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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: 22 hours 5 minutes

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: 50 minutes)

• Introduction
• Background of the Harmonized System
  • Reasons for Global Harmonization
  • The Core Classification System
  • Periodic Harmonized System Updates
• Overview of the U.S. Classification System
  • Adoption and Administration of the Harmonized System in the U.S.
  • Maintenance of the HS and the HTSUS
  • The U.S. Nomenclature System
  • U.S. Tariff Classification Determines Duty and Taxes
  • The Importer is Ultimately Responsible for Proper Classification
  • Most Commodities are Classifiable
• How Important is it to Get the Right Classification?
• Responsibility for Classification of Imported Goods
• Basis for the HTSUS

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: 52 minutes)

• Introduction
• The HTSUS is Divided into Sections
• Sections are Divided into Chapters
• Chapter and Heading Listing to the Rescue
• Chapters 1–97
• Special and Temporary U.S. Classification Provisions: Chapters 98 and 99
• Chapters are Divided into Headings
• Some Headings are Organized into Subchapters
• Headings are Divided into Subheadings
• Subheadings are not born equal!
• Example of One-tab Subheading
• Example of a Two-tab Subheading
• Parts of the Tariff Number beyond Six Digits

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: 52 minutes)

• Introduction
• Section Notes, Chapter Notes and Subheading Notes
  • Defining and Refining Classification Choices
• Exclusions from Classification in Section and Chapter Notes
• Definitions of Goods or their Composition in Section and Chapter Notes
• Subheading Notes are Shown After Section and Chapter Notes
  • Subheading Notes are Strictly for Classification at the Subheading Level
  • Subheading Notes that Apply to a Chapter
  • Subheading Notes that Apply to the Whole Section

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: 46 minutes)

• Introduction
• Practical Application of Notes
• Visible and Invisible Elements of the HS
• Technical Language and Vocabulary
• Latin Expressions in the HS Represent Specific Concepts
• Punctuation in the Harmonized System Influences Meaning
• Use of the Semi-Colon in the Harmonized System
• Interpreting the Harmonized System When the Comma is Used

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 3 minutes)

• Introduction
• The Operating System
• The Six General Rules at a Glance
• The Rules Made Readable
• Classification Example: Fancy Stopper
• General Rule of Interpretation Number 1
• The First General Rule of Interpretation is the Most Important!
• Section, Chapter and Subchapter Titles are for Reference Only
• Chapter and Section Titles May be Misleading
• Certain Underwear, Even if Knitted or Crocheted, is Classified in Chapter 62
• Classify According to Legal Elements
• Begin with the Heading Descriptions
• Consider the Terms of Relative Section and Chapter Notes
• Check the Legal Notes (Section and Chapter) When Deciding on a Heading
• General Rules 2 to 6 Must not be Used if they Contradict Rule 1
• When the Text of a Heading Creates a Hard Stop at Rule 1
• According to the Following Rules

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: 48 minutes)

• Introduction
• General Rule of Interpretation Number 2
• General Rule 2 Broadens the Scope of Headings
• General Rule 2(a)
• How to Handle Incomplete or Unfinished Articles
• Examples of the Essential Character of Incomplete Articles
• "Blanks" are Considered Unfinished Articles Because they Require Additional Manufacturing
• What to do with Unassembled or Disassembled Articles
• What if the Articles are Both Unassembled or Disassembled AND Incomplete or Unfinished?
• Unassembled AND Incomplete: The Double Test
• Unassembled or Disassembled Articles Must be Ready for Assembly.
• Examples of Unassembled or Disassembled Articles
• General Rule 2(b)
• Materials and Substances Mixed with Other Materials or Substances
• Goods Consisting Wholly or Partly of Materials or Substances
• Goods or Articles Made of a Given Material or Substance
• When Two or More Headings may Apply
• Be Aware of Possible Rule 2 Exclusions
  • Rule 2 must not Contradict Rule 1
  • Some Heading Terms May Forbid Using Rule 2

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: 40 minutes)

• Introduction
• General Rule of Interpretation Number 3
• Rule 3 The Referee
• General Rule 3(a)
• The Heading Providing the Most Specific Description
• When No Heading Specifically Describes the Mixture, Composite Good or Set
• Examples of Headings that Fall Under Rule 3(a)
• Steps for Classifying Two or More Plausible Headings
• What happened to all the examples?

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: 1 hour 3 minutes)

• Introduction
• General Rule 3(b)
• Material or Component Giving Essential Character
• Mixtures
• Composite Goods Consisting of Different Materials
• Composite Goods Made Up of Different Components
• Goods Put Up in Sets for Retail Sale
• Goods NOT Considered to be Sets for Retail Sale
• Use Essential Character Only if Applicable

General Rule 3(c) and 4

Rule 3(c) of the General Rules of Interpretation (GRI) provides guidance on how to classify goods when they can be classified under two or more headings, and neither Rule 3(a) nor Rule 3(b) can resolve the issue. Rule 3(c) states that in such cases, the goods should be classified under the heading that appears last in numerical order among those that equally merit consideration. This rule ensures a systematic approach to classification, promoting consistency and fairness in international trade.

This lesson will provide training on when to move past essential character in 3(b) and look at the third part of Rule 3 to classify in the numerically last heading. Then, we will learn when to use Rule 4, the rule that applies when all else truly fails. Rule 4 helps classify something that absolutely cannot be found anywhere else in the in the Harmonized System.

(Estimated study time: 43 minutes)

• Introduction
• General Rule 3(c)
• Heading Appearing Last in Numerical Order
• Rule 3 Exception; Legal Elements Take Precedence
• General Rule 4
• When Everything Else Fails

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: 1 hour 6 minutes)

• Introduction
• General Rule of Interpretation Number 5
• Boxes, Cases, Packaging and Packing
• Specially Shaped or Fitted Cases, Boxes and Similar Containers
• General Rule 5(a)
• General Rule 5(b)
• Rule 5(b) is not Binding
• Two Categories of Packing Material and Containers
  • Non-Reusable Packing Material
  • Reusable Packing Material

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: 21 minutes)

• Introduction
  • General Rule of Interpretation Number 6
  • Rule 6 is Similar to Rule 1
  • Classification at the Subheading Level
  • Only Subheadings at the Same Level are Comparable
  • Section and Chapter Notes may also Apply to Subheadings
  • General Rules of Interpretation – In Summary
  • The Rules as a Frame of Thought

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)

• Introduction
• Additional U.S. Rules of Interpretation
  • Additional U.S. Rules in General
  • Use and Purpose of Goods
  • Additional Rule 1(a) – Principal Use
    • Example Ball Bearing Classification
    • Principal Use Includes "Use Solely or Principally With"
    • Principal Use Includes "Technical Use and Technical Purpose"
  • Additional Rule 1(b) - Actual Use
    • Examples of where Actual Use is used
    • Actual Use in Chapters 98 and 99

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 2 minutes)

• Introduction
• Additional Rule 1(c) – Parts & Accessories
• Classification Using The Double Approach
• Application of Section and Chapter Notes
  • Note 2 to Section XVI
  • Note 1 of Chapters 84 and 85 Exclude "Parts of General Use"
  • Note 2 to Section XV Explains "Parts of General Use"
• Parts of General Use Outlined
• Section and Chapter-Specific Conditions
• Sequence for Determining Classification of Parts
• Notes Always Govern Classification of Parts

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: 45 minutes)

• Introduction
• Additional Rule 1(d) - Mixtures of Textile Materials
• Textile Mixtures Classified by Predominant Weight
• Classification Appearing Last Numerically

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. 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 27 minutes)

• Introduction
• 10-Step U.S. Classification Method
• A Tip on Searching for the Proper Heading
• Conducting a Classification Inquiry
• Factors Influencing Classification
• Description of Goods from the Commercial Invoice
• Seeing Goods "as Presented"
• Classification Can be Subjective in Spite of the Notes

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: 57 minutes)

• Introduction
• Tariff Treatment for "Conditionally" Free or Reduced Duty
• Special Treatment Based on Importer
• Special Treatment Based on Disposition of Goods
• Goods for Personal Use and Commercial Samples Exempt from Quota

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 that are returned to the U.S. duty free or with reduced duty.

(Estimated study time: 1 hour 12 minutes)

• Introduction
• Chapter 98; Exceptions and Special Circumstances
• HTSUS Chapter 98 Subchapter I
  • Articles Previously Imported, Not Advanced and Re-imported
    • Product Returned to the United States (9801.00.10)
    • Documentation for Products Exported From and Returned to the U.S. Regardless of Country of Origin.
      • Documentation Requirements for Products Returned to the U.S. Valued at $2500 or less and Certain Aircraft Equipment
        • Required Documents for U.S. Goods Returned (USGR) Valued $250 or Less and Certain Aircraft and Aircraft Parts & Equipment
        • Documentation for Returned Goods Valued $800 USD or less
        • Documentation for Returned Goods Valued $801 - $2500 USD
      • Documentation for Returned Goods Valued over $2500 USD
        • Importers Responsibility to Provide Documented Proof for U.S. Goods Returned Claim and Customs Brokers Duty of Care
        • Declaration by Foreign Shipper (DFS)
        • Consignee's or Owner's Declaration
        • Manufacturer's Affidavit
      • Documentation for Certain Products of the United States Valued at $10,000 or Less
      • Other Documents Providing Sufficient Proof of Export
      • Documentation Requirements for Certain Aircraft Returned to the U.S.
      • Documentation Requirements of Re-imported Goods Under Department of State License
  • Articles Previously Imported Duty Paid, Not Advanced and Re-imported
    • Articles Previously Imported Duty Paid, Not Advanced while Abroad, and Returned to the U.S.
    • Re-imported Articles Exported under Lease (9801.00.20)
    • Articles Exported and Returned (9801.00.25)
    • Articles Exported for Scientific or Educational Purposes and Returned (9801.00.40)
    • Articles Exported for Exhibition and Returned 9801.00.50-60)

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 imported articles that were made abroad with U.S. content. We'll briefly discuss the conditions for re-importation.

(Estimated study time: 1 hour 14 minutes)

• Introduction
• HTSUS Chapter 98 Subchapter II
  • Articles Repaired, Altered, or Processed Abroad and Returned to the United States
    • Classifications Applicable to Goods Returned after Alteration or Processing Abroad (9802)
    • Definition of Repairs and Alterations
    • What are Not Considered Repairs or Alterations?
    • The Process for U.S. Goods Repaired, Altered, or Processed Abroad and Returned
    • Repairs, Alterations and Processes Completed in a USMCA Country
    • Special Documentation Required for Declaring Articles Repaired, Altered or Processed Abroad (9802)
  • Articles with U.S. Content
    • Classifications Applicable Articles with U.S. Content (9802)
    • U.S. Content Articles in General
    • Definition of Assembly and Acceptable Assembly Procedures Under 9802
    • What are not Acceptable Assembly Procedures
    • Valuation of U.S. Components
    • Country of Origin Marking of Goods Assembled with U.S. Content
    • U.S./Mexico Assembly Provision (Mexican Special Regime)
    • Special Documentation for U.S. Content Articles

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 (9808) and talk a little bit about ITAR.

(Estimated study time: 39 minutes)

• Introduction
• HTSUS Chapter 98 Subchapter VIII Articles Imported under Government Contract
  • Department of Defense Contract Articles (9808)
  • Government Contract Articles or DCMCI-IC
  • ITAR Direct Government Shipments
  • ITAR Government Temporary Imports

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: 45 minutes)

• Introduction
• HTSUS Chapter 98, Subchapter XIII Temporary Imports
  • Importing under a Temporary Import Bond (9813)
  • Temporary Importation of Samples for Taking Orders (9813.00.20)
  • Documentation for Temporary Importation Bond Imports (9813)
  • Additional Fees for Temporary Importation Bond Handling
  • Cancellation of the Temporary Import Bond

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)

• Introduction
• Chapter 99 General Information
• General Tariff Classification and Entry Procedures for Goods Classified in Chapter 99
  • Consult any Filing Instructions, Chapter or Subchapter Notes
  • Goods Classified in Chapter 99
    • General Entry Filing Using Chapter 99
    • Imports of Steel and Aluminum from Canada and Mexico
    • Entry of Steel or Aluminum into a Foreign Trade Zone (FTZ) Prior to July 10, 2024
    • Steel and Steel Derivative Articles from the Ukraine
  • When Quota Applies to Goods in Chapter 99
  • CBP Rejects for Inaccurate Classification or Information in Chapter 99
  • Post Entry for Goods in Chapter 99
• Order of Reporting for Multiple HTSUS Classifications (Column 29A)

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: 1 hour 31 minutes)

• Introduction
• General Notes to the HTSUS
• General Note 1—Tariff Treatment of Imported Goods and of Vessel Equipment, Parts and Repairs
• General Note 2—Customs Territory of the United States
• General Note 3—Rates of Duty
  • Duty Columns
    • Duty Column 1
    • Duty Column 2
  • GN3 – Insular Possessions, QIZ
    • Insular Possessions
    • Products of the West Bank, the Gaza Strip or a Qualifying Industrial Zone
  • Duty Exemptions
  • Commingling of Goods
  • Unit of Quantity
  • Special Tariff Treatment Programs
  • Abbreviations and Definitions
  • Issuance of Rules and Regulations and Methods of Ascertainment
• General Note 5—Automotive Products and Motor Vehicles Eligible for Special Tariff Treatment
• General Note 6—Articles Eligible for Duty-Free Treatment Pursuant to the Agreement on Trade in Civil Aircraft
• General Note 9, 11 and 12—U.S. Free Trade Agreements with Canada and Mexico
• General Note 13—Pharmaceutical Products
• General Note 14—Intermediate Chemicals for Dyes
• General Note 15—Exclusions
• U.S. Trade Agreement Listing By General Note

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: 38 minutes)

• Introduction
• General Statistical Notes
• Other Statistical Notes Throughout the HTSUS
• Additional U.S. Section and Chapter Notes
• Additional Information Found in the HTSUS
  • HTSUS Change Record
  • Preface to the HTSUS
  • Notice to Exporters
  • China Tariffs
  • Appendices to the HTSUS
  • Statistical Annexes to the HTSUS
  • Alphabetical Index to the HTSUS and the Online Search Function

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: 43 minutes)

• Introduction
• Reference Material Supporting Classification
  • Overview of the Available Classification Reference Material
  • The WCO Explanatory Notes
    • Some Answers are not in the legal text...
    • We found answers!
    • Explanatory Notes Legal Status
    • The Ultimate Reference
  • Compendium of Classification Opinions
    • WCO Classification Opinions
    • Compendium of Classification Opinions Legal Status
    • Amendments to the Explanatory Notes and Compendium
  • Alphabetical Index to the Harmonized System
  • Other Sources of Harmonized System Classification Information
  • Summary of Available Resources
    • Two Types of Resources
    • The Essentials
    • Extra Resources