[Federal Register Volume 63, Number 162 (Friday, August 21, 1998)]
[Notices]
[Pages 44949-44957]
From the Federal Register Online via the Government Publishing Office [www.gpo.gov]
[FR Doc No: 98-22480]


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DEPARTMENT OF THE TREASURY

Customs Service


Revision and Expansion of National Customs Automation Program 
Test of Account-Based Declaration Prototype

AGENCY: U.S. Customs Service, Department of the Treasury.

ACTION: General notice.

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SUMMARY: This document is a replacement of a notice published in the 
Federal Register on March 27, 1997, which announced Customs' plan to 
conduct an account-based prototype (NCAP/P) under the National Customs 
Automation Program (NCAP). This notice broadens the eligibility 
requirements for participation in the NCAP/P, incorporates enhancements 
to reconciliation (based on the February 6, 1998 announcement of the 
ACS Reconciliation Prototype) and clarifies the statement process. This 
notice also outlines the development and evaluation methodology to be 
used in the test and invites public comment on any aspect of the 
planned test.
    With this notice, Customs is also inviting additional importers to 
apply to participate in the NCAP/P in accordance with the eligibility 
requirements specified in this notice. Applicants that have already 
been accepted as participants in the NCAP/P based on the 3/27/97 NCAP/P 
notice need not re-apply. All participants in the NCAP/P, including 
previously accepted applicants, are required to follow all the 
operational procedures described in this notice, e.g., procedures on 
the account-based import declaration process, reconciliation, remote 
location filing, and maintenance of account information, and are bound 
by the terms and conditions of this notice.
    The NCAP/P will become operational under a staged implementation 
program. Implementation of the NCAP/P will be as follows: (1) Cargo 
release, (2) Cargo release with examination, (3) Entry summary 
acceptance and processing, and periodic statement processing, and 4) 
Reconciliation.

DATES: The cargo release stage of the NCAP/P commenced on April 27, 
1998. The NCAP/P will be operational for up to three years, with 
evaluations of the prototype occurring periodically. Applications to 
participate in the test may be submitted throughout the duration of the 
prototype. Priority review will be given to applications received on or 
before September 18, 1998. Public comments on any aspect of the planned 
test must be received on or before September 25, 1998. All comments 
received will be part of the public record and made available to third 
parties upon request.

ADDRESSES: Applications and comments should be addressed or faxed to 
Don Luther, U. S. Customs Service, 1300 Pennsylvania Avenue NW, Room 
5.2A, Washington, DC 20229, fax number (202) 927-1096.

FOR FURTHER INFORMATION CONTACT: For inquiries regarding eligibility of 
specific importers contact: Margaret Fearon at (202) 927-1413. For 
questions on reconciliation contact: Don Luther at (202) 927-0915. For 
questions on statement processing: contact Tim Raeck at (317) 298-1520, 
extension 1445. For questions on violation billing: contact Jim Gleason 
at (202) 927-2995. For questions on other aspects of the Account-Based 
Declaration Prototype contact: Daniel Buchanan at (617) 565-6236.

SUPPLEMENTARY INFORMATION:

Background

    Title VI of the North American Free Trade Agreement Implementation 
Act (the Act), Public Law 103-182, 107 Stat. 2057 (December 8, 1993), 
contains provisions pertaining to Customs Modernization (the Mod Act). 
Subtitle B of title VI establishes the National Customs Automation 
Program (NCAP)--an automated and electronic system for the processing 
of commercial importations. Section 631 of the Act creates sections 411 
through 414 of the Tariff Act of 1930 (19 U.S.C. 1411-1414), which 
define and list the existing and planned components of the NCAP 
(section 411), establish program goals (section 412), provide for the 
implementation and evaluation of the program (section 413), and provide 
for remote location filing (section 414). Section 637 of the Act amends 
Section 484 of the Tariff Act of 1930 to establish a new subsection 
(b), entitled ``Reconciliation'' (19 U.S.C. 1484(b)). Section 101.9(b) 
of the Customs Regulations (19 CFR 101.9(b)), provides for the testing 
of NCAP components. See, T.D. 95-21 (60 FR 14211, March 16, 1995). This 
test is established pursuant to that regulation.
    A key element of Customs efforts to re-engineer its Trade 
Compliance process is a shift in emphasis from the traditional 
transaction-based approach of ensuring compliance with import laws and 
regulations to an account-based approach, which addresses an importer's 
overall compliance through account management, process reviews, and 
audits. One feature of this approach is a new account-based declaration 
process. Customs is also developing a new commercial processing system, 
the Automated Commercial Environment (ACE), which is designed to 
support the new Trade Compliance processes. The account-based 
declaration prototype (NCAP/P) is being developed to provide the first 
operational demonstration of ACE capabilities for processing imports, 
integrating the new account-based import declaration process with other 
aspects of the Trade Compliance process and with selected features of 
NCAP elements of the Mod Act.

I. Development Methodology

    The NCAP/P will be monitored by a Joint Prototype Team consisting 
of trade participants, Customs personnel, and other interested 
government agencies. This team will meet regularly throughout the 
prototype period at appropriate locations to set development 
milestones, monitor progress, resolve issues and evaluate program 
effectiveness. The development effort will be coordinated with other 
on-going NCAP prototype programs such as Remote Location Filing and 
Reconciliation, and will be as consistent as possible with the overall 
direction of ACE development.
    Potential participants should recognize that this is a prototype 
test of new processes. Data definitions and values and formats for 
electronic transmission of manifest, entry and commercial data will 
differ from those currently used in the Automated Commercial System 
(ACS). It is also important to note that development efforts undertaken 
for the NCAP/P may not meet the eventual requirements for programs as 
they are finally implemented in ACE.
    The public is invited to comment on any aspect of the NCAP/P as 
described by this notice. All comments received will be part of the 
public record and made available to third parties upon request.

II. Eligibility Requirements

    In order to be eligible for participation in the NCAP/P, an 
importer must:
    A. Be participating or approved for participation in the Importer 
Compliance Monitoring Program (63 FR 20442) or be scheduled for, 
participating in, or, in the application, agree to undergo and 
cooperate fully with a Customs Compliance Assessment. At

[[Page 44950]]

the time the application is filed, if a Customs Compliance Assessment 
or other type of Customs audit is in progress, the importer must be 
fully cooperating and provide timely and accurate information and the 
resources necessary for Customs to conduct the Compliance Assessment or 
audit. If the importer is subject to a compliance improvement plan, the 
importer must be abiding by the terms and conditions of the plan;
    B. For Southern border NCAP/P shipments, use carriers who 
participate in the Land Border Carrier Initiative Program (LBCIP). No 
importer may enter Southern border cargo transported by non-participant 
carriers;
    C. Commit in the application to file or maintain a continuous bond 
with sufficient liability coverage which will be obligated upon release 
of each NCAP/P shipment. Participants who elect to reconcile entry 
summaries must have on file a rider along with the continuous bond, 
which will be obligated on the underlying entries and used to cover the 
Reconciliation. (See Section VIII below);
    D. Be capable of and/or commit to arranging for timely and accurate 
electronic transmission to Customs of all data required in the NCAP/P 
declaration process, including data required to pre-identify parties 
and commodities involved in NCAP/P transactions, manifest and pre-
release shipment data, additional data required to support physical 
examinations of cargo, entry summary data, detailed commercial data 
when requested, and reconciliation data. If an importer does not 
transmit electronic data for a particular shipment, Customs may exclude 
that shipment from NCAP/P processing; and
    E. Be capable of and/or commit to arranging for timely electronic 
payment of applicable duties, taxes, fees, and interest.
    Applications will be accepted from all volunteers; however, 
priority consideration will be given to:
    F. Companies within the top 379 importers ranked by entered value 
(the top 379 represent approximately 50 percent of all imports by 
value);
    G. Companies within the top 250 importers within any of Customs' 
Primary Focus Industry (PFI) categories, which are as follows:

1. Agriculture
2. Automotive
3. Communications--Telecommunications, Advanced Displays, Board Level 
Products
4. Critical Components--Bearings, Fasteners
5. Footwear
6. Production Equipment
7. Steel
8. Textiles--Textile Products, Wearing Apparel; and

    H. Companies that do not represent an unacceptable compliance risk.

III. General Requirements

    For the NCAP/P, the following restrictions will be placed upon 
importers:
    A. Importers must enter merchandise identified in the application 
as being from their typical commodities in their established lines of 
business and coming from pre-identified sellers and shippers;
    B. Importers must enter only the merchandise identified in the 
application as being within a range of pre-identified commodities 
(classified at the 6-digit Harmonized Tariff Schedule (HTS) level);
    C. Importers must only enter merchandise conveyed on trucks 
operated by carriers pre-identified by participants in the application;
    D. Importers must enter merchandise for release into the commerce 
under a consumption entry at the port of arrival, and may not enter 
NCAP/P merchandise into a warehouse or Foreign Trade Zone, or as an in-
bond entry;
    E. Importers must enter merchandise at the ports of Laredo, Texas 
(Colombia Bridge only), or at Detroit or Port Huron, Michigan;
    F. Importers may not enter merchandise in the NCAP/P if it is 
subject to antidumping or countervailing duty, quota, trade preference 
level or visa requirements, or pre-release reporting requirements 
imposed by other federal agencies;
    G. No prohibited or embargoed merchandise will be permitted in 
prototype shipments; and
    H. Importers are responsible for ensuring that ineligible 
merchandise is not included in NCAP/P shipments, and that all shipments 
aboard a conveyance are eligible for NCAP/P processing. Customs will 
exclude ineligible shipments from NCAP/P processing.

IV. Application

    NCAP/P participants previously selected need not re-apply under 
this notice. Importers who wish to participate in the NCAP/P and have 
not yet been accepted must submit a written application that contains 
the following information:
    A. Importer name, address and IRS employer identification number;
    B. Names and addresses of all shippers for the NCAP/P;
    C. Names and addresses of all sellers/vendors for the NCAP/P, and, 
for each seller/vendor identified, a listing of all the 6-digit HTS 
numbers in which the commodities to be imported are classified;
    D. The surety and surety code and the number of the continuous 
surety bond which will cover all cargo processed under NCAP/P 
procedures. If the applicant plans to reconcile their NCAP/P entry 
summaries, a commitment to file the bond rider prior to flagging 
underlying entry summaries for reconciliation, along with 
identification of the port in which the continuous bond and rider are 
filed must be included;
    E. Names, addresses and Standard Carrier Alpha Codes of truck 
carriers who will be transporting NCAP/P shipments across the 
international borders. For Southern border carriers, the Carrier 
Initiative Program number must also be provided;
    F. Names, addresses and filer codes of any customs brokers who will 
be filing data;
    G. The approximate total number of entries per month expected to be 
processed at each of the following locations: Colombia Bridge, Laredo; 
Ambassador Bridge, Detroit; Windsor Tunnel, Detroit; and Blue Water 
Bridge, Port Huron;
    H. Detailed description of anticipated issues (from the eligible 
issues listed in Section VIII of this Notice) and commodities for which 
the participant anticipates electing reconciliation; and
    I. For applicants not participating in or approved for 
participation in the Importer Compliance Monitoring Program or not 
already scheduled for or participating in a Customs Compliance 
Assessment, a statement in which the applicant commits to undergo and 
cooperate fully with a Customs Compliance Assessment.
    Customs will make admissibility determinations on NCAP/P shipments 
based on cargo examinations and the information supplied with the 
application, which shall serve as a pre-filed entry for NCAP/P 
purposes.
    Importers who submit applications to participate in the NCAP/P will 
be notified in writing of their acceptance or rejection. If an 
applicant is selected for NCAP/P participation, Customs will assign the 
importer an NCAP/P Authorization Code. If an applicant is denied 
participation, the notification letter will include the reasons for 
that denial. Eligible importers whose initial applications are rejected 
may re-apply upon correction of the situation which led to the denial.
    Preference in accepting applicants will be given to those who 
indicate that they plan to maintain an average of at

[[Page 44951]]

least 25 entries per month throughout the prototype period.

V. Maintenance of Account Information

    Each entry filer participating in the NCAP/P must provide Customs 
with a range of entry numbers to be reserved for assignment by Customs 
to NCAP/P shipments. Entry filers may not assign these numbers to 
transactions, either for NCAP/P or for non-prototype entries.
    Throughout the prototype period, participating importers must 
provide Customs with advance notification of any proposed changes in 
the information provided in the application. This notification will be 
considered an amendment to the application. Amendments must be 
submitted at least seven days prior to the arrival of any cargo that 
reflects the proposed changes. Participants must not enter any cargo 
referenced in an amendment before Customs has approved the amendment. 
By notification to the participating importer, Customs may reject any 
proposed change, e.g., use of a particular carrier, shipper, or seller, 
entry of particular merchandise under this prototype, etc. Customs will 
notify participants of the decision regarding proposed changes to the 
applications. If a participant's proposed changes are rejected, Customs 
will specify the reason for the rejection. The importer may re-submit 
proposed changes upon correction of the situation which led to the 
denial.

VI. Account-Based Declaration Process

    The account-based declaration process is a fully electronic process 
that will base cargo examination decisions primarily on pre-filed 
account/entry information; thereby, minimizing the transaction data 
that needs to be transmitted to Customs prior to the release of cargo. 
Cargo examinations will also be performed on the basis of selectivity 
criteria and random compliance measurement sampling. This process will 
also permit reporting of detailed entry summary data on a monthly 
cycle, provide for payment of duties, taxes, and fees on a periodic 
statement cycle employing semi-monthly estimated payments and allow for 
reconciliation of summary data.
    Cargo will be released and duties, taxes, and fees assessed on the 
basis of data transmitted to the NCAP/P system. For shipments processed 
in the NCAP/P, participants will not be required to provide parallel 
filing of ACS data or paper documents.
    While various automatic notifications and back-up procedures will 
also be supported, the basic declaration flow when the NCAP/P is fully 
implemented will be as follows:
    A. The application, including any amendments, will serve as a pre-
filed entry for NCAP/P purposes. A participating importer or authorized 
broker will electronically transmit data to Customs to provide timely 
and accurate identification of any proposed changes to the original 
application, e.g., changes in a participant's NCAP/P business partners 
or merchandise imported under the prototype. These changes must be 
provided at least seven days prior to the arrival of the referenced 
cargo.
    B. Prior to arrival of cargo at the border, the carrier issuing the 
manifest or an authorized agent will electronically transmit to Customs 
basic manifest data: coded identification of the carrier; trip details; 
identification of drivers, the conveyance and other equipment; and an 
identifying number and the laden quantity for each shipment on the 
conveyance.
    C. Also prior to arrival of the cargo at the border, data 
pertaining to each individual shipment must be electronically 
transmitted to Customs. This shipment data will include information 
generally found on freight bills, plus the NCAP/P Authorization Code 
assigned to the participating importer by Customs, and identification 
of the entry filer and the seller and buyer of the merchandise. This 
shipment data may be transmitted by the carrier issuing the manifest, 
an authorized agent acting on behalf of the carrier issuing the 
manifest, or the entry filer (i.e., either the importer of record or 
the importer of record's customs broker.)
    D. Customs will assign an entry number to each shipment from the 
range of entry numbers provided in advance by each participating entry 
filer for that purpose. When a truck arrives at the border, shipments 
for which no physical examination of cargo is required will be released 
without additional data or documentation. For any shipment aboard that 
truck selected by Customs for physical examination of cargo, Customs 
will issue to the entry filer designated in the shipment data an 
electronic request for additional information. This request may be 
satisfied by transmission of either partial or complete entry summary 
and commercial data, as requested by Customs, plus packing data. The 
commercial data required for cargo examination, whether partial or 
complete, will be at the detailed line item level. Cargo will not be 
examined until this data is received by Customs.
    E. The date of entry will be the date on which merchandise is 
released by Customs. The release will obligate the continuous bond 
identified in the prototype application of the importer whose NCAP/P 
Authorization Code is present in the shipment data.
    F. If the participant uses a blanket flag to notify Customs of 
entry summaries subject to reconciliation, the flag must be received by 
Customs no later than seven working days prior to transmission of the 
first entry summary being flagged under the blanket.
    G. For each shipment released during a calendar month, the entry 
filer must electronically transmit complete entry summary data to 
Customs on or before the filing deadline for that month. The filing 
deadline for each month will be the 10th calendar day of the following 
month, or, if the 10th falls on a weekend or holiday, the next business 
day. Entry summary data transmitted prior to this deadline will be 
considered provisional and may be replaced by the entry filer anytime 
before the deadline. All summaries filed on or before the deadline will 
be considered as filed on the deadline date. If the participant uses 
individual entry flags to notify Customs of entry summaries subject to 
reconciliation, such flags must be included in the transmission of the 
final entry summary data.
    H. For any entry summary selected by Customs for data review, 
Customs will issue to the entry filer an electronic request for 
complete commercial data, unless such data was previously transmitted 
to support a cargo examination. This request must be satisfied by 
electronic transmission of a complete set of commercial data, as 
requested by Customs, plus packing data if specifically requested.
    I. By virtue of 19 CFR 101.9, Customs may impose requirements 
different than those specified in the Customs Regulations; but only to 
the extent that such different requirements do not affect the 
collection of revenue. Consequently, in order to permit a different 
procedure to test the periodic deposit of estimated duties without 
adversely affecting the collection of revenue, participants must abide 
by the following procedures. Each participating importer will make 
semi-monthly preliminary estimated payments through an electronic 
medium. Preliminary estimated payments will be initiated electronically 
using Automated Clearinghouse (ACH) credit on the 15th and the last day 
of the month. If the 15th or the last day of the month falls on a 
weekend or holiday, the payment must be initiated the next business 
day. Under the prototype,

[[Page 44952]]

special electronic payment procedures will be utilized. The preliminary 
estimated payments will be based upon the following percentages: (a) 
the payment initiated on the 15th will be 75% of the estimated revenue 
due to Customs as a result of entry activity for the 1-15th of the 
month, (b) the payment initiated on the last day of the month will be 
57% of the estimated revenue due to Customs as a result of entry 
activity from the 16th to the last day of the month. These percentages 
will be reviewed and may have to be adjusted to maintain revenue 
neutrality. Payment for the remaining balance will be initiated 
electronically on the 15th of the following month, and it is this date 
which will serve as the date of actual deposit of estimated duties and 
fees for purposes of assessing interest under 19 U.S.C. 1505. Customs 
will create two types of statements each month, one before and one 
after the monthly filing deadline. Each statement will list each 
importer's revenue NCAP/P activity at all locations for the reporting 
month, and will list entry summary revenue data that has been filed and 
amounts due.
    J. Within the period of time prescribed for each issue, the entry 
filer must transmit an electronic Reconciliation to resolve each issue 
identified for reconciliation in the Notice of Intent. (See Section 
VIII below.)

VII. Remote Location Filing

    Remote location filing allows participants to electronically file 
data for the entry of merchandise with Customs from any location in the 
United States regardless of the port designated in the entry for 
examination or the port of entry.
    An NCAP/P participant will be voluntarily utilizing remote location 
filing if the electronic transmission of an entry, entry summary, 
commercial data (when required by Customs) and payment of duties, 
taxes, and fees is received from a participant not located in the port 
of arrival, which for purposes of this prototype will also be the port 
of entry and examination.
    The designation of alternative locations for cargo examination will 
not be supported in the NCAP/P. All cargo examinations will be 
conducted at the port where the cargo first arrives in the United 
States.

VIII. Reconciliation

A. The Concept of Reconciliation

    When certain information (other than that related to the 
admissibility of merchandise) is not determinable at the time of entry 
summary, an importer may later provide Customs with that information on 
a Reconciliation. A Reconciliation is treated as an entry for purposes 
of liquidation, reliquidation, and protest. Upon liquidation of any 
underlying entry summary, any decision by Customs entering into that 
liquidation, e.g., classification, may be protested pursuant to 19 
U.S.C. 1514. When the outstanding issue, e.g., value as determined by 
the actual costs, is later furnished in the Reconciliation, the 
Reconciliation will be liquidated. The liquidation of the 
Reconciliation will be posted to the Bulletin Notice of Liquidation, 
and may be protested pursuant to 19 U.S.C. 1514, but the protest may 
only pertain to the issue(s) flagged for reconciliation (i.e., the 
protest may not re-visit issues previously liquidated on the underlying 
entry summary).
    Importers must be aware of the distinction between prior disclosure 
and reconciliation. A prior disclosure exists when a person concerned 
discloses the circumstances of a violation pursuant to the Customs 
Regulations. The person disclosing this information must do so before, 
or without knowledge of, the commencement of a formal investigation of 
that violation. Reconciliation is the process by which an importer 
notifies Customs of undeterminable information, and by which the 
outstanding information is provided to Customs at a later date. Under 
reconciliation, the importer is not disclosing a violation, but rather 
identifying information which is undeterminable and will be provided at 
a later time.

B. Definitions

    1. Reconciliation: The process which allows an importer to identify 
undeterminable information (other than that affecting admissibility) to 
Customs, and provide the outstanding information at a later date. The 
term ``reconciliation'' also describes the entry used to submit the 
outstanding information.
    2. Underlying entry summary: A consumption entry summary flagged 
for reconciliation.
    3. Flagging an entry summary for reconciliation: Providing Customs 
with a notice of intention to file a Reconciliation (``Notice of 
Intent''). The Notice of Intent will identify to Customs that an entry 
summary is subject to reconciliation for a defined issue(s). There are 
two ways an importer can flag an entry summary for reconciliation:
    a. Individual entry flagging: At time of summary filing, the 
importer electronically inputs an indicator on any entry summary which 
is subject to reconciliation. This indicator identifies the issue(s) 
subject to reconciliation.
    b. Blanket flag: Prior to filing entry summaries subject to 
reconciliation, the importer notifies Customs of the importer of record 
number, the time period in which entry summaries are subject to 
reconciliation, and the issue(s) subject to reconciliation. Customs 
will input an electronic indicator on ALL entry summaries within the 
defined scope, which will identify them as being subject to 
reconciliation for the issue(s) indicated. Please note: Customs will 
determine at a later date if the blanket flag can include more specific 
parameters, e.g., HTS number, country of origin, etc.
    4. Entry-By-Entry Reconciliation: A Reconciliation in which the 
revenue adjustment is specifically provided for each affected entry 
summary.
    5. Aggregate Reconciliation: A Reconciliation filed with summarized 
data showing reconciled adjustments at an aggregate level. A list of 
the affected entry summaries is required, but the revenue change need 
not be broken out according to individual underlying entries. Aggregate 
Reconciliations may be used only where all adjustments covered by the 
Reconciliation result in absolute increases in duties, taxes, and fees. 
Drawback is not available and may not be requested on the increased/
reconciled adjustment.
    6. Absolute increase: Each underlying entry summary covered by the 
Reconciliation results in an increase or no change in duties, taxes, 
and fees. Only absolute increases are eligible for Aggregate 
Reconciliations.
    Examples: Where entry summaries A and B are both covered by a 
Reconciliation, the Reconciliation would have an Absolute Increase if 
the changes to both entry summaries would be increases or no changes. 
If A increased and B decreased, even if A's increase is greater than 
B's decrease, this is NOT an Absolute Increase. See Netting, below.
    Note: This principle applies at the entry level rather than at 
the line level. That is, regardless of decreases on individual lines 
on entry A, as long as the total change for entry A resulted in an 
increase in duties, taxes, and fees, it could be considered part of 
an Absolute Increase.

    7. Netting: Situations in which increases AND decreases resulted at 
the end of the reconciliation period. In any netting situation, the 
importer has the following options:
    a. File an Entry-By-Entry Reconciliation to account for both the 
increases and decreases, or

[[Page 44953]]

    b. File two Reconciliations: An Aggregate Reconciliation for all 
the increases and an Entry-By-Entry Reconciliation for all the 
decreases.

C. Description of the NCAP/P Reconciliation Component

1. Exclusive Means
    Operating concurrent with the reconciliation component of the NCAP/
P is a reconciliation prototype in ACS (see 63 FR 6257, dated February 
6, 1998). Any party who elects to reconcile entries pursuant to 19 
U.S.C. 1484(b) may only do so through the reconciliation component of 
the NCAP/P or the ACS Reconciliation Prototype. These prototypes will 
serve as the exclusive means to reconcile entries for (1) value, (2) 
classification on a limited basis, (3) merchandise entered under 
Harmonized Tariff Schedule of the United States (HTSUS) heading 9802, 
and/or (4) merchandise entered under the North American Free Trade 
Agreement (NAFTA). Outside of reconciliation, the only alternative 
post-entry, pre-liquidation adjustment will be to file a Supplemental 
Information Letter for each affected entry summary, with appropriate 
corrective data and duty tenders. (For information on the Supplemental 
Information Letter, see Automated Broker Interface (ABI) administrative 
message #97-0727, posted on 8/4/97, entitled ``314 Day Liq Cycle--Trade 
Notice''.) As always, importers retain the right to request extension 
of liquidation of entry summaries, as described in 19 CFR 
159.12(a)(ii).
2. Notice of Intent
    A notice of intention to file a Reconciliation (``Notice of 
Intent'') identifies an undeterminable issue, transfers liability for 
that issue to a Reconciliation and permits the liquidation of the 
underlying entry summary as to all issues other than those which are 
transferred to the Reconciliation. By providing a Notice of Intent, an 
importer is requesting that a certain issue or group of issues be 
separated from the entry summary. The importer voluntarily requests and 
accepts that the issue(s) identified in the Notice of Intent remain 
open and outstanding. The importer remains responsible for filing a 
Reconciliation, and liable for any duties, taxes, and fees resulting 
from the filing and/or liquidation of the Reconciliation. The Notice of 
Intent creates an obligation on the importer to file the 
Reconciliation. Importers participating in this prototype will 
recognize that the liquidation of the underlying entry summaries 
pertains only to those issues not identified by the importer on the 
Notice of Intent.
    Only consumption entries may be filed in the NCAP/P system, and 
therefore, only consumption entries via the NCAP/P may be flagged for 
reconciliation under this prototype. The underlying entry summaries 
flagged for a Reconciliation may be filed at any port within the NCAP/
P, including any combination of ports.
    a. Option: Individual Entry Flag. During this prototype, the 
importer may ``flag'' the underlying entry summaries at time of summary 
filing via an electronic indicator, which will serve as the Notice of 
Intent.
    b. Option: Blanket Flag. Importers may provide their Notice of 
Intent by filing a ``blanket flag'' in lieu of individual entry flags. 
The blanket flag will identify the Importer of Record number, range of 
dates in which the underlying entry summaries will be subject to 
reconciliation, and the issue(s) subject to reconciliation. (Customs 
will determine at a later date if additional parameters, such as HTS 
number, may be specified in the blanket flag.) This notification must 
be received by Customs no later than seven working days prior to 
transmission of the first entry summary being flagged under the 
blanket. Upon receipt of the blanket flag, Customs will automatically 
apply the above-mentioned electronic indicator to the entry summaries 
within the identified scope.
    c. Option: Retroactive Flag. Customs is exploring the 
implementation of an option to retroactively flag entry summaries for 
reconciliation. A retroactive flag, if implemented, would enable the 
importer to request a Notice of Intent after filing and prior to 
liquidation of the entry summary. Retroactive flags would be requested 
on an individual entry basis, and would require approval by Customs. 
Customs will notify participants if this option is implemented.
3. Issues To Be Reconciled
    The NCAP/P reconciliation component will allow the following issues 
to be flagged for reconciliation: value, HTSUS heading 9802, NAFTA, and 
classification on a limited basis.
    a. Value--The reconciliation component of the NCAP/P is open to 
reconciliation of all value issues.
    b. HTSUS heading 9802--The issue of 9802 includes the value aspect 
involved with this HTSUS provision, e.g., reconciling the estimated to 
actual costs.
    c. NAFTA--Reconciliation may be used as a vehicle to file post-
importation refund claims under 19 U.S.C. 1520(d). NAFTA 
Reconciliations are subject to the obligations of 19 CFR Part 181, 
subpart D. The importer must possess a valid Certificate of Origin at 
the time of making a NAFTA claim. Presentation of the NAFTA Certificate 
of Origin to Customs is waived for the purposes of this prototype, but 
the filer must retain this document, which shall be provided to Customs 
upon request. The Certificate of Origin is part of the (a)(1)(A) list 
(19 U.S.C. 1508(a)(1)(A)), and covered by the recordkeeping provisions 
of the Customs laws and regulations. Filers are reminded that interest 
shall accrue from the date on which the claim for NAFTA eligibility is 
made (the date of the NAFTA Reconciliation) to the date of liquidation 
or reliquidation of the Reconciliation. The obligation to file a 
Reconciliation opened by the Notice of Intent applies to all 
Reconciliations, including NAFTA, even if the participant finally 
concludes it cannot file a valid 520(d) claim, in which instance the 
NAFTA Reconciliation would be filed with no change.
    d. Classification--Classification issues will be eligible for 
reconciliation as long as the reconciled HTS classification falls 
within the pre-identified 6-digit HTS provisions provided on the 
participant's application. Generally, the exercise of reasonable care 
should ensure that Reconciliations do not result in a tariff shift 
outside the pre-identified HTS provisions. However, at the time such a 
tariff shift has been identified, the participant must immediately 
refrain from entering the merchandise classified outside the pre-
identified HTS provisions in any future NCAP/P shipments. A participant 
may include this merchandise in future NCAP/P shipments only after 
submitting an application amendment with the proposed changes to HTS 
provisions and obtaining Customs approval of this amendment. The 
failure to identify merchandise not included in the original 
application or filed in amended applications in a timely manner may 
result in penalties, administrative sanctions and/or suspension from 
the prototype.
4. Filing of the Reconciliation
    The continuous bond on the underlying entry summaries flagged for 
reconciliation will be used to cover the Reconciliation. Customs will 
accept no drawback claims on the underlying entry summaries until the 
Reconciliation is filed with duties, taxes, and fees deposited.
    The following choices are for the type of Reconciliation filed. 
They are not conditioned on the method of flagging used. In other 
words, an importer can

[[Page 44954]]

flag entry summaries either individually or via a blanket application, 
and reconcile those entry summaries via an Entry-By-Entry or Aggregate 
Reconciliation.
    a. Entry-by-Entry Reconciliation.
    (1) This option can be used for all reconciliation adjustments, 
including refunds of duties, taxes, and fees.
    (2) The revenue adjustment will be broken down to entry-by-entry 
detail for all underlying entry summaries.
    (3) After the Reconciliation has been filed, drawback may be 
claimed against the underlying entry summaries and, if appropriate, the 
reconciled increase.
    b. Aggregate Reconciliation.
    (1) This option applies only to those situations which involve an 
absolute increase, i.e., each entry covered by the Reconciliation 
results in an increase or no change in duties, taxes, and fees. If 
netting is involved to reach a net increase, this option does not 
apply. (See Definitions section above for more details.) For example, 
entry 123 covers product A. Entry 234 covers product B. An assist was 
provided for product A, which resulted in an increase in duty. The 
value of product B was affected by currency fluctuations, which 
resulted in a decrease in duty. An Aggregate Reconciliation cannot be 
filed to cover both entry 123 and entry 234. Remember, this restriction 
against netting applies only to netting between different entries. If 
entry 456 covers both products A and B, as long as entry 456 as a whole 
had an increase in duties, taxes, and fees, it may be included in an 
Aggregate Reconciliation.
    (2) After the Reconciliation has been filed, drawback may be 
claimed against the underlying entry summaries, but may NOT be claimed 
against the reconciled increase. Furthermore, participants should be 
aware that duties, taxes, and fees paid on an Aggregate Reconciliation 
may only be refunded through adjustments to that Reconciliation on 
which the duties, taxes, and fees were paid, i.e., not through drawback 
or any other claims on the underlying entry summaries or a related 
Reconciliation (when two Reconciliations are filed on one entry 
summary.)
    Example: The duty paid on the underlying entry summary is $1,000, 
and the amount of the Aggregate Reconciliation adjustment is $10,000. 
The $1,000 paid at entry summary is eligible for a drawback refund. The 
$10,000 reconciliation adjustment is not eligible for a drawback 
refund. By opting to file an Aggregate Reconciliation, all participants 
understand that they waive their ability to claim drawback or transfer 
drawback rights for the amount of the reconciled increase.
    (3) The Reconciliation will include a list of all underlying entry 
summaries, but will not require the revenue adjustment to be broken 
down by entry.
5. Filing of the Reconciliation--Grouping, Timeliness, and Location
    Reconciliation is to be used to group entries together for a 
common, outstanding issue. Entry summaries flagged for reconciliation 
which have the same outstanding information should all be grouped on 
one Reconciliation, e.g., entry summaries flagged for reconciliation 
awaiting finalization of assist information should be grouped on one 
Reconciliation where the assist information is provided.
    A Reconciliation of value, HTSUS heading 9802 and/or classification 
shall be filed within 15 months of the date of the oldest entry summary 
flagged for and grouped on that Reconciliation. A Reconciliation may 
cover any combination of value, HTSUS heading 9802 and classification 
issues. Should the issues of value, HTSUS heading 9802 and/or 
classification on one entry summary be flagged for reconciliation, the 
participant shall address all those issues on the same Reconciliation.
    A NAFTA Reconciliation must be filed within 12 months of the date 
of importation of the oldest entry summary flagged for and grouped on 
that Reconciliation. NAFTA Reconciliations may not be combined with 
other issues, because of NAFTA's unique nature and different due dates, 
and so that Customs may expedite the processing of such refunds.
    One underlying entry summary may have up to two Reconciliations, 
one for any combination of classification, HTSUS heading 9802 and/or 
value, and one for NAFTA. A Reconciliation which is not filed by the 
appropriate deadline will be handled as a liquidated damages claim for 
failure to file.
6. Effect of Reconciliation on Drawback
    Inherent in the concept of reconciliation is the fact that, because 
certain issues are kept open pending filing of the Reconciliation, the 
information regarding these issues and the resulting liability for the 
duties, taxes, and fees previously asserted by the importer may change 
when the Reconciliation is filed. Customs will therefore not accept 
drawback claims or certificates on underlying entry summaries flagged 
for reconciliation until the Reconciliation is filed with all duties, 
taxes, and fees deposited. In the case of a drawback claim and a 
reconciliation refund against the same underlying entry summaries, the 
importer is responsible for ensuring that a claim for a refund in 
excess of the duties paid is not filed with Customs and for 
substantiating how the drawback and reconciliation refund requests 
apply to different merchandise.
    Since drawback is paid on a per-entry basis, reconciled adjustments 
filed with aggregate data are not eligible for drawback. As the 
adjustment made pursuant to an Aggregate Reconciliation is not 
connected to specific entry summaries, it would be impossible for 
Customs to ensure that those duties were indeed entitled to drawback, 
and/or that the duty for which the drawback was claimed had not been 
previously refunded on the underlying entry summary(ies).
7. Filing of Reconciliation--Bond Issues
    Entry summaries flagged for reconciliation will require a 
continuous bond, which must be accompanied by a rider. The rider shall 
read as follows:
    By this rider to the Customs Form 301 No.________, executed on 
________, by ________ as principal(s), importer no(s). ________, and 
________, as surety, code no. ________, which is effective on ________, 
the principal(s) and surety agree that this bond covers all 
Reconciliations pursuant to 19 U.S.C. 1484(b) that are elected on any 
entries secured by this bond, and that all conditions set out in 
Section 113.62, Customs Regulations, are applicable thereto. The 
principal(s) and surety also agree that, when an Aggregate 
Reconciliation under this rider lists entries occurring in more than 
one bond period, any liabilities to Customs reflected in that Aggregate 
Reconciliation shall be attributable (up to the full available bond 
amount) to any or all of those bond periods.
    The continuous bond obligated on the underlying entries, along with 
the rider, will be used to cover the Reconciliation. Adequate bond 
coverage must exist for the Reconciliation.
    All underlying entry summaries subject to one Reconciliation must 
be covered by one surety and one continuous bond. Each Reconciliation 
must be covered by one surety. Termination of the continuous bond, 
either by the bond principal or surety, will require that a 
Reconciliation be filed for the entries covered by the terminated bond, 
and a separate Reconciliation be filed for the entries covered by the 
new bond (within the designated time frames).
    Termination of the Reconciliation Bond Rider by either the 
principal or the surety may be affected in accordance

[[Page 44955]]

with procedures set forth in part 113.27, Customs Regulations. 
Termination of the Reconciliation Bond Rider will not serve to 
terminate the underlying bond. Moreover, it should be noted that 
Customs will not terminate bonds or riders filed pursuant to this 
prototype.
8. Reconciliation Component of the NCAP/P--Chain of Events
    a. Entry summaries flagged for reconciliation--
    (1) An electronic indicator, or ``flag'', signifying that 
underlying entry summaries are to be reconciled, will be applied at the 
header level. The flag designates that the indicated issue(s) for the 
entire entry summary (not just a specific line) is subject to 
reconciliation.
    (2) As mentioned above, there is also a ``blanket application'' 
option, in which ACE will automatically set the flag for all of an 
importer's entry summaries for a given period for a given issue(s).
    (3) For purposes of this prototype, the ``flag'' (set either by the 
filer or by Customs in accordance with a blanket application) serves as 
the importer's Notice of Intent to file a Reconciliation. The flag may 
be transmitted at the time of summary filing, or after summary filing 
in the case of a retroactive flag.
    (4) The importer must use reasonable care in filing the entry 
summary, including but not limited to declaring the proper value, 
classification, and rate of duty on the underlying entry summary, 
regardless of whether a particular issue has been flagged for 
reconciliation. For example, if the entry summary is subject to value 
reconciliation, the importer must still use reasonable care in 
providing a good faith value estimate, and deposit the appropriate 
duties, taxes, and fees at time of entry summary.
    (5) Entry summaries may be flagged for reconciliation until the 
close of the test period.
    b. Liquidation of underlying entry summaries--Liquidation of the 
underlying entry summary will occur as with any entry summary and will 
be posted to the Bulletin Notice of Liquidation. Importers who 
participate in this prototype will recognize that the liquidation of 
the underlying entry summary pertains only to those issues not 
identified by the importer as subject to reconciliation. Upon 
liquidation of the underlying entry summaries, any Customs decisions 
entering into that liquidation can be protested pursuant to 19 U.S.C. 
1514. It should be noted that liquidation of the underlying entry 
summaries may, but does not necessarily, precede the filing of the 
Reconciliation.
    c. Importer Electronically Transmits the Reconciliation--
    (1) When the importer has finalized the outstanding information, 
and has the answer to the issue in question, the filer, using 
reasonable care, will electronically transmit the Reconciliation to 
Customs.
    (2) Transmission of a Reconciliation for value, HTSUS heading 9802, 
and/or classification must occur within 15 months of the date of the 
oldest entry summary flagged for and grouped on that Reconciliation. 
Transmission of a NAFTA Reconciliation must occur within 12 months of 
the date of importation of the oldest entry summary flagged for and 
grouped on that Reconciliation.
    (3) Each Reconciliation will be limited to one importer of record 
and one surety, i.e., the underlying entry summaries and the 
Reconciliation must have the same importer of record and the same 
surety.
    (4) This prototype will allow up to 9,999 underlying entry 
summaries per Reconciliation.
    (5) The importer must clearly document how the information in the 
Reconciliation was derived. The importer must maintain all supporting 
documentation required to substantiate the declaration made via the 
Reconciliation, and provide this information to Customs or Census upon 
request. Supporting documents may include, but are not limited to:
    (a) CF 247--Cost Submission;
    (b) Detailed line-level spreadsheets;
    (c) Landed cost analysis sheets;
    (d) Invoices, purchase orders, and contracts; and
    (e) Documents supporting apportionment of assists in accordance 
with 19 CFR 152.103(e).
    (f) Documents supporting a post-importation NAFTA claim in 
accordance with 19 CFR 181.32.
    The recordkeeping provisions of the Customs laws and regulations 
apply to the Reconciliation and all supporting documentation as 
described above.
    (6) While underlying entry summaries may be flagged until the close 
of the test period, Reconciliations may be filed and liquidated after 
the closing date of the test.
    (7) Structure--For both the entry-by-entry and aggregate methods of 
reconciliation, the structure of the Reconciliation will include a 
header, association file, and line item data. The header record will 
contain basic summary data for the Reconciliation. The association file 
will contain the list of entry summaries being reconciled, and for 
Entry-by-Entry Reconciliations, the revenue adjustment per entry 
summary. Under the line item data, each reconciliation line will be 
consolidated for all of the underlying entry summaries listed in the 
association file. Each combination of HTSUS, country of origin, Special 
Program Indicator (SPI) and calendar year of release will require a 
separate line. Upon request, Customs will provide applicants and other 
interested parties with sample Reconciliations of each type.
    d. Payment--Payments of duties, taxes, fees, and interest due from 
the participant as a result of the Reconciliation will be reflected on 
the participant's periodic statement and are due on the statement pay 
date. (See Section IX below). Refunds will be paid individually at the 
time of liquidation. Interest on increases due Customs must be 
deposited when the Reconciliation is filed, and will be calculated 
pursuant to 19 U.S.C. 1505.
    e. Taxes and fees--For entry-by-entry Reconciliations, all taxes 
and fees on each entry summary must be adjusted to show the correct 
amount appropriate to that entry summary had the complete information 
for the transaction been known at the time of entry summary filing. On 
Aggregate Reconciliations, since monetary changes to individual entry 
summaries are not reported, adjustments to taxes and fees will be 
reported as follows:
    (1) Taxes and Fees applied to individual commodities, such as 
Cotton Fee, Beef Fee and the like, will be adjusted by multiplying any 
increase in dutiable value by the rate associated with the tariff 
number for the product in question.
    (2) For Harbor Maintenance Tax (HMT), the importer is responsible 
for determining and declaring the amount owed, based on any increase in 
dutiable value, for those products which had been subject to HMT at the 
time of original entry summary.
    (3) Merchandise Processing Fee (MPF) will be determined and 
declared in a similar fashion. The importer is responsible for 
determining and declaring the proper amount of MPF due based on any 
increase in dutiable value, at the MPF rate applied to the product at 
time of filing the underlying entry summary. Because there is a maximum 
assessment of MPF for entry summaries, Customs will use the following 
formula to set the maximum MPF to be paid on an Aggregate 
Reconciliation: [($485  x  number of entries covered by the 
Reconciliation which were subject to MPF), less the amount of MPF 
already paid on those same entries.]
    f. Liquidation of Reconciliation--

[[Page 44956]]

    (1) The Reconciliation will be reviewed and liquidated, and the 
liquidation of the Reconciliation will be posted to the Bulletin Notice 
of Liquidation. One bill or refund will be issued if a revenue change 
is appropriate. Revenue changes determined at liquidation will not be 
included on the periodic statement. Participants should recognize that 
there may be instances where no bill or refund is necessary. Interest 
will be calculated in accordance with 19 U.S.C. 1505. Please note: 
Customs is in the process of analyzing options for interest calculation 
which are revenue-neutral and do not link to every underlying entry 
summary. A subsequent Federal Register notice will be published with 
any options for interest calculation. Until such further notice, 
interest must be calculated in accordance with 19 U.S.C. 1505.
    (2) On a matter of dispute, the importer may follow normal protest 
procedures (pursuant to 19 U.S.C. 1514) with regard to any decision 
pertaining to the liquidation of the Reconciliation.

D. Reasonable Care and Recordkeeping

    Under the statutory mandate of 19 U.S.C. 1484, the importer is 
responsible for using reasonable care in declaring at entry, among 
other things, the proper value, classification and rate of duty 
applicable to imported merchandise. The public is reminded that the 
obligation to use reasonable care applies to all aspects of 
reconciliation, including the filing and flagging of the underlying 
entry summaries and the filing of the Reconciliation.
    Auditable and verifiable financial records must be the basis for 
any Reconciliation. Accordingly, the importer is required to maintain 
all records to support the Reconciliation, whether an Entry-By-Entry or 
Aggregate Reconciliation, pursuant to Customs recordkeeping laws and 
regulations, and maintain a system of records providing an audit trail 
between the data provided in the Reconciliation and the importer's 
books and records.
    Upon request by Customs and/or Census, further information in 
support of the Reconciliation must be provided by the importer. For 
example, Customs may, for verification purposes, request that the 
importer break down a certain [HTSUS/country of origin] line by part 
number, contract number, etc., and provide the documentation to support 
the change made at that level. The importer will have to track the 
adjustment to entry if requested by Customs. Census may in certain 
circumstances request that the yearly change for a given [HTSUS/country 
of origin/SPI] be broken down to quarterly adjustments, in order to 
capture seasonal fluctuations.

IX. Statement Processing

    In order to permit a different procedure to test the periodic 
deposit of estimated duties without adversely affecting the collection 
of revenue, participants must abide by the following procedures.

A. Periodic Statements

    Customs will electronically produce two types of statements each 
month, one before (preliminary) and one after (final) the filing 
deadline. The preliminary statement will be available anytime from the 
1st of the month following the release period (calendar month) until 
the 10th of the month following the release period. The preliminary 
statement must be requested by the participant; it will not be issued 
automatically. It will then be produced as part of a scheduled periodic 
automated routine. The preliminary statement is for information 
purposes only.
    The final statement will be produced immediately after the 10th of 
the month following the release period (filing deadline). The final 
statement will show amounts due to, or payable by, Customs. Any amounts 
due shall be initiated via ACH credit by the 15th of the month 
following the release period. Only NCAP/P entry release transactions 
will be included on the statement.
1. Entries Released During the Release Period
    All entries, with revenue due, released during the release period, 
will be listed on the final statement. This will include 
Reconciliations filed during the release period. The statement will 
show the amount due and the amount of the preliminary estimated 
payments (described below) applied to each entry. The statement will 
normally contain a balance due, but if the preliminary estimated 
payments exceed the total estimated duties, taxes, and fees due, there 
would be an amount payable by Customs.
2. Prior Statement Items
    Any estimated duties, taxes, and fees that have appeared on a 
previous statement that have an open balance, payable to Customs, will 
be listed on the final statement. This will consist of any NCAP/P entry 
transactions where the participant still owes Customs estimated duties, 
taxes, and fees.
3. Violation Bills
    Any violation bills that are open at the time the final statement 
is produced will be listed on the statement for informational purposes 
only. The violation bills will be shown separately and the amounts will 
not be consolidated with entry related transactions. Customs will only 
apply funds to violation bills if specifically designated by the 
participant. (See Section X below.)

B. Payment Process

    The participant will make three types of payments to Customs via 
ACH credit. The three types include preliminary estimated payments, 
final statement payments, and specific payments.
1. Preliminary Estimated Payments
    The preliminary estimated payments shall be initiated by the 15th 
and last day of the month of the release period. If the 15th or the 
last of the month falls on a weekend or holiday, the payment shall be 
initiated by the next business day. These estimated payments are to 
ensure revenue neutrality.
    a. All payments shall be made via ACH credit and initiated no later 
than the 15th or the end of the month.
    b. The first preliminary estimated payment will be 75% of the 
estimated revenue due to Customs as a result of entry activity for the 
first 15 days of the calendar month.
    c. The second preliminary estimated payment will be 57% of the 
estimated revenue due to Customs as a result of entry activity from the 
16th to the end of the month.
    These percentages will be reviewed and may have to be adjusted to 
maintain revenue neutrality. The participant will be required to 
identify the applicable release period for the payment. This 
identification will be done as part of the ACH transaction. The 
preliminary estimated payment will always be applied against the 
entries released during the period identified by the participant. If 
there is an amount remaining after this application, that is, if the 
estimated payments exceed the total duties, taxes, and fees due for the 
period, it will be held by Customs and applied to the next statement, 
unless the participant requests a refund within 10 calendar days.
2. Final Statement Payment
    This payment shall be initiated by the 15th of the month following 
the release period, and should include:
    a. Any prior period estimated duties, taxes, and fees, payable to 
Customs; and
    b. The difference between the total amount of revenue due on entry

[[Page 44957]]

summaries filed during the release period and the preliminary estimated 
payments.
    The final statement payment shall be initiated, through ACH, on the 
15th of the month following the release period. The settlement date of 
this transaction is the date which will serve as the date of actual 
deposit of estimated duties and fees for purposes of assessing interest 
under 19 U.S.C. 1505. The final statement payment received by Customs 
will be applied against any estimated duties, taxes, and fees payable 
to Customs listed on the statement. If there is an amount remaining 
after this application, that is, if the final statement payment exceeds 
the final statement amount due, it will be held by Customs and applied 
to the next statement, unless the participant requests a refund within 
10 calendar days.
3. Specific Payment
    This is a payment that explicitly identifies the item to be paid. 
This identification is done as part of the ACH payment transaction. A 
specific payment will be applied against the specifically identified 
item. If there is an amount remaining after this application, that is, 
if the payment exceeded the amount due for the specific item, it will 
be held by Customs and applied to the next statement, unless the 
participant requests a refund within 10 calendar days. If the specific 
item identified by the participant is not found, the payment will be 
held in suspense until further instructions are provided by the 
participant. The participant may notify Customs of any individual 
amounts due to which they do not want Customs to apply funds. Customs 
will not apply any funds to these items until explicitly informed to do 
so by the participant.

X. Misconduct Under Prototype

    All participants in the NCAP/P, whether accepted under the prior 
notice or this notice, are required to abide by the terms and 
conditions of this notice. Customs may employ the violation billing 
process for certain instances of misconduct. In those instances where a 
bond breach has occurred, the facts are known, and the harm to the 
government is quantifiable, Customs may issue a violation bill to the 
participant. The participant may choose to pay the violation bill, in 
which case, liquidated damages will not be issued and the matter will 
be closed. Should the participant wish to contest or fail to pay the 
violation bill, liquidated damages will be issued and the 
administrative procedures of Part 172 of the Customs Regulations will 
be invoked.
    If a participant is removed from or voluntarily discontinues 
participation in the Importer Compliance Monitoring Program; if a 
participant fails to cooperate fully in a Compliance Assessment or 
audit, provide timely and accurate data and adequate resources in 
support of a Customs Compliance Assessment or audit; if a participant 
fails to abide by the terms and conditions of a compliance improvement 
plan; if a participant enters or attempts to enter goods conveyed by 
non-LBCIP carriers on the southern border; enters or attempts to enter 
goods from shippers or sellers/vendors or conveyed by carriers not 
approved by Customs; enters or attempts to enter goods classified in 
commodity ranges not approved by Customs; files non-consumption 
entries; enters or attempts to enter or submit data relating to 
prohibited merchandise, merchandise subject to quota or antidumping or 
countervailing duties, or other non-eligible merchandise; fails to 
maintain sufficient continuous bond coverage; files erroneous or 
untimely data; makes late or inadequate payments; misuses 
reconciliation by using it when the reconciliation issue is not truly 
undeterminable at the time of entry summary; fails to supply Customs 
with requested invoice data or sufficient supporting documentation for 
a Reconciliation; fails to maintain a sufficient level of compliance; 
fails to exercise reasonable care in the execution of participant 
obligations; or otherwise fails to follow the procedures outlined 
herein, and applicable laws and regulations, then the participant may 
be suspended from the prototype, subject to liquidated damages, 
penalties, and/or other administrative sanctions, and/or prevented from 
participation in future prototypes. Customs has the discretion to 
suspend a prototype participant based on the determination that an 
unacceptable compliance risk exists. This suspension may be invoked at 
any time after acceptance in the prototype.
    Any decision proposing suspension of a participant may be appealed 
in writing to the Director, Trade Compliance, within 15 days of the 
decision date. Such proposed suspension will apprise the participant of 
the facts or conduct warranting suspension. Should the participant 
appeal the notice of proposed suspension, the participant should 
address the facts or conduct charges contained in the notice and state 
how he does or will achieve compliance. However, in the case of 
willfulness or where public health interests or safety are concerned, 
the suspension may be effective immediately.

XI. Regulatory Provisions Suspended

    Certain provisions of Parts 24, 111, 113, 141, 142, 143, 159 and 
181 of the Customs Regulations (19 CFR Parts 24, 111, 113, 141, 142, 
143, 159 and 181) will be suspended during this prototype test to allow 
for monthly filing of entry summary data, periodic payment of duties, 
taxes, and fees, reconciliation for NAFTA, classification, value and 
9802 issues, liquidation, billing and remote filing by Customs brokers 
in ports where they currently do not hold permits.
    Absent any specified alternate procedure, the current regulations 
apply.

XII. Prototype Evaluation

    Once the importers are selected for the NCAP/P, the Joint Prototype 
Team will, during the initial six months of the test period, evaluate 
the effectiveness of the automation involved. Subsequent reviews will 
additionally consist of evaluating the data received from the 
importers, along with the internal and external process operations of 
the NCAP/P.
    Additional importers may become eligible during the prototype 
period, using the eligibility requirements cited above, thereby 
increasing the number of companies involved in the NCAP/P. The 
evaluation of the prototype as it pertains to these importers may occur 
separately from that which is done on the original participants. 
Regardless, the intention of the evaluations is to enhance operational 
procedures and to develop the detailed data requirements that are 
needed for the NCAP/P.
    Note that the fact of participation in the NCAP/P is not 
confidential information. Lists of participants will be made available 
to the public by means of the Customs Electronic Bulletin Board and the 
Customs Administrative Message System, and upon written request. We 
stress that all interested parties are invited to comment on the 
design, conduct, and evaluation of the NCAP/P at any time during 
prototype.
    Upon conclusion of the prototype the final results will be 
published in the Federal Register and the Customs Bulletin as required 
by Sec. 101.9(b), Customs Regulations, and reported to Congress.

    Dated: August 17, 1998.
Robert S. Trotter,
Assistant Commissioner, Office of Field Operations.
[FR Doc. 98-22480 Filed 8-20-98; 8:45 am]
BILLING CODE 4820-02-P