Clarification of the National Customs Automation Program Test Regarding Reconciliation; Latent Defects, 46882-46884 [05-15904]

Download as PDF 46882 Federal Register / Vol. 70, No. 154 / Thursday, August 11, 2005 / Notices Information is also available on the Institute’s/Center’s home page: https:// www.niehs.nih.gov/dert/c-agenda.htm, where an agenda and any additional information for the meeting will be posted when available. DEPARTMENT OF HEALTH AND HUMAN SERVICES National Institutes of Health National Institute of Environmental Health Sciences; Notice of Meeting Pursuant to section 10(d) of the Federal Advisory Committee Act, as amended (5 U.S.C. Appendix 2), notice is hereby of a meeting of the National Advisory Environmental Health Sciences Council. The meetings will be open to the public ad indicated below, with attendance limited to space available. Individuals who plan to attend and need special assistance, such as sign language interpretation or other reasonable accommodations, should notify the Contact Person listed below in advance of the meeting. The meeting will be closed to the public in accordance with the provisions set forth in sections 552b(c)(4) and 552b(c)(6), Title 5 U.S.C., as amended. The grant applications and the discussions could disclose confidential trade secrets or commercial property such as patentable material, and personal information concerning individuals associated with the grant applications, the disclosure of which would constitute a clearly unwarranted invasion of personal privacy. Name of Committee: National Advisory Environmental Health Sciences Council. Date: September 13, 2005. Open: 8:30 a.m. to 3 p.m. Agenda: Discussion of program policies and issues. Place: Nat. Inst. of Environmental Health Sciences, Building 101, Rodbell Auditorium, 111 T.W. Alexander Drive, Research Triangle Park, NC 27709. Closed: 3 p.m. to 5:30 p.m. Agenda: To review and evaluate grant applications. Place: Nat. Inst. of Environmental Health Sciences, Building 101, Rodbell Auditorium, 111 T.W. Alexander Drive, Research Triangle Park, NC 27709. Contact Person: Anne P. Sassaman, PhD, Director, Division of Extramural Research and Training, National Institute of Environmental Health Sciences, National Institutes of Health, PO Box 12233, Research Triangle Park, NC 27709, (919) 541–7723. Any interested person may file written comments with the committee by forwarding the statement to the Contact Person listed on this notice. The statement should include the name, address, telephone number and when applicable, the business or professional affiliation of the interested person. In the interest of security, NIH has instituted stringent procedures for entrance into the building by non-government employees. Persons without a government I.D. will need to show a photo I.D. and signin at the security desk upon entering the building. VerDate jul<14>2003 20:18 Aug 10, 2005 Jkt 205001 (Catalogue of Federal Domestic Assistance Program Nos. 93.115, Biometry and risk Estimation—Health Risks from Environmental Exposures; 93.142, NIEHS Hazardous Waste Worker Health and Safety Training; 93.143, NIEHS Superfund Hazardous Substances—Basic Research and Education; 93.894, Resources and Manpower Development in the Environmental Health Sciences; 93.113, Biological Response to Environmental Health Hazards; 93.114, Applied Toxicological Research and Testing, National Institutes of Health, HHS) Dated: August 5, 2005. Anthony M. Coelho, Jr., Acting Director, Office of Federal Advisory Committee Policy. [FR Doc. 05–15948 Filed 8–10–05; 8:45 am] BILLING CODE 4140–01–M DEPARTMENT OF HEALTH AND HUMAN SERVICES National Institutes of Health National Institute of Allergy and Infectious Diseases; Notice of Closed Meetings Pursuant to section 10(d) of the Federal Advisory Committee Act, as amended (5 U.S.C. Appendix 2), notice is hereby given of the following meetings. The meetings will be closed to the public in accordance with the provisions set forth in sections 552b(c)(4) and 552(c)(6), Title 5 U.S.C., as amended. The grant applications and the discussions could disclose confidential trade secrets or commercial property such as patentable material, and personal information concerning individuals associated with the grant applications, the disclosure of which would constitute a clearly unwarranted invasion of personal privacy. Name of Committee: National Institute of Allergy and Infectious Diseases Special Emphasis Panel, Immune Tolerance Network JOFOC. Date: August 23, 2005. Time: 1 p.m. to 4 p.m. Agenda: To review and evaluate contract proposals. Place: National Institutes of Health, Rockledge 6700, 6700B Rockledge Drive, Bethesda, MD 20817, (Telephone Conference Call). Contact Person: Paul A. Amstad, PhD, Scientific Review Administrator, Scientific Review Program, Division of Extramural Activities, DHHS/National Institutes of Health/NIAID, 6700B Rockledge Drive, MSC 7616, Bethesda, MD 20892–7616, (301) 402– 7098, pamstad@niaid.nih.gov. PO 00000 Frm 00074 Fmt 4703 Sfmt 4703 This notice is being published less than 15 days prior to the meeting due to the timing limitations imposed by the review and funding cycle. Name of Committee: National Institute of Allergy and Infectious Diseases Special Emphasis Panel, ‘‘Pathogenesis of Type 1 Diabetes’’. Date: August 30, 2005. Time: 1 p.m. to 3:30 p.m. Agenda: To review and evaluate grant applications and/or proposals. Place: National Institutes of Health, Rockledge 6700, 6700B Rockledge Drive 3200, Bethesda, MD 20817, (Telephone Conference Call). Contact Person: Mercy R. PrabhuDas, PhD, Scientific Review Administrator, Scientific Review Program, Division of Extramural Activities, National Institutes of Health/ NIAID, 6700B Rockledge Drive, MSC 7616, Bethesda, MD 20892–7616, (301) 451–2615, mp457n@nih.gov. Name of Committee: National Institute of Allergy and Infectious Diseases Special Emphasis Panel, Clinical Research Products Management. Date: August 31, 2005. Time: 8 a.m. to 5 p.m. Agenda: To review and evaluate contract proposals. Place: Marriott Washington, 1221 22nd Street, Washington, DC 20037. Contact Person: Annie Walker-Abbey, PhD, Scientific Review Administrator, Scientific Review Program, Division of Extramural Activities, National Institutes of Health/ NIAID/DHHS, 6700B Rockledge Drive, RM. 3266, Bethesda, MD 20892–7616, (301) 451– 2671, aabbey@niaid.nih.gov. (Catalogue of Federal Domestic Assistance Program Nos. 93.855, Allergy, Immunology, and Transplantation Research; 93.856, Microbiology and Infectious Diseases Research, National Institutes of Health, HHS) Dated: August 5, 2005. Anthony M. Coelho, Jr., Acting Director, Office of Federal Advisory Committee Policy. [FR Doc. 05–15949 Filed 8–10–05; 8:45 am] BILLING CODE 4140–01–M DEPARTMENT OF HOMELAND SECURITY Bureau of Customs and Border Protection Clarification of the National Customs Automation Program Test Regarding Reconciliation; Latent Defects Customs and Border Protection, Homeland Security. ACTION: General notice. AGENCY: SUMMARY: This document clarifies the Customs and Border Protection Automated Commercial System Reconciliation prototype test by setting forth that the issue of value allowances for alleged latent manufacturing defects E:\FR\FM\11AUN1.SGM 11AUN1 Federal Register / Vol. 70, No. 154 / Thursday, August 11, 2005 / Notices made pursuant to 19 CFR 158.12 or any other provision is not among the issues eligible for Reconciliation. Entry summaries cannot be flagged for Reconciliation to account for latent manufacturing defects discovered after importation. All other aspects of the test remain the same as set forth in previously published Federal Register notices. DATES: The two-year testing period of this Reconciliation prototype commenced on October 1, 1998, and was extended indefinitely starting October 1, 2000. Applications to participate in the test will be accepted throughout the duration of the test. ADDRESSES: Written inquiries regarding participation in the Reconciliation prototype test and/or applications to participate should be addressed to Mr. Richard Wallio or Ms. Marla Bianchetta, Reconciliation Team, Bureau of Customs and Border Protection, 1300 Pennsylvania Ave. NW., Room 5.2A, Washington, DC 20229–0001. Inquiries regarding the test also may be made by e-mail: Recon.Help@dhs.gov. FOR FURTHER INFORMATION CONTACT: Mr. Richard Wallio at (202) 344–2556 or Ms. Marla Bianchetta at (202) 344–2693. SUPPLEMENTARY INFORMATION: Background Initially, it is noted that on November 25, 2002, the President signed the Homeland Security Act of 2002, 6 U.S.C. 101 et seq., Public Law 107–296 (the HS Act), establishing the Department of Homeland Security and, under section 403(1) (6 U.S.C. 203(1)), transferring the U.S. Customs Service, including functions of the Secretary of the Treasury relating to the Customs Service, to the new department, effective on March 1, 2003. Also, under the HS Act and the Reorganization Plan Modification for the Department of Homeland Security that was signed on January 30, 2003, the U.S. Customs Service was renamed the Bureau of Customs and Border Protection (CBP). The agency will be referred to by that name in this document, unless reference to the Customs Service (or Customs) is appropriate in a given context. Reconciliation, a planned component of the National Customs Automation Program (NCAP), as provided for in Title VI (Subtitle B) of the North American Free Trade Agreement Implementation Act (Pub. L. 103–182, 107 State. 2057 (December 8, 1993)), is currently being tested by CBP under the CBP Automated Commercial System (ACS) Prototype Test. Customs initially announced and explained the test in a general notice document published in VerDate jul<14>2003 16:14 Aug 10, 2005 Jkt 205001 the Federal Register (63 FR 6257) on February 6, 1998. Clarifications and operational changes were announced in several subsequent Federal Register notices: 63 FR 44303, published on August 18, 1998; 64 FR 39187, published on July 21, 1999; 64 FR 73121, published on December 29, 1999; 66 FR 14619, published on March 13, 2001; 67 FR 61200, published on September 27, 2002; 67 FR 68238, published on November 8, 2002; 69 FR 73730, published on September 2, 2004; and 70 FR 1730, published on January 10, 2005. A Federal Register (65 FR 55326) notice published on September 13, 2000, extended the prototype indefinitely. For application requirements, see the Federal Register notices published on February 6, 1998, and August 18, 1998. Additional information regarding the test can be found at https:// www.customs.gov/xp/cgov/import/ cargo_summary/reconciliation/. Reconciliation Generally Reconciliation is the process that allows an importer, at the time an entry summary is filed, to identify undeterminable information (other than that affecting admissibility) to CBP and to provide that outstanding information at a later date. The importer identifies the outstanding information by means of an electronic ‘‘flag’’ which is placed on the entry summary at the time the entry summary is filed. Prior to this clarification, the issues for which an entry summary could be ‘‘flagged’’ (for the purpose of later reconciliation) were limited to: (1) Value issues; (2) classification issues, on a limited basis; (3) issues concerning value aspects of entries filed under heading 9802, Harmonized Tariff Schedule of the United States (HTSUS; 9802 issues); and (4) post-entry claims under 19 U.S.C. 1520(d) for the benefits of the North American Free Trade Agreement (NAFTA) or the United States-Chile Free Trade Agreement (US–CFTA) for merchandise as to which such claims were not made at the time of entry. Under the test procedure, the flagged entry summary (the underlying entry summary) is liquidated for all aspects of the entry except those issues that were flagged. The means of providing the outstanding information at a later date relative to the flagged issues is through the filing of a Reconciliation entry. Thus, the flagging of an entry summary constitutes the importer’s declaration of intent to file a Reconciliation entry. The flagged issues will be liquidated at the time the Reconciliation entry is liquidated. Any adjustments in duties, taxes, and/or fees owed will be made at PO 00000 Frm 00075 Fmt 4703 Sfmt 4703 46883 that time. (The Reconciliation test procedure for making post-entry NAFTA claims is explained in the February 6, 1998, and December 29, 1999, Federal Register notices.) Reconciliation and Defective Merchandise Claims—19 CFR 158.12 Under § 158.12 of the Customs and Border Protection (CBP) regulations (19 CFR 158.12), importers may request an allowance in value for merchandise found by the port director to be partially damaged at the time of importation. For example, if the port director finds that the imported merchandise contains defective zippers, an allowance in value may be granted to the extent of the defect. Reconciliation is an acceptable method of reporting the change in value if it is known at the time of importation that the merchandise at issue is defective but the extent of the defect is not known. Thus, as in the above example, if the importer does not have sufficient information to determine the extent of the known defect when the entry is filed (e.g. because it is not yet known whether the zippers can be repaired, and if so, the cost of such repairs), the entry can be flagged for Reconciliation. The importer can file a Reconciliation entry once the extent of the known defect is established. Some importers have requested an allowance in value under § 158.12 for imported merchandise that allegedly contains a latent manufacturing defect. A latent manufacturing defect is a defect that exists at the time of manufacture, and thus at the time of importation, but is invisible, hidden, or concealed. The defect is not discovered until some time later (in many cases, long after importation), usually when a consumer requests a repair under a consumer warranty pertaining to the imported article. The importer’s claim for a defective merchandise allowance is generally based on the costs of the warranty repairs. Recently, some of these importers have flagged entry summaries for Reconciliation on the issue of latent manufacturing defects so that information may be submitted after any latent defects are revealed (for example, information regarding the nature of the latent defects, the identity of the defective merchandise, and the extent of the defects based on warranty repair costs or other data). Thus, the question has arisen as to whether these types of claims are value issues eligible for Reconciliation. The purpose of this notice is to clarify that CBP does not consider claims for latent defects value issues eligible for Reconciliation and will not accept Reconciliation entries based on such claims. Because the E:\FR\FM\11AUN1.SGM 11AUN1 46884 Federal Register / Vol. 70, No. 154 / Thursday, August 11, 2005 / Notices importer does not know that a latent defect in the merchandise exists at the time of entry summary, the importer cannot flag the entry summary for later resolution through Reconciliation. CBP notes that the issue of whether these latent defect claims fall within the scope of § 158.12, and if so, the evidence needed to support these claims, is still under review by the courts. There have been several preliminary court rulings on the subject, but several cases addressing these issues are still pending at the Court of International Trade and the Court of Appeals for the Federal Circuit (Volkswagen of America, Inc. v. United States, Court No. 96–01–00132, Court of International Trade; Saab Cars USA Inc. v. United States, Court Nos. 04–1268 and 04–1416, Court of Appeals for the Federal Circuit). Regardless of the final outcome of the court cases, the Reconciliation procedure cannot be used with regard to latent defect claims made pursuant to § 158.12 or any other provision. Test Clarification Reconciliation may not be used with respect to claims for value allowances made pursuant to § 158.12 or any other provision based on alleged latent manufacturing defects. Thus, to clarify, the Reconciliation test covers the following issues: (1) Value issues other than claims based on latent manufacturing defects; (2) classification issues, on a limited basis; (3) issues concerning value aspects of entries filed under heading 9802, Harmonized Tariff Schedule of the United States (HTSUS; 9802 issues); and (4) post-entry claims under 19 U.S.C. 1520(d) for the benefits of the North American Free Trade Agreement (NAFTA) or the United States-Chile Free Trade Agreement (US– CFTA) for merchandise as to which such claims were not made at the time of entry. CBP considers this a clarification of the test procedure because CBP never contemplated latent defect claims to be value issues eligible for Reconciliation. Dated: August 3, 2005. Denise Crawford, Acting Assistant Commissioner, Office of Field Operations. [FR Doc. 05–15904 Filed 8–10–05; 8:45 am] BILLING CODE 4820–02–U INTERNATIONAL TRADE COMMISSION [Inv. No. 337–TA–548] [Investigation No. 731–TA–429 (Second Review)] Mechanical Transfer Presses From Japan United States International Trade Commission. AGENCY: ACTION: Termination of five-year review. SUMMARY: The subject five-year review was initiated in May 2005 to determine whether revocation of the antidumping duty order on mechanical transfer presses from Japan would be likely to lead to continuation or recurrence of dumping and of material injury to a domestic industry. On August 1, 2005, the Department of Commerce published notice that it was revoking the order effective June 21, 2005 because ‘‘the domestic interested parties did not participate in this sunset review. * * *’’ (70 FR 44089). Accordingly, pursuant to section 751(c) of the Tariff Act of 1930 (19 U.S.C. 1675(c)), the subject review is terminated. DATES: Effective: June 21, 2005. FOR FURTHER INFORMATION CONTACT: Mary Messer (202–205–3193), Office of Investigations, U.S. International Trade Commission, 500 E Street, SW., Washington, DC 20436. Hearingimpaired individuals are advised that information on this matter can be obtained by contacting the Commission’s TDD terminal on 202– 205–1810. Persons with mobility impairments who will need special assistance in gaining access to the Commission should contact the Office of the Secretary at 202–205–2000. General information concerning the Commission may also be obtained by accessing its Internet server (https:// www.usitc.gov). Authority: This review is being terminated under authority of title VII of the Tariff Act of 1930; this notice is published pursuant to section 207.69 of the Commission’s rules (19 CFR 207.69). Issued: August 8, 2005. By order of the Commission. Marilyn R. Abbott, Secretary to the Commission. [FR Doc. 05–15935 Filed 8–10–05; 8:45 am] BILLING CODE 7020–02–P VerDate jul<14>2003 16:14 Aug 10, 2005 Jkt 205001 INTERNATIONAL TRADE COMMISSION PO 00000 Frm 00076 Fmt 4703 Sfmt 4703 In the Matter of Certain Tissue Converting Machinery, Including Rewinders, Tail Sealers, Trim Removers, and Components Thereof; Notice of Investigation U.S. International Trade Commission. ACTION: Institution of investigation pursuant to 19 U.S.C. 1337. AGENCY: SUMMARY: Notice is hereby given that a complaint was filed with the U.S. International Trade Commission on July 8, 2005, under section 337 of the Tariff Act of 1930, as amended, 19 U.S.C. 1337, on behalf of Fabio Perini North America, Inc., of Green Bay, Wisconsin. The complaint alleges violations of section 337 in the importation into the United States, the sale for importation, and the sale within the United States after importation of certain tissue converting machinery, including rewinders, tail sealers, trim removers, and components thereof, by reason of infringement of claims 1, 3, 6, 7, 8, 13, 14, and 15 of U.S. Patent No. 5,979,818, claims 1–5 of U.S. Patent No. Re. 35,729, and claim 5 of U.S. Patent No. 5,475,917. The complaint further alleges that there exists an industry in the United States as required by subsection (a)(2) of section 337. The complainant requests that the Commission institute an investigation and, after the investigation, issue a permanent exclusion order and a permanent cease and desist order. ADDRESSES: The complaint, except for any confidential information contained therein, is available for inspection during official business hours (8:45 a.m. to 5:15 p.m.) in the Office of the Secretary, U.S. International Trade Commission, 500 E Street, SW., Room 112, Washington, DC 20436, telephone 202–205–2000. Hearing impaired individuals are advised that information on this matter can be obtained by contacting the Commission’s TDD terminal on 202–205–1810. Persons with mobility impairments who will need special assistance in gaining access to the Commission should contact the Office of the Secretary at 202–205–2000. General information concerning the Commission may also be obtained by accessing its Internet server at https:// www.usitc.gov. The public record for this investigation may be viewed on the Commission’s electronic docket (EDIS) at https://edis.usitc.gov. FOR FURTHER INFORMATION CONTACT: David O. Lloyd, Esq., Office of Unfair E:\FR\FM\11AUN1.SGM 11AUN1

Agencies

[Federal Register Volume 70, Number 154 (Thursday, August 11, 2005)]
[Notices]
[Pages 46882-46884]
From the Federal Register Online via the Government Printing Office [www.gpo.gov]
[FR Doc No: 05-15904]


=======================================================================
-----------------------------------------------------------------------

DEPARTMENT OF HOMELAND SECURITY

Bureau of Customs and Border Protection


Clarification of the National Customs Automation Program Test 
Regarding Reconciliation; Latent Defects

AGENCY: Customs and Border Protection, Homeland Security.

ACTION: General notice.

-----------------------------------------------------------------------

SUMMARY: This document clarifies the Customs and Border Protection 
Automated Commercial System Reconciliation prototype test by setting 
forth that the issue of value allowances for alleged latent 
manufacturing defects

[[Page 46883]]

made pursuant to 19 CFR 158.12 or any other provision is not among the 
issues eligible for Reconciliation. Entry summaries cannot be flagged 
for Reconciliation to account for latent manufacturing defects 
discovered after importation. All other aspects of the test remain the 
same as set forth in previously published Federal Register notices.

DATES: The two-year testing period of this Reconciliation prototype 
commenced on October 1, 1998, and was extended indefinitely starting 
October 1, 2000. Applications to participate in the test will be 
accepted throughout the duration of the test.

ADDRESSES: Written inquiries regarding participation in the 
Reconciliation prototype test and/or applications to participate should 
be addressed to Mr. Richard Wallio or Ms. Marla Bianchetta, 
Reconciliation Team, Bureau of Customs and Border Protection, 1300 
Pennsylvania Ave. NW., Room 5.2A, Washington, DC 20229-0001. Inquiries 
regarding the test also may be made by e-mail: Recon.Help@dhs.gov.

FOR FURTHER INFORMATION CONTACT: Mr. Richard Wallio at (202) 344-2556 
or Ms. Marla Bianchetta at (202) 344-2693.

SUPPLEMENTARY INFORMATION:

Background

    Initially, it is noted that on November 25, 2002, the President 
signed the Homeland Security Act of 2002, 6 U.S.C. 101 et seq., Public 
Law 107-296 (the HS Act), establishing the Department of Homeland 
Security and, under section 403(1) (6 U.S.C. 203(1)), transferring the 
U.S. Customs Service, including functions of the Secretary of the 
Treasury relating to the Customs Service, to the new department, 
effective on March 1, 2003. Also, under the HS Act and the 
Reorganization Plan Modification for the Department of Homeland 
Security that was signed on January 30, 2003, the U.S. Customs Service 
was renamed the Bureau of Customs and Border Protection (CBP). The 
agency will be referred to by that name in this document, unless 
reference to the Customs Service (or Customs) is appropriate in a given 
context.
    Reconciliation, a planned component of the National Customs 
Automation Program (NCAP), as provided for in Title VI (Subtitle B) of 
the North American Free Trade Agreement Implementation Act (Pub. L. 
103-182, 107 State. 2057 (December 8, 1993)), is currently being tested 
by CBP under the CBP Automated Commercial System (ACS) Prototype Test. 
Customs initially announced and explained the test in a general notice 
document published in the Federal Register (63 FR 6257) on February 6, 
1998. Clarifications and operational changes were announced in several 
subsequent Federal Register notices: 63 FR 44303, published on August 
18, 1998; 64 FR 39187, published on July 21, 1999; 64 FR 73121, 
published on December 29, 1999; 66 FR 14619, published on March 13, 
2001; 67 FR 61200, published on September 27, 2002; 67 FR 68238, 
published on November 8, 2002; 69 FR 73730, published on September 2, 
2004; and 70 FR 1730, published on January 10, 2005. A Federal Register 
(65 FR 55326) notice published on September 13, 2000, extended the 
prototype indefinitely.
    For application requirements, see the Federal Register notices 
published on February 6, 1998, and August 18, 1998. Additional 
information regarding the test can be found at https://www.customs.gov/
xp/cgov/import/cargo_summary/reconciliation/.

Reconciliation Generally

    Reconciliation is the process that allows an importer, at the time 
an entry summary is filed, to identify undeterminable information 
(other than that affecting admissibility) to CBP and to provide that 
outstanding information at a later date. The importer identifies the 
outstanding information by means of an electronic ``flag'' which is 
placed on the entry summary at the time the entry summary is filed. 
Prior to this clarification, the issues for which an entry summary 
could be ``flagged'' (for the purpose of later reconciliation) were 
limited to: (1) Value issues; (2) classification issues, on a limited 
basis; (3) issues concerning value aspects of entries filed under 
heading 9802, Harmonized Tariff Schedule of the United States (HTSUS; 
9802 issues); and (4) post-entry claims under 19 U.S.C. 1520(d) for the 
benefits of the North American Free Trade Agreement (NAFTA) or the 
United States-Chile Free Trade Agreement (US-CFTA) for merchandise as 
to which such claims were not made at the time of entry.
    Under the test procedure, the flagged entry summary (the underlying 
entry summary) is liquidated for all aspects of the entry except those 
issues that were flagged. The means of providing the outstanding 
information at a later date relative to the flagged issues is through 
the filing of a Reconciliation entry. Thus, the flagging of an entry 
summary constitutes the importer's declaration of intent to file a 
Reconciliation entry. The flagged issues will be liquidated at the time 
the Reconciliation entry is liquidated. Any adjustments in duties, 
taxes, and/or fees owed will be made at that time. (The Reconciliation 
test procedure for making post-entry NAFTA claims is explained in the 
February 6, 1998, and December 29, 1999, Federal Register notices.)

Reconciliation and Defective Merchandise Claims--19 CFR 158.12

    Under Sec.  158.12 of the Customs and Border Protection (CBP) 
regulations (19 CFR 158.12), importers may request an allowance in 
value for merchandise found by the port director to be partially 
damaged at the time of importation. For example, if the port director 
finds that the imported merchandise contains defective zippers, an 
allowance in value may be granted to the extent of the defect. 
Reconciliation is an acceptable method of reporting the change in value 
if it is known at the time of importation that the merchandise at issue 
is defective but the extent of the defect is not known. Thus, as in the 
above example, if the importer does not have sufficient information to 
determine the extent of the known defect when the entry is filed (e.g. 
because it is not yet known whether the zippers can be repaired, and if 
so, the cost of such repairs), the entry can be flagged for 
Reconciliation. The importer can file a Reconciliation entry once the 
extent of the known defect is established.
    Some importers have requested an allowance in value under Sec.  
158.12 for imported merchandise that allegedly contains a latent 
manufacturing defect. A latent manufacturing defect is a defect that 
exists at the time of manufacture, and thus at the time of importation, 
but is invisible, hidden, or concealed. The defect is not discovered 
until some time later (in many cases, long after importation), usually 
when a consumer requests a repair under a consumer warranty pertaining 
to the imported article. The importer's claim for a defective 
merchandise allowance is generally based on the costs of the warranty 
repairs. Recently, some of these importers have flagged entry summaries 
for Reconciliation on the issue of latent manufacturing defects so that 
information may be submitted after any latent defects are revealed (for 
example, information regarding the nature of the latent defects, the 
identity of the defective merchandise, and the extent of the defects 
based on warranty repair costs or other data). Thus, the question has 
arisen as to whether these types of claims are value issues eligible 
for Reconciliation. The purpose of this notice is to clarify that CBP 
does not consider claims for latent defects value issues eligible for 
Reconciliation and will not accept Reconciliation entries based on such 
claims. Because the

[[Page 46884]]

importer does not know that a latent defect in the merchandise exists 
at the time of entry summary, the importer cannot flag the entry 
summary for later resolution through Reconciliation.
    CBP notes that the issue of whether these latent defect claims fall 
within the scope of Sec.  158.12, and if so, the evidence needed to 
support these claims, is still under review by the courts. There have 
been several preliminary court rulings on the subject, but several 
cases addressing these issues are still pending at the Court of 
International Trade and the Court of Appeals for the Federal Circuit 
(Volkswagen of America, Inc. v. United States, Court No. 96-01-00132, 
Court of International Trade; Saab Cars USA Inc. v. United States, 
Court Nos. 04-1268 and 04-1416, Court of Appeals for the Federal 
Circuit). Regardless of the final outcome of the court cases, the 
Reconciliation procedure cannot be used with regard to latent defect 
claims made pursuant to Sec.  158.12 or any other provision.

Test Clarification

    Reconciliation may not be used with respect to claims for value 
allowances made pursuant to Sec.  158.12 or any other provision based 
on alleged latent manufacturing defects. Thus, to clarify, the 
Reconciliation test covers the following issues: (1) Value issues other 
than claims based on latent manufacturing defects; (2) classification 
issues, on a limited basis; (3) issues concerning value aspects of 
entries filed under heading 9802, Harmonized Tariff Schedule of the 
United States (HTSUS; 9802 issues); and (4) post-entry claims under 19 
U.S.C. 1520(d) for the benefits of the North American Free Trade 
Agreement (NAFTA) or the United States-Chile Free Trade Agreement (US-
CFTA) for merchandise as to which such claims were not made at the time 
of entry. CBP considers this a clarification of the test procedure 
because CBP never contemplated latent defect claims to be value issues 
eligible for Reconciliation.

    Dated: August 3, 2005.
Denise Crawford,
Acting Assistant Commissioner, Office of Field Operations.
[FR Doc. 05-15904 Filed 8-10-05; 8:45 am]
BILLING CODE 4820-02-U

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