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October 29, 2017

Five Critical Things You Should Know about HTS Codes

HTS codes are an aspect used globally. The World Customs Organization (WCO) is responsible for the Harmonized Tariff Description and Coding system (HTS). More than 170 countries participate in the WCO’s HTS system. The first six digits of the HTS code refer to the goods in international trade, and they are the same for all countries that use the HTS. The two or four suffix digits provide the duty rate and balance of trade statistical reporting suffix for the imported goods. As an importer, you are responsible for establishing the correct HTS classification to be used on your import entries and ISF security filings. This supports why it is mandatory to establish that correct details about your goods is reported to CBP. Also, you should not depend on third parties to guess about your products to give HTS classifications for your sake. It is your responsibility as the importer to provide sufficient detailed information of the imported goods so that the customs professional can know the right classifications for those items.

You may have paid more by using an incorrect HTS code. The HTS is fundamentally a classification system to uniformly identify products and secondarily a tariff system on imported merchandise. When you use the wrong HTS, it results in an incorrect payment of duties whether a little or a lot. The consequence of this arises in the CBP during revenue collection and may cause them to issue penalties for failure to give the right information and accurate information to CBP. The HTS codes you were utilizing might not be the right ones, you still have time to amend this so that you eliminate extravagant penalties. When you realize that you have been using incorrect HTS codes and been paying more or less, you have two choices for correcting this matter. You can file for a Post-Entry Amendment (PEA) to pay any extra owed duties or to request a refund for overpayments. If the entry has been liquidated which usually happens 315 day after entry, you can file an administrative protest up to 180 days after liquidation of the entry.

HTS codes are dynamic in a way. Universally, the HTS is always updated and changed to allow for innovation and technology. Additionally, states are evaluating new revenue avenues and looking into balancing their trade with other countries. In the U.S, a HTS code is created along with the day when it becomes invalid for updates to be incorporated. Accordingly, constantly ensure that the codes you are using are still valid and correct. Classification of imported goods is continuous.

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