Tariff Classification
Category: other
The process of assigning a product to the correct HS code to determine duty rates.
Tariff classification is the process of assigning the correct HS code (and national extensions) to a product to determine applicable customs duty rates, trade restrictions, and regulatory requirements. Proper classification requires understanding the product's material composition, function, and the General Rules of Interpretation (GRI). Incorrect classification can lead to overpayment of duties, penalties, or seizure of goods.
Examples
- • A product made of 60% cotton and 40% polyester fabric is classified under a different HS code than a 100% cotton product, resulting in different duty rates.
- • The US Customs Ruling system provides binding tariff classification rulings that importers can request for certainty on duty rates.
- • Tariff classification disputes are common; a wrong HS code can result in duty rate differences of 5-20% or more.