What is Customs Entry? Types And Differences

What is Informal Entry Customs?

Informal Entries refer to the process of importing goods with a total value typically under $2,500. While informal entries are often used for personal items, they can also be applied to low-value commercial shipments. The process is simpler than formal entries, and no customs bond is required. Once the goods have cleared customs, they are usually liquidated immediately.

Informal entries save importers the cost of posting a customs bond, which is required for formal entries. Additionally, the process is more streamlined, making it quicker and more cost-effective for low-value goods.

For quota items, the minimum value for informal entries is not universally set at $250. Some quota items may have different thresholds or may not be eligible for informal entry at all. It’s essential to check the specific rules for the goods you’re importing.

While the process used to require visiting a Customs house to claim goods, this method is largely outdated. Today, most U.S. ports use electronic systems for processing entries. The exact procedure can vary depending on the port and the type of shipment, so it’s advisable to consult with your freight forwarder or customs broker for the latest information.

It’s also important to note that certain goods, such as those regulated by the FDA, may require a formal entry regardless of their value.

As of 2023, the U.S. Customs and Border Protection (CBP) is considering raising the informal entry limit from $2,500 to $5,000, but this change has not yet been implemented.

What Is Formal Entry Customs?

Formal entries refer to the process of importing goods typically intended for commercial purposes and covered by an entry bond. These goods generally have a value exceeding $2,500, though there have been discussions about increasing this threshold to $5,000 as of 2023—but this change has not yet been implemented. Formal entries require more documentation and scrutiny compared to informal entries and are a necessary step for most high-value or commercial shipments.

International Consideration:

Many countries have similar concepts of formal and informal entries, though the specifics can vary greatly. Here’s a brief comparison:

United States: The information provided here is specific to U.S. Customs and Border Protection (CBP) procedures. The $2,500 threshold, forms like CBP Form 7501 and 5106, and the specific exceptions apply to U.S. customs regulations.
European Union: The EU uses a simplified declaration process for lower-value imports, but the thresholds and procedures differ from the U.S.
Canada: The Canada Border Services Agency (CBSA) has its own formal and informal entry processes, with different value thresholds and procedures.
Australia: The Australian Border Force allows for streamlined import declarations for low-value goods, but the specifics differ from the U.S. system.
Japan: Japan Customs also has simplified procedures for lower-value imports, but again, the details vary from U.S. rules.

What is Customs Entry and informal customs entry

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How Do I File a Formal Entry?

To file a formal entry, the importer must follow a series of steps to ensure compliance with U.S. Customs and Border Protection (CBP) regulations:

Identify the Port of Entry: Determine which port your goods will enter.
Contact a Commodity Specialist: Reach out to a Commodity Specialist Team member at the port to get guidance on:

HTSUS Tariff Classifications
Duty Rates
Applicable Regulations
Bond Type

Submit the Required Documents:

CBP Form 7501 (Entry Summary)
CBP Form 5106 (Importer ID Input Record)
Release Documents

These forms must be submitted within 15 calendar days of the shipment’s arrival. Many ports use electronic systems like the Automated Commercial Environment (ACE) for filing these documents.
Submit for Review: After preparing the documents, submit them—along with an invoice, packing list, and shipping documents—for review by an entry specialist at the port. Payments for estimated duties and fees must also be included, with most customs transactions now conducted electronically.
Customs Review and Release:

Customs will either approve and release the goods with an officer’s signature or
Issue a stamp requiring a further examination of the shipment.

If an examination is required, the shipment will be carted under bond to an inspection site at the importer’s expense.

Important Note:

Many countries, like the U.S., are moving towards electronic systems for customs declarations, though the exact requirements and systems differ by country. For example, the ACE system is specific to the U.S., while the EU, Canada, and Australia use their own platforms.

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What Are Some Exceptions to Formal Entries?

Certain goods are exempt from the formal entry process. These exceptions primarily apply to instruments of international traffic, such as:

Container Ships
Freight Cars
Railway Locomotives
Other Vessels Transporting Goods

Additionally, some categories of undeliverable articles are also exempt from formal entry requirements. These include:

Goods intended for export to a foreign country.
Imports returned to the U.S. within 45 days of departure under certain duty-free re-entry conditions.
Commodities that never left the custody of the carrier or foreign customs authorities.
Undeliverable imports returned from a foreign country.

International Considerations:

The value thresholds, documentation requirements, and exceptions vary by country:

In the European Union, certain goods may qualify for simplified declarations, but the rules differ from U.S. processes.
In Canada, the CBSA has its own set of formal entry rules, often requiring different forms and thresholds than those used by CBP.
Japan and Australia also have specific regulations for low-value imports, but these processes can differ from the U.S. system.

Why Is It Important to Understand Different Country Regulations?

For international shipping, it’s essential to understand that the formal entry process varies significantly from country to country. The thresholds, required documents, and exceptions for formal entries in the U.S. may not apply in other countries like the EU, Canada, Japan, or Australia. Therefore, it’s crucial to:

Research the destination country’s customs requirements.
Consult a customs broker or freight forwarder who specializes in the specific country you are shipping to or importing from.
Stay updated on electronic filing systems used in different countries, as many are moving towards digital platforms to streamline the entry process.

By understanding the differences between formal and informal entries across various countries, importers can ensure compliance, reduce delays, and avoid penalties. Always consult the most recent customs regulations or speak with a customs expert for the most up-to-date information.