Issue 312, August 31, 2001
In today's international trade environment, the Harmonized Tariff Schedule (HTS) classification of your imported product(s) is one of the most critical issues. Classification not only affects the rate of duty, but also special claim eligibility such as NAFTA, admissibility, country of origin determinations and other import restrictions and requirements. Classification errors can result in significant import penalties, seizures, delays, duty overpayments and underpayments.

Whether you are managing new imported products or products which have been imported for years, performing a Classification Check Up on a periodic basis is an excellent strategy for maintaining and securing your company's import compliance.

The eight steps for proper classification:

1. Review and assemble a complete and accurate description of the product.
2. Look to the alphabetical index in the HTSUS. It will help direct you to the specific chapter, heading and/or subheading.
3. Review the chapter and section notes for any restrictions or limitations
4. Review and apply the General Rules of Interpretation (GRIs)
5. If available, review the Explanatory Notes (ENs). The ENs provide a detailed commentary on the scope of each heading and subheading.
6. Review previous Classification Rulings issued by the U.S. Customs Service on similar or identical merchandise.
7. Consult with your Customs Broker or Customs Attorney for a written opinion.
8. File a Binding Classification Ruling Request with the U.S. Customs Service.

At minimum, importers should perform a Classification Check Up on an annual basis. Those companies who are continually adding new products, new styles and new parts to their import regime may want to conduct a classification check up on a more frequent basis.

Over the past few years, many importers are looking for assistance from outside trade experts to perform these targeted and focused import check ups. One of the primary advantages of the outside expert includes their unbiased and fresh approach to your classification issues. Many times, the seasoned expert will see issues and opportunities previously unrecognized by the experienced importer. In addition, the use of any outside expert is a strong example of reasonable care and will certainly help insulate the company from potential penalty liability for classification or other import errors.

Our contributing writer, Steven B. Zisser, is an attorney in the San Diego border community of Otay Mesa, where he offers import consulting and trade management support services. He can be reached via email or at (619) 671-0376.

Please note that due to the complex nature of the subject matter, Danzas AEI cannot be responsible for actions taken by the reader in reliance on the information contained herein without prior consultation with Danzas AEI.