Every eCommerce business wants to cut costs or provide something unique to customers, which frequently involves importing products. Fortunately, you can not only achieve these objectives but also save money on eCommerce fulfillment by utilizing Customs and Border Protection’s (CBP) Section 321 provision.
Section 321 allows businesses to avoid paying taxes and duties on certain imported goods. The regulation is nuanced, but it is primarily intended for companies whose shipments are low-cost, with a total value of less than $800. As Chinese manufacturing resumes, the provision becomes even more important for today’s businesses looking to capitalize on the U.S. eCommerce boom.
So, let’s take a look at what the provision entails and who it can assist. This guide is a general overview, and each eCommerce company should conduct its own Section 321 research to ensure that you and your products qualify.
Table of Contents
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- What does Section 321 Entry Type 86 entail?
- Who does it benefit?
- Is it required?
- Due diligence and best practices
- What is the danger?
What does Section 321 Entry Type 86 Entail?
Section 321 Entry Type 86 is a de minimis shipment that permits businesses to bring items into the United States duty-free if they are worth less than $800. Informal entry cargoes that meet the criteria can be imported by air, land, or sea, and can use any commercial port of entry.
It is based on CBP’s Automated Commerce Environment (ACE), which allows importers to save money on shipments while also speeding them through customs. For many eCommerce businesses, the low-value ceiling makes this a very appealing option.
Who Does it Benefit?
Section 321 is a significant boon to eCommerce companies that import their goods. It can be a beneficial tool whether you need it on a regular basis or less frequently depending on demand fluctuations. As the popularity of eCommerce has grown in the United States, so has the use of Section 321 Entry Type 86 for eCommerce fulfillment. Its immediate benefit is the elimination of customs taxes and levies.
However, trade analysis has revealed that Section 321 speeds up the clearance of shipments, resulting in fewer delays and expenses. That can make a huge difference for eCommerce enterprises whose supply chains have been disrupted by COVID-19.
To get that quick clearance, you’ll need to employ the ACE for your paperwork, which usually means you’ll need the services of a freight forwarder.
Is it Required?
Section 321 is completely optional for the goods you intend to import. Because of how much it can save eCommerce businesses, use is rapidly increasing, and anyone who uses it is considered a “test participant” at this point. In the future, requirements that require the use of the designation and/or related systems such as ACE entry may change.
At the moment, the Type 86 entry of Section 321 has a direct impact on customs brokers and ABI self-filers.
Due Diligence and Best Practices
eCommerce businesses that want to save money under Section 321 will need a competent supply chain team. To prevent penalties associated with having numerous transactions per day, your eCommerce fulfillment partners must communicate with one another. Your partners should be required to provide you with visibility.
Here are a few more things to think about:
*Each day, specify which shipment will submit a Section 321 claim and notify the eCommerce fulfillment partner.
*Encourage your partners to file a Section 321 claim only when you specifically instruct them to do so for a shipment.
Each day, ask your partners to submit formal entries for any other shipments you have.
*Create clear lines of communication for your freight forwarders, customs brokers, and carriers by connecting your eCommerce fulfillment network.
*Reduce the number of customs brokers you use to ensure consistency in import and export paperwork.
*Make sure your shipments have a clear audit trail, especially if you have a lot of low-value shipments.
*COVID-19 taught the logistics world to look for backups and alternatives as needed. Using a single customs broker for these instances could help protect your operations against Section 321 filings. As long as your previous connection is in effect, any second customs broker partner might be directed not to file Section 321 claims.
What is the Danger?
At this time, it is unclear whether Section 321 Entry Type 86 shipments pose any additional risks in addition to noncompliance with the one-shipment-per-day limitation. Examine Section 321 with the same rigor that you apply to other imports.
Notably, eCommerce businesses must ensure that accurate information is provided for each shipment. Inaccuracies and improper documentation, as with other imports, can result in cargo holds or seizures. Other requirements or limitations, such as intellectual property compliance, are not removed by Section 321.
Please keep an eye out for updates.
There is one potential area of uncertainty that businesses and their partners should keep an eye on regularly. CBP generally requires you and your supply chain partners to deliver Section 321 goods information before they arrive at any entry point.
There is currently no specific requirement governing Section 321 data submission. However, given the increased usage of the program, it wouldn’t be surprising if its regulatory requirements increased this year.
Section 321: Applicable Terms and Conditions
The Section 321 Entry Type 86 program is growing and increasing, allowing more businesses to use it for their products. Cosmetics, food goods, and other smaller groupings generally controlled by Partner Government Agency (PGA) restrictions were added to the list of imports eligible for informal entry in 2019.
While the list of qualifying commodities is growing, importers, shippers, and their partners should be aware of some typical terms and limitations.
Price and restrictions in the United States
According to reports, CBP examines Section 321 entries with a significant degree of attention. The value of the products being imported is the primary focus of the reviews and checks, which guarantee that they do not exceed the $800 barrier.
Section 321 has four advantages:
Cost savings
The primary advantage of adopting Section 321 shipments is that it lowers import prices for eCommerce businesses. These daily shipments are duty and tax-free, and if you buy from China, you may even avoid Section 301 taxes.
China provides access to lower-cost manufacturing solutions for many enterprises. If this is the case for your company, using Section 321 Entry Type 86 shipments could help you save money on a variety of fronts.
Fewer Delays
Another big benefit of Section 321 is that it reduces paperwork and allows you to spend less time at customs. Not only do your shipments require less paperwork, but some of the documentation and other required information exchanges can be automated by your eCommerce fulfillment partners. As a result, your items are cleared faster and you avoid regular customs delays.
ACE Entrance Preparation
Companies can use the Automated Commercial Environment (ACE) technology for eManifest to get faster clearance processing and compliance. Its web portal facilitates communication between trade companies, government agencies, and CBP, as well as access to customs reports. The site is free and well-suited to small businesses. Using ACE for Section 321 shipments will help you begin to accelerate your eCommerce fulfillment.
Understanding ACE makes it easier to secure automation and integration solutions as your import quantities rise and expand. For bigger volumes, CBP-approved service providers can assist you in using preset shipment details and performing additional duties that eliminate the need for repetitive manual data entry.
Customers will Benefit From the Savings.
In the end, Section 321 Entry Type 86 shipments help you save money. You can start passing on savings to clients as you save more. At the same time, establishing more trustworthy connections with carriers and freight forwarders may help you avoid delays and concerns about product delivery. You can save logistical expenses while maintaining inventory levels if you optimize your restocking efforts to reach as near the $800 valuation as safely practicable.
When you combine these practices with a US 3PL like Red Stag Fulfillment, you can import in large quantities. Your U.S. partner can then assist with last-mile delivery to meet domestic clients as they place orders. You save money, and your customers benefit from faster, more consistent delivery.