Duty Elimination on Waste, Scrap & Yield Loss

Many Manufactures are unaware that by using a Foreign Trade Zone, they can save the duty costs on all imported materials that become waste, scrap or yield loss, during their manufacturing process.  This can mean Hundreds of Thousands of dollars over the life of an imported product.

An example might be, a US Manufacture imports leather for automotive seats.  The duty rate on the leather is at 6.5%.  No matter how well they space and plan-out to cut the material, 1/10 will always be waste or scrap (un-usable).  If this company imports $1,000,000 worth of leather per month @ 6.5%, it is a total of $65,000 per month in duties paid to the US Government.  If there is NO DUTY on 1/10 of the leather, it is a savings / increase in profit of $6,500 per month ($78,000 per year).  *All manufacturing work must be done within the FTZ. 

As you can see, the FTZ can provide significant savings for manufactures who use imported products within their manufacturing process.  This is just one way – there are many more that I will discuss in up-coming blogs.

Imported Goods – What Customs Agents are looking for…

Have you ever wondered what the Customs Officials are looking for when they examine your shipment of Imported Goods?  Listed below are a few tips, to help you understand and get your goods cleared through the Customs process much faster.

Here are a few things that the Customs Agents are looking for:

• The value of the goods for customs purposes and to check whether duties apply.
• Whether the goods need to be marked with country of origin or require special marking.  If this is lacking, they are then marked to meet regulations.
• Whether the shipment contains prohibited articles.
• Whether the goods are correctly invoiced.
• Whether the goods are in excess of the invoiced quantities or a shortage exists.
• Whether the shipment contains illegal narcotics.

Here are a few things to do, to make sure you shipment will clear Customs much faster:

• Invoices are clear and contain the information you would expect to see on a packing slip.
• Each package is marked and numbered so it can easily be identified against the invoice.
• A detailed description of the merchandise, in each package, listed on the invoice.
• The country of origin is clearly marked.
• Any special laws are complied with.  (Any merchandise such as food, drugs, cosmetics, alcohol and so on will usually fall into this category).
• Your supplier maintains good security, reducing the risk that narcotics smugglers are able to introduce narcotics into your shipment.