Customs entry type codes and in-bond movements: the first split in an entry audit

Why start an entry audit with the entry type?

Every other check on a Form 7501 line depends on it. The entry type decides whether duty was deposited at all, which date's rate the line should carry, when the entry liquidates and which correction routes are open. A line that is right for a type 01 entry can be wrong for the same goods on a 21, 06 or 03, and a correction that works on one type does not exist on another.

The Form 7501 instructions (revision 02/26) say the first digit of the code "identifies the general category of the entry (i.e., consumption = 0, informal = 1, warehouse = 2)" and the second digit the processing type within it. Sort your broker's entry export by that code before you test a single rate. What block 2 and the other header boxes should agree with is in Form 7501 field by field; this page is about what each type changes once the entry is filed.

What does each entry type change about duty, deadlines and corrections?

Three rows need a page of their own. Zone entries are in foreign trade zone entries and stacked tariffs, reconciliation in CBP reconciliation for flagged entries and temporary importation in temporary importation under bond on past entries.

Which type errors cost money?

Most type errors are not about the code itself but about the rules the code switches on or off.

• 01 that should have been 03. Goods within the scope of an antidumping or countervailing duty order entered as type 01 carry no case number and no cash deposit. CBP's Post Summary Correction page allows a change from 01 to 03 and from 03 to 01, and no other type change. After liquidation, the route for an underpayment is a prior disclosure.
• 03 that should have been 01. The reverse: a cash deposit on goods outside the order's scope. That is an overpayment, recoverable by PSC before liquidation; because 03 entries often stay unliquidated for years while suspended, the window can stay open long after the 300 days, under the exception on CBP's PSC page.
• 11 on goods that needed a formal entry. Since the informal limit excludes articles over $250 under Chapter 99 subchapters III and IV, a low-value informal entry of goods carrying Section 232 or Section 301 duty is a finding. The fees on informal and formal entries also differ; see MPF, HMF and the other Form 7501 fees.
• Warehouse withdrawals rated on the arrival date. A type 31 line should carry the rate in force on the withdrawal date in block 7. When a Chapter 99 rate changes while goods sit in a warehouse, the withdrawal pays the new rate, unless the instrument says otherwise. Check each instrument's own wording: Proclamation-based actions usually say they apply to goods "entered for consumption, or withdrawn from warehouse for consumption" on or after a date.
• Type changes that cannot be made. A PSC cannot change the date of entry, the port, the importer of record or the reconciliation issue code (CBP's PSC page). A finding that turns on any of those goes to your broker for a different route.

What are in-bond movements, and where do they show on an entry?

An in-bond movement carries imported goods "from one port to another prior to the appraisement of the merchandise and without the payment of duties" under a bond (19 CFR 18.1(a)). The transportation entries are immediate transportation (IT, type 61), transportation and exportation (T&E, type 62) and immediate exportation (IE, type 63), plus warehouse withdrawals for transportation or exportation (18.1(b)).

When goods move under an IT and are then entered for consumption at the destination, the IT number appears in block 16 of the 7501, and block 11 carries the import date at the first port. The in-bond itself is not a duty-paying entry, so a broker's entry export lists it only as that block 16 number. An in-bond that was never followed by an entry, an export or a zone admission does not appear in the export at all. That is why open in-bonds are found from ACE in-bond records and the carrier's or broker's in-bond log, not from the entry summary.

Which in-bond clocks run, and what happens when one is missed?

Exam or inspection time does not count toward the 30 days, but diversion to another port and a new in-bond application do not extend it. An extension is at CBP's discretion on written request, for extraordinary circumstances (18.1(i)(2)). A late delivery or a missing arrival report "constitutes an irregular delivery".

The consequences fall on the party whose bond is obligated on the transportation entry, which may be a bonded carrier rather than the importer; who bears the cost in the end is a matter for the commercial contract. Under 19 CFR 18.8(b) that party is liable for liquidated damages, and under 18.8(c) for the duties, taxes and fees on missing goods, "not limited to the amount of the bond". The custodial bond conditions in 19 CFR 113.63 set liquidated damages for a default involving merchandise at the value of the merchandise, or three times that value for restricted or prohibited goods or alcoholic beverages, and at $1,000 per default that CBP determines does not involve merchandise.

Worked line: an in-bond that arrived but was never reported

A container of furniture valued at $60,000 is unladen at Long Beach and moves on an IT to a bonded facility in Chicago. CBP authorizes the movement on March 2. The container reaches Chicago on March 20, inside the 30 days, but the arrival is never reported in ACE. The importer files a type 01 entry on March 25 with the IT number in block 16 and pays the duty.

• The duty side is settled. The entry was filed and the duty deposited, so the duty and fees are not owed twice.
• The in-bond side is not. No arrival report within two business days of March 20 is an irregular delivery under 18.1(j). The bond principal on the IT faces a liquidated damages claim. Under 113.63 that claim is the $60,000 value of the goods if CBP treats the default as involving merchandise, or $1,000 if it does not; the regulation leaves that call to CBP, and goods that were delivered and entered are the principal's argument for the lower figure.
• The relief route. A petition under 19 CFR part 172 can cancel or reduce the claim where CBP is satisfied the violation occurred without intent to evade (18.8(b)(2)). Evidence that the goods were entered and duty paid is the core of that petition.

The audit lesson is to match every block 16 IT number to a closed in-bond record, and every in-bond in the log to an entry, an export or a zone admission. The gaps are open liabilities on someone's bond. The rate on an IT entered at its destination follows 19 CFR 141.69(b), which applies the rate in effect when the IT was accepted at the port of original importation, if the goods are not subject to a quantitative or tariff-rate quota and were entered at the designated port without going to general order. That rule opens "except as otherwise specifically provided for by Executive Order", so where a Chapter 99 duty changed while the goods were in bond, check the instrument's own effective-date clause with your broker before relying on it.

How do you run the entry type split on your own export?

1. Count lines by entry type for the period and list any type you did not expect: an 03 you have no order for, an 11 on goods with a Chapter 99 heading, a 21 with no withdrawals.
2. Apply the right rate date per type: entry date for 01, 02, 03 and 11; withdrawal date for 31 to 38; zone status rules for 06.
3. Put each type on its own clock: liquidation one year from entry for 01, one year from final withdrawal for warehouse entries, suspended for most 03 entries, filing deadlines for reconciliation, export deadlines for 23.
4. Check the type itself: goods within an AD/CVD scope on 01, goods outside it on 03, informal entries above the limits.
5. Match in-bonds: every block 16 IT number to a closed in-bond, every open in-bond to an entry or export.
6. Route each finding by type: PSC where the type allows it, protest after liquidation, prior disclosure for an underpayment. The windows are in how long you have to fix a past entry.

Corrections and petitions are filed by your broker or the bonded carrier; confirm the route with them or with customs counsel. TariffSense reads entry summaries and broker exports, splits them by entry type and checks each line against the measures in force on the date that applies to its type, flagging differences in both directions. To check one line, use the duty calculator; the post-entry audit guide covers the rest of each line.