Understanding HTS Codes
HTS codes are a system used universally. The World Customs Organization (WCO) preserves the Harmonized Tariff Description and Coding system (HTS). Over 170 countries take part in the WCO’s HTS system. The initial six digits of the HTS code identifies all the items in international trade and they are similar for every country that uses the HTS. The two or four suffix digits provide the duty rate and balance of trade statistical reporting suffix for the imported goods. As an importer, you are responsible for establishing the correct HTS classification to be used on your import entries and ISF security filings. Due to this, it is critical to determine that accurate information about your products is reported to CBP. Additionally, you shouldn’t rely on third parties to guess about your goods and provide HTS classifications on your behalf. It is up to you as the importer to give comprehensive information about the imported goods so that the customs professional determines the correct classifications for that merchandise.
You may have paid more by using an incorrect HTS code. The HTS is fundamentally a classification system to uniformly identify products and secondarily a tariff system on imported merchandise. When you use the wrong HTS, it results in an incorrect payment of duties whether a little or a lot. Such an error arises in the CBP during revenue collection, and it can lead to issuing of penalties for not providing the correct and accurate information to CBP. It could be that you have been using wrong HTS codes, it’s never late to rectify this so that you avoid costly fines. If you realize that you have been using inappropriate HTS codes and been paying high or low, you have two ways to rectify it. You can file for a Post-Entry Amendment (PEA) to pay any extra owed duties or to request a refund for overpayments. If the entry was already liquidated which normally occurs 315 day after entry, you can file an administrative protest up to 180 days after liquidation of the entry.
HTS codes are dynamic in a way. Universally, the HTS is always updated and changed to allow for innovation and technology. Moreover, governments are exploring new revenue sources and they are considering balancing their trade with other countries. In the U.S, a HTS code is created along with the day when it becomes invalid for updates to be incorporated. Following this, always make sure that the codes you are using are still applicable. Classification of imported items is an ongoing project.