GLOSSARY OF TERMS

Automated Clearinghouse (ACH) – An electronic payment program that allows ABI filers to pay CBP duties, taxes, and fees with one electronic transaction

Ad Valorem Literally means According to Value. It is the primary method by which Customs duties are calculated. An Ad Valorem duty is a duty based on the value of the merchandise. This is in contrast to specific duties which are calculated on the weight, volume or item count and compound duties which are a combination of ad valorem and specific duties.

Air Waybill (AWB) – An AWB is a bill of lading for both domestic and international air transportation. It is a non-negotiable instrument of air transport which serves as a receipt for the shipper, indicating that the carrier has accepted the goods listed therein and obligates itself to carry the consignment to the airport of destination according to specified conditions. The AWB issued by carrying airlines and also called Master Air Waybill (MAWB) which comes with three digits of numeric airline identification codes issued by IATA to non-U.S. based airlines and Air Transport Association of America to U.S. based airlines. However, air freight forwarders also issue HAWB (House Air Waybill) to their customers for each of the shipments.

Antidumping Duty (ADD) – An additional duty imposed by the United States against specific merchandise from certain countries for selling below home market prices or cost of manufacture with material injury to an U.S. manufacturer is called dumping.  Antidumping duties are imposed in order to offset the unfair pricing of the imported merchandise.

Antidumping Duty Deposit – The deposit collected by U.S. Customs & Border Protection at the time of entry of merchandise subject to an antidumping duty order. The deposit is based on the most recently concluded review. The actual amount to be paid will depend on the results of the administrative review, if any, for the period in question and the actual duties may be higher or lower.

Arrival Notice (AN): A notice given by the carrier or freight forwarder that is to inform the consignee of the arrival of the goods at the port of entry.  The AN indicates the container number, total charges due from consignee, pickup location, allowed free time before storage charges begin, etc and sent to the consignee prior to carrier arrival.

ATA Carnet: A customs document that may be used in lieu of national customs entry documents permitting the holder to carry or send goods temporarily into certain foreign countries for display, demonstration, or similar purposes, without paying duties or posting bonds.

Automated Broker Interface (ABI) – An integral part of the Automated Commercial System (ACS), ABI is the means by which brokers or importers transmit entry and release data to the U.S. Customs and Border Protection (CBP).  ABI entries are identified by either an ABI/N (non-statement) or ABI/S (statement) next to the entry type code in block 2 of the CBP Form CBPF-7501, Entry Summary.  Through ABI, brokers are permitted to pay entries individually (non-statement) or by batch (statement).

Bill of Lading (BL): A document that allows the carrier to transport a merchandise shipment from a shipper to a consignee.

Bonded Warehouse:  U.S. Customs & Border Protection (CBP) authorizes bonded warehouses for temporary storage of merchandise on which payment of duties is deferred until the goods enter the Customs Territory. The goods are not subject to duties if reshipped to foreign points.

Commercial Invoice: is a bill of sale for the goods from the seller to the buyer. This invoice contains detailed information about the merchandise, it’s manufacturer, country of origin, destination, tariff code, and more. The information on the commercial invoice is critical for a customs broker to prepare the customs entry.

Cost, Insurance and Freight (CIF): A pricing term indicating that these cost are included in the quoted price. This term should only be used for sea or inland waterway transport.

Customs Broker:  A person or firm licensed by an importer’s government and engaged in entering and clearing goods through customs. The responsibilities of a broker include preparing the entry form and filing it; advising the importer on duties to be paid; advancing duties and other costs; and arranging for delivery to the importer. A Customs Broker administers more than 400 laws for over 40 agencies, including the Fish and Wildlife Service, the Food and Drug Administration, the Federal Trade Commission, and the Consumer Product Safety Commission.

Delivered Duty Paid (DDP): The seller is responsible for delivering the goods to the named place in the country of importation, including all costs and risks in bringing the goods to import destination. This includes duties, taxes and customs formalities. This term may be used irrespective of the mode of transport.

Dock Receipt: is a document issued by an ocean carrier to acknowledge receipt of shipment at the carrier’s dock or warehouse facilities.

Drawback: Drawback is a refund of duties paid upon certain imported goods that are manufactured and re-exported, never used within the United States and re-exported, or never used within the United States and destroyed under CBP supervision.

Duty: The tax imposed by a customs authority on imported merchandise. Duties are typically based on the value of the goods (ad valorem duties), other factors such as weight or quantity, or a combination of value and other factors.

Entry: Documentation required by and submitted to CBP by an entry filer to secure release of imported merchandise from CBP custody.  The entry package usually consists of a CBPF-3461 or CBPF-3461A, the invoice, a packing list and any special release forms including other Government agency forms. Various types of entries are used in different circumstances such as consumption entries, warehouse entries, immediate transportation entries, and transportation and exportation entries. Customs has moved towards a paperless system and most of these documents are now submitted electronically.

Examination: The process by which the customs authorities inspect the merchandise identified in the customs entry and confirm whether the merchandise is the same as described in the customs entry and whether the goods are eligible for entry.

Export License: Required document issued by the U.S. Government authorizing the export of specific commodities. This license is for a specific transaction or time period in which the export is to take.

Free Alongside Ship (FAS): Is when the seller bears obligations; risk and cost for delivery of goods have been placed alongside the vessel at the port of departure. The buyer is responsible for the costs and risk of loading, unloading, ocean transportation, and insurance. The buyer is also required to clear the goods for export. This term may be used for sea or inland waterway transport only. 

Free On Board (FOB): Is when the seller bears responsibilities, risk and cost to deliver the goods to a named port of export in the seller’s country. Once the goods have been loaded aboard a vessel arranged for by the buyer, all further obligations, risk and cost are for the account of the buyer. FOB is applicable only to ocean or inland waterway modes of transport.

Freight Forwarder: An Independent business that handle export shipments for compensation.  The forwarder takes care of all documentation needed to move the shipment from origin to destination.

Freight Prepaid: An agreement between the seller and a buyer that the seller will pay for the transportation charges before delivery to the transportation carrier.

General Order (GO): Cargo seized by customs due to failure on part of consignee to make customs entry within allotted free time.

Harmonized Tariff System (HTS):  Common international classifications facilitate balance of trade statistics collection, customs classification, and country of origin determination. The HTS is a system for classifying goods in international trade, developed under the auspices of the Customs Cooperation Council.

House air waybill (HAWB) – Transport document issued by carrying airlines’ agent or freight forwarder.

Importer Number:  is required by Customs and Border Protection (CBP) and has to be listed on the entry paperwork. The importer number is usually the IRS business tax number assigned to the businesses or the social security number for the individual for personal imports. If neither is available, such as for foreign parties, a customs broker may request an importer number to be assigned by Customs at the port of entry.

In Bond: The act of transporting a cargo shipment from a port of unlading to another port for entry or disposition under bond for the time period which is allowed by law for transportation or storage. Transportation or storage in bond may be affected by transportation carriers or warehouses that have posted a bond with customs authorities guaranteeing payment of all customs duties in the event that the goods are improperly released with out the payment of customs duties by the owner of the goods.

Informal Entries: are filed for personal shipments of any value, for certain commercial shipments valued at $1250 or less and for certain textile shipments valued at $250 or less.

Immediate Transportation Bond (IT Bond): is an in-bond movement transporting a cargo shipment from the port of unlading to the in-land port of destination under bond for entry or disposition.

Importer Security Filing (ISF): A requirement for all ocean freight cargo being sent to the United States. It is the importing US parties’ responsibility to declare specific data sets (description of commodity, seller, manufacturer information etc.). These data sets consist of information from the shipper and Buyer/Importer and need to be forwarded to a customs broker prior cargo sailing. The ISF is then submitted electronically by the customs broker to U.S. Customs at least 24 hours prior to loading at the last foreign port.

Liquidations: Final determination made by customs authorities of the classification and value of the imported merchandise. Within a period time, for example, three to six months, Customs will make its own analysis of the goods and determine whether or not they agree with the classification, value, and duties paid.

Manufacturer Identification code (MID): constructed using specific segments of the manufacturer’s or shipper’s, name and address.

Merchandise Processing Fee (MPF): Formal and informal entries are subject to a MPF. The MPF for formal entries is an ad valorem fee of 0.3464 percent. The fee is based on the value of the merchandise being imported, not including duty, freight, and insurance charges. The maximum amount of the fee shall not exceed $485 and shall not be less than $25. For example, if .3464 percent of the amount of your merchandise is greater than the maximum amount of $485, the importer is only required to pay the maximum amount of $485.00. The MPF for informal entries is assessed on goods that are transported to the U.S. via air, ship and international mail. MPF for informal entries is a set fee and ranges from $2.00, $6.00 or $9.00 per shipment.

North American Free Trade Agreement (NAFTA):  A preferential trade agreement among Canada, Mexico and the United States covering trade in goods, technical barriers to trade, government procurement, investment, services and related matters, intellectual property, administrative, institutional and other provisions.  The objectives of NAFTA are to eliminate barriers to trade, facilitate the cross-border movement of goods and services, promote conditions of fair competition, increase investment opportunities, provide adequate and effective protection and enforcement of intellectual property rights, create effective procedures for the implementation and application of this agreement, and to establish a framework for further trilateral, regional and multilateral cooperation to expand and enhance the benefits of this agreement within the territories of the signatory countries.

Packing List: shipping document issued by shipper to carrier, Customs and consignee serving the purposes of identifying detail information of package count, products count, measurement of each package, weight of each package, etc.

Port of Entry: The port where the entry is filed.

Port of Unlading: The U.S. port of call in which cargo shipments are discharged.

Power Of Attorney (POA): an authorization granted by consignee or importer to its customs broker for the processing of customs clearance on its behalf.

Pro Forma Invoice: An abbreviated invoice sent at the beginning of a sale transaction, usually to enable the buyer to obtain an import permit or a foreign exchange permit or both. The pro forma invoice gives a close approximation of the weights and values of a shipment that is to be made.

Proof of Delivery (POD): a cargo/package receipt with the signature of recipient. This term has been widely used in courier and express industry and also gaining more attention and implementation at air cargo industry.

Ocean Bill of Lading (OBL): A receipt for the cargo and a contract for transportation between a shipper and the ocean carrier. It may also be used as an instrument of ownership which can be bought, sold, or traded while the goods are in transit. To be used in this manner, it must be a negotiable “Order” Bill-of-Lading.

Quota: Under a quota, only a certain amount of the designated merchandise can be entered into the commerce of the United States during a specific time period.  Under an absolute quota, once the specified amount of merchandise has been entered, no more can be entered until the next opening.  Under a tariff-rate quota, a certain amount may be entered at a reduced rate of duty.  Once that amount has been entered, a higher rate of duty is charged.

Seller: The entity that is selling the goods or, if not being sold, the entity that is the owner of the goods.

Shipper’s Export Declaration: A form required by the Commerce Department for shipments over $2500 ($500 for mail shipments) to all countries except Canada. It is completed by a shipper or its freight forwarder showing the value, weight, consignee, designation, schedule B number, etc. for the export shipment.

Shipper’s Letter of Instructions: A document issued by an exporter or importer instructing the freight forwarder to effect transportation importation and exportation in accordance with the terms specified in the letter of instructions.

Ship to Party: The entity in the United States, to whom the goods are being first shipped to, after clearance.

Standard Carrier Alpha Code (SCAC):  The carrier identifier issued by the National Motor Freight Traffic Association (NMFTA).

Tariff: A duty (or tax) levied upon goods transported from one customs area to another. Tariffs raise the prices of imported goods, thus making them less competitive within the market of the importing country.

Temporary Importation Bond (TIB): When an importer makes entry of articles brought into the United States temporarily and claimed to be exempt from duty under Chapter 98, Subchapter XIII, Harmonized Tariff Schedule of the United States, a bond is posted with Customs which guarantees that these items will be exported within a specified time frame (usually within one year from the date of importation). Failure to export these items makes the importer liable for the payment of liquidated damages for breach of the bond conditions. (See 19 CFR 10.31.). The Temporary Importation under Bond (TIB) is usually twice the amount of duties and other payments the importer would otherwise be required to pay. Merchandise imported under TIB is usually for sales demonstration, testing, or repair.

THC:Terminal Handling Charge

Ultimate Consigne: The entity in the US to whom the goods are sold or, if not sold, to whom cargo is consigned to (end user), if not consigned, to whom the goods are going to be first delivered.

Value-Added Tax (VAT): An indirect tax on consumption that is levied at each discrete point in the chain of production and distribution, from the raw material stage to final consumption. Each processor or merchant pays a tax proportional to the amount by which he increases the value or marks up the goods he purchases for resale.