Harmonized Tariff Schedule: Properly Classifying Your Product

Dust off your compliance toolbox, it’s time to talk about classification! Did you know that all merchandise has a harmonized tariff number? Did you also know that it is your responsibility as the importer or exporter to properly classify your product? Customs classifications are complex and are used to determine applicable duties, trade statistics, whether a license is required, other government agency requirements and whether a product is subject to ADD/CVD. The U.S. Harmonized Tariff Schedule (HTS), the bible of duty classification, has 99 chapters. Chapters 1-97 are arranged in 21 sections, grouped together by industry. The HTSUS also has additional sections with two additional chapters. Chapter 98 covers special classification provisions relating to articles exported and returned to the United States, as well as other special provisions, such as those classifications for articles returning to the United States after repair abroad. Chapter 99 is designed for the incorporation of temporary legislation, proclamations and administrative actions.

These are some resources available for classification:

  • Explanatory Notes to the Harmonized System: Although not legally binding, these are helpful in determining the correct classification.
  • Harmonized Tariff Schedule (HTS): The US HTS code has 10-digits. The first six (6) digits of the HS code are standard, meaning that all countries use the same six digits to classify a commodity; the remaining four (4) digits are unique from country to country and used for statistics.
  • Customs Rulings Online Search Service (CROSS): This is a user-friendly system that allows you to search by keywords for similar products.
  • General Rules of Interpretation (GRI’S): There are six rules. Rules one to four are related and must be applied in sequence. Rules five and six stand on their own and are applied as needed.
  • Customs Informed Compliance Publications: CBP has many Informed Compliance Publications providing guidance to the public on the classification of various commodities.

With these resources in mind, let’s look at storage containers as an example. The classification depends on the material they’re made of — plastic, glass, or stainless steel — and their intended use. Once you know these questions, you can look up the correct chapter.

Here are some suggestions for importers and exporters when classifying merchandise:

  • Provide an accurate and detailed description of your product. What it is? What is it made of? What is the intended use? What is the common name of the product?
  • An incomplete description can lead to the wrong classification, a costly mistake which can result in additional duties, delayed cargo release, and penalties.
  • List the HTS number in your commercial documents.
  • Contact your customs broker or an Import Specialist for guidance in classifying your product.

Still having difficulty deciding how to classify your product? Shapiro offers an excellent tool to help importers streamline their classification process. Our Classification Advisory Module or “CAM” is a one-stop resource for classification. Our skilled compliance team uses combined experience to research, analyze and classify each request. Pre-classification is a great way to forecast landed costs and reduce unnecessary research.

And if you ever need any assistance, or feel lost in the classification process, then please contact the Shapiro Compliance Team to start building a strong classification compliance program.

-- Patricia Carvalho, LCB
Compliance Analyst