U.S. imports and exports are subject to classification. In both cases, federal regulations clearly state who is ultimately responsible. Any company involved in imports or exports should know this. Not knowing responsible parties can lead to improper classifications capable of stirring up trouble with Customs or the Census Bureau.
If you want to read what the actual regulations say about responsible persons, consult the following:
- 19 USC §1484 – Discusses assigning HTS codes for imports
- 15 CFR §30 – Discusses assigning Schedule B codes for exports.
Note that import codes are determined by language in the Tariff Act. They are the domain of U.S. Customs and Border Protection. The Schedule B codes for exports are the domain of the Census Bureau. They are found in the Foreign Trade Regulations (FTR).
HTS Responsibility for Imports
As product classification experts, we are intimately familiar with both import and export classification codes. We can tell you that the importer is ultimately responsible for assigning the correct HTS codes. Federal regulations state that importers must take ‘reasonable care to ensure classifications are correct.
Although ‘reasonable care’ is not clearly defined in the law, regulators generally look at importer classification processes when there is reason to believe an importer is not complying. Here’s the most important thing to understand – relying on vendors or customs brokers alone is not considered reasonable care.
In other words, blaming a customs broker for lack of compliance will not cut it. Regulators expect importers to put forth at least some effort to guarantee vendor and customs broker classifications are accurate.
Schedule B Responsibility for Exports
Responsibility for correctly classifying exports is a bit more complicated. Here, you’re dealing with either the Foreign Principal Party in Interest (FPPI) or the U.S. Principal Party in Interest (USPPI). Technically, the former is ultimately responsible for assigning the correct codes. But the FPPI cannot do what it does without correct information from the USPPI. Therefore, both play a critical role in compliance.
Product classification codes for exports are required to get approval to export the goods but the receiving customer (FPPI) may request you to use a different classification than the one currently assigned which can cause much confusion. Who is right? When exporting from the US you must classify to the US requirements.
Regulators expect that both parties will have policies and procedures in place to guarantee that things get done correctly and on time.
Outsourcing Product Classification
We always recommend outsourcing product classification to a company offering expert worldwide classification services. Vigilant Global Trade Services is one such company. Imports and exports are what we do. We are experts because we don’t do anything else. Outsourcing product classification to a company like ours significantly reduces compliance risks.
As an importer, you would still ultimately be responsible for compliance even if you contracted with us to provide import classification services. But because we handle the heavy lifting for you, there are fewer worries on your end. We know what we’re doing. We can virtually guarantee that all of your imports are properly classified and reported.
The same assurances apply to our export classification services. We work with your FPPIs to make sure the right classifications are assigned and that the correct forms are filed with the AES. We leave no stone unturned.
If your company imports, it is ultimately accountable to all compliance regulations, even if customs brokers and other vendors are utilized. If your company exclusively exports, you and your FPPIs are responsible for compliance. We can help in both areas by way of our worldwide classification services.