Resolve to Have Compliant Commercial Invoices in 2016

One common and preventable cause of shipments “stuck in customs” is incorrect documentation.  This year, ring in the New Year by resolving to have compliant commercial invoices.

Whether a company creates the document or relies on a supplier to create the commercial invoice, 19 CFR 141.86 is clear on what is necessary for an invoice to be compliant. There are several essential components to a valid commercial invoice, and while seemingly self-explanatory, missing or erring on any of them may mean delay at the border.

 Adequate description of the merchandise

The description on a commercial invoice needs to be specific enough for a customs agent or broker to determine the merchandise that is being transported.  A common pitfall that causes delay at the border is utilizing an overgeneralized description of what is being sold. For example, listing out by line items “pencil, pen and notepad” would better serve the clearance process than the description “box of desk supplies”.

Quantities and Values of the Merchandise

The quantity of the merchandise must be reflective of what is being shipped. Likewise, the value of the merchandise should reflect the fair market value of the items being shipped keeping in mind intercompany pricing and valuation.   It is invalid and unacceptable to place zero as the price of an item.

Shipper and Consignee

The shipper and the consignee on the invoice should project the individuals or the firms that initiated the sale. Listing the correct consignee on the paperwork is essential in determining the importer of record of the transaction and is a direct link to the broker that will be used as well as who will be paying the duty and taxes.

The Shipper and the Consignee can be related parties but the paperwork must display the international transaction. Therefore, if there is a drop shipment by which a foreign affiliate will fulfill a domestic transaction, to avoid confusion at the border it is the best practice to display the international sale for the purpose of customs clearance.

Country of Origin

The country of origin on the commercial invoice must reflect the country from which the merchandise was manufactured, birthed or grown and is not reflective of where the merchandise was shipped from. Incorrectly assigning a country of origin determined according from where an item was shipped may cause clearance issues, particularly if the product undergoes inspection and the country of origin marking does not match the country of origin that is displayed on the commercial invoice.

 Assists, Rebates and Bounties

All goods and services except those that were provided in the United States but were provided for the production of the merchandise (assists), as well as all rebates and drawbacks, must be separately itemized on the commercial invoice.

Harmonized Tariff Code

Although not specifically mentioned as a must have on the commercial invoice in 19 CFR 141.86, the Harmonized Tariff code is an important piece of a compliant commercial invoice.  The Harmonized Tariff code determines the duty rate of the merchandise and therefore it is absolutely necessary to utilize the correct code.  Many times the code that is on the commercial invoice is utilized by the broker upon clearance; if the code is incorrect, then the importer of record or consignee risks paying either too much or too little in duty and MPF.

Currency

The currency of the transaction is a very easy component and is essential for clearance. Be sure to list the currency somewhere conspicuous on the invoice so as to avoid delay.

 

It cannot be overstated how important a valid commercial invoice is in the import process.  To learn more about how Allyn International can assist in sprucing up you documentation or for any of your trade compliance needs contact sales@allynintl.com