Our Customs and International Trade practice at the Dilendorf Law Firm advises clients in several areas related to U. S. Customs law. One of the central topics of importance to our clients is Tariff Classification, which refers to the process of determining the appropriate tariff code for imported and exported goods.
All goods being imported into the U.S. must abide by the Harmonized Tariff Schedule of the United States (HTSUS), which essentially categorizes any import entering the U.S. stream of commerce based on the type of product and the duties it incurs upon entering the U.S. stream of commerce. More complex than it sounds, the HTSUS classification system also determines the way items are taxed. As a result, many importers might try to manipulate this system to their benefit.
Because the effective rate of duty is determined by tariff classification, it is common for disputes to arise between importers and U.S Customs over which tariff classification applies. One of the primary goals of Customs is to protect the revenue of the U.S. Treasury, which explains why the correct classification of goods is highly relevant to U.S. Customs and Border Protection (CBP).
Tariff classification impacts numerous aspects of imported goods, including customs duties, excise duties, origin management, import VAT, preferential duties, and import/export restrictions. Without the correct tariff classification on entry documentation, an importer can be held liable by CBP and other governing authorities for any tariffs that might apply to these goods, as well as applicable penalties and fines.
Should such a disagreement arise, the provisions of the Customs fraud and negligence statute (19 U.S.C. § 1592) allow the agency to “claw-back” unpaid duties for prior imports over a five year lookback period, plus interest charges and civil penalties. Importers are wise to work with experienced attorneys who will guide them in establishing “reasonable care” to avoid such an outcome. An attorney will also file a prior disclosure or protest with CBP and follow procedures that actively challenge a Customs assessment to avoid lengthy litigation in the U.S. Court of International Trade.
Another way that our customs and trade attorneys assist clients is by helping them manage their relationship with licensed Customs brokers. A Customs broker is responsible for using “reasonable supervision and control” but they are not responsible for developing classifications or managing internal compliance with CBP regulations. It is still the obligation of the Importer of Record to exercise “reasonable care” in compliance with CBP, meaning the importer, not their broker, will be solely liable for any errors. Our team works in harmony with importers to fine tune their pre-compliance plans, while keeping their Customs brokers informed of any changes.
The attorneys at the Dilendorf Law Firm provide skilled counsel to shield the importer from unforeseen enforcement actions and penalties that arise from tariff classification errors. Our firm is able to handle tariff classification issues independently or as part of an overall CBP compliance analysis.
- Tariff Classification| US Customs and Border Protection
- Customs Classification | United States Trade Representative
- Harmonized Tariff Schedule – U.S. International Trade Commission
- Industrial Tariffs – Office of the United States Trade Representative
- 19 USC 1952: Penalties for fraud, gross negligence, and negligence – Office of the Law Revision Counsel
- Import Tariffs Overview – International Trade Administration
- Determining Duty Rates – U.S. Customs and Border Protection
- Customs Brokers – U.S. Customs and Border Protection
- Customs Broker Frequently Asked Question – U.S. Customs and Border Protection
- Tariff Classification, Export Control and Trade Agreements
- Trade: US Import Requirements
- U.S. Department of Treasury | Trade Sanctions List
- U.S. Customs Border Patrol: Customs Rulings
- U.S. Customs Valuation Encylopedia