Abady Law Firm, P.C. – Customs and Import/Export Attorney Blog

Learn the Basics of Customs and International Trade Policy and Procedure

Archive for October, 2011

Customs Attorney: How Much Duty Do I Have To Pay? – Customs Classification

CLASSIFICATION is the process by which goods are categorized for determining payment of duty as well as for statistical purposes. The United States is apart of the Harmonized System of Classification which functions under an International and a Domestic (Country Specific) level. On the international level all those who are parties to the Harmonized system will classify the product the same. However, at the domestic level each country has its own detailed descriptions and rates of duty one has to pay.

There are many laws and rules regarding interpreting the Harmonized Tariff Schedule of the United States (HTSUS). For every product there is a place for classifying it and if your good comes from outer space there are ways to squeeze your item some place in the tariff. I would hate to describe to you the tedious nature of columns, headings, and subheadings involved in tariff (if you do e-mail me). Thus, it is important to have a customs broker handling these transactions and counsel assisting on difficult matters if they should arise. Incorrectly classifying a product can result in improper duty liability, failure to meet the free trade opportunities if applicable, or major penalties. Be Cautious and choose your customs agents wisely.

Happy Importing 🙂

You may call us at 347-512-9007 for more information on your international trade and customs issues.

Customs Attorney: What is the "Value" of my goods? – Customs Valuation

The duty, taxes, and Customs’ fees due on an imported article are its percentage of its DUTIABLE VALUE. The dutiable value is determined by the process of appraisement. Generally, appraisement is calculated by determining the transaction value of the goods, i.e. the price actually paid or payable for the goods when sold for export into the United States. Usually, the the price paid or payable is based on the F.O.B price at the port of export and shipping it onto the carrier.

Improper valuation of goods affects the duty liability. If the value of the goods is in excess of its proper value, the importer will pay a greater amount than necessary. Conversely, under declaring the value of goods may result in costly penalties. Our firm assists importers in appraising the value of goods as well as preparing and submitting binding rulings to Customs for calculating the correct value of goods.

The following costs are included in the price actually paid or payable:

1. Selling Commissions – Any commission paid to the seller’s agent (anyone who is related to , controlled, by, works for, or on behalf of the manufacturer or seller).

2. Assists – Anything that the buyer provides to the manufacturer and/or seller directly or indirectly either free of charge or for less than the arms length price for which he would have charged the buyer.

3. Royalties or License fees – Fees that the buyer must pay directly or indirectly as a condition of sale for export to the United States.

4. Packing Costs – Any costs incurred by the buyer for labor and materials to make them ready for exportation.

5. Proceeds of subsequent sale – Generally, if subsequent to the importation an importer pays or is required to pay more for the imported goods than was declared at the time of entry, those additional payments are part of the price paid for the goods.

Happy Importing 🙂

Customs Attorney: Documents you should know!

Providing documentation to U.S. Customs and Border Protection (“CBP”) dictates the basis for all CBP decisions. Without complete and accurate information results in delay and added expenses. What are the documents usually involved in international trade?

The Invoice:
1. Provides the documents evidencing the commercial transaction.
2. Government agencies such as CBP, Food and Drug Administration, Consumer Product Safety Commission use the invoice to determine importing compliance.
3. Special information may be required accompanying the invoice. For example, Footwear requires the following:

Footwear, classifiable in headings 6401 through 6405 of the HTSUS-
(1) Manufacturer’s style number.
(2) Importer’s style and/or stock number.
(3) Percent by area of external surface area of upper (excluding
reinforcements and accessories) which is:
Leather a._________%
Composition Leather b.__________%
Rubber and/or plastics. c. __________%
Textile materials d.__________%
Other (give separate percent for each type of material) e.__________%
f. ___________%

Certificates of Origin:
The certificates of origin are declarations as to where the imported goods are originating from.
1. Important for establishing preferential treatment for rates of duty if they come from a certain country e.g., Israel, Canada, and Mexico.
2. For certain programs if the certificate of origin is missing the goods may be seized.

Documents of Transportation and Title:
Bills of Lading (Water and Ground Shipping) and Air Waybills (Air Shipping) are the documents under which goods are transported.
1. They are contracts! Thus, they list the terms and liabilities for goods that are damaged during shipment.
2. They evidence the right to delivery or possession of goods.
3. They evidence the right to make a CBP entry into the U.S.

Export Licenses
Export Licenses provide that government authorizations to export certain types of products to a specific country. Highly technological goods such as electronics or military products generally require a validated license.