CB5u—Intro to U.S. Customs Brokerage, Part 5: U.S. Customs Tariff (HTSUS) Classification

Subscriber price: $299.00, Non-subscriber price: $418.00
Estimated total study time: 20 hours 22 minutes [Enroll now]

This the fifth of the nine-part series of introductory courses in the practical work of U.S. customs brokerage. This is a comprehensive "nuts and bolts" training in how to properly classify goods in the U.S. customs tariff. You will learn the structure of the Harmonized Tariff Schedule of the United States ("HTSUS") and how to apply the HTS classification steps known as General Rules of Interpretation ("GRIs") to most types of products. The Additional Rules of Interpretation, general notes, and the most commonly used special provisions in the HTSUS (Chapter 98 and 99), are introduced.

This course is updated at the beginning of each year to reflect the amendments to the basic HTSUS publication. Links to the online version and to download the current HTSUS are provided. However, some students may find it more convenient to use the HTSUS in paper format to complete the practical exercises.

Use this course to rapidly train staff newly assigned to handle HTSUS and to fill in the gaps for existing staff who perform basic classification but who have not been formally trained.

For drill and practice purposes after taking this course, assign C8u—HTSUS Classification Post Evaluation; Learning by Practice and Simulation. Please note, there is also a final exam for certification purposes at the end of C8u.

Important: This course can be taken out of sequence if so desired.

Classification of Goods in the HTSUS

The Harmonized Tariff Schedule of the United States (HTSUS) is subdivided into various elements which together form the structure of the nomenclature. In order to perform accurate classification it is essential to understand the relation between the elements. These elements are sections, chapters, subchapters, headings, subheadings, and notes. This first lesson deals with the general overall structure, and the breakdown by sections.

(Estimated study time: 57 minutes)

HTSUS Framework

This lesson continues with the breakdown of the HTSUS by chapters, headings and subheadings. Also available for download in this module is a unique Chapter and Heading listing that is not commercially available. This document allows a quick glance at the whole HTSUS condensed into less than 30 pages.

(Estimated study time: 43 minutes)

HTSUS Section and Chapter Notes

The next important thing to consider when determining the correct classification of an article are the section, chapter and subheading notes. Notes hold the key to exclusions and definition of terms.

(Estimated study time: 41 minutes)

More on Notes, Language and Punctuation

Apart from the very structure of the Harmonized Tariff Schedule of the United States (HTSUS), classifying involves the knowledge of the meaning of some Latin expressions, attention to punctuation, and awareness of the language of the HTSUS.

(Estimated study time: 57 minutes)

General Rule 1

HTSUS Classification in the Harmonized Tariff Schedule of the United States (HTSUS) is governed by six HTSUS General Rules of Interpretation. The General Rules provide a uniform and mandatory system to read and interpret all the elements of the tariff. Knowledge and understanding of those rules is the single most important prerequisite to accurately classify goods. We will begin with Rule 1 which deals with the legal elements.

(Estimated study time: 1 hour 10 minutes)

General Rule 2

This lesson details how General Rule 2 expands the scope of headings. It covers incomplete, unassembled, mixed or composite goods. We will discuss how headings are expanded through GRI 2 to include goods that do not perfectly match the terms of those headings.

(Estimated study time: 47 minutes)

General Rule 3(a)

Rule 3 is the referee. In this lesson we will discuss the first and second part of Rule 3. When a good is, at first glance, classifiable in two or more headings, it is Rule 3 that will tell us which heading to use. Rule 3(a) directs us to the heading whose text better identifies the goods.

(Estimated study time: 27 minutes)

General Rule 3(b)

We know that Rule 3 tells what to do when goods are classifiable in two or more headings. If there is no heading that better identifies the goods according to Rule 3(a) then Rule 3(b) will provide the direction on when to use essential character to determine the proper heading.

(Estimated study time: 45 minutes)

General Rule 3(c) and 4

Rule 3 tells what to do when goods are classifiable in two or more headings. This lesson will provide training on when to move past essential character and look at the third part of Rule 3 and classify in the numerically last heading. Then, we will learn when to use the rule that applies when all else truly fails. Rule 4 helps classify something that absolutely cannot be found elsewhere in the nomenclature.

(Estimated study time: 45 minutes)

General Rule 5

From Rule 5 we will learn how to classify packing materials and containers. This includes containers specially made for articles, as well as reusable and non-reusable containers.

(Estimated study time: 58 minutes)

General Rule 6

Rule 6 helps us determine the proper HTSUS subheading. We have learned that to find the proper heading we must apply rules 1-5 in order. Now, to find the subheading we must apply rules 1-5 in order again at the subheading level.

(Estimated study time: 1 hour 2 minutes)

Additional U.S. Rules 1(a) & (b): Use and Purpose of Goods

The HTSUS Additional U.S. Rules of Interpretation are provided by the U.S. government to further clarify the GRIs. This lesson goes over the first two rules which deal with the use and purpose of goods.

(Estimated study time: 1 hour 6 minutes)

Additional U.S. Rule 1(c): Parts and Accessories

Continuing our discussion of the HTSUS Additional U.S. Rules of Interpretation we arrive at clarification for the classification of parts & accessories.

(Estimated study time: 1 hour 9 minutes)

Additional U.S. Rule 1(d): Mixtures of Textile Materials

Continuing our discussion of the HTSUS Additional U.S. Rules of Interpretation we arrive at clarification for mixtures of textile materials. This lesson is about classification by the weight of material and applicability of General rule 3(b) versus 3(c) for textiles.

(Estimated study time: 15 minutes)

A Classification Strategy

After learning the theory of the HTSUS, the next step is to put it all together to make it work as a coherent ensemble. This is where we point out some common pitfalls and discuss irregular situations. How goods are presented is a big part of determining the correct classification. The use and purpose of the good is also an important factor. We will discuss these and show that even when all the facts are given, the outcome can still be subjective.

(Estimated study time: 1 hour 31 minutes)

Conditionally Free or Reduced Duty Rate Goods

Some goods can be imported duty free or with a reduced duty rate if they meet specific conditions. In this lesson we will talk about special treatment based on importer, and disposition of goods.

(Estimated study time: 44 minutes)

Chapter 98 Subchapter 1 (9801)—Articles Exported and Returned, Not Advanced or Improved in Condition; Animals Exported and Returned

In this lesson we review the conditions for U.S. Goods Returned touching on a few other provisions under 9801 for articles to returned to the U.S. duty free or with reduced duty.

(Estimated study time: 54 minutes)

Chapter 98 Subchapter 2 (9802)—Articles Exported and Returned, Advanced or Improved Abroad

9802 provides provisions for reduced duty for goods that were exported from the U.S., repaired or altered abroad and then returned to the U.S. This includes repaired articles and articles were made abroad using materials from the U.S. We'll briefly discuss the conditions for re-importation.

(Estimated study time: 1 hour 7 minutes)

Chapter 98 Subchapter 8 (9808) - Importations of the United States Government (Government Contract)

There are some other Chapter 98 provisions, but the two additional classifications you will see most often will probably be from HTSUS headings 9808 and 9813. In this lesson we will review imports under government contract and talk a little bit about ITAR.

(Estimated study time: 39 minutes)

Chapter 98 Subchapter 13 (9813) - Articles Admited Temporarily Free of Duty Under Bond (TIB)

In this lesson we continue on with the temporary import bond provisions in Chapter 98. Closing a temporary import bond is more important than opening one because the importer may incur double the duties if the bond is not closed properly. It is also just as important to recognize when it is more beneficial to the importer NOT to file under a TIB as it is to recognize when a temporary import bond is required.

(Estimated study time: 32 minutes)

Special Harmonized Tariff Provisions in Chapter 99

Chapter 99 provides temporary legislation for changes in the rate of duty charged upon import. We will review some of the circumstances to look into Chapter 99 for these special duty rates and some of the conditions for import.

(Estimated study time: 1 hour 1 minute)

HTSUS General Notes Define Terminology, Exemptions, and Trade Agreements

The HTSUS General Notes define trade agreements, exemptions, and rules for determining the applicable duty rate. We will continue with our study of the General Notes and discuss other requirements for classification under various other free trade agreements.

(Estimated study time: 50 minutes)

Other Information Included in the U.S. HTS

The HTSUS contains other useful information in addition to the classifications, rules and notes discussed earlier. There are Statistical Notes, Notes for the U.S. imports only, Appendices, Annexes, and change records, oh my! We will discuss each briefly in turn to give an idea of what they are and where to find them.

(Estimated study time: 35 minutes)

The WCO Explanatory Notes and Other References

There are documents (paper and electronic) that provide authoritative guidance in HTS classification. This lesson is an overview of those documents.

(Estimated study time: 46 minutes)