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Do you rely on your broker to classify your imported products?
Mar 28, 2022
How proper classification can equate to big savings for your company.
Do you import? Do you rely on your broker to classify your imported products?
Import brokers have a general understanding of the Harmonized Tariff Schedule of the United States (HTSUS), and classify thousands of separate items across hundreds of different industries. But do they really know what your products are or how they are intended to be used?
The classification process is extremely intricate and requires an understanding of both the HTSUS and the merchandise being classified. We at ITM have been classifying merchandise according to the HTSUS for nearly 40 years and in doing so have found that a lot of merchandise is not always classified correctly.
In order to properly classify an imported item, one must understand how to navigate the HTSUS that includes over 10,000 classifications that are broken down by Sections, Chapters, Headings and ultimately Subheadings. Subsequently, one must also understand what the product is, what it is used for and how it is made. For items that are not very specifically provided for, the process is very complex and quite often mistakes are made.
A lot goes into an accurate analysis and classification. A common misconception is that every item is accounted for in the HTSUS. This is not the case. More often than not, an evaluation involves a significant knowledge of the product itself to determine where it belongs. A product may be designated in the HTSUS according to what it is but it can also be defined according to how it is used.
An inaccurate classification, causing an underpayment of duty, can result in the burden of monetary penalties as well as an interruption of receipt of your merchandise. Conversely, an incorrect classification where too much duty is paid, is giving away money that could fall to your organization’s bottom line.
Not everything is misclassified. 90% of imported merchandise is classified properly. Of the 10% that is improperly classified, 80% results in millions of dollars of over-payment of duties.
The importer is obligated to properly classify imports even if there is no change in the duty rate. Therefore, in order to be compliant, it is imperative that importers exercise their due diligence to ensure that their items are properly assigned upon importation.
An importer should initiate periodic reviews of the classification of merchandise. CBP reviews merchandise on a daily basis and writes hundreds, if not thousands, of rulings as to their positions on how individual items should be classified. As these change over time, you should review your classifications regularly in order to remain compliant and up to date. A specific item classified under one HTSUS number last year might have a totally different HTSUS today.
Don’t settle for generic. Demand an in-depth analysis of your products when determining how they fit into the HTSUS. ITM specializes in providing a meticulous evaluation of your product while determining the precise tariff classification.
A portion of the millions of dollars of overpaid duties might be yours!
Join our webinar and learn how proper classification can equate to big savings for your company - join our webinar:
Join our webinar and learn how proper classification can equate to big savings for your company - join our webinar:
In the intricate world of international trade, various mechanisms exist to facilitate smoother transactions and encourage commerce across borders. One such mechanism is duty drawback, a process that offers significant benefits to businesses engaged in importing and exporting goods. In this guide, we will delve into the concept of duty drawback, its benefits, and how businesses can leverage it to their advantage.
The implications in the case of Union of India and ORS. v. Patil and Sons Belgaum
Department of Commerce's new policies and trade community advancements
Recent news from CBP regarding cargo messaging and expediting cargo shipping
We are excited to announce our first monthly newsletter! Our goal of this new endeavor is to keep our clients and the companies in our network up to date with all information regarding drawback, CBP and more!
A free trade agreement (FTA) is an agreement between two or more countries where the countries agree on certain obligations that affect trade in goods. Currently, there are 14 Free Trade Agreements in effect in the U.S. with 20 different countries.
An importer collects and maintains the information to support the FTA qualification. An exporter from the U.S. is required to complete a declaration verifying that their goods qualify for free trade with the participating country.
The rules associate with FTAs are complicated and the analysis is intricate. There are multiple steps to the process and each one must be completed in order to move onto the next.
1. Classify the product according to the HTSUS in order to determine the rule of
origin for the specific finished product
2. Choose a preference criteria from the 4 available.
3. Use the rule of origin to determine the qualification of the finished good.
Duty Drawback is a refund from Customs, for 99% of the duties paid on imported materials that are subsequently exported, destroyed or used in the manufacture of exported goods. Today, only about 25 percent of eligible duty is being recovered. This means that $5 billion dollars goes unclaimed for drawback, and that money might be yours. So, how do you know if you are a candidate for a lucrative duty drawback program?
The new drawback regulations are written and will take effect on February 24, 2019. That’s less than a month from now!!
ITM is prepared to continue filing on behalf of all of our clients and we are excited about the possibility of new opportunities that will now exist under the new guidelines.
Customs has maintained that the ultimate goal of TFTEA is to streamline and simplifying the drawback process. At this time, there are no formal regulations in effect, but the guidelines have been released and reviewed extensively by the trade. After much conversation and deliberation, the trade was allowed and has formally submitted a response to Customs on these proposed regulations and now waits the allotted 90 days to find out how they have been received and what the final determinations will be.
In April of 2018, the current administration announced that it would impose increased tariffs on items imported from China. By April of 2018, the Office of the US Trade Representative (USTR), released the first list of 1,300 tariff numbers subject to an additional 25% duty. That list, referred to as US List 1, went into effect on July 6th and included steel and aluminum. The USTR announced that this would subsequently be followed by a List 2 and 3.
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