Last modified: November 14, 2017
Engaging in international trade brings up a host of concerns, regulations, and compliance questions. In the service parts supply chain, trade between parties across international lines results in the need for an Importer of Record. In the US, an Importer of Record is used to describe the person who bears much of the responsibility for ensuring compliance with all applicable state, local, and federal laws when importing goods. However, many businesses fail to understand the value of an Importer of Record and how this role affects effective global supply chain management. Take a look at what you need to know about the role of the Importer of Record.
The Importer of Record is a person or entity who assumes the responsibility for ensuring legal goods are imported into the US. The Importer of Record must ensure all goods are appropriately documented and valued. Furthermore, the Importer of Record is the responsible party for the payment of duties, tariffs, and fees of the imported goods.
The Importer of Record should ensure compliance with all necessary regulations and statutes through compliance tools, a self-auditing program, training of staff, recognition from executive-level management, communication, and the Importer Self-Assessment Program. Although voluntary compliance measures are preferred by CBP, an Importer of Record may be subject to enforced compliance.
Enforced compliance includes inspections and examinations of imports, audits of documentation, assessment of monetary penalties, investigations into Importer of Record business dealings, civil penalties, and additional criminal penalties.
Some government agencies have authority to go beyond the Importer of Record and deny entry of imports on the basis of possible threats to the general welfare of the US. For example, the Environmental Protection Agency, the Food and Drug Administration, and the Consumer Product Safety Commission may refuse entry for any product. If such refusal occurs, CBP does not assume responsibility for importing of goods. Rather, CBP may oversee the export or destruction of such goods.
The Customs Modernization Act of 1993 created the Importer of Record. The role of Importer of Record was created by Customs and Border Protection (CBP) to further secure imports from terroristic threats and assure the payment of duties on all imported goods. The Importer of Record carries the legal responsibility for the initial valuing, classifying, and assessment of duties on imports.
Documentation responsibilities for the Importer of Record include supporting documentation of all initial assessments for an import. Furthermore, the Importer of Record is required to appoint a valid Power of Attorney (POA). When an Importer of Record is not located on-site at the time of import, the POA has the authority to act on behalf of the Importer of Record for the accountability of the import. However, the POA must have been executed and maintain reasonable care, as outlined by the CBP, at the time of the import.
In most cases, the Importer of Record is the person or entity who actually has ownership of the imported goods at the time of import. This concept becomes slightly confusing when thinking about suppliers, distributors, and end-users. At the time of import of already-purchased goods, the typical thinking would imply the owner of the product (the end-user) has the obligation to pay any associated duties. However, appointing a given entity as the Importer of Record eradicates this confusion. The entity becomes the temporary owner of the goods until the goods have been accepted by the distribution center.
Since the Importer of Record can appear complicated when considering international trade between differing parties, the role of the Importer of Record is often forgotten. To effectively manage the global supply chain, the Importer of Record can be streamlined by an entity in the service parts supply chain.
When a company uses a service parts supply chain entity, such as Flash Global, the separate entity assumes all of the necessary responsibility for the Importer of Record and all subsequent duties until such goods have been transferred to the end-user. As a result, the opportunities for violations of compliance regulations is minimized, which saves money across all parties within the service parts supply chain.
The Importer of Record can be compared to the dock supervisor: the Importer of Record is responsible for the accuracy and accountability of the goods at the time of import. In modern, global trade patterns, the Importer of Record for a large organization can be split into multiple parties throughout the US-based parts of the organization. Therefore, the overall duties and responsibilities of the Importer of Record, such as recordkeeping, can be effectively managed with minimal effort on any single person. In the next post, we will address the exporter of record.
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