Abady Law Firm, P.C. – Customs and Import/Export Attorney Blog
Learn the Basics of Customs and International Trade Policy and Procedure
Archive for the "Tariff Classification" Category
In general, a commercial invoice should provide enough information for a Customs and Border Protection (CBP) Officer to determine if the goods being imported are admissible, and if so, what the correct rate of duty should be applicable based on its Harmonized Tariff Number.
Customs does not provide a specific format for a commercial invoice, however they do provide the elements that should be on an invoice in 19 C.F.R. 141.85.
At a minimum, an invoice should:
1. Describe the item clearly
2. Give the quantity
3. State the value (either price paid, or estimated value based on other considerations.) Give both the value in foreign currency and U.S. dollars
4. Country of Origin (where the item was made)
5. Where it was purchased
6. Name of the business or person selling the merchandise
7. Location of the business or person selling the merchandise
8. Name and address of business or person buying the merchandise, and if different from the importer
9. The U.S. address of the person or business the goods are being shipped to
In addition, Footwear is unique and Customs requires more detail; these additional requirements may be viewed at 19 C.F.R. 141.89. The additional invoice one must include with all their shipments is the “Interim Footwear Invoice.” A sample of a interim footwear invoice can be found here.
When Customs believes that there should be a change in classification or an increase in duty they are required to issue what is called a “Notice of Action” – Customs Form 29. A notice of action signifies Customs intentions to change the way current and possibly future shipments will be treated. The notice will provide the importer with two possible Customs actions; “Action Taken” or “Action Proposed.”
1. Action Taken – Once Customs indicates that Action has been taken, any increase in duties can only be addressed via protest or 520 claim.
2. Action Proposed – When Customs indicates Action proposed, the importer is given 20 days to convince Customs that the increase or change in classification is unfounded.
The importer should carefully respond to any Notices of Action issued by Customs as any decision will have an impact on the way business is conducted.
Contact us today at 347-512-9007 for legal assistance in responding to the Notice of Action.
When goods are presented at the border for entry into the United States, Customs, at the point of liquidation, makes a final determination as to the classification and valuation, or other requirements pertaining to the imported goods. How does Customs make that determination? Customs uses the information provided by the importer such as the commercial invoice and other documentation at the time of entry. Issues arise when Customs finds that the information given to them is inaccurate, incomplete, or insufficient whereby Customs cannot formulate a decision. Customs may give the importer an opportunity to add additional information, clarify what was provided, or provide a sample of the imported product in order for Customs to make a final determination.
The means by which Customs does this is via a Request for Information – Customs Form 28 (CF 28) – see it here. The importer must be cautious; responding to Customs’ questions may have future effects. Importers should ask themselves, why is Customs asking me this question, and what effect will my answer have on my shipments. This is the opportunity to make your case to Customs for present and future treatment.
The importer has 30 days to respond in writing to Customs from the date of issuance. If not possible to respond within that time frame a request for an extension can be asked for and usually obtained from the Customs Import Specialist handling the matter. If a Request for Information is not responded to, Customs will most often presume the least favorable interpretation of the facts, thus leaving the importer in a financial disadvantage. Therefore, it is vital that CF 28 be responded to properly and with the help of an experienced person who can guide the importer in the appropriate direction.
Contact us today at 347-512-9007 regarding a CF 28 you received, time is of the essence!
A quick explanation of substantial transformation:
As mentioned in the earlier post – Country of Origin – substantial transformation is the degree to which processing of an article leads to a new article, with a different name, character, and use. In addition, Customs uses a second method known as the “tariff shift” i.e. change in tariff classification, which is also used to determine substantial transformation. As of now, there are no uniform rules that settle country of origin questions.
As a result, substantial transformation can be highly subjective and tend to be based on political considerations. There has been much litigation in this area and have case-specific interpretations. Further, determinations as to what is considered a substantial transformation change periodically. Thus, it would be wise to discuss the nature of the product with Customs prior to importation because you are not excused from exercising reasonable care when determining the proper country of origin for your goods.
For Tariff Classification purposes, there are circumstances in which more than one word can describe an item. What do you do?! Well the law provides under the “General Rules of Interpretation” 2(b) that consideration is to be given to every heading that identifies an item by name, language or description. Okay, that is great but my goods can be described in more than one way.
General Rules of Interpretation 3 comes along and simplifies the identification of the goods.
Relative Specificity More SPECIFIC language is preferred over general language, thus the heading which more precisely describes the good will be used and the others will be ignored.
Composite Goods and Goods Sold in Retail Sets when a good is a mixture or a composite of different material, components, or sets Customs again uses the concept of Essential Character. In these cases, the question becomes which part of the retail set is causing you to purchase the item? To qualify as a retail set 1) there must be two or more articles with different classifications 2)a single commercial purpose and 3) packaged as ready for sale.
More Than One Essential Character What happens if the good has more than one essential character? Customs Answer: Look to the feature of the good that appears in the Tariff Schedule the last numerically.
Good Cannot be found in the Tariff Self Explanatory. Answer, General Rule of Interpretation 4 says pretend like the goods have changed to one in the tariff to which it is most akin.
Packing and Packaging Whether certain types of packaging are treated as part of the merchandise or must be classified separately. Fitted cases for example, camera cases, musical cases, gun cases, specifically designed for the particular product and have long term use are to be classified with the merchandise for which they are imported. However, if you import these separately then they would need there own tariff number.
Many goods are unassembled or incomplete when they arrive at the port. The U.S. Harmonized Tariff Schedule for classification predominantly addresses complete and assembled products. However, the law provides via the “General Rules of Interpretation” for unassembled or incomplete goods by allowing certain goods to be classified as though they are complete and assembled.
The rule qualifies these goods by its ESSENTIAL CHARACTER. Essential character is not defined in the law but all depends on the specifications of the product. Can a person objectively recognize the product for what it is when incomplete? While Customs may have their own opinion it is within the importers best interest to convince them of the goods essential character for beneficial duty treatment.
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.
There are those importers who find themselves under the belief that duty rates are beyond their control. However, one of the ways an importer can use his or her whit and intelligence is known as “Tariff Engineering.”
The importing laws in the United States are for the most part narrowly tailored to a specific item. For example, you import an adult bicycle and there is a tariff duty rate for that bicycle. However, this strict construction of items based on a tariff may benefit the importer. That same adult bicycle may have different duty rates based on its wheels diameter!
The laws in the U.S. provide a framework for how to import your goods. During the manufacturing process the importer is recommended to speak with the manufacturer, customs broker, and/or attorney to determine the most cost effective way of manufacturing the product to save on import duties – i.e. Tariff Engineering. The earlier this is done in the production process the more one can predict how Customs will react to the product during importation.
Planning is the key word folks – you do not want to the surprise of owing thousands in duty after the goods left the dock.