Customs, import and trade law > Tariff Classifications and Rulings

Correct, Current Classification of Tariffs Is Complex

The United States Harmonized Tariff Schedule is based upon the International Harmonized System, which is a global classification system used by more than 150 countries to describe imported goods. The U.S. Bureau of Customs and Border Protection interprets the Harmonized Tariff Schedule (HTS), issues legally binding rulings, and advises on the tariff classifications of imports and their treatment upon entry into the United States.

Determination of the proper tariff classification is complicated. For example, determining the country of origin must be accurate, because international trade agreements may provide exemptions from restrictions and special treatment for goods meeting specialized country of origin rules. Additionally, valuation of the product is not as simple as the price paid for the good: adjustments under the law must also be considered. These can include a variety of things, such as royalties associated with the production of the good that may be added to the price.

Adding to the complexity is the fact that tariff classifications are constantly changing. U.S. Customs routinely revokes or modifies tariff classification rulings on an enormous variety of products. It is a streamlined process: first, Customs issues a notice advising the public of its intended action and inviting public comments over a 60 day period; once the deadline passes, Customs issues a finalized modification or revocation of the tariff classification in question.

The Importance of Correct Tariff Classifications

Duty is assessed, or found not to exist, depending on the tariff classification; therefore, classifications impact profitability and revenue. Accurate classification is very important, and very complicated.

For example, those involved in the textile and apparel industries find tariff classifications to be especially critical, because they must be concerned not only with the consequences of duty upon their bottom line, but also because of the appropriate quota category governing soft goods from countries subject to textile restraints.

Furthermore, the correct tariff classification is extremely important in taking full advantage of duty rate reductions available through preferential treatment programs. Lower import duties are available through these programs, and they can significantly decrease company costs.

Additionally, proper classification under the Harmonized Tariffs Schedule is required under the Customs Modernization Act as a part of informed compliance. Federal law considers proper classification to be part of a company's duty to exercise reasonable care, and a company's tariff classifications will be reviewed whenever U.S. Customs performs a compliance assessment. Failure to exercise reasonable care in proper tariff classifications can not only delay the release of merchandise, it can also in result in fines and penalties, as well as seizure of the goods.

In sum, U.S. Customs holds importers of record responsible for classifying imported merchandise properly under the law, as well as demonstrating their reasonable care in the overall classification process. Accurate tariff classifications have a tremendous impact upon a company’s profits. Nevertheless, most companies lack the experience and knowledge necessary to do this task accurately and expediently, and many errors are made every day in the classification of merchandise.

How Fuerst Ittleman Helps Clientele -- Tariff Classifications and Tariff Classification Rulings

Up-to-date knowledge of tariff classification and import duty assessment is imperative for efficient and profitable international trade. Fuerst Ittleman continually monitors U.S. Customs activity regarding tariff classifications in order to notify their clientele of those that are pertinent to their industry. Fuerst Ittleman reports potential modifications or revocations of pertinent classifications, provides input to U.S. Customs during reclassification processes, and obtains individual rulings for clients on specific goods.

Fuerst Ittleman routinely offers its clientele assistance in determining the correct classification for their products. This includes inspecting products on site, examining company documentation, and communicating with company personnel as well as relevant third parties such as manufacturers.

Fuerst Ittleman also implements individualized training sessions for company staff on how to accurately assess HTS classifications for company products. The firm offers individualized in-house training seminars to companies in a great variety of industries. Thereafter, Fuerst Ittleman remains on stand-by to answer questions and otherwise assist clients in their internal tariff classification operations.

Inevitably, company staff as well as Fuerst Ittleman experts will run into a situation where it is simply unclear on how to properly categorize a product. Here, it is absolutely necessary to seek an individualized ruling from U.S. Customs, and not simply shove a square peg into a round hole.

Getting Individual Tariff Classification Rulings from U.S. Customs

A tariff classification ruling is an official written document on the classification of a specific good issued to any individual by U.S. Customs Office of Regulations and Rulings. It is possible to obtain rulings on products from U.S. Customs -- and is extremely important to do so for the majority of your international business transactions.

Researching for Favorable Comparisons - HTS and IHS

Before a ruling is requested, however, research is necessary in order to find the most favorable classification solution. This research will involve not only U.S. Customs applications but those of several foreign nations as well. Since the HTS is based upon the IHS, analogies to the classification determinations of other national authorities can be persuasive.

Appealing Unfavorable Initial Classifications

Not all initial classification rulings that have been requested from U.S. Customs are favorable. If the ruling is not acceptable, it can be formally appealed as well as informally revisited in an informal request for reconsideration. While the initial ruling is sometimes scant, a reconsideration in the form of a "headquarters ruling" will contain a detailed legal rationale for the final classification, along with providing supporting documentation of the laws, regulations, and judicial opinions supporting the Customs determination.

At Fuerst Ittleman, it is imperative that our clientele pay the minimal duty required by law in order maximize their profits.

Please feel free to contact Fuerst Ittleman if Fuerst Ittleman may be of help to you or your company.