Classifying Correctly for Customs Clearance: Part II - Guidelines and Guardrails

Imagine there's been an update to the 301 tariffs. You've been importing a specific good for 20 years and have always paid the 2% base duty. Now, the duty has been updated to 20%. You decide to change your documentation to reflect a 5% provisional duty with a classification that's not entirely accurate, placing your item in a cheaper tariff category. This is fraud. US Customs will eventually discover the remaining 15% duty you owe. This highlights the importance of transparency with both Customs and your broker. To assist importers in properly classifying goods or appealing to Customs, here are some references:

• Use Classification Tools provided by the Harmonized Tariff Schedule (HTS).

• Start with General Rules of Interpretation (GRI) to guide your classification decisions.

• Refer to Case Law for similarly categorized items under Customs Ruling and Decisions.

• Apply Explanatory Notes under the GRI to explain in detail every aspect of a product, ensuring it matches the best descriptive definition. If US Customs deems this definition inaccurate, the product is misclassified.

• Seek Binding Rulings which allow importers to refer to US Customs' rule book to argue for a better classification than the one proposed by a customs agent.

These tools can help build your case if US Customs questions your classification. However, it's best to maintain transparency with your broker to avoid these situations.

In general, new importers should watch out for these common issues:

• Ball Bearings: Subject to anti-dumping duties due to their low cost abroad, which can disrupt the US market.

• Customs Value: Report the correct value of your goods, including those received for free, based on their market value if sold.

• Drawbacks: If importing goods to re-export them later, you may be eligible for a tax refund.

• Reasonable Care: Maintain open communication with your broker.

• Recordkeeping: Keep import records for up to 5 years, especially if you change brokers.

• Rules of Origin: Understand the full scope of the country of origin, including where the product was produced.

• Tariff Classification: Ensure your documentation accurately reflects your items to avoid issues.