The Customs Service has performed a number of
training sessions in Africa addressing the appropriate and necessary
documentation to establish that goods qualify for AGOA treatment. These
training sessions have included both local Customs officials and
manufacturers. Customs has also examined the recordkeeping capacity of
factories in these countries. In a number of cases, recordkeeping was
found to be inadequate. When Customs finds that a factory's
recordkeeping is not adequate, the likely consequence is a denial of
AGOA treatment. Obviously, in such circumstances, the heavy burden falls
on the importer who finds, usually after clearance, that duty-free goods
are not duty-free and receives a bill from Customs for duty and interest.
With that in mind, it is important for importers to understand the
necessity of recordkeeping and to ensure that factories they use satisfy
these requirements.
Customs does not require specific forms of recordkeeping, however, it
does require that sufficient production records be provided to establish
the country of origin and that the records be understandable.
Understandable records are those in which the steps of production are
clear, and which permit tracing of specific goods to specific records.
The records must reflect the quantity of the shipment. The records must
reflect the actual production machinery necessary and document that they
are available in the factory. If the factory subcontracts work,
documentation should be available to identify the subcontractor and the
specific work done by that subcontractor.
Customs expects to see the following types of documents:
1) payment for materials;
In the case of imported raw materials, Customs
would expect to see the shipping documents showing the importation of
the materials and appropriate customs clearance documents.
2) export documentation including shipping
records;
When examining specific shipments, customs
would expect to see purchase orders, confirmation of purchase orders,
correspondence between the factory and the buyer, shipping
arrangements and payments for shipping, inspection reports by the
buyer or its agent, export invoices and packing lists and records of
payment by the buyer.
3) contracts, including contracts with
subcontractors;
4) payroll records;
In order to establish labor, Customs would
expect to see time cards and payroll records or their equivalent.
5) cutting records;
Production documents would include cutting
ticket and cutting records, as well as sewing tickets. Customs would
expect to see some form of daily cutting and daily sewing records as
well as summary records and supporting documentation.
6) assembly records; and
7) out-processing records
8) Certificates of Origin
Because the eligibility for the AGOA
preference depends in part on the origin of fabric and trim, the
factory records should indicate the origin of these materials. Where
United States origin is claimed, Customs would expect to see a
certificate or other proof of United States origin, including shipping
documentation such as bills of lading, showing the goods were imported
from the United States, invoices from sources in the United States and
purchase orders directed to sources in the United States. The same
would be true of regional fabrics.
Although it is the factory, which is required
to maintain documents, because it is the importer who is responsible
for making the claim for the AGOA preference, it should take
appropriate steps to ensure that the factory with in which it is
dealing, maintains the appropriate records and is able to provide them
in a reasonable period of time in the event of a request by Customs.
An importer who relies only on the AGOA certification can probably
avoid a penalty case as long as the certification is valid on its face
and as long as there have not been prior problems with the particular
factory. However, relying only on the certification will not prevent
an importer from facing bills for additional duties. The only way the
importer can avoid this is to ensure that the goods purchased from the
factory do in fact qualify for the AGOA preference and that the
factory has sufficient documentation to establish eligibility for that
preference.
