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Things To Know About Harmonized Tariff System (hts) Classification
The harmonized system, or as it is more formally known, the harmonized commodity description and coding system, is an international classification system designed to facilitate the collection of trade statistics as well as to assist in the collection of tariffs and customs duties. For decades, individual nations used their own systems for classifying goods and services. Without a universal standard, it was difficult or impossible to categorize correctly merchandise for collecting tariffs, customs duties, or for reporting purposes.
Watch list screening is a process of screening of the business partners against the various sanction and enforcement lists.
Internal implementation of this process is generally required for all exporters, manufacturers, banks, financial institutions, freight forwarders, and other organizations which are involved in the international business. The lists that are used for the screening, also referred to as the watch lists, contain entities, companies, and persons which are restricted from doing business with the entities located in the publishing country. For instance, watch lists published by an agency located in the United States would include the entities and persons that are sanctioned and restricted from doing business with the U.S. based companies and persons. There might be several reasons of being listed in a watch list. Some of the reasons would include support of terrorism, narcotic trafficking, money laundering and other activities that threat the national security of the country. The United States government agencies are not the only ones that publish restricted party lists. The UK, World Bank, United Nations, Canada, Australia, Japan, Mexico, China, India, and the EU are some of those countries and organizations that periodically publish watch lists and sanctioned party lists. Doing business with those restricted parties is prohibited unless the company has a written authorization or a license received from the publishing agency. Circumventing the related sanctions and regulations can cause companies losing their export privileges, fines and imprisonment of their executives.
HTS classification codes are globally used codes. The World Customs Organization (WCO) maintains the Harmonized Tariff Description and Coding System (HTS). Over 170 countries participate in WCO's HTS system. The first six digits of the HTS code identify all items in international trade and are the same for all countries that use the HTS. The last two or four digits are country specific; in the U.S. these last four 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 classifications used on your import entries and/or ISF security filings. This is why it is important to establish that accurate information about your products is reported to CBP and to not completely rely on third parties to guess about your products to provide export classification on your behalf. It is the importer's responsibility to supply sufficient information about the imported goods so that a customs expert may determine the proper classifications of those goods.
You could be overpaying or underpaying the duties necessary by using the wrong HTS code. The HTS is primarily a classification system to uniformly identify products and secondarily a tariff system on imported goods. Using the wrong HTS will result in an incorrect payment of duties whether too little or too much; this creates an issue for CBP in their revenue collection mission and may result in them issuing penalties for failure to provide correct and accurate information to CBP.
If you have been using the wrong HTS codes, it is not too late to fix your mistake and avoid costly fines. If you find out you have been using the wrong HTS code and have been paying too much or too little, you can file a Post-Entry Amendment (PEA) to pay any additional owed duties or to request a refund for overpayment.
Intredex's mission is to provide a full scope of trade compliance software services to corporations and organizations. We have the expertise and knowledge in Watch List Screening, Restricted Party Screening, HTS classification, and HTS classification to solve the complex trade compliance issues.
linqs software helps you with an accurate KYC screening of customers or trading partners before entering a deal with them.
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