Classification for compliance, cost savings

The correct classification of goods for entry within the Harmonized Tariff Schedule of the United States (or “HTS” for short) is of critical importance to each and every company or individual entering goods into the US. Without a correct classification, an importer may miss a savings opportunity for a product eligible for reduced or duty-free treatment. Conversely, an incorrect classification could lead to missed trade remedy duties like Section 301 or antidumping / countervailing, causing even more problems down the line.

While there are countless reasons to get the classification right, here are the top 3 in our opinion.

  • The HTS number plays a critical role in admissibility by CBP and other agencies. Within Customs’ system, the proper application of the tariff number will set off flags for whether or not additional information is required for filings such as the Lacey Act, Food and Drug declarations, DOT or EPA filings and multiple other agency requirements. Getting the HTS wrong not only will have a potential impact on duty, but failing to declare the entry to one of those regulatory agencies could result in a host of actions from a penalty through to a complete redelivery, exportation and/or destruction.
  • Getting a binding ruling on the HTS number prevents differing CBP interpretations on what it should (or shouldn’t) be. Before CBP had augmented their systems, importers would port shop, or try to find a port with the lowest duty rate on the item in question. Port shopping was illegal then as it is now, but was easier to do without the computer system in place today. An importer who feels that their goods could fall into one category or another can write Customs for a binding ruling. This ruling is issued to the importer and absent CBP revising the classification at a later date, cannot be challenged at the port or CEE level. This gives some stability in calculating landed costs in supply chains ravaged by whipsaw, record transportation prices.
  • The correct HTS can open the door to legitimate reduced or duty-free entry. The front of the HTS lays out the rules for programs like bilateral or multilateral trade agreement rules like the USMCA. Depending upon the classification and conditions at the time of entry, there are ways to lower the duty amount or claim preferential treatment based on meeting the agreement’s rules of origin. 

Sobel Network Shipping employs licensed customs brokers with experience throughout the tariff. We also have experience in both writing for binding rulings ourselves or engaging outside counsel on binding rulings, valuation rulings or both when the stakes are high. To learn more about our classification services, contact Sobel today.