Mastering HTSUS and Schedule B Classifications. Suzanne Richer Rennie Alston Michael Roll

Transcription

1 Mastering HTSUS and Schedule B Classifications Suzanne Richer Rennie Alston Michael Roll

2 Classification Mastering Your Classification Program Suzanne Richer Director, Global Trade Academy

3 Amber Road s Global Trade Academy Trade Advisory Practice Import / Export Assessments C-TPAT A to Z Develop Written Manuals Training Earn CCS and CES Credits Over 75 Courses Public and On Site/Webinars Drawback / CCLS / Export Control Certifications Made In America How to Qualify Your Goods

4 Highlights and Key Points Importance of Classification Globally Harmonized Classification Challenges that Lead to Non Compliance Best Practices Customs & Trade Solutions, Inc. 2011

5 Importance of Classification Basis of All Import / Export Activity Filing Data within Single Window Free Trade Agreements ISF Filings Combined with Value, Top Audit Areas for CBP

6 General Rules of Interpretation (GRIs) Six GRIs Globally Harmonized, Regardless of the Language You Read them in Country Specific Rules do NOT Supercede a GRI I.e.: USA, Canadian or WCO additional Rules Customs & Trade Solutions, Inc. 2011

7 Country Specific Classification Rules Canadian Additional Country Rule # 3 For the purpose of packing materials or packing containers clearly suitable for repetitive use shall be classified under their respective headings. Customs & Trade Solutions, Inc. 2011

8 Country Specific Classification Rules Harmonized GRI 5(b) This Canadian rule restates that part of GRI 5(b) which provides that "packing materials and packing containers entered with the goods therein shall be classified with the goods if they are of a king normally used for packing such goods. However, this provision is not binding when such packing materials or packing containers are clearly suitable for repetitive use. Customs & Trade Solutions, Inc. 2011

9 General Rules of Interpretation GRI 1 Table of Contents, Index Ease of reference only; For legal purposes, classification shall be determined according to the terms of the headings AND any relative section or chapter notes, Customs & Trade Solutions, Inc. 2011

10 General Rules of Interpretation GRI 1 Classify Terms of the Heading (4-Digits) AND Section and Chapter Notes Customs & Trade Solutions, Inc. 2011

11 General Rules of Interpretation GRI 1 Example 0101 Live horses Chapter Headings Include Parts at Heading Level.Parts Thereof.With their Parts Customs & Trade Solutions, Inc. 2011

12 GRI 1 Headings and Notes Section Notes / Chapter Notes Define the Scope or Limit of a Heading or a Subheading Provide list of items excluded from a section, chapter or heading Provide list of items included Customs & Trade Solutions, Inc. 2011

13 GRI 1 and 6 Rule is Often Misapplied 13

14 Challenges Leading to Non Compliance Parts, Accessories and Parts of General Use Use of Chapter 98 Codes Reliance on Broker or Supplier, FF Misuse of Rulings

15 When is a Part a Part? Parts Accessories Parts of General Use 15

16 Classification of Parts What is a Part? Part cannot be used on its own Must be combined with other articles to be used Integral component required for article to work Identifiable as being used as a part Customs & Trade Solutions, Inc. 2011

17 Classification of Parts What is an Accessory? Facilitates use or handling Widens range of uses of main article Improves operation of main article Not needed to enable article used on to function Identifiable as intended for use with specific article Customs & Trade Solutions, Inc. 2011

18 Classification of Parts Part Classification Example Wiper Aid: plastic unit helps efficiency of windshield wiper, prevents wind lift Is it a part? Customs & Trade Solutions, Inc. 2011

19 Classification of Parts Is it a part? Part cannot be used on its own Must be combined with other articles to be used Integral component required for article to work Identifiable as being used as a part Not excluded within the Notes YES 8512 Windshield wipers Parts: Other Customs & Trade Solutions, Inc. 2011

20 Parts of General Use Section XVI Machinery; Electrical; Parts thereof Note 1 This section does NOT cover: (g) Parts of general use, as defined in note 2 to section XV, of base metal (section XV), or similar goods of plastics (chapter 39) Customs & Trade Solutions, Inc. 2011

21 Parts of General Use Legally Defined Group Distinct and Separate from a Part or an Accessory Excluded from Most Chapters from 82-96

22 Chapter 98 Codes Conditionally Duty Free Have specific supporting documentation required 19 CFR Part 10 Must have these documents on file at time of importation

23 Liability Differences Importer / Exporter are Responsible parties Importers should control the Supplier and the Customs Broker This includes Using FFs who Choose the Customs Broker Exporters must control Customer and Freight Forwarder

24 Liability Differences What does it mean to Control your service agents? Understanding letter of the law Compliance Written instructions Check and Balance or Monitoring Capability Documented Corrective Action

25 Rulings CROSS or WCO Rulings Wonderful Resource Your LAST Tool in Classification Should Not be Primary First step to Classification Benefits of Research HQ Rulings Case Study how a Ruling Can lead you astray

26 Classification Best Practices Groom Your Team to Become Classification Experts Consider becoming a Certified Classification Specialist (CCLS ) Centralize the Classification Program Limit Authorization of Those who Can Classify Audit External Sources for Data (i.e.: Supplier or Customer HTS Codes)

27 Classification Best Practices Manage Your CF 28s This Includes s from the CBP CEEs Recognize Impact on FTA and DB Qualification Process You don t want to Pay CBP Back for Your Duty Savings

28 Contact Our Team Suzanne Richer Amber Road Director, Trade Advisory Practice Drop off a Card to be added to our Free webinar listing

29 HTS Compliance Management Rennie Aston, CEO American River Group of Companies

30 Rennie Alston Chief Executive Officer American River Group of Companies Mr. Alston is the Chief Executive Officer of American River Group of Companies and President of American River Brokerage Services Ltd., a premiere international trade and logistics consulting firm. He is also the founder, CEO and President of the Alston Group. Mr. Alston is regarded as a premiere Customs Regulatory expert, licensed customhouse broker, and Global Security specialist, who holds over thirty years of interactive work experience with the Bureau of Customs and Border Protection. In 2010, Mr. Alston received his Master Certification from the International Chamber of Commerce in Paris, France as a Master trainer of the International Commercial Terms. Mr. Alston has provided Incoterms training for the United Nations global purchasing and procurements managers from all four regions of the globe. Mr. Alston began his career with United Customs Inc. as an import manager. He later became a senior account representative for The Wilson Group USA. Mr. Alston then served nine years as Brokerage Manager for Nippon Express USA. Respected and noted throughout the international trade community, Mr. Alston is considered an expert in the area of Customs Regulatory issues and Compliance Management.

31 Topics of Discussion Periodic HTS Line Review management New product assessment and HTS determinations strategies Use of Ace to review scope of HTS numbers used in IOR profile Defense of HTS determination supported by GRI, Section and Chapter notes Best practices of use of Cross in your affirmation of HTS classifications

32 Periodic HTS Product Line Review Annual vs periodic designation of line review Proactive query of all active HTS numbers against PO and inventory activity Review replacement numbers for alternative HTS designations

33 Periodic HTS Product Line Review continued Review legacy numbers to ensure they remain the most specific option of HTS classification available in the updated annual reference Include product knowledge specialist as an internal resource in this effort such as engineers, scientist, lab technicians, etc. Utilize Customs brokers, attorneys and consultants as a demonstration of reasonable care

34 New product assessment Connectivity in a corporation breeds advance knowledge of pending items for purchase or sale Utilize this advance information to determine HTS classification applicability prior to shipment status

35 New product assessment continued Utilize descriptive literature in alliance with internal HTS knowledge to assign classifications to new products based on essential character and controlling use as applicable Proactive assessment will identify partnering government agency actions requirements and affirm landed cost deliverables related to duties, fees and taxes.

36 Use of Automated Commercial Environment Importer Activity Reporting to identify HTS numbers used Entry type category to identify ADD/CVD entries filed against existing HTS database

37 Use of Automated Commercial Environment continued Query HTS item status to identify ADD/CVD applicability considerations Query HTS item to identify PGA cross reference regulations to imported items Access ACE to monitor CF28 request for information related to HTS numbers utilized

38 Defense of HTS Classifications currently used General Rules of Interpretation Section Notes Chapter Notes Alphabetical Index Cross Ruling reviews Informed Compliance HTS written standard operational procedures Annual HTS line review findings

39 Best Practices for Use of Cross Use Cross as a reference for classification affirmation, not for classification execution Cross is not a substitute for Informed Compliance Review rulings for elevated understanding of CBP past interpretations Use CBP interpretations as guide for your independent research

40 Best Practices for Use of Cross continued Understand that all rulings may not directly apply to the specific item that you are attempting to classify though similar in nature Follow any binding rulings issued to your company until such ruling is overturned Utilize the advisory services of attorneys, consultants or brokers before applying an indirect ruling to your company s direct profile if there is any need for clarification of any points beyond your industry expertise as a reasonable care standard.

41 Summary of Classification Management Informed Compliance demonstration as formal HTS training is required Connectivity with technical knowledge in your company for product specific information necessary for proper classification Detailed knowledge of all of the general rules of interpretation

42 Summary of Classification Management Understanding of definitions to terms in the Section and Chapter notes Reference of the alphabetical index for reference purposes Understanding of the HTS page outline format Specific knowledge on the interpretation of Other references throughout the tariff

43 Rennie Alston, CEO American River Group of Companies Office: Mobile:

44 HTSUS/Schedule B A Legal Point of View Michael Roll, Esq. Pisani & Roll LLP mroll@worldtradelawyers.com

45 Classification Considerations Need to exercise due diligence Due diligence basics include Getting all relevant FACTS Reviewing all applicable LAW

46 Relevant Facts Relevant facts are not merely product invoice descriptions but instead include a wide array of data points. Not all of these data points are always needed but relevant data would include: Drawings, pictures, samples, usage, marketing materials, cost/value information, bill of materials/components, type of material, etc.

47 Relevant Law Tariff schedule Explanatory Notes Administrative Precedent Rulings Other decisions Court cases

48 Facts + Law = Analysis Sometimes analysis is simple/straightforward These are the black & white cases Sometimes analysis is not simple/straightforward There are rulings that say tariff = A but you think rulings are wrong Rulings are inconsistent Legal analysis is complicated

49 What to do in the hard cases? Go to court? Go to lawyer? Get own ruling? Get opinion letter? Distinguish rulings? Challenge rulings?

50 What to do in the hard cases? Need to understand the risks!!!! Being practical vs. being legal and knowing when to be practical vs. legal!!!!