C6u—U.S. Customs Tariff (HTSUS) Classification

Subscriber price: $295.00, Non-subscriber price: $380.00
Estimated total study time: 20 hours 41 minutes

This is a comprehensive "nuts and bolts" training in how to properly classify goods in the U.S. customs tariff. You will learn the structure of the Harmonized Tariff Schedule of the United States ("HTSUS") and how to apply the HTS classification steps known as General Rules of Interpretation ("GRIs") to most types of products. The Additional Rules of Interpretation, general notes, including USMCA eligibility and the most commonly used special provisions in the HTSUS (Chapter 98 and 99), are introduced.

This course is updated at the beginning of each year to reflect the amendments to the basic HTSUS. Links to the online version and to download the current HTSUS are provided. However, some students may find it more convenient to use the HTSUS in paper format to complete the practical exercises.

Use this course to rapidly train staff newly assigned to handle HTSUS and to fill in the gaps for existing staff who perform basic classification but who have not been formally trained.

Note: To keep this course relatively short, we do not provide complex practical application exercises for GRIs 3 and 4. For more in-depth training in HTS classification, we recommend GISTnet Course C5—Harmonized Tariff (HTS) Classification. Alternatively, for drill and practice purposes after taking this course, assign C8u—HTSUS Classification Post Evaluation; Learning by Practice and Simulation. Please note, there is also a final exam for certification purposes at the end of C8u.

Classification of Goods in the HTSUS (C6u)

The Harmonized Tariff Schedule of the United States (HTSUS) is subdivided into various elements which together form the structure of the nomenclature. In order to perform accurate classification it is essential to understand the relation between the elements. These elements are sections, chapters, subchapters, headings, subheadings, and notes. This first lesson deals with the general overall structure, and the breakdown by sections.

(Estimated study time: 1 hour 0 minutes)

• Introduction
• Background of the Harmonized System
  • Reasons for Global Harmonization
  • The Core Classification System for Participating Countries
  • Periodic Harmonized System Updates
• Overview of the U.S. Classification System
  • U.S. Obligations under the Harmonized System Convention
  • Maintenance of the HTSUS
  • The U.S. Nomenclature System
  • U.S. Tariff Classification Determines Duty and Taxes
  • The Importer is Ultimately Responsible for Proper Classification
  • Most Commodities are Classifiable
• How Important is it to Get the Right Classification?
• Responsibility for Classification of Imported Goods
• Basis for the HTSUS
• The HTSUS is Divided into Sections

HTSUS Framework (C6u, C6.1u)

This lesson continues with the breakdown of the HTSUS by chapters, headings and subheadings. Also available for download in this module is a unique Chapter and Heading listing that is not commercially available. This document allows a quick glance at the whole HTSUS condensed into less than 30 pages.

(Estimated study time: 45 minutes)

• Introduction
• Sections are Divided into Chapters
  • Chapter and Heading Listing to the Rescue
  • Chapters 1–97
  • What about Chapters 98 and 99?
  • Chapters are Divided into Headings
  • Headings Organized in Subchapters
• Headings are Divided into Subheadings
  • Subheadings are not born equal!
  • Example of One-tab Subheading
  • Example of a Two-tab Subheading
  • Parts of the Tariff Number beyond Six Digits

HTSUS Section and Chapter Notes (C6u, C6.1u)

The next important thing to consider when determining the correct classification of an article are the section, chapter and subheading notes. Notes hold the key to exclusions and definition of terms.

(Estimated study time: 43 minutes)

• Introduction
• Section Notes and Chapter Notes
  • Defining and Refining Classification Options
• Exclusions from Classification in Section and Chapter Notes
• Definitions of Goods or their Composition in Section and Chapter Notes

More on Notes, Language and Punctuation (C6u)

Apart from the very structure of the Harmonized Tariff Schedule of the United States (HTSUS), classifying involves the knowledge of the meaning of some Latin expressions, attention to punctuation, and awareness of the language of the HTSUS.

(Estimated study time: 57 minutes)

• Introduction
• Subheading Notes are Shown After Section and Chapter Notes
  • Subheading Notes are Strictly for Classification at the Subheading Level
  • Example A; Subheading Notes that Apply to a Chapter
  • Example B; Subheading Notes that Apply to the Whole Section
• Practical Application of Notes
• Visible Elements vs. Elements that are not Visible
• Technical Language and Vocabulary
• Latin Expressions in the HS Represent Specific Concepts
• Text Punctuation Influences Meaning
• The Semi-Colon Meaning for Classification
• Text Punctuation and the Comma

General Rule 1 (C6u)

HTSUS Classification in the Harmonized Tariff Schedule of the United States (HTSUS) is governed by six HTSUS General Rules of Interpretation. The General Rules provide a uniform and mandatory system to read and interpret all the elements of the tariff. Knowledge and understanding of those rules is the single most important prerequisite to accurately classify goods. We will begin with Rule 1 which deals with the legal elements.

(Estimated study time: 1 hour 9 minutes)

• Introduction
• The Operating System
• At a Glance...The Six General Rules
• The Rules Made Readable
• Classification Examples
• General Rule of Interpretation Number 1
• The First General Rule of Interpretation is the Most Important!
• Section, Chapter and Subchapter Titles are for Reference Only
• Chapter and Section Titles May be Misleading
• Certain Underwear, Even if Knitted or Crocheted, is Classified in Chapter 62
• Classify According to Legal Elements
• Terms of the Headings
• Terms of Relative Section and Chapter Notes
• Remember to Check the Legal Notes When Deciding on a Heading
• Not to Contradict Rule 1
• When the Text of a Heading Creates a Hard Stop at Rule 1
• Rule 1 Conclusion

General Rule 2 (C6u)

This lesson details how General Rule 2 expands the scope of headings. It covers incomplete, unassembled, mixed or composite goods. We will discuss how headings are expanded through GRI 2 to include goods that do not perfectly match the terms of those headings.

(Estimated study time: 47 minutes)

• Introduction
• General Rule of Interpretation Number 2
• General Rule 2 Broadens the Scope of Headings
• General Rule 2(a)
• How to Handle Incomplete or Unfinished Articles
• Examples of the Essential Character of Incomplete Articles
• "Blanks" are Considered Unfinished Articles
• Blanks Require Additional Manufacturing
• Practical Use of Blanks
• What to do with Unassembled or Disassembled Articles
• What if the Articles are Both Unassembled or Disassembled AND Incomplete or Unfinished?
• Unassembled AND Incomplete: The Double Test
• Unassembled or Disassembled Articles Must be Ready for Assembly.
• Examples of Unassembled or Disassembled Articles
• General Rule 2(b)
• Materials and Substances Mixed with Other Materials or Substances
• Goods Consisting Wholly or Partly of Materials or Substances
• Goods or Articles Made of a Given Material or Substance
• When Two or More Headings may Apply
• Watch for Possible Rule 2 Exclusions
  • Rule 2 must not Contradict Rule 1
  • Certain Heading Terms May Forbid Using Rule 2

General Rule 3(a) (C6u)

Rule 3 is the referee. In this lesson we will discuss the first and second part of Rule 3. When a good is, at first glance, classifiable in two or more headings, it is Rule 3 that will tell us which heading to use. Rule 3(a) directs us to the heading whose text better identifies the goods.

(Estimated study time: 27 minutes)

• Introduction
• General Rule of Interpretation Number 3
• Rule 3 The Referee...
• General Rule 3(a)
• The Heading Providing the Most Specific Description
• When Having the Most Specific Description is Not Sufficient!
• Examples of Headings which do not Refer to "Part Only" of Materials
• Steps for Classifying Two or More Plausible Headings
• What happened to all the examples?

General Rule 3(b) (C6u)

We know that Rule 3 tells what to do when goods are classifiable in two or more headings. If there is no heading that better identifies the goods according to Rule 3(a) then Rule 3(b) will provide the direction on when to use essential character to determine the proper heading.

(Estimated study time: 52 minutes)

• Introduction
• General Rule 3(b)
• Material or Component Giving Essential Character
• Mixtures
• Composite Goods Consisting of Different Materials
• Composite Goods Made Up of Different Components
• Goods Put Up in Sets for Retail Sale
• Essential Character
• Goods NOT Considered as Sets for Retail Sale
• Essential Character
• Use Essential Character Only if Applicable

General Rule 3(c) and 4 (C6u)

Rule 3 tells what to do when goods are classifiable in two or more headings. This lesson will provide training on when to move past essential character and look at the third part of Rule 3 to classify numerically in the last heading. Then, we will learn when to use the rule that applies when all else truly fails. Rule 4 helps classify something that can absolutely not be found elsewhere in the nomenclature.

(Estimated study time: 45 minutes)

• Introduction
• General Rule 3(c)
• Heading Appearing Last in Numerical Order
• Rule 3 Conclusion
• General Rule of Interpretation Number 4
  • General Rule 4
  • When Everything Else Fails

General Rule 5 (C6u)

From Rule 5 we will learn how to classify packing materials and containers. This will include containers specially made for articles, as well as reusable and non-reusable containers.

(Estimated study time: 58 minutes)

• Introduction
• General Rule of Interpretation Number 5
  • Boxes, Cases, Packaging and Packing
  • General Rule 5(a)
  • General Rule 5(b)

General Rule 6 (C6u)

Rule 6 helps us determine the proper HTSUS subheading. We have learned that to find the proper heading we must apply rules 1-5 in order. Now, to find the subheading we must apply rules 1-5 in order again at the subheading level.

(Estimated study time: 51 minutes)

• Introduction
  • General Rule of Interpretation Number 6
    • Classification in Subheadings
    • Mutatis Mutandis
    • Only Subheadings at the Same Level are Comparable
    • Section and Chapter Notes may also Apply to Subheadings.

Additional U.S. Rules 1(a) & (b): Use and Purpose of Goods

The HTSUS Additional U.S. Rules of Interpretation are provided by the U.S. government to further clarify the GRIs. This lesson details the first two rules dealing with the use and purpose of goods.

(Estimated study time: 1 hour 7 minutes)

• Introduction
• Additional U.S. Rules of Interpretation
  • Additional U.S. Rules in General
  • Use and Purpose of Goods
  • Additional Rule 1(a) – Principle Use
  • Additional Rule 1(b) - Actual Use

Additional U.S. Rule 1(c): Parts and Accessories

Continuing our discussion of the HTSUS Additional U.S. Rules of Interpretation we arrive at clarification for the classification of parts & accessories.

(Estimated study time: 1 hour 9 minutes)

• Introduction
• Additional Rule 1(c) – Parts & Accessories
• Classification Using The Double Approach
• Application of Section and Chapter Notes
  • Note 2 to Section XVI
  • Subject to Section XVI Note 1 and Note 1 of Chapters 84 and 85
  • Note 2 to Section XV
• Parts of General Use
• Section and Chapter Specific Conditions
• The Terms "Solely" and "Principally"
  • Classification Example: Ball Bearings for Motorized Toy Truck
  • Classification Example: Lawn Mower Handle
• Sequence for Determining Classification of Parts
• Notes Always Govern Classification of Parts

Additional U.S. Rule 1(d): Mixtures of Textile Materials

Continuing our discussion of the HTSUS Additional U.S. Rules of Interpretation we arrive at clarification for mixtures of textile materials. This lesson is about classification by the weight of material and applicability of General rule 3(b) versus 3(c) for textiles.

(Estimated study time: 15 minutes)

• Introduction
• Additional Rule 1(d) - Mixtures of Textile Materials
• Textile Mixtures Classified by Predominant Weight
• Classification Appearing Last Numerically

A Classification Strategy (C6u)

After learning the theory of the HTSUS, the next step is to put it all together to make it work as a coherent ensemble. This is where we define some common pitfalls and discuss irregular situations. How goods are presented is a big part of determining the correct classification. The use and purpose of the good is also an important factor. We will discuss these and show that even when all the facts are given, the outcome can still be subjective.

(Estimated study time: 1 hour 54 minutes)

• Introduction
• A Classification Strategy
• Tips on Searching for the Proper Heading
• Conducting a Classification Inquiry
• Factors Influencing Classification
• Description of Goods from the Commercial Invoice
• Seeing Goods "as Presented"
• Subjective Factors in Classification
• Reusable Packing Material
• More Sources
• Additional Information Found in the HTSUS
  • HTSUS Change Record
  • Preface to the HTSUS
  • Notice to Exporters
  • Appendices to the HTSUS
  • Statistical Annexes to the HTSUS
  • Alphabetical Index to the HTSUS and the Online Search Function

General Notes 1-3 (C6u)

The General Notes give direction on how to handle the different trade agreements and provide guidance on tariff treatment of imported goods and what is considered the customs territory of the United States.

The General Notes also give guidance on determining the proper duty rate. General Note 3 describes the rates of duty columns and what they mean. There are codes called special program indicator (SPI)s that increase or decrease normal trade relation (NTR) duty rates. It is also essential to understand certain circumstances where articles are exempted from duty or allowed to be commingled together. This lesson addresses all of these issues.

(Estimated study time: 35 minutes)

• Introduction
• General Notes to the HTSUS
• General Note 1—Tariff Treatment of Imported Goods and of Vessel Equipment, Parts and Repairs
• General Note 2—Customs Territory of the United States
• General Note 3—Rates of Duty
  • Duty Columns
    • Duty Column 1
    • Duty Column 2
  • Duty Exemptions
  • Commingling of Goods
  • Unit of Quantity
  • Products of Insular Possessions
  • Products of the West Bank, the Gaza Strip or a Qualifying Industrial Zone

The Generalized System of Preferences (GSP) Overview

Some goods have a condition that must be met in order to be imported duty free or with a reduced duty rate. In this lesson we will talk about some of the regulations concerning the most common trade preference program, GSP. Certain conditions must be met for importing at the preferential duty rate.

(Estimated study time: 53 minutes)

• Introduction
• Generalized System of Preferences (GSP) Overview
• Articles Designated as Eligible for the Generalized System of Preferences (GSP)
• General Note 4—Products of Countries Designated Beneficiary Developing Countries for Purposes of the Generalized System of Preferences (GSP)
• Identifying Articles under the Generalized System of Preferences (GSP) in the Tariff Schedules
• Generalized System of Preferences (GSP) Statutory Competitive Need Limitations
• Pooling Inputs from Generalized System of Preferences (GSP) Beneficiaries
• Products and Countries Covered by the Certified Handicraft Textile Arrangement
• Status of the Generalized System of Preferences (GSP); Expiration and Retroactive Renewal
• Generalized System of Preferences Documentation Requirements

All Other General Notes (C6u)

The HTSUS General Notes define trade agreements, exemptions, and rules for determining the applicable duty rate. We will continue with our study of the General Notes and discuss other requirements for classification under various other free trade agreements.

(Estimated study time: 1 hour 8 minutes)

• Introduction
• General Note 5—Automotive Products and Motor Vehicles Eligible for Special Tariff Treatment
• General Note 6—Articles Eligible for Duty-Free Treatment Pursuant to the Agreement on Trade in Civil Aircraft
• General Note 10—Products of the Freely Associated States
• General Note 13—Pharmaceutical Products
• General Note 14—Intermediate Chemicals for Dyes
• General Note 15—Exclusions
• Other General Notes Specific to Trade Agreements
  • Imported Directly From a Country in the Same Trade Agreement
  • Transit and Transshipment: May not Leave Customs Control
  • Third Country Transportation: May Leave Customs' Control

Other HTSUS Notes (C6u)

The HTSUS contains notes in addition to those of the sections and chapters. There are HTSUS General Statistical Notes, HTSUS additional U.S notes, HTSUS General Notes and more! We will discuss each briefly in turn to give an idea of what they are and where to find them.

(Estimated study time: 51 minutes)

• Introduction
• General Statistical Notes at the Beginning of the HTSUS
• Additional U.S. Chapter and Subheading Notes
• Other Statistical Notes Throughout the HTSUS

Chapter 98 Subchapter 1 (9801)—Articles Exported and Returned, Not Advanced or Improved in Condition; Animals Exported and Returned

In this lesson we review the conditions for U.S. Goods Returned touching on a few other provisions under 9801 for articles to returned to the U.S. with free or reduced duty.

(Estimated study time: 53 minutes)

• Chapter 98 Subchapter 1 (9801) Introduction
• Product Returned to the United States
• Documentation Required for Returned Product
  • Documentation for Product Returned to the U.S. Valued at $2500 or less
    • Documentation for USGR Valued $250 or Less and Certain Aircraft and Aircraft Parts & Equipment
    • Documentation for Foreign and U.S. Goods Returned Valued $800 USD or less
    • Documentation for Foreign and U.S. Goods Returned Valued $801 - $2500 USD
  • Documentation for USGR Valued over $2500 USD
    • Responsibility to Provide Documented Proof for USGR Claim
    • Foreign Shippers Declaration (FSD)
    • Consignee's or Owner's Declaration
    • Manufacturer's Affidavit
  • Documentation for Certain USGR Valued at $10,000 or Less
  • Other Documents Providing Sufficient Proof of Export
  • Documentation Requirements for Certain Aircraft Returned to the U.S.
  • Documentation Requirements of Re-imported Goods Under Department of State License
• Articles Previously Imported Duty Paid, Not Advanced and Re-imported
  • Articles Previously Imported Duty Paid, Not Advanced while Abroad, and Returned to the U.S.
  • Re-imported Articles Exported under Lease
  • Articles Exported and Returned
  • Articles Exported for Scientific or Educational Purposes and Returned
  • Articles Exported for Exhibition and Returned

Chapter 98 Subchapter 2 (9802)—Articles Exported and Returned, Advanced or Improved Abroad

9802 provides provisions for reduced duty for goods exported from the U.S., repaired or altered abroad and then returned to the U.S. This includes repaired articles and articles imported with U.S. content. We'll briefly discuss the conditions for re-importation.

(Estimated study time: 1 hour 6 minutes)

• Chapter 98 Subchapter 2 (9802) Introduction
• U.S. Goods Repaired, Altered, or Processed Abroad and Returned
  • Classifications Applicable to Goods Returned after Alteration or Processing Abroad
  • The Two-Step Process for U.S. Goods Repaired, Altered, or Processed Abroad and Returned
  • Definition of Repairs and Alterations
  • What are Not Considered Repairs or Alterations?
  • Repairs, Alterations and Processes Completed in a USMCA Country
  • Special Documentation Required to Declare Articles Repaired, Altered or Processed
• Articles with U.S. Content
  • Classifications Applicable Articles with U.S. Content
  • U.S. Content Articles in General
  • Definition of Assembly and Acceptable Assembly Procedures Under 9802
  • What are not Acceptable Assembly Procedures
  • Valuation of U.S. Components
  • Country of Origin Marking of Goods Assembled with U.S. Content
  • U.S./Mexico Assembly Provision (Mexican Special Regime)
  • Special Documentation for U.S. Content Articles

Government Contract (9808) and TIB (9813) (C6u)

There are some other Chapter 98 provisions, but the two additional classifications you will see most often will probably be from HTSUS headings 9808 and 9813. In this lesson we will review government contract, talk a little bit about ITAR and temporary imports under bond.

(Estimated study time: 1 hour 8 minutes)

• Introduction
• Articles Imported under Government Contract
  • Department of Defense Contract Articles
  • Government Contract Articles Sold to Government Facilities or DCMCI-IC
  • ITAR Direct Government Shipments
  • ITAR Government Temporary Imports
• Temporary Imports; Another Two-Step Process
  • Importing under a Temporary Import Bond
  • Documentation for Temporary Importation Bond Imports
  • Additional Fees for Temporary Importation Bond Handling
  • Cancellation of the Temporary Import Bond

Chapter 99 Provisions

Chapter 99 provides temporary legislation for changes in the rate of duty charged upon import. We will review some of the circumstances to look into Chapter 99 for these special duty rates and some of the conditions for import.

(Estimated study time: 28 minutes)

• Introduction
• Chapter 99 General Information
• Order of Reporting for Multiple HTSUS Classifications (Column 29A)
• Conclusion