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Details of a Commercial Invoice

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Category: Supply Chain, Customs, Import, Freight Forwarding, Customs Broker

Details of a Commercial Invoice

April 09, 2021 Posted by Tanya Krieger

In addition to being a document required to be submitted with a Customs Entry, the commercial invoice contains vital information needed to prepare the Entry such as the goods purchased and the prices paid. This information is critical to determining the amount of duty, if any, that is to be assessed. The Customs requirements for a commercial invoice can be found in 19 CFR § 141.86. Many of you may not have time to decipher the U.S. Customs regulations, so we will detail below the important requirements to make it simple for you. These are the items required to be on your commercial invoice (you may use this as a checklist):

1. The port of entry & final destination: The commercial invoice is prepared by the seller of the goods, so the port of entry is meant as the first port, in the country of destination, where the goods arrive. The final destination is the place where the shipment is intended to come to rest. For example, the Port of Entry—Los Angeles and Port of Destination—Phoenix, Arizona.

2. Time, Place, Seller, and Buyer: The name and address of the buyer and the seller must be listed as well as the terms of sale/ Incoterms.

3. A detailed description of the merchandise: Customs requires that the invoice description provide sufficient detail to determine the correct Harmonized Tariff Code which is one of the elements required to determine the correct duty. What are the items? What are they made of? What are they used for? The Importer of Record is required to provide any missing information.

4. Quantities & weights: Many Harmonized Tariff Codes require a quantity, in the specified unit of measure (UOM), to be transmitted. This information comes from the commercial invoice. When shipments arrive by ocean there is ample time for a Customs Broker to seek clarification from the Importer of Record without disrupting the shipment. That same time cushion does not exist for most shipments at the border from Mexico and Canada where a delay of minutes can result in a truck being turned away from the Customs line at substantial expense.

It is very important to ensure the correct UOM for the Harmonized Tariff Code of the goods is shown on the commercial invoice. If the reportable quantity required by Customs is the net weight, this information needs to be listed on either the invoice or the packing list. If you have questions, please reach out to our border compliance team at CXL.CMP@nkinc.com.

5. The purchase price of each item: How much did you pay for these goods? (Customs may grant an importer the use of a process called RECONCILIATION, which allows the importer to file entry summaries with the best available information {if the final value of goods is unknown, using reasonable care, an estimated value is entered}. At a later date, when the specifics have been determined, a reconciliation is filed which providesproviding the final and correct information—please contact us for further information).

6. The value of each item (if the items are not purchased): Some items in a shipment may be free to the importer, such as a gift, a complimentary item, or a free sample. Each free item must be given a fair market dollar value or the entry cannot be submitted to Customs. A customs broker may not knowingly submit an entry to Customs that does not contain the required information.

7. Currency: The currency needs to be specified on the invoice. If the currency is not U.S. dollars (USD) then the currency must be converted to USD using an exchange rate provided by Customs which can sometimes be to the disadvantage of the importer. may not be what the importer expects. Calculating exchange rates for multiple items can slow entries at the borders with Mexico and Canada which can result in shipment delays and additional cost. We recommend that transactions be reported in USD for such transactions to reduce cost and delay.

8. Additional charges: Customs requires that related costs, such as freight, insurance, and commissions, be declared at the time of entry. In most cases, Customs regulations permit some or all of these to be deducted from the value before duty is determined. If freight and insurance, for example, are part of the cost of the goods they may be deductible if you provide documentary evidence detailing how much and for what purpose. Due to the small window of time to obtain and submit documents importers find it difficult to provide this required evidence. It is recommended that considering buying FCA terms (read our blog here) and avoid paying duties on your freight and insurance charges.

9. Any rebates, drawbacks, or bounties: Customs regulations require this information needs to be listed and separately itemized on the invoice.

10. The country of origin of the goods: The country of origin (COO) has an impact not only on the duty to be assessed but also on whether the goods may be imported. While many interpret the COO as being the country where the goods were shipped from it is more complicated. Generally, the COO is the country in which the goods were grown or produced. For example, a shipment may depart from Hong Kong, but the goods may not have been manufactured in Hong Kong. For some articles the COO rules are more complex. For example, some treaties or laws may have more complex requirements based on, for example, where the yarn for a garment was created.

11. Any assists not included in the invoice price: This Examples of assists includes, but are not limited to, such things as any molds, tools, dyes, or engineering plans that were not included in the invoice price. Failure to do so may result in civil or criminal penalties.

In addition to all the requirements listed above, Customs requires that all commercial invoices must be written in English or have an English translation attached. Certain classes of merchandise such as textiles, footwear, chemicals, and steel have specific invoice requirements in addition to what is listed above. It is important to know what documentation requirements there are for your commodity, you can find additional details here 19 CFR § 141.89. If your broker is calling you with questions about your commercial invoice—they are looking out for your best interest! If you have any further questions, please contact us.

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