U.S. Customs expects every company that imports products into the U.S. to make certain that every product is properly classified under the Harmonized Tariff Schedule of the U.S. (HTSUS). Considering the fact that there are over 17,000 possible HTS classifications to choose from, assigning the proper HTS number can be a great challenge.
The HTS classification number:
- Determines the duty rate applied to the imported product.
- Helps determine which specific rules and regulations apply to the imported product.
- Helps U.S. Customs determine whether to examine a shipment or request further information or documentation about the imported product.
- Helps determine whether goods may qualify for duty exemption or reduction under a trade agreement.
- Helps determine whether any trade remedy laws apply to the imported products.
- Allows the U.S. government to collect accurate import and export trade statistics.
An importer should consult with their customs broker, a customs consultant or customs attorney to try to determine the correct HTS classification for their products. Importers may also request a binding HTS classification ruling for their products from U.S. Customs. Since the ultimate responsibility for correctly classifying their imported product lies with the importer it is critical that they get it right.
It is interesting to note that duty rates vary greatly, from duty free up to 30% or more depending on the exact type of product imported. Customs audits documents and data after the goods have been cleared and delivered and can invoice importers for additional duty, interest and penalties where mistakes in HTS classification are found. It is never a good thing to get a bill six months or more after you have already sold your products to your customers as this is a direct hit to your bottom line.
Customs looks to importers to exercise due diligence and reasonable care in all their import transactions. Considering the risks involved in any mistakes that are made every importer is encouraged to be proactive in reviewing their import transactions and their HTS classifications. Customs has noted that HTS classification errors are the most common error made by importers and their brokers, and considering the risks and potential high costs of a classification error it is critical that importers take extra steps to insure the accuracy of their HTS classifications.
This link is for a very informative Customs publication regarding HTS classification - https://www.cbp.gov/sites/default/files/documents/icp017r2_3.pdf. Further information can be found on the Customs website at www.cbp.gov.
For more information or assistance please feel free to contact us at firstname.lastname@example.org.