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US Customs keeping keen eye on LDP clothing imports
Apr '09
Custom authorities at a number of ports in the US have recently started a strict review of over declared value of imported clothing and at the same time are conducting investigations against custom clearance agents, who are involved in clearing the goods from customs in Landed Duty Paid (LDP)) transactions.

LDP means exporter or seller is responsible for all charges including destination duty and freight to local port. Buyer is only responsible for clearing the goods and the local transportation which may also be done through agents and the real importer of goods nowhere needs to come in to the picture.

After elimination of quota from January 1, exports of certain categories of Chinese textile clothing to the United States have seen a large increase. At the same time, the focus of U.S. Customs has shifted from investigating illegal textile re-exports to reviewing price of clothing imported in to the US.

In addition, the Customs has also begun to conduct investigations against custom clearance agents, who are clearing the goods from the customs authorities in suspect LDP transactions.

Regulations of U.S. Customs requires that companies or individuals who make customs clearance for imported goods must have some kind of ownership interest shown in the documents of the merchandise, otherwise, they will not be entitled to apply for the entry of the imported goods.

Most clearance agents in LDP transactions specially make customs clearance for others and are just middlemen on the true meaning. They just earn their commissions from Customs clearance and they have no real trade interests with the goods, as specified in the customs manual.

In case the customs are able to prove that there is over invoicing in the imported goods, the situation can take a turn for the worse, if they are to be returned back to the home country as original importers are still unable to prove that they have the right to return those goods by submitting export documents for customs clearance.

This will create a situation, under which the goods will have to be stored in custom warehouses and will attract high warehousing costs adding to the burden of the exporter and owner of the goods.

Fibre2fashion News Desk - India

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