truckers who they had contrary with to provide those moves are either unable or unwilling to provide the capacity that was negotiated.
26:59 – So this is a bottleneck that’s really important, you know, we live in this ‘just-in-time’ kind of environment for our factories and for our warehouses and delivery to our customers. So if you have a contract with a steamship line and the goods are duly shipped to a port, but once they get there the contracts and, these can be complicated, you know Maersk requires that their drayage providers used their chassis and not another chassis from the pool.
27:38 – Some of the drayage providers that contracted an aggressive rates with the Steamship Lines don’t have the capacity or they’ve all of a sudden become unwilling to fulfill that capacity because the rates are down the SPOC rates are down and they’re getting a lot higher rate.
27:56 – So be aware as these contracts come up in May, we might see a different environment unfolding out there as far as that last mile in your drayage rates. So as a broker, and as a drayage provider, a trucking provider, we get involved in this quite a bit and we’ve seen a lot of pain here in the past couple of months because that container that got delivered sometimes was one, two, and even three weeks delayed getting to the final warehouse, the fine delivery point.
28:27 – So a lot of you out there really don’t like that to be the case so, you know, it may be that you might be taking or looking at a port delivery than taking care of that transportation yourself. If that’s the case make sure you know you’ve got access to a good provider.
Questions and Answers with Gregg Cummings from Strix
29:05 – You know, CEEs may or may not be using ACE for that you as an importer you should have access to ACE. You should get signed up and you should get familiar with ACE because the ability to view a CF-28 in ACE is there today and you’ve actually got an ability to respond to a 28 out of the ACE portal. So get familiar with it and use it where you can.
29:30 – Now if CBP calls us up and says ‘Hey, we’ve got some question on that?’ You know, I guess we look at that as being serious because there’s some question involved in that shipment, but today the way that things are set up is we’ve got the ability to download document a via the document imaging system. So that system is still there and used in the kind of informal stage can I protest a rate increase without paying the duty nope Customs gives you a Notice of Action, that is a notice of action in a Supplemental Duty Bill.
30:10 – That must be paid unless it’s, of course, you get the, you know, Proposed Notice of Action you got another 20 minutes, well 20 days, hopefully, it’s not that short but you got to pay that. And if in the future that protest is successful, then you would get a refund but you’ve got to pay that duty otherwise you’re going to be, kind of, in contempt of the order.
30:34 – So next question do these notices go straight to the importer, company, or to the broker, will a broker assist in the investigation? That’s something we talked a little bit about earlier. These notices always go to the importer of record. Now I can tell you as a broker, and as a software provider, if you get one contact me immediately because we get very involved in this, we can kind of, you know, work through a little of the gray areas.
30:58 – Help you understand it better, but they’re coming to you because that is, you know, Customs has a bond they’ve got an address it gets back a little bit to our last webinar where, we say, have a policy and procedure in place to receive notices they are serious if you go to 28 and it goes unseen because it ends up in someone’s box who wasn’t supposed to get it.
31:20 – They didn’t know what it was that’s a problem because Customs may have moved to a Notice of Action without your reply and they don’t have a sense of humor when you say dog ate the homework we had one asking about if you happen to be involved in a particular commodity like potatoes or something else food-related would a 28 or 29 pertain to your business it is not product specific 28 or 29 s or on any potential imported product that come into the United States so it doesn’t matter if it’s if it’s fish or Steel potatoes or potatoes I recently received a 28 it okay to send all the information back by email to see who’d be official you will provide in the back yes it is I would send it FedEx I would send it so that you know it was received and signed and duly noted by them and, again, if you know if you want.
32:25 – So if you want a couple more eyes on that, give us a ring and we’re happy to help out with that. But I always like to know it was received and have that record. Really thank you for attending today, hopefully, we covered some things of interest and helped you out. If you’ve got additional questions please give us a ring and thanks again for attending.
Meredith Lambert • May 10, 2018
↞ Previous Post[Webinar] What Are Customs Brokers & Freight Forwarders?