My previous three articles have dealt with the backbone of classification: the six General Rules of Interpretation as detailed in the Explanatory Notes to the Harmonized System (EN) and the Harmonized Tariff Schedule of the United States (HTSUS). This final article will detail some additional principles and give you some hints for classifying your products.
The most important thing I can tell you about classifying is to be sure to carefully read the Section and Chapter Notes applicable to any prospective classification. Quite often these notes will give you definitive instructions for selecting the correct heading for a class of products, or they will give you specific lists of articles included or excluded from a particular section or chapter.
Without reviewing these notes, you cannot be said to have taken “reasonable care” in classifying your product.
In my experience, the most confusing aspect of the HS and the HTSUS is the different treatment of goods that can be considered “parts” of other products. Some items to remember:
- Most importantly, there are classes of goods that can never be considered to be parts of a parent item. These are considered to be “Parts of General Use” defined in Note 2 to Section XV, HTSUS. These articles include springs, nails, screws, pipe fittings, etc. Under no circumstances can they be considered to be parts of any article, but must be classified under their own headings.
Please note that although it is not specified in this note, this generally applies to similar articles of plastic, see Note 1(g) to Section XVI, HTSUS. You have to eliminate the article you are classifying from general use before you can consider classifying it under any other heading.
- Once you have eliminated your article as not being a part of general use, you must read the applicable Section and Chapter Notes before you can classify it! In most cases, these provide definitive guidance for what constitutes parts of articles and where they are to be found. For a good example of this, go to Note 2 to Section XVI, HTSUS.
- Referring to Note 2 to Section XVI, let’s look at a couple of the referenced headings. Heading 8408 is for diesel engines. However, parts of diesel engines are classified in another heading: 8409. But, if we go to heading 8477—machinery for working rubber or plastics, we see that parts are included in 8477. Confusing? Yes, but not too confusing if you follow the proper steps for classifying and read the directions first!
Here are some problem areas that you should be aware of when classifying:
- There are definitions in the HTSUS that do not necessarily match the dictionary definitions for certain products. An example of this is in Chapter 76, where unalloyed aluminum can actually contain up to one percent of certain elements. By the dictionary definition, adding any amount of another metal would make this an alloy, but for classification purposes, this does not apply.
- There are certain classes of items that are difficult to classify because the headings are broken down into so many subheadings. Some examples of these are bearings, screws, and industrial/commercial belts and belting. In many cases, such as belts, you must first identify the constituent material and then classify the product. This is an area where Customs has actually published a number of articles on their website to assist you in determining the proper classification.
- Some items are classified by their actual use such as the previously mentioned heading 8477, while other items are classified by their constituent materials. For example, Chapter 39 is entirely composed of Plastics and Articles Thereof.
- Unfortunately, some items require a little more digging than others. For example, gaskets can be found in four different places in the HTSUS depending on their composition and use.
In any case, if you feel that you don’t understand the meaning of a particular heading or subheading, you should consult the U.S. Customs Rulings after reading both the Explanatory Notes and the HTSUS. The Customs Ruling Online Search System (CROSS) is a very user-friendly system that allows you to search by keywords. You can either enter descriptive names for your article, or, if you want to see what Customs has classified under a particular HTSUS number, put that number in and see rulings that have been issued classifying products under that number.
As an importer or exporter, you are not required by law to perform your own classifications; however, the correctness of your classifications is your responsibility. Even if you have contracted with a broker or consultant to classify your products, you must understand what is behind the classifications and be able to understand why your products fall in certain classifications.