The Harmonized Tariff Schedule of the United States (HTSUS) contains thousands of different possible classifications of every known commodity. Theoretically, only one HTSUS classification is correct for any given commodity - though in many cases, an importer will have several likely classifications to choose from. In those cases, the HTSUS and Customs laws have specific rules for which HTSUS classification should be chosen.
Obtain the Entered Value for the Goods
Value is very important for imports, as most duty rates are calculated based on the value of the imported goods. Although a number of factors can change the entered value, the standard value is the "price paid or payable" for the goods by the importer. This is known as "transaction value". Customs laws have special rules for adding to and subtracting from the "price paid or payable", and for situations where transaction value is not applicable (e.g., transfers from a related company, goods are not sold, etc.).
Identify the Country of Origin
The Country of Origin of goods is also important. For goods that are wholly produced in a given foreign country, the origin is easy. It gets trickier when the goods incorporate materials from more than one country or were processed in more than one country prior to importation. In these situations, the last country in which the goods undergo a "substantial transformation" is the country of origin. "Substantial transformation" means that the goods obtained a new name, character or use. Trade agreements, such as NAFTA, have special rules related to country of origin that dictate whether the imports will qualify under the agreement for preferential duty rates.
Calculate Duties & Fees Owed
In the HTSUS, locate the correct HTSUS classification and search under the correct country column (based on the country of origin) to ascertain the appropriate duty rate. Assuming the duty is based on value, calculate the duties by multiplying the appropriate rate by the entered value of the goods. In addition, CBP may charge additional fees, such as merchandise processing fees and harbor maintenance fees, related to the importation. These are also calculated based on the entered value of the goods.
File entry documents and pay fees
Once completed, importers (or their customs brokers) file the documents with CBP along with any duties & fees owed. CBP will then release the good to the importer, but may not actually review the documents for several months. When CBP reviews the documents and determines that all the information is correct, the entry will be "liquidated". Even after liquidation, importers must keep accurate and complete records of all imports, as Customs can request them any time within 5 years of the date of entry. Failure to correctly complete entry documents can subject importers to fines of as must as the entire value of the imported goods, and failure to keep records can result in fines of up to $100,000 per transaction.
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