Virginia Conference on World Trade Roanoke, Virginia October 3 -4, 2006 Import Product Classification General Introduction Leonard L. Fleisig Troutman Sanders LLP Washington, D. C. leonard. fleisig@troutmansanders. com 202. 274. 2863
Customs Compliance • Why does it matter? • What is at stake? • What do you need to do to protect yourself and your company?
Why Does it Matter? • It is the law • Non-compliance has commercial and security implications • Mistakes cost money • Fixing mistakes time away from focus on core business
What Do You Need to Do • Informed compliance & Shared Responsibility – Mutual obligation of CBP and stakeholders • Reasonable care – Standard by which your actions are judged
Reasonable Care • CBP responsible for: – Providing you with sufficient information and tools to make informed and appropriate decisions with regard to your import transactions • You are responsible for: – Utilizing that information and those tools to make informed and appropriate decisions with regard to your import transactions
Reasonable Care - 2 • If you use reasonable care you will – Lessen the number of mistake and – Your mistakes will be less costly • Mistakes will happen but – If you can show that you used reasonable care the ‘cost’ of those mistakes should be significantly lower or eliminated
General Tips • Don’t under-utilize your Customs House Broker – Are they just pushing paper for you or: • Do they assist with classification, marking, valuation issues? • Do you tell them your classifications or do you seek their feedback? • Do you ask them about recent rulings or other issues relating to your products?
General Tips - 2 • Don’t rely solely on your Customs House Broker – Keep yourself informed • Keep a copy of the regs; [19 CFR] – free and available on-line • Keep and use a copy of the Harmonized Tariffs Schedules of the US • Go on line and check for rulings about your products
General Tips - 3 • Why? – The more you can show reliance on a professional and that you provided a professional with the means to provide you with informed advice – the more reasonable care you will have shown – The more you can show that you are also acting independently to stay informed – the more reasonable care you will have shown
Classification-1 • Its not a simple world anymore • Products more complex • Supply chain and assembly regimes – have created shipments of parts, components, etc. • Multiple possible classifications for any given product
Classification • You need to jump through some hoops • Have you checked – the HTSUS? – Explanatory Notes? – Rulings? • Formal/informal classification requests – CHB?
Example • Aerial Digital Surveying Camera – Official Harmonized Tariff Schedule of the United States Annotated • • • http: //www. usitc. gov/tata/hts/index. htm ALPHABETICAL INDEX CAMERAS, PHOTOGRAPHIC for microfilm, microfiche or other microforms. . . 9006. 20 for preparing printing plates or cylinders. . . . 9006. 10 for underwater, aerial survey, medical or surgical exam, forensic or criminological uses. . . . 9006. 30 instant print. . . . . 9006. 40 other than cinematographic. . . 9006. 10 -59
Is it this? • HTSUS 9006. 30. 00? ? • Cameras specially designed for underwater use, for aerial survey, or for medical or surgical examination of internal organs; comparison cameras forensic or criminological purposes. • Rate of duty = 0%
But wait. . . • Explanatory Note to Chapter 90 – This Chapter does not cover still image video cameras, other video camera recorders and digital cameras (heading 8525). – So on to 8525: • 8525. 40 00 Digital still image video cameras. . . . No. . . Free
But wait some more • Check the rulings: – HQ 967142 September 17, 2004 CLA-2 -RR: CR: GC 967142 IOR CATEGORY: Classification – By application of GRI 2(a) and Section XVI, Note 4, HTSUS, as applied by Chapter 90, Note 3, HTSUS, the ADS 40 is provided for in heading 9015, HTSUS. It is classified in subheading 9015. 40. 8000, HTSUSA, as "Surveying (including photogrammetrical surveying), hydrographic, oceanographic, hydrological, meteorological or geophysical instruments and appliances, excluding compasses; rangefinders; parts and accessories thereof: Photogrammetrical surveying instruments and appliances: Other" with a column one, general duty rate of 3%.
So is it really • 9015. 40. 8000? – Protest – CIT – Outcome
Conclusion • Remember: – In the event of a dispute you will not always be wrong and Customs won’t always be right. – You know your product better than most. – But, if you are wrong the more you have done to get it right will limit your potential exposure
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