What is Liquidation?

Posted on: October 9th, 2015 • In Bond Type: 301-1 - Importer, Bonds, Claims

Liquidation is the process of final review of an entry by Customs which occurs approximately one year after the entry date for a typical consumption entry.  In accordance with 19CFR 159.1, liquidation means the final computation, or assessment of duties on entries for consumption or drawback entries.  Presently, the liquidation cycle utilized by CBP is 314 days absent an extension by CBP (up to two years) or suspension of liquidation under court order (indefinite).

At liquidation, any over payments of duty would facilitate a refund and under payments necessitate the issuance of a supplemental duty bill which importers receive in the form of the pink carbon paper notices.  Reasons for underpayment of duties can encompass incorrect classification of merchandise under the Harmonized Tariff System, improper country of origin, incorrect valuation of merchandise and rules of origin issues pertaining to NAFTA treatment.  If received, these supplemental duty bills should be dealt with promptly.  Should the importer believe a supplemental duty bill be erroneous, a formal protest pursuant to 19USC 1514 should be filed at the port of entry within (180) days from the date of liquidation.  Failure to timely protest or resolve open bills could result in, among other things, bond sufficiency issues and/or the importer being placed on Customs’ sanction list.  Also, this time lag in the liquidation process is a major contributor for tail liability on an importer bond, but not the only factor for the surety in determining future underwriting requirements.

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