U.S. reporting concerning watches and clocks subject to Section 301 customs duties (imported from China)

Entry/entry summary filing requirements for components of watches and clocks subject to Section 301 trade remedies on products from China

Section 301 customs duties (imported from China)

U.S. Customs and Border Protection (CBP) today issued guidance on the entry/entry summary filing requirements for components of watches and clocks subject to Section 301 trade remedies on products from China.

Read CSMS #50019756 (November 8, 2021)

Background

Imported watches and clocks are currently reported in Automated Commercial Environment (ACE) with one country of origin on one entry summary line. The components of a complete watch or clock are apportioned by value. All applicable duties and fees—including Section 301 duties for all of the components—can still be reported on one entry summary line when all the components of a watch or clock have a country of origin of China, or all the components of a watch or clock have countries of origin other than China.

Components of watches or clocks may have different countries of origin if a component is not substantially transformed when joined to other components of a watch or clock.

The functionality for acceptance of proper entry/entry summary line reporting for watches and clocks is available in ACE as of September 29, 2021.

CBP guidance

Today’s CBP guidance provides that when the band or case component in watches or clocks are made in China:

  • If the band or case component(s) are not “substantially transformed” and are subject to Section 301 duties, then all of the components need to be constructively separated into their component parts and each component separately valued and reported on separate entry summary lines.
  • If the band or case component of a watch or clock classified under heading 9101 through 9105 of the Harmonized Tariff Schedule of the United States (HTSUS), has a country of origin of China and the watch or clock has components of one or more additional countries of origin, then filers will be required to break out the country of origin for each component of the watch or clock on a separate entry/entry summary line with the apportioned value. The breakout will allow for the reporting of various countries of origin to pay proper duties on each component, including applicable 301 China duties.

The CBP release further explains by providing the following example:

An importer submits an entry for 1,137 complete watches. The value of the 1,137 watches (including the case, strap, band or bracelet, battery, and movement) classified under HTSUS 9102.11.25 is $154,700.22. This includes the costs of the components and the costs to produce the 1,137 watches. The movements from Japan cost $133,176.81, the cases from Japan cost $11,370, the bands from China cost $8,789.01 and the batteries from Japan cost $1,364.40. The bands were made in China and are subject to Section 301 duties.

Because the watch contains Chinese and non-Chinese components from various countries of origin, each component breakout will need to be reported on a separate entry/entry summary line with the appropriate statistical suffix.

To comply with CBP invoice requirements, the commercial invoice must include a detailed description of the merchandise, materials, value, quantity, HTSUS, and country(s) of origin. The invoice and supporting documents must provide sufficient information to determine the value, quantity, HTSUS classification, and country or countries of origin of the components of the completed watch or clock.
 

For more information on this topic or to learn more about KPMG’s Trade & Customs Services, contact:

Doug Zuvich
Partner and Global Practice Leader
T: 312-665-1022
E: dzuvich@kpmg.com

John L. McLoughlin
Principal and East Coast Leader
T: 267-256-2614
E: jlmcloughlin@kpmg.com

Andy Siciliano
Partner and National Practice Leader
T: 631-425-6057
E: asiciliano@kpmg.com

Steve Brotherton
Principal and Global Export and Sanctions Leader
T: 415-963-7861
E: sbrotherton@kpmg.com

Luis (Lou) Abad
Principal, Washington National Tax
T: 212-954-3094
E: labad@kpmg.com

Irina Vaysfeld
Principal
T: 212-872-2973
E: ivaysfeld@kpmg.com

Amie Ahanchian
Principal
T: 202-533-3247
E: aahanchian@kpmg.com

Christopher Young
Principal
T: 312-665-3229
E: christopheryoung@kpmg.com

Gisele Belotto
Principal
T: 305-913-2779
E: gbelotto@kpmg.com

George Zaharatos
Principal
T: 404-222-3292
E: gzaharatos@kpmg.com

Andy Doornaert
Managing Director
T: 313-230-3080
E: adoornaert@kpmg.com

Jessica Libby
Principal
T: 612-305-5533
E: jlibby@kpmg.com

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