If you are one of the millions of business that import and export on a daily basis, then Classification needs to be an absolutely necessary step towards the success of you business.
So let's go ahead talk about Classification and why it is so necessary to get it right.Harmonized Tariff Schedule (HTS) codes are the 10-digit import codes specific to the United States.
The first six digits are used globally, and the last four are for statistical codes used by the government to track what is being imported. The HTS codes are also used to determine the duty rates of products being imported into the United States.
Beginning to classify a product can be a daunting task so we have a few tips in order to make this process a little easier.
Gather all necessary and pertaining docs – engineer drawings, manufacture, materials, attributes, size, weight etc.:
If this seems difficult, create some kind of checklist for your supplier to quickly fill out. Make it as easy as possible for them to give you the related docs but also let them know how important it is you gather this information.
Do your research:
Have there been other rulings on similar products? Read articles customs has released to find out why they ruled the way they did. Do those products relate to yours in the same manner? Are they sold as or used by the consumer in the same way?
Are you being told your product is one material but it really has multiple materials that make up the product? Make sure to get a second opinion if you are questioning the material.
Figure out if your product will be a “simple classification” which are items that are specifically named in the tariff and are commonly used (screw, bananas, pencil, watermelon) or “complex classification” (apple watch, laptop, xbox):
Also is your product a finished good or does it have the essential character of a finished good? If not, you need to classify it as a “part” which will have different codes and duty rates. A part is an item that cannot be used or function by itself and is dependent on other items. A finished good can function by itself without the support of any additional items.
Read all necessary chapter and section notes:
Read in detail your chapter notes. Most of the time the section notes include “This section does not cover:” notes and Chapter Notes have exclusions and redirects for certain types of products.
Go through the GRI’s – much more complicated but we compiled a quick list for reference:
GRI 1 classification should be determined according to headings, section or chapter notes.
GRI 2 is for incomplete or unfinished goods or mixtures of goods.
GRI 3 most specific heading, essential character or classify last in numerical order.
GRI 4 classify to goods which are most akin.
GRI 5 specialty cases and packaging material.
GRI 6 subheadings related to headings at the same level are comparable.
U.S. Supreme Court
ICP (Informed Compliance Publication)
Internet – Google, dictionary, etc.
Document your findings: Where did you get certain info, why did you arrive to that conclusion, use some sort of “justification/rationale” tool to prove yourself, record your legal citations, who you talked to for information (engineer, technical drawings, legal authority etc).
Corrections and Protests:
Corrections can be filed within 270 days of date of entry and 20 days prior to liquidation
Protests need to be filed within 180 days of liquidation and can be sent in batches with same issue