Supplemental Duty Bills Explained

A supplemental duty bill is issued by U.S. Customs and Border Protection (CBP) when it is determined upon liquidation that additional duty is due.  In other words,  the duties that have been paid on a liquidated entry are believed to be insufficient.   This is why it is called a supplemental duty bill—it supplements the original duty bill that has already been assessed.

There are several issues that can cause a supplemental duty bill to be issued. Below are some examples:

An increase in the Merchandise Processing Fee is something that can be retroactively charged to an importer, and therefore, will be issued as a supplemental duty bill.

Anti-dumping duty collection is another reason a supplemental duty bill might be issued.  Since the conclusion of an anti-dumping investigation can be a somewhat drawn out process, and the duties associated with it are often charged retroactively to a specific date—this can be a cause for supplemental duty bills.

Improper classification: if an importer originally classified goods with a 4% duty rate, yet Customs determines that the goods are improperly classified and the actual classification has a duty rate of 5%, a supplemental duty bill will be assessed.

It is important to pay a supplemental duty bill in a timely fashion.  Paying a supplemental duty bill right away is important because the bill will accrue interest immediately, but if it is paid within 30 days, interest will not be charged.  Even if an importer plans to protest the bill, paying it up front first will eliminate the accrual of interest in the interim.  If the protest is accepted, CBP will issue a refund for the bill and the interest; if the protest is denied, the bill will have already been paid, and no interest will have accrued during the protest process.

Timely payment cannot be stressed enough.  If the bill is not paid within 90 days, it will result in a demand on surety, which is likely to cause problems far beyond the accrual of interest.  Sureties rarely tolerate demands on the bonds they hold.  In fact, a demand on surety is often grounds for termination of a bond.  Without a bond, entries cannot be cleared at the port of entry.  After 180 days of non-payment, an importer will be placed on the National Sanction List.  Suffering any of these penalties, either from CBP or a surety, will make it very difficult for an importer to obtain another bond in the future.  The best approach is to pay supplemental duty bills right away, regardless of any plans to protest.

For more information on supplemental duty bills, visit CBP’s website—it offers some good information on supplemental duty bills.  A professional customs broker or freight forwarder is also an excellent resource for information on these bills.  Gathering as much solid knowledge, and paying close attention to these issues when they arise will go a long way towards mitigating any major consequences related to supplemental duty bills.