It’s been quite a while since your caped HTS crusader has been able to post to his loyal cadets… I’ve been on a secret mission within the Compliance Alliance, a coalition of masters of mystical classification arts.
But rest assured, dear cadets… the HTS Nerd will be back very soon with all new adventures in classification. Keep your eyes posted to this space!
Until our next lesson, happy classifying!
I’m very much a “dot-my-i’s-and-cross-my-t’s” kind of person, and that’s been an extremely useful tool in harnessing the anal retentive powers that make me the HTS Nerd.
But I admit – this was not always the case. Before I received that fateful paper-cut from a radioactive HTSUS and became a classification superhero, I often allowed myself to fall victim to those Classification Rules Whose Names Should Never Be Spoken. You know the ones – though unwritten, they are perhaps the most widely used rules in the industry.
Although they seem logical to most, these nefarious rules have the uncanny ability to cause major compliance problems and should never, ever be used under any circumstance. They are often used by inexperienced classifiers who simply don’t know better. But be warned, my faithful HTS Cadets… Ignorantia juris non excusat – or simply, ignorance of the law excuses not.
For your safety, here are the Bizarro Rules of Interpretation (BRI) to be avoided at all costs:
BRI 1:
If you wish to obtain a more favorable duty rate, simply change the name of the product you are importing.
This Bizarro rule is usually pushed onto the unsuspecting or inexperienced classifier by an aggressive sales or marketing department looking to find a way to cut costs on their import. Changing the name of a product doesn’t change either its essential character or what is actually is. The danger in attempting to use this BRI is that it goes beyond simple negligence into the realm of blatant fraud, as it is a deliberate attempt to avoid the proper payment of duty to CBP.
BRI 2a:
Whenever a commodity is potentially classifiable within two or more headings, the tariff classification with the highest duty rate applies.
I hate to admit this, but I often fell prey to this concept in my early years when I was but a naive HTS cadet. Many importers mistakenly believe that by paying more duty that they will gain compliance points with CBP, but always remember – a wrong classification is a wrong classification, no matter the duty rate.
BRI 2b:
Whenever a commodity is potentially classifiable within two or more headings, the tariff classification with the lowest duty rate applies.
The inverse to BRI 2a, this rule is most frequently used by importers who are naturally inclined to look for the lowest duty rate possible. The rate of duty should never be a consideration when trying to determine the correct classification of a product, and so experienced classifiers have learned to ignore the duty rate so as not to cloud the correct application of the GRIs and reasonable care to the classification process.
BRI 3a:
If a classification for similar product exists within an HTS database, the importer’s ERP (Enterprise Resource Planning) system should always assign the same HTS code.
Although this superficially appears to be a reasonable solution, it relies on the erroneous assumption that the classification process is completely linear. It ignores the fact that even minor differences between products can result in completely different classifications. While most automated systems can certainly assist, they should only be used as a starting point, as the classification process is always subject to some level of interpretation that automation cannot provide.
BRI 3b:
A classification will always be considered correct if it is never challenged by Customs and is used over a long period of time. Also known as the “We’ve always done it this way” rule.
Didn’t your mother ever teach you that two wrongs don’t make a right? Just because CBP has not challenged your classification, it doesn’t mean it is correct. It also doesn’t mean that CBP is not already aware of your incorrect classification as a larger case for non-compliance is being built.
BRI 3c:
The wisdom of an importer’s broker should never be questioned when it comes to assigning classification to a product. Also known as the “The Supplier Made Me Do It” rule.
Even when a classification is assigned by your broker, the law holds the importer responsible for exercising reasonable care in both assigning classification and your broker management. The importer should always monitor the accuracy of the broker’s work, even if there is a documented classification process in place.
BRI 4:
Whenever a commodity is subject to two or more headings, write all potential headings on slips of paper. Tape the slips of paper to a wall. Load a spitball into a straw and blow toward the slips of paper. The one to which the spitball sticks will be the correct classification. Also known as the Dartboard Rule or the Russian Roulette Rule.
Ready, aim, fire… the law of averages tell us you’re bound to get it right at least some of the time. But some of the time is by no means a demonstration of compliance, because just like a real life game of Russian Roulette, getting the wrong number can bring serious consequences.
BRI 5a/b:
CBP is not concerned about the accuracy of a complete 10-digit classification. It’s enough to at least classify in the correct four-digit heading (BRI 5a) or six digit subheading (BRI 5b).
Pardon the language of the HTS Nerd, but that is sheer poppycock! There is a logic and reasoning behind the government’s 10-digit system. Although classification to the eight-digit level will ensure the proper duty rate, statistical reporting requirements are determined at the ten-digit level. Although the distinction may seem trivial to most, it isn’t to regulators.
BRI 6:
Whenever two individuals disagree over an HTS classification, the one with the biggest ego wins. If a bigger ego cannot be determined, other factors which may be considered are (in order of preference) the loudest voice, the higher ranking, or the greatest financial investment.
Need more be said?
Make no mistake, my HTS Cadets… the Bizarro Rules of Interpretation have no place when considering the real General Rules of Interpretation. Each of the Bizarro Rules of Interpretation carry their own risks that ultimately result in bad classifications when they stray from the actual GRIs. Simply stick to legal guidelines provided by the GRIs – they will not steer you wrong.
But in the event that you find yourself stuck with a particularly difficult classification, reach out to the HTS Nerd or other classification professional(s) for guidance before you turn to the BRIs and send yourself down a risky path.
The final day of HTS Boot Camp arrived for the team of HTS Cadets. After timidly tiptoeing through the mid-point exam, we drilled the basics even more. By the time they got to the final exam, my cadets blasted through the questions, filled with the knowledge they needed to zoom through with confidence. Nothing warms an HTS superhero’s heart like seeing the team take command of the General Rules of Interpretation and start classifying complex items with ease.
As the team settled back in for one last deep dive into the topic of their choice (footwear), we started with a pair of boys’ tennis shoes with rubber outsoles and uppers of pigskin leather.
Right before my eyes, the cadets were suddenly afflicted with group amnesia, forgetting many of the basics they had just mastered. The idea of classifying footwear became terrifying to them, and Chapter 64 of the HTSUS seemed like another language (well, technically it was, but you, dear reader, get the idea).
The team was getting bogged down in and overwhelmed by a myriad of details that kept them going through the chapter in circles. One kept insisting we needed to know the value of the shoes. Another kept insisting we needed to know if the pair had foxing or foxing-like banding.
“What about the insoles?” cried a cadet who had curled up in a fetal position in one corner of the room. “For the love of all that is good, what about the insoles?!?!?!?!”
This could only be the work of Confuzo and his cursed ray that blocks the minds of even the most skilled classifiers, leaving only muddled confusion where there was once clarity.
There is but one defense against such a nefarious weapon – simplicity.
STEP 1: Break the chapter down to its most basic legal element – the headings.
In this case, Chapter 64 consists of only six different headings, so start your focus there and only there. Begin with the first heading and making your way from there, eliminating the possibilities as you go.
Since the example we were reviewing was not waterproof, we automatically exclude this heading as a possibility. One heading down, five to go.
Our example had an outer sole of rubber, but the upper was made of leather. Since it was not an upper of rubber or plastic, another possible heading was eliminated. Two headings down, four to go.
Bingo! At the most simple terms, it would appear we have arrived at the correct heading. It accounts for our outer sole of rubber with an upper of leather.
But just to be sure, let’s take a quick look at the remaining three headings of this chapter:
Our upper is made of leather, so this heading is also out.
This heading would only be applicable if our example does not fall into one of the previous headings. Since the legal language of 6403 describes our immediate product, 6405 is therefore also eliminated.
Since our example is a complete article of footwear, this heading is also eliminated. By exploring the chapter at the heading level only before examining any other detail, we’ve taken 40 pages of HTS classifications and whittled it down to only 7.
But we can still do better than that.
STEP 2: Move your focus onto the subheadings, but don’t forget to check the section and chapter notes!
Within heading 6403, we have only seven subheadings to consider:
Chapter 64 Subheading Note 1 provides definition for “sports footwear”, applying the term only to footwear designed for a sporting activity and has (or has provisions for the attachment of) spikes, sprigs, cleats, stops, etc., or skating boots, ski-boots and others listed Subheading Note 1(b).
Tennis shoes do not meet that definition, so 6403.12 is eliminated. We can also eliminate the next four subheadings on their language alone.
STEP 3: Continue to the next level of indentation and focus only on the relevant details.
We have two possible subheadings left:
So do our tennis shoes cover the ankle? The Informed Compliance Publication on Footwear provides a clarification of what “covering the ankle” means:
Here is where it becomes necessary to do further analysis beyond just the information that we had at the beginning. After further examination of the shoe’s design, the cadets were able to verify that our example does cover the ankle.
Thus, having eliminated 6403.99, we’re left with 6403.91 – and only one page in the HTSUS of possible classifications. But don’t just throw the previous steps out the window – it’s important to maintain your focus on the most basic elements.
Beyond the subheading of 6403.91, we move to the next level of indentation (tariff rate) which has just four options:
Our sample does not contain any wood content, base or otherwise, so the first option is eliminated. The second option is eliminated by Chapter 64 Additional U.S. Note 1(a). And as our sample meets the criteria of Additional U.S. Note 1(b) for footwear for men, youths and boys, we do not need to go beyond 6403.91.60.
All that remains is determining the statistical tracking portion of our 10-digit classification. Chapter 64 Additional U.S. Note 2 provides relevant clarification:
From there, arriving at a classification of 6403.91.6050 seemed so simple. Suddenly the details on price, foxing, insoles and so on did not matter to the sample at hand, and with that, Confuzo’s ray no longer had any effect on my cadets.
But heed this warning. Confuzo is still out there, though, and inevitably every classifier from the newest cadet to the experienced guru will come up against that blasted ray of his. Just remember to keep it simple, and you too will overcome it.
James Bond starts a new adventure this week, and MI6 has reached out to the HTS Nerd to help 007 get his Bulgarian Umbrella through Customs. The last thing Q wants is for the top agent to spend time being held up at the border when the fate of the world could hinge on even a few seconds.
So what exactly is a Bulgarian umbrella?
It’s a pneumatic gun hidden within an umbrella which uses compressed gas to fire a small poisonous pellet containing ricin, and was allegedly used in the 1978 assassination of Georgi Markov, a Bulgarian dissident writer. It was also allegedly used in a failed assassination attempt against Bulgarian journalist Vladimir Kostov in the same year.
A spirited debate at the Compliance League offered several intriguing possibilities. Captain Sanction believed that, at the most basic level, it was still an umbrella. The Deemed Export Dynamo Twins suggested it might even be a medical device. With so many possibilities, where’s a classification superhero to turn?
To the Regulatron 3000 and the HTSUS!
Let’s start with the basic question: what are the possible headings for this item?
6601 –
Umbrellas and sun-umbrellas (including walking-stick umbrellas, garden umbrellas and similar umbrellas)
OR, IS IT…
9304 –
Other arms (for example, spring, air or gas guns and pistols, truncheons), excluding those of heading 9307: Pistols, rifles and other guns which eject missiles by release of compressed air or gas, or by the release of a spring mechanism or rubber held under tension
Chapter 66 Legal Note 1 says this Chapter does not cover (b) firearm-sticks, sword-sticks, loaded walking sticks or the like. Chapter 93 does not have any such exclusions.
In a follow-up call with 007 himself, though, he let it slip that Q had sent him with the very same Bulgarian Umbrella used to assassinate Markov. Everyone knows that the HTS Nerd’s kryptonite is incomplete information – and this little nugget changes everything!
Chapter 93 Legal Note 1(f) does exclude collectors pieces or antiques, and given the historical significance of the item, our Bulgarian Umbrella is instead classified using GRI 1 through the provisions of GRI 6 as:
9705 –
Collections and collectors’ pieces of zoological, botanical, mineralogical, anatomical, historical, archeological, paleontological, ethnographic or numismatic interest
All I can say is that I am relieved that I didn’t have to classify 007’s rectal tool kit!
International travel is not always about seeing the sites or trying the local cuisine, especially for a classification superhero. Sometimes, a nefarious foe will rear its head and you’ll find yourself battling for the mind of an HTS cadet.
I began the HTS Boot Camp with my new cadets in pretty much the same manner I usually do – by going back to the very basics. I have to make sure that my students have a good working knowledge of the most basic HTS fundamentals. We go over what it is, how it was developed, the structure of the HTSUS, and then start an intensive deep dive into the General Rules of Interpretation.
As my class of global HTS cadets discussed the resources available to help in determining a classification, one cadet said, “I just go to CROSS and use the part name to look for a ruling. I go with the first one I find at the top of the list.”
Although in the guise of this new cadet, I immediately recognized my old foe – the Ruling Jumper. As one of the 7 Deadly Classification Sins, the Ruling Jumper is a spirit that searches out for desperate cadet classifiers who are most susceptible to possession, usually when they find themselves struggling with a particularly difficult determination. It’s in that moment of frustration the Ruling Jumper can get in. He becomes that quiet voice in your mind whispering, “Just go to CROSS… just go to CROOOOOSSSSSSSS…” Before you know it, you’re disregarding all of your training and instead quickly scanning for the first ruling that might have some bearing.
Preying on a cadet’s eagerness to get a hard product classification out of the way and move on to the next, the Ruling Jumper guides the cadet’s fingers to the keyboard and types the most basic part name possible in CROSS to get the most results at once. Which is rather irrelevant because the Ruling Jumper just goes to the first listing that pops up and uses that HTS.
This isn’t my only time I’ve faced off against the Ruling Jumper. I admit – before that fateful paper cut from a radioactive HTSUS that transformed me into a classification superhero, I once fell prey to the Ruling Jumper. Fortunately, I’ve developed a tool that always weakens his hold – education. I know if I successfully educate this young cadet to sharpen his classification skills, the Ruling Jumper no longer has a foothold, and is forced to flee in search of a new host.
The list of reasons one should not jump to the rulings in CROSS are numerous, so let me share the top 3:
Number 1: They do not provide a complete picture.
The requesting company may not have included all of the details… perhaps even leaving something out intentionally in order to obtain a more favorable ruling.
In comparing someone else’s ruling to your product, you often have to make assumptions. There may be additional details that the CBP commodity specialist may not have included, so always keep in mind that the absence of detail in a binding ruling does not mean the detail does not exist.
Number 2: Rulings often change.
Upon further review, Customs may re-determine their classification in a ruling, usually in the form of an HQ ruling. And unless you are the requesting party, you won’t receive direct notification of an update.
Additionally, if you are not frequently following up on every ruling that you reference in your classification’s reasonable care documentation, chances are that at some point you’ll miss an update.
Number 3: Rulings themselves may contain errors.
Believe it or not, you may come across a ruling in CROSS that contains some kind of error.
For example, let’s say you’re searching for a ruling on a musical Christmas wreath. You enter the product name and look at the first thing that pops up:
If you just went by the search results, your classification 9505.90.6000 would end up being incorrect. Diving further into the ruling letter itself, you would find that the ruling actually concluded that the item is classified under 9505.10.2500 instead.
And, by looking further, you can see directly below that CBP issued a correction letter to rectify this mistake. Unless you were specifically looking for it, though, you might overlook it.
Believe it or not, this is more commonplace than you might think. That in no way is meant to disparage the hard-working folks in the National Commodity Specialists Division – it just means that sometimes mistakes do happen (they are human, too).
Looking out over the classification landscape, I can see that many of you out there have experienced this at some point during a classification. You’re now wondering to yourself, “Was I possessed by the spirit of the Ruling Jumper? Does he have a foothold in my classification process even now?”
Perhaps, my dear HTS cadet, perhaps. But there is hope.
The first step to any 12-step HTS recovery program is admitting you have a problem, and then seeking guidance from a higher power… such as the HTS Nerd. Joking aside, there are lots of opportunities to get that additional training you may need – just take that first step, and soon you’ll be rid of the Ruling Jumper and the other six Deadly Classification Sins.
Greetings, HTS Cadets!
It’s been some time since the HTS Nerd has posted anything… I’ve been adapting and acclimating to life in Gotham. But fear not! The HTS Nerd will soon be back with new adventures in classification!
I’ve recently partnered with ComplianceOnline to bring a series of classification webinars to the community. Stay tuned for upcoming dates and topics in the near future.
Happy classifying!
That’s right – the HTS Nerd is taking a bite out of the Big Apple!
Starting tomorrow, I’ll be taking my not-so-secret identity into the international compliance world of fashion.
Stay tuned for more news and posts!
HTS Nerd here, sitting in Terminal 4 at JFK (yes, even classification superheroes have to sometimes travel by normal means), about to jet off to Bengaluru to lead an eager group of HTS cadets in an intense 5-day Customs classification course (try saying that 5-times fast!).
It’s an amazing opportunity to share my excitement and passion for classification. Yes, that’s right… genuine excitement (which is why your’s truly is the HTS Nerd). It’s truly a blessing when you can share your passion with others.
Alright… I can see those eyes rolling out there – I am a classification superhero after all. I see the act of classification determination as a logic puzzle to be solved (and I do love logic puzzles!). Each one, no matter how mundane it may seem, is a challenge to master.
That’s what makes this field so exciting for me. I get to wake up every single day and do what I love.
In the coming days ahead and beyond, I’ll be sharing highlights of my trip to India. Follow me on Twitter (@HTSNerd) and tag #HTSNerdAdventures.
In the meantime, share with the Nerd and your fellow HTS cadets what your passion is. What is it that brings excitement and joy into your life? Share how you are making the most of that passion!
HTS Nerd here… calling out to all of HTS cadets for your help!
I am putting together a plan for my 2016 classification training webinars (once or twice a month), but I want to be sure that my courses have relevance and meaning to the trade community.
The most recent webinars tackled the classifications of semiconductors (October) and tooling (November), and now I need new topics. On the agenda so far, I have:
A good start, but certainly not enough to fill up an entire year!
So… what are some of the areas of the HTSUS that give you the greatest challenge? Is there an area of the HTSUS you feel the trade community could benefit the most from? Share your thoughts with me. Post your message here, or send an email to me at HTSNerd@gmail.com.
The effects of the radioactive HTS binder paper cut finally kicked into full effect, and it finally happened… the HTS Nerd has gone full superhero!
Yes folks, the HTS Nerd is joining forces with the C-TPAT Guru and her elite team of industry experts fighting to preserve truth, justice, and international trade compliance.
This is just the first fitting of the new outfit… more revisions sure to come in the near future!
And stay tuned – a new Compliance League blog post will be coming to you in the next few days in honor of the upcoming James Bond movie. Don’t miss it!
The HTS Nerd 