Guide to 3 Key Factors for Classification

  • By Jill LaMadeleine
  • 27 Dec, 2016

How incorrect classification of imports can cost you more than HTSUS requires.

Classification

  1. The first thing you will need to determine is the last time your imports were classified according to the Harmonized Tariff Schedule of the United States (HTSUS). Even though the HTSUS does not frequently change, U.S. Customs and Border Protection does issue rulings almost every day that can directly affect the classification and duty rates of imported merchandise.

  2. Perhaps simultaneously, you need to determine who did the classification of your imports. The classification of imported merchandise is very complex. It requires the cooperative effort of people that have technical knowledge of your merchandise as well as people that understand the HTSUS. Too often either the technical people classify the merchandise without expert knowledge of the HTSUS or your import broker does the classification without extensive knowledge of the merchandise.

  3. The classification of imported merchandise is more of an art than a science. It is very seldom that the exact parameters of your merchandise will be defined in the tariff. The determination of the correct tariff is not black or white but usually lies within the gray area. Rulings must be carefully checked, the explanatory notes (international guidelines) must be reviewed, and all technical aspects of the merchandise known.

Our experience has shown that about 90% of the merchandise imported into the United States is classified properly. This is because most of the importers are aware of the 3 key points mentioned above and do what’s necessary to minimize their duty obligations. In the other 10% of the cases, where the merchandise is misclassified, the importer is most likely paying more duty than is necessary. Under the law, it is the importers responsibility to classify their merchandise but most of them leave that task to their customs broker. The broker usually does not spend the time and/or does not have the technical ability to make the proper determination. In order to assess your situation, contact International Tariff Management and we will conduct a contingency based audit to help you possibly minimize your duty obligation.

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