What is a Freight Forwarder?

An international freight forwarder is an agent for the exporter in moving cargo to an overseas destination. These agents are familiar with the import rules and regulations of foreign countries, the export regulations of the U.S. government, the methods of shipping, and the documents related to foreign trade. Export freight forwarders are licensed by the International Air Transport Association (IATA) to handle air freight and the Federal Maritime Commission to handle ocean freight.

Freight forwarders assist exporters in preparing price quotations by advising on freight costs, port charges, consular fees, costs of special documentation, insurance costs, and their handling fees. They recommend the packing methods that will protect the merchandise during transit or can arrange to have the merchandise packed at the port or containerized. If the exporter prefers, freight forwarders can reserve the necessay space on a vessel, aircraft, train, or truck. The cost for their services is a legitimate export cost that should be included in the price charged to the customer (see Chapter 11 of the Basic Guide to Exporting for pricing information.).

Once the order is ready for shipment, freight forwarders should be review all documents to ensure that everything is in order. This is of particular importance with letter of credit payment terms. They may also prepare the bill of lading and any special required documentation. After shipment, they can route the documents to the seller, the buyer, or to a paying bank. Freight forwarders can also make arrangements with customs brokers overseas to ensure that the goods comply with customs export documentation regulations. A customs broker is an individual or company that is licensed to transact customs business on behalf of others. Customs business is limited to those activities involving transactions related to the entry and admissibility of merchandise; its classification and valuation; the payment of duties, taxes, or other charges assessed or collected; or the refund, rebate, or drawback thereof.

Finding a Local Freight Forwarder Freight forwarders are located in most metropolitan areas. Yellow pages often have a freight forwarder, or transportation, heading. Additionally, the National Customs Brokers and Forwarders Association of America will provide exporters with information on their members. They can be reached at 1200 18th Street, NW, Suite 901,Washington, DC 20036, (202) 466-0222, or http://www.ncbfaa.org/.

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Find HTS Codes

Here’s a new HTS lookup service for anyone who’s ever had problems finding HTS tariff codes for their import or export shipments.

Basically, you can use it to look up tariff rates for any item with a keyword search, or by typing in the HTS number directly. There are a few software packages that you can buy to do this kind of lookup, but this one is free and you don’t have to signup or give out your email. I also imagine that they keep it up to date with the latest HTS versions, so no worrying about that.

Here’s the link to find hts codes

The free service is cool, but on top of that they also offer a downloadable version of the same database that powers their site. I’ve seen this same product go for $400+, and they have it listed for about that half price. If you need that kind of data for a larger import business or some other application (I use it on this site), then it’s a pretty good deal. Here’s the link to download the HTS database. If you find any other good uses for that data, let me know and I’ll list them on our sit

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Fines, Penalties, and Forfeitures

What’s the maximum amount of money Customs can fine a person for negligence in importing (if the circumstances were not disclosed beforehand to Customs)?

According to 19 CFR 162.73(a)(3)(ii), an importer can be penalized 20% of the dutiable value of the goods.

Are fines with Customs set in stone? Do they have any room to work with importers for special circumstances?

Customs can work with penalties and mitigate fines at their discretion if

The importer is inexperienced, and the fine/penalty is a result of that inexperienceThe importer in violation takes steps to correct the source of the penalty (remarking goods, repackaging, fumigation, etc.)The importer has a long-standing history of violation-free imports.An error was made by Customs.

What would cause Customs to seize merchandise?

According to 19 CFR 171 Appendix B G, Customs decision to seize merchandise can be influenced if:

The commodity is prohibited for import.There is an import restriction on the merchandise.The importer has stopped paying required duties and taxes on their imported merchandise.Customs believes they must seize an importer’s goods in order to ensure they receive payment.

After making a verbal report to Customs about an import violation, how long do I have to provide a written statement?

According to 19 CFR 162.74(a)(2), an importer has 10 days from the time the oral report is made to provide a written statement to the Fines, Penalties and Forfeitures Officer.

I’ve made an error with Customs in the amount of duty I have to pay and have been penalized, but Customs has agreed to a reduced amount to cover everything I owe. How can I make sure it’s official?

This is known as “an offer in compromise.” In order for it to be official, you must receive notification in writing from CBP that they received the offer.

We imported a commodity that displayed a trademark which we do not own and Customs seized the shipment. The trademark owner gave us written permission to import the merchandise fourteen days after we were notified of the seizure. How long do we have to get the seizure and penalty reversed?

You have thirty days from the date the notice of seizure was mailed to petition for relief.

Please note: This article is intended for informational purposes only and is not specific legal advice. As an importer, it is your responsibility to meet all the legal requirements for importing goods.

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How to Import – Internet Purchases, Personal vs. Commercial Use

Many import regulations only apply to goods imported for commercial – business or resale – purposes. For instance, most goods imported for personal use are not subject to quota. The one exception to this is made-to-measure suits from Hong Kong, which are subject to quota restrictions regardless of the use they are imported for. On the other hand, import restrictions that are based on health, safety and protecting endangered species apply across the board. Note: Customs is authorized to make judgment calls about what qualifies as personal use. Several suits that are identical or a number of very similar handbags will have a hard time passing the credibility test as items for personal use.

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NAICS Definitions – 42 Wholesalers Trade

The Wholesalers Trade sector comprises establishments engaged in wholesaling merchandise, generally without transformation, and rendering services incidental to the sale of merchandise.

The wholesaling process is an intermediate step in the distribution of merchandise. Wholesalers are organized to sell or arrange the purchase or sale of (a) goods for resale (i.e., goods sold to other wholesalers or retailers), (b) capital or durable nonconsumer goods, and (c) raw and intermediate materials and supplies used in production.

Wholesalers sell merchandise to other businesses and normally operate from a warehouse or office. These warehouses and offices are characterized by having little or no display of merchandise. In addition, neither the design nor the location of the premises is intended to solicit walk-in traffic. Wholesalers do not normally use advertising directed to the general public. Customers are generally reached initially via telephone, in-person marketing, or by specialized advertising that may include Internet and other electronic means. Follow-up orders are either vendor-initiated or client-initiated, generally based on previous sales, and typically exhibit strong ties between sellers and buyers. In fact, transactions are often conducted between wholesalers and clients that have long-standing business relationships.

This sector comprises two main types of wholesalers: those that sell goods on their own account and those that arrange sales and purchases for others for a commission or fee.

(1) Establishments that sell goods on their own account are known as wholesalers, merchants, distributors, jobbers, drop shippers, import/export merchants, and sales branches. These establishments typically maintain their own warehouse, where they receive and handle goods for their customers. Goods are generally sold without transformation, but may include integral functions, such as sorting, packaging, labeling, and other marketing services.

(2) Establishments arranging for the purchase or sale of goods owned by others or purchasing goods on a commission basis are known as agents and brokers, commission merchants, import/export agents and brokers, auction companies, and manufacturers’ representatives. These establishments operate from offices and generally do not own or handle the goods they sell.

Some wholesalers establishments may be connected with a single manufacturer and promote and sell the particular manufacturers’ products to a wide range of other wholesalers or retailers. Other wholesalers may be connected to a retail chain or a limited number of retail chains and only provide a variety of products needed by that particular retail operation(s). These wholesalers may obtain the products from a wide range of manufacturers. Still other wholesalers may not take title to the goods, but act as agents and brokers for a commission.

Although, in general, wholesaling normally denotes sales in large volumes, durable nonconsumer goods may be sold in single units. Sales of capital or durable nonconsumer goods used in the production of goods and services, such as farm machinery, medium and heavy duty trucks, and industrial machinery, are always included in wholesale trade.

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How to Import – Internet Purchases, Quota

Many kinds of goods imported for commercial use may be subject to a quota limit. It is the classification number of the article as identified in the Harmonized Tariff Schedule of the United States and the country of origin that determine whether or not an item is subject to quota requirements. In some cases, the quota is absolute, meaning that once the quota is filled – because the quota has reached its limit for that particular period of time – no additional quantities of that item may be imported until the next open period. Such merchandise must be warehoused or exported. Other quotas are tariff-related, which means that a certain quantity of goods may enter at a low rate of duty, but once that threshold is reached – during a specified period of time – a higher duty rate will be assessed for any additional quantities of that particular imported good. Unlimited quantities of some merchandise subject to tariff-rate quota may, however, enter at over the quota rates.

If you are importing goods for commercial use or resale, it’s a good idea to contact your local port of entry for more specific information.

The Quota program is generally applied only to commercial importations. While the importation of many goods imported under “personal use” quantities are not affected by quota restrictions, there is one exception; made-to-measure suits made in Hong Kong, which are restricted for both personal and commercial use.

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FAST Truck Driver Requirements Effective November 15, 2004

On August 15, 2004, U.S. Customs and Border Protection (CBP) published the “Required Advance Electronic Presentation of Cargo Information” for importers, carriers, and commercial truck drivers to meet the requirements of the Trade Act of 2002. This notice is to inform truck carriers when they will be required to transmit advance electronic cargo information to CBP regarding cargo they are bringing into the United States, as mandated by section 343(a) of the Trade Act of 2002 and the implementing regulations.

These regulations, titled 19CFR123, specify that truck carriers carrying Border Release Advanced Screening and Selectivity (BRASS) merchandise may only utilize drivers who are registered under the Free and Secure Trade (FAST) program and carrying a valid FAST Driver Card.

CBP will begin enforcing the requirements indicated in the “Required Advance Electronic Presentation of Cargo Information” November 15, 2004.

The FAST Commercial Driver Program is the result of United States, Canada and Mexico Border Partnership Action Plans. These plans are designed to enhance the security of our shared borders while facilitating the legitimate flow of low-risk commerce. These initiatives were implemented by CBP with the cooperation and assistance from the Governments of Mexico and Canada.

There are separate applications for the Northern Border FAST and Southern Border FAST programs. Applications take approximately six weeks to process for registration in the Northern Border Fast program and two weeks to process for registration in the Southern Border Fast program.

As of November 15, any BRASS shipment that is not being hauled by a FAST registered driver will be denied entry into the United States.

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What is a General Order Warehouse?

Importers bringing merchandise into the United States for consumption must place their goods in a bonded facility while entry is filed with Customs. Goods remaining in a bonded facility for fifteen calendar days without an entry filed will be moved to a Customs approved, GO (General Order) bonded warehouse. There the goods will remain for six months from the date of import. If after six months, the goods have not been documented and duties/fees paid, they will be sold at auction, donated to charity or retained by the Government. Bonded warehouses must notify Customs of un-entered goods not later than 20 calendar days from the date of arrival in the port of import. Warehouse/vessel operators failing to report un-entered merchandise are subject to a penalty of up to one thousand dollars per bill of lading.

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What are Import Taxes?

Import tax or import tariffs (also known as import duties) in the United States generally refer to the taxes and fees charged by US Customs when importers bring goods into the country. They are assessed by government employees with US Customs at the port of entry, and are paid by the importer of record.

All goods entering the United States are subject to the same import procedure and the same tariff (tax) assessment, although every product has its own duty rate and some have a duty rate of zero!

Import taxes are the second largest source of revenue for the United States behind the Internal Revenue Service.

In addition to being revenue source, import taxes are used to control domestic market conditions and as a political tool. US Customs and the US International Trade Commission will raise and lower import taxes on particular goods to give domestic producers an edge over foreign imports. To exert political pressure, certain countries may be assigned a higher duty rate on their exports or may be embargoed (locked out) to prevent trade.

The primary criteria for import tariffs and taxes are:

Country of originCommodity typeIntended use

and are determined using the US Harmonized Tariff Schedule, a yearly publication listing duty rates for a wide variety of import commodities. The USHTS also includes procedures and guidelines for determining import tax rates.

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CBP ensures pest-free flowers for Valentine’s Day

U.S. Customs and Border Protection (CBP) agriculture specialists are making sure that the bouquet of flowers you order for your sweetheart this Valentine’s Day is free from insects, pests and diseases that could harm the agricultural and floral industries in the United States.

Whether it’s rare orchids from Thailand or roses from Colombia, it is the job of the CBP agriculture specialist to carefully inspect them before they get to the florist, the grocery store or the sidewalk stand.
CBP agriculture specialists are specially trained in how to inspect cut flowers, plants and fresh herbs for signs of insects, pests or diseases. During the inspection, if an infested shipment is found, a sample of the insect, pest or disease is sent to a U.S. Department of Agriculture identifier.

If the sample is “actionable,” that is, not known to exist in the United States, or is an exotic invasive species detrimental to American agriculture, the shipment is ordered for fumigation, destruction, or reexport. If not actionable, the shipment is released to the importer or consignee.

The top three U.S. ports of entry that receive the most imported cut flowers are Miami, Los Angeles and New York. In a single shipment, CBP agriculture specialists working at any of these ports inspect samples representing up to 50 different varieties of cut flowers.

The top three imported cut flowers are roses, carnations and chrysanthemums. In 2005, more than 6,000 actionable insects or pests were intercepted at the port of Miami. The most common insects found were leaf miners, caterpillars and leaf bugs.

At international ports of entry, land borders, and international mail facilities, CBP agriculture specialists are the front line in the fight against the introduction of insects, pests and diseases into the United States.

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Import Duty on Returned Items

Question

Do I have to pay import duty on items that have been exported from the United States that are being returned?

Answer

If you have an item that was previously resident in the United States, but for some reason was exported and is now being returned, be sure to inform US Customs about its status. Items previously exported are often considered duty free! This means that although you might have to pay a small entry fee, your goods will not be assessed taxes as a percentage of their value.

The logic behind this duty free status is simple – US Customs wants importers to pay an import tax at least once on items not made in the United States. That means that in general you can claim a duty free status under chapter 98 of the US Harmonized Tariff Schedule on items that were either made in the USA, or had already been imported previously.

When might this apply?

This scenario might come into play if:

one of your products was exported, used in a foreign country, and is now being returned;you’re exporting something for repair;your item was exported as an exhibit for a trade show or similar;your item is a “tool of trade” used abroad temporarily.

Gotcha’s to avoid:

Just because your entry is duty free does not mean you can avoid filing import paperwork. You might also be subject to processing fees.If your item was “advanced in value” while overseas, you will probably owe duty on the value of the improvement. Example: you exported a car made in the US and had a French radio installed. When the car returns, you will owe duty on the value of the radio but not the car.Depending on the product, there may be a three year window between the exportation and duty free re importation of your item.

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What is a Foreign Trade Zone?

A foreign trade zone is a warehouse on US soil that acts like limbo for imported goods. If you have something that can’t come into the country, is just stopping off before being shipped to another country, or needs to operate outside of standard Customs procedures, a Foreign Trade Zone (FTZ) might be the way to go.

Example: I worked with a customer one time importing textiles (T-shirts) from China for sale in the US. As many textile importers will tell you, there is an import quota on Chinese textiles that caps the total amount they’re allowed to import into the US each year. Unfortunately, this importer’s agent failed to advise his customer that his category’s quota for the year had been filled. The end result was 50,000 embroidered T-shirts held at the port of Long Beach California that could not be cleared through Customs.

As you can probably guess, the solution I recommended was a Foreign Trade Zone. By warehousing the goods in an FTZ on US soil, the importer was able to avoid shipping his goods back to China (and all the costs that would incur) and was first in line when quota was re-opened the following year.

Not a totally pleasant experience for the importer, but a lot better than the alternative!

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What is Transshipment?

Transshipment is the act of shipping goods to an intermediate destination prior to reaching their ultimate end-use. Transshipment is a common practice with logistic benefits, but can be used to illegitimately to disguise country of origin or intent of the goods.

Transshipment is commonly used by smugglers and terrorists seeking to disguise the point of origin of their goods from Customs officials. Certain countries like Libya, North Korea, and Syria are considered higher risk for security threats while countries like China and Taiwan are likely sources for counterfeit goods. Importers can transship goods both intentionally and accidentally. Intentional transshipments are done to avoid higher duty rates levied on certain countries, avoid import restrictions like visa and quota restrictions, or make use of a special trade program to drastically lower duty rates.

Accidental transshipments are usually caused by miscommunication between foreign vendors or US buyers. Too often, US importers do not recognize the need for properly declaring country of origin and see reduced duty rates as smart business. Foreign vendors typically do not have the in-depth knowledge of US Customs regulations to advise against the practice.

In addition to the loss of import privileges and seizure of imported merchandise, importers practicing transshipment may also be subject to an array of civil penalties under 19 U.S.C. 1592.

Maximum penalties for transshipment are:

Fraud: An amount not exceeding the domestic value of the merchandise.Gross Negligence: The lesser of the domestic value of the merchandise, orfour times the lawful duties, taxes, and fees, orif the violation did not affect the assessment of duties, 40 percent of the dutiable value of the merchandise.Negligence: The lesser of the domestic value of the merchandise, ortwo times the lawful duties, taxes, and fees, orif the violation did not affect the assessment of duties, 20 percent of the dutiable value of the merchandise.

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Ultimate Consignee Reporting Requirements

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U.S. Customs and Border Protection (CBP) has for many years allowed different parties to be identified as the Ultimate Consignee for shipments of imported merchandise. This is largely due to concerns expressed by some entry filers over the difficulty in obtaining the correct Ultimate Consignee identification number at the time of entry or release. The current policy was written prior to September 11, 2001, and does not reflect the current need for accurate and advanced Ultimate Consignee data so that arriving shipments can be effectively targeted for security and enforcement examinations.

The Ultimate Consignee at the time of entry or release is defined as the party in the United States, to whom the overseas shipper sold the imported merchandise. If at the time of entry or release the imported merchandise has not been sold, then the Ultimate Consignee at the time of entry or release is defined as the party in the United States to whom the overseas shipper consigned the imported merchandise. If the merchandise has not been sold or consigned to a U.S. party at the time of entry or release, then the Ultimate Consignee at the time of entry or release is defined as the proprietor of the U.S. premises to which the merchandise is to be delivered.

For entry release, the current Ultimate Consignee reporting policy is outlined in CBP Directive 3550-079A, which requires that the Ultimate Consignee on a formal entry be identified with its appropriate identification number or an ABI transmission of the Ultimate Consignees name and address.

For informal entries, the Ultimate Consignee can be identified by an ABI transmission of the Ultimate Consignees name and address, but may also be identified with any of several other optional identification methods that may identify a different party as the Ultimate Consignee. For both types of entries, this policy has resulted in inaccurate historical Ultimate Consignee data, which seriously undermines CBP efforts to manage the security related risks associated with arriving shipments of imported merchandise.

For entry summary, the current Ultimate Consignee reporting policy is outlined in CBP Directive 3550-061 (later amended by administrative message 92-0717) that identifies the Ultimate Consignee number as the Internal Revenue Service employer identification number, the social security number or the CBP assigned number.

Note: CBP Assigned numbers are issued to non-resident corporations or individuals and therefore should rarely be used as the Ultimate Consignee number. This policy applies to both formal and informal entries.

The purpose of this letter is to correct weaknesses in the current CBP policy pertaining to the identification of the Ultimate Consignee at the time of entry or release and to unify entry release and entry summary Ultimate Consignee procedures. This policy change will incorporate the following:

Formal Entries: The Ultimate Consignee on a formal entry must be identified with an appropriate Ultimate Consignee identification number, and may not be identified with an ABI transmission of the Ultimate Consignees name and address. If the Ultimate Consignee has not been issued an appropriate identification number as listed above, he/she must obtain one before his/her entry can be processed by CBP. If the Ultimate Consignee identification number is not provided at the time of entry or release, entry of the merchandise shall be denied. Informal Entries: At a minimum, the Ultimate Consignee must be identified with the Ultimate Consignees name and address, which can be provided to CBP through either an ABI transmission or through other available means to include manual processing methods. Note: In most cases the address will be a U.S. address not a foreign one. If a name and address is provided for Ultimate Consignee, the entry will not be allowed to be paperless and entry documents will be required for release. The Ultimate Consignee may also be identified by an appropriate identification number (as noted above), if one is provided by the entry filer.

If the Ultimate Consignee is not identified by either an appropriate identification number or a name and address at the time of entry or release, entry of the merchandise shall be denied.

Consolidated Entries: Consolidated release and entry summary is used by shippers and importers for shipments that have multiple ultimate consignees arriving at the border in a single conveyance. The Ultimate Consignee for each portion of a consolidated entry that equals or exceeds $2,000 in value must be identified with an appropriate Ultimate Consignee identification number. If the Ultimate Consignee does not have an appropriate identification number, he/she must obtain one before his/her entry can be processed by CBP. If the Ultimate Consignee identification number is not provided at the time of entry or release, entry of the merchandise shall be denied. For portions of a consolidated entry that are valued at less than $2,000, the Ultimate Consignee must at a minimum be identified with the Ultimate Consignees name and address but may also be identified with an appropriate Ultimate Consignee identification number if provided by the entry filer. If the Ultimate Consignee is not identified with either the name and address or an appropriate identification number at the time of entry or release, entry of the merchandise shall be denied.

Due to ACS limitations, when consolidated entries are certified from summary data at the time of entry or release, the portion of the consolidated entry with the highest value must be included with the ABI transmission, while the Ultimate Consignees associated with the remaining portions of the consolidated entry must be identified on a separate list that must be attached to the entry package.

The policy for Ultimate Consignee number reporting format will be amended as follows:

U.S.-Based Ultimate Consignees: The appropriate Ultimate Consignee identification number for U.S.-based ultimate consignees is defined as either an Internal Revenue Service employer identification number or a Social Security number. U.S.-based Ultimate Consignees are not to be identified with a CBP-issued Ultimate Consignee identification number. If a U.S.-based Ultimate Consignee does not have either an Internal Revenue Service employer identification number or a Social Security number, he/she must obtain one for any shipments that require the Ultimate Consignee to be identified with an appropriate Ultimate Consignee identification number. If the appropriate Ultimate Consignee identification number is not provided at the time of entry or release, entry of the merchandise shall be denied.

Foreign-Based Ultimate Consignees: In the limited instances in which imported merchandise is consigned to an Ultimate Consignee that is not based in the United States, the Ultimate Consignee must be identified with a CBP-issued Ultimate Consignee identification number for formal entries, or in the case of informal entries, including consolidated entry lines with a value less than $2000, may be identified with either a CBP-issued Ultimate Consignee identification number or the name and address of the foreign-based Ultimate Consignee. CBP-issued Ultimate Consignee identification numbers are only to be used to identify foreign-based Ultimate Consignees and must be based on the name and address of the foreign-based Ultimate Consignee. If the foreign-based Ultimate Consignee does not have a CBP-issued Ultimate consignee number, he/she must obtain one before his/her entry can be processed by CBP. If the appropriate CBP-issued Ultimate Consignee identification number is not provided at the time of entry or release, entry of the merchandise shall be denied.

These reporting requirements will become effective October 1, 2004. A memorandum has been sent to the Directors, Field Operations that will serve as interim policy guidance until the current directives can be modified. Inspectors have been instructed to verify entry documentation to ensure that it conforms to the new Ultimate Consignee reporting policy. Non-compliant shipments will not be released. In addition, entry filers that violate the new policy may be subject to the issuance of penalties for failure to exercise due diligence.

I thank you for your assistance in disseminating this information to your members and for your efforts in assisting CBP in its mission of protecting the people of the United States from terrorism.

Sincerely,

Jayson P. Ahern
Assistant Commissioner
Office of Field Operations

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General Rules of Interpretation: How to Interpret the Tariff

The General Rules of Interpretation can be found online here.

The General Rules of Interpretation (GRIs) outline the method used to determine a products classification. They also address special scenarios wherein a final classification may be difficult to determine. The General Rules of Interpretation below have been taken verbatim from the HTS (current as of 11/1/04). GENERAL RULES OF INTERPRETATION

Classification of goods in the tariff schedule shall be governed by the following principles:

1. The table of contents, alphabetical index, and titles of sections, chapters and sub-chapters are provided for 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 and, provided such headings or notes do not otherwise require, according to the following provisions:

2. (a) Any reference in a heading to an article shall be taken to include a reference to that article incomplete or unfinished, provided that, as entered, the incomplete or unfinished article has the essential character of the complete or finished article. It shall also include a reference to that article complete or finished (or falling to be classified as complete or finished by virtue of this rule), entered unassembled or disassembled. (b) Any reference in a heading to a material or substance shall be taken to include a reference to mixtures or combinations of that material or substance with other materials or substances. Any reference to goods of a given material or substance shall be taken to include a reference to goods consisting wholly or partly of such material or substance. The classification of goods consisting of more than one material or substance shall be according to the principles of rule 3.

3. When, by application of rule 2(b) or for any other reason, goods are, prima facie, classifiable under two or more headings, classification shall be effected as follows: (a) The heading which provides the most specific description shall be preferred to headings providing a more general description. However, when two or more headings each refer to part only of the materials or substances contained in mixed or composite goods or to part only of the items in a set put up for retail sale, those headings are to be regarded as equally specific in relation to those goods, even if one of them gives a more complete or precise description of the goods. (b) Mixtures, composite goods consisting of different materials or made up of different components, and goods put up in sets for retail sale, which cannot be classified by reference to 3(a), shall be classified as if they consisted of the material or component which gives them their essential character, insofar as this criterion is applicable. (c) When goods cannot be classified by reference to 3(a) or 3(b), they shall be classified under the heading which occurs last in numerical order among those which equally merit consideration.

4. Goods which cannot be classified in accordance with the above rules shall be classified under the heading appropriate to the goods to which they are most akin.

5. In addition to the foregoing provisions, the following rules shall apply in respect of the goods referred to therein: (a) Camera cases, musical instrument cases, gun cases, drawing instrument cases, necklace cases and similar containers, specially shaped or fitted to contain a specific article or set of articles, suitable for long-term use and entered with the articles for which they are intended, shall be classified with such articles when of a kind normally sold therewith. This rule does not, however, apply to containers which give the whole its essential character; (b) Subject to the provisions of rule 5(a) above, packing materials and packing containers entered with the goods therein shall be classified with the goods if they are of a kind 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.

6. For legal purposes, the classification of goods in the subheadings of a heading shall be determined according to the terms of those subheadings and any related subheading notes and, mutatis mutandis, to the above rules, on the understanding that only subheadings at the same level are comparable. For the purposes of this rule, the relative section, chapter and subchapter notes also apply, unless the context otherwise requires.

This article is intended to provide a general understanding of the structure of the Harmonized Tariff Schedule and the method used to determine a products classification. By nature of an introductory article, it does not cover special and extenuating circumstances that often arise when determining a products final classification. The authors of this article recommend that you consult with a licensed Customs broker or member of the US Customs Service should there be any question as to the classification of your product. As the importer of record for your product, it is your responsibility to ensure that the classification presented to Customs for the import of your shipment is the most accurate and legitimate classification. It is important to understand the process of classifying your product because as the importer of record you can be held ultimately responsible for mistakes made in classification.

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General Rules of Interpretation: How to Interpret the Tariff

The General Rules of Interpretation can be found online here.

The General Rules of Interpretation (GRIs) outline the method used to determine a products classification. They also address special scenarios wherein a final classification may be difficult to determine. The General Rules of Interpretation below have been taken verbatim from the HTS (current as of 11/1/04). GENERAL RULES OF INTERPRETATION

Classification of goods in the tariff schedule shall be governed by the following principles:

1. The table of contents, alphabetical index, and titles of sections, chapters and sub-chapters are provided for 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 and, provided such headings or notes do not otherwise require, according to the following provisions:

2. (a) Any reference in a heading to an article shall be taken to include a reference to that article incomplete or unfinished, provided that, as entered, the incomplete or unfinished article has the essential character of the complete or finished article. It shall also include a reference to that article complete or finished (or falling to be classified as complete or finished by virtue of this rule), entered unassembled or disassembled. (b) Any reference in a heading to a material or substance shall be taken to include a reference to mixtures or combinations of that material or substance with other materials or substances. Any reference to goods of a given material or substance shall be taken to include a reference to goods consisting wholly or partly of such material or substance. The classification of goods consisting of more than one material or substance shall be according to the principles of rule 3.

3. When, by application of rule 2(b) or for any other reason, goods are, prima facie, classifiable under two or more headings, classification shall be effected as follows: (a) The heading which provides the most specific description shall be preferred to headings providing a more general description. However, when two or more headings each refer to part only of the materials or substances contained in mixed or composite goods or to part only of the items in a set put up for retail sale, those headings are to be regarded as equally specific in relation to those goods, even if one of them gives a more complete or precise description of the goods. (b) Mixtures, composite goods consisting of different materials or made up of different components, and goods put up in sets for retail sale, which cannot be classified by reference to 3(a), shall be classified as if they consisted of the material or component which gives them their essential character, insofar as this criterion is applicable. (c) When goods cannot be classified by reference to 3(a) or 3(b), they shall be classified under the heading which occurs last in numerical order among those which equally merit consideration.

4. Goods which cannot be classified in accordance with the above rules shall be classified under the heading appropriate to the goods to which they are most akin.

5. In addition to the foregoing provisions, the following rules shall apply in respect of the goods referred to therein: (a) Camera cases, musical instrument cases, gun cases, drawing instrument cases, necklace cases and similar containers, specially shaped or fitted to contain a specific article or set of articles, suitable for long-term use and entered with the articles for which they are intended, shall be classified with such articles when of a kind normally sold therewith. This rule does not, however, apply to containers which give the whole its essential character; (b) Subject to the provisions of rule 5(a) above, packing materials and packing containers entered with the goods therein shall be classified with the goods if they are of a kind 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.

6. For legal purposes, the classification of goods in the subheadings of a heading shall be determined according to the terms of those subheadings and any related subheading notes and, mutatis mutandis, to the above rules, on the understanding that only subheadings at the same level are comparable. For the purposes of this rule, the relative section, chapter and subchapter notes also apply, unless the context otherwise requires.

This article is intended to provide a general understanding of the structure of the Harmonized Tariff Schedule and the method used to determine a products classification. By nature of an introductory article, it does not cover special and extenuating circumstances that often arise when determining a products final classification. The authors of this article recommend that you consult with a licensed Customs broker or member of the US Customs Service should there be any question as to the classification of your product. As the importer of record for your product, it is your responsibility to ensure that the classification presented to Customs for the import of your shipment is the most accurate and legitimate classification. It is important to understand the process of classifying your product because as the importer of record you can be held ultimately responsible for mistakes made in classification.

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Documents Needed by US Citizens for Travel Abroad

Trade Notices
Valid US Passport orCertified copy of their birth certificate or record of baptism accompanied by a picture ID – Driver’s license, State ID card, or Military ID.A US Passport is required.Other documents that may serve as proof of citizenship include a state or government issued record or birth or baptism.Certificates issued by hospitals are not acceptable as proof of citizenship.Laminated birth certificates are not acceptable as the raised seal used to identify authenticity is indistinguishable.This entry was posted on Monday, November 12th, 2007 at 1:53 am and is filed under Trade Notices. You can follow any responses to this entry through the RSS 2.0 feed. You can leave a response, or trackback from your own site.

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US Customs and Border Protection

Government

The priority mission of CBP is to prevent terrorists and terrorist weapons from entering the United States.This important mission calls for improved security at America’s borders and ports of entry as well as for extending our zone of security beyond our physical borders – so that American borders are the last line of defense, not the first.

This entry was posted on Monday, November 12th, 2007 at 2:03 am and is filed under Government. You can follow any responses to this entry through the RSS 2.0 feed. You can leave a response, or trackback from your own site.

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How Much Does it Cost to Import?

Importers are expected to pay an import tax on virtually every item they import, but few know how much they owe until their shipments arrive in the US.

Many importers are overcharged by US Customs at the border because they did not purchase a copy of the US Harmonized Tariff Schedule and properly classify their imports.

Import taxes are based on the type of item you are importing and where it’s coming from.

Import taxes for every item imaginable can be determined using the United States Harmonized Tariff Schedule (HTSUS, USHTS, or HTS for short).

This exceptionally large book breaks down into categories virtually every product and commodity imported into the United States. Each line item contains a ten digit classification number, a product description, and a duty rate. Find your item and apply its rate to calculate what you will owe.

Every item that comes into the US must be classified with the Harmonized Tariff Schedule. If you don’t classify your item, US Customs will charge you a fee to do it for you.

Before you let Customs classify your product, remember that import tariffs are the second largest source of revenue next to the IRS.

Import tax (also known as an import duty or import tariff) is collected by US Customs on every import that comes into the US.

Import taxes are a source of income for the US Government and are a way to restrict or facilitate the import of certain commodities.

1. The US Harmonized Tariff Schedule is used to assess import duties and taxes on imports. The US Customs Service is the second largest source of revenue for the US Government, second only to the Internal Revenue Service.

2. The HTS is used to track import and export statistics for the US Department of Census. Each month hundreds of billions of dollars in goods and services are imported and exported from the United States. The Tariff Schedule is designed so that the Federal Government can effectively track the import and export of individual product groups into and out of the United States.

3. Lastly, the USHTS is a tool to enforce the United States political agenda. By raising and lowering duty rates and import restrictions from specific countries or around the world, the United States can exercise a certain amount of economic influence.

You can use the Tariff Schedule to calculate duties and taxes on imports. All imported products must be classified with the HTS before they will be allowed into the United States.

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Importer Security Filing (ISF), aka “10+2″

When does the ISF have to be filed?

Not later than 24 hours prior to loading of the shipment to the vessel at the foreign port of lading.

Does the effective date of Jan. 26th mean that any shipment which is departing from the origin port on or after Jan. 26th is required to have an ISF, or any shipment arriving in the USA after Jan. 26th?

The regulation is effective for any shipment loading to vessel at the origin port on or after Jan. 26th.

Do I have to present my complete set of shipping documents to you for ISF filing at that time?

No; the minimum required data elements can be provided, along with a commercial invoice (which should be available at the time of filing), on a simple cover sheet and faxed/emailed to the filing agent. Additionally, FgL’s ABI software provider is developing a spreadsheet for this purpose, which can be emailed to FgL for filing. Other brokers will likely have similar options available.

What should the importer provide in order to accomplish the ISF filing?

The minimum required data elements can be provided, along with a commercial invoice (which should be available at the time of filing), on a simple cover sheet and faxed/emailed to the filing agent. Additionally, FgL’s ABI software provider is developing a spreadsheet for this purpose, which can be emailed to FgL for filing. Other brokers will likely have similar options available.

Is the party actually receiving the freight the only one responsible for this filing?

NO! CBP has defined the responsible party as the “ISF Importer”. See the Assessment [PENDING] page for more on this.

Doesn’t Customs realize that this is not possible?

No. CBP does, however, recognize that this entails, or may entail, changes in some business practices. For this reason, there is a 12 month phased in compliance period.

So who files this?

A party meeting the requirements to file electronically can file on behalf of the ISF importer, or the ISF importer may self-file, provided they have the technological capability. This means being either ABI or AMS participants. The filer (aka agent) does NOT have to be a licensed US Customs broker ; it can be a freight forwarder or other interested party meeting the technological capabilities. A power of attorney is required in all cases where an agent is performing the actual filing.

Is this going to cost?

Yes! See the Assessment [PENDING] page.

If Freightgator files the ISF, what’s the fee?

See the Assessment [PENDING] page.

So do we need new powers of attorney for existing clients?

What impact does the ISF have on Customs clearance?

None, provided that it has been done. For importers without a continuous bond in place, evidence of the filing will be required by FgL, if not done by FgL, so as to minimize the risk of punitive damages against the broker’s bond.

What is the impact on freight forwarders?

The only significant impact is that the AMS filing party will receive a DO NOT LOAD message if there is no ISF matched against the AMS bill of lading prior to the 24 hour cutoff. Depending on the processes ultimately created by all parties involved, there could be missed sailings due to missing ISF’s against shipments in a consolidation container.

After the shipment arrives in the USA, does it clear Customs again, or is this ISF in lieu of clearance?

The ISF is a security filing only, and is not the same as a clearance or release. Although the entry summary data can be filed in conjunction with the ISF, the customary entry/release procedures are unchanged.

How long does the ISF process take?

As of this writing, any estimate is speculative. The actual, total time will depend on several factors, such as when the data is received, and its’ accuracy and completeness. In theory, the minimum turnaround time would be about 5 minutes, accounting for data entry and ABI transmission to CBP.

If the importer does not have a continuous bond, will a single entry bond suffice for ISF purposes?

No. The importer must have a continuous entry bond in force, or the new ISF bond which CBP has authorized. However, at this time, no information is available from FgL’s sureties as to the availability & pricing of this bond. Alternately, the ISF filer may use its’ own bond (i.e. the broker’s bond). See Fees for information on pricing. NOTE: CBP has suspended the bond requirements for the duration of the flexible enforcement period, being Jan. 26th, 2009 through Jan. 25th, 2010.

Is freight which is merely transiting the USA (imported but then exported under inbond conditions (IE, T&E)) required to have a security filing?

Yes; the primary difference between IE/T&E cargo and regular imports is that only five data elements are required. Please see the CBP presentation for a glimpse of this information.

If CBP is not issuing Do Not Load messages for failure to file timely, and is also not assessing penalties, what incentive does an importer have to file?

CBP will be issuing “report cards” to filers & importers as the flexible enforcement period progresses. These reports will demonstrate, in an enforced compliance phase, whether or not parties are negligible in compliance improvement, and thus, whether or not penalties will be enforced during the initial enforcement phases.

Does the AMS bill of lading have to be filed before the ISF?

NO! The ISF can be filed at any time, irrespective of the AMS status. The ISF filer is notified of the bill’s AMS status at the time of filing (either on file or not); if the bill is not on file, ABI will hold the ISF for 30 days.

Chinese trade practice typically has manufacturers exporting through licensed exporters, who in effect become the shipper/selling party. In this case, the actual manufacturer may not be known. How does this affect the ISF requirement to supply the information for the manufacturer?

The current regulation allows for the use of the party currently required by existing rules for standard entry procedures. In short, this means that we can use the shipper/selling party as the manufacturer for ISF purposes.

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Import Export Forum

Informed Trade International has made their import/export trade forum available to the public!

If you have a question related to importing, exporting, or international trade, please feel free to post it in our online import forum or search through the database of import questions.

Informed Trade International is an import/export compliance community devoted to US Customs import and export practices. Our goal is to facilitate international trade with the United States by assisting individuals in their efforts to manage the trade process.

Informed Trade International is one of the largest import export communities on the internet. We have a rapidly expanding member base, and provide our services at no charge in order to promote its growth and work toward the goal of informed trade.

Our membership includes licensed US Customs brokers, experienced freight forwarders, and professional importers. Please post your questions and comments to our community and let one of our members assist you today.

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