{"id":5361,"date":"2021-10-04T08:45:41","date_gmt":"2021-10-04T12:45:41","guid":{"rendered":"https:\/\/diaztradelaw.com\/?p=5361"},"modified":"2025-01-30T06:43:05","modified_gmt":"2025-01-30T11:43:05","slug":"a-primer-on-customs-classification","status":"publish","type":"post","link":"https:\/\/diaztradelaw.com\/a-primer-on-customs-classification\/","title":{"rendered":"Customs Classification – A Key Component of an Import Compliance Manual"},"content":{"rendered":"

We are often asked by importers to assist in classifying their products under the Harmonized Tariff Schedule of the U.S. (\u201cHTS” or “HTSUS\u201d). While seeking assistance from expert counsel is a best practice, under the CBP Modernization Act, an importer of record (\u201cIOR\u201d) is the sole party responsible for determining the correct classification of imported goods (and thereby paying the correct amount of customs duties). An IOR must use reasonable care<\/a> in classifying its product at the time of entry. Should an importer misclassify their products and not pay the appropriate duties to CBP at the time of importation; the importer is exposing itself to potential CBP penalties under 19 U.S.C. 1592<\/a>.\u00a0 The process of classifying goods can be a tedious process and may require time and research to arrive at the correct HTSUS number for any one product.<\/p>\n

This blog expands our prior blog, Crash Course in the Harmonized Tariff Schedule of the United States<\/a>, and provides additional detail on the classification process and tips for importers to use when deciding on a classification its customs broker will declare to CBP.<\/p>\n

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Experts use the HTS, in conjunction with explanatory notes, general notes, general rules of interpretation<\/a>, and Customs Binding Rulings<\/a> to help determine the correct HTS. Correct classification is one of many \u201creasonable care<\/a>\u201d requirements an importer of record must comply with. Penalties for non-compliance can be severe. 19 U.S.C. 1592<\/a> is the statute CBP utilizes when issuing penalties, based upon whether CBP believes an importer was negligent, grossly negligent or fraudulent when using an incorrect HTS.<\/p>\n

The importer should understand the structure of the HTSUS, including chapters, headings, subheadings, and the General Rules of Interpretation for classifying products within the HTSUS.<\/p>\n

What is the HTSUS and Structure?<\/strong><\/p>\n

The HTSUS is issued annually by the International Trade Commission (ITC). It is comprised of a 10-digit import classification system that is specific to the United States. This 10-digit code encompasses the World Customs Organization\u2019s (WCO) six-digit uniform classification system shared among more than 200 countries.<\/p>\n

An HTSUS is formatted to list the first 6-digits set forth by the WCO, also known as a heading and subheading and the last four digits assigned by the ITC that are specific to the U.S.<\/p>\n

HTSUS Structure: <\/em><\/strong><\/p>\n

To showcase the HTS structure, we’ll use the example of purebred, live, female horses. When viewing an HTS, the first column contains the heading and subheadings which contains the first 8 digits of the HTSUS number.<\/p>\n