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Assigning HTS Codes for Imports
The import responsibility is buried in the Tariff Act where it states the importer must exercise reasonable care when making entry. This includes assigning HTS codes to the goods. The citation is found in 19 USC §1484.
As we know, reasonable care has come to be defined as hyper due diligence. A discussion of reasonable care can be found at the CBP website.
While reasonable care could mean different things for different importers, it has come to mean the importer must implement internal controls to assign HTS codes and ensure their accuracy. This means documenting the process by which codes were assigned using the general rules of interpretation protocol.
This routine doen't mean it's incorrect to work with third parties such as the vendor or a customs broker when identifying a code. Blindly trusting their advice, however, is not a control and will likely result in inaccurate classification. If your company makes an error, Customs and Border Protection will not accept an excuse such as "my broker assigned the code" as proof of exercising reasonable care.
Assigning Schedule B Codes for Exports
As you can imagine, the regulations for exporting are a bit more dispersed due to the variety of regulations and regulators involved. The reporting of HTS or Schedule B codes falls primarily under Census Bureau's Foreign Trade Regulations (FTR). Of course, Census is collecting this data on behalf of other regulators. For this discussion let us focus on 15 CFR §30 and the reporting requirements under a direct export.
When your company arranges transportation of the cargo, it is the U.S. Principal Party in Interest (USPPI), and it is responsible for filing the Electronic Export Information (EEI) through the Automated Export System (AES). This responsibility is clearly stated with 15 CFR §30.2. The EEI data elements, including the Schedule B classification of the goods, are described within 15 CFR §30.6.
What is your responsibility when you are not the exporter? The regulations refer to this situation as a routed export transaction. In other words, your foreign customer (also known as the Foreign Principal Party in Interest or FPPI) designates the freight forwarder. The FPPI's forwarder is typically the one who files the EEI in this situation, but your company is still the USPPI. In this situation, FTR §30.3(e)(1) states that the USPPI must provide a list of data elements including the Schdule B to the freight forwarder.
Sorry for the alphabet soup, Virginia, but I believe this is the regulation your corporate leaders are looking for. The Export Administration Regulations (EAR) and the International Traffic in Arms Regulations (ITAR) reflect the FTR and include their own obligations for exporters to either submit the EEI or ensure the EEI has been submitted. These regulations would imply that the Schedule B is part of that declaration and that it is accurate.
FTA Certificates of Origin
If you participate in a free trade agreement such as NAFTA you will need to incorporate the HS code within the NAFTA Certificate of Origin. While your company may be participating in NAFTA as an exporter, the company will be subject to the Customs regulations cited above and be responsible for exercising reasonable care in determining those codes.
Let me raise a non-regulatory issue for you. HS codes are the foundation for duty rates around the world. Duty rates can be a critical factor for a customer when making a purchasing decision. Even if your company is not paying the duty, wouldn't it be a wise strategy for your sales people to have an idea what the customer's duties are going to be? Of course it would! This is a common approach to closing a deal in international trade. Without the HS codes, however, your sales people won’t be able to analyze a deal from the customer's perspective and may be put in a situation where they leave money on the table or are unable to close the deal.
| Product Model | Inside Diameter | Outside Diameter | Thickness |
| LM330448/10 bearing | 152.4 | 203.2 | 41.275 |
| M231649/10 bearing | 152.4 | 222.25 | 46.83 |