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Guide to 3 Key Factors for Classification
jlamadeleine • Dec 27, 2016
How incorrect classification of imports can cost you more than HTSUS requires.
- 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.
- 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.
- 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.
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.
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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.
How proper classification can equate to big savings for your company.
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.
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