HTS Compliance

Understanding HTS vs. ECCN For Your Business

If you are importing or exporting anything for your business, then you need to pay special attention to how you classify shipped products. It’s easy to become confused about the Export Control Classification Number (ECCN) and the Harmonized Tariff Schedule (HTS) for specific products.

The ECCN is used to determine if products need special controls before they are exported. This number tells you if you need to apply for an export license or if you need a special license before shipping specific products to other countries.

The ECCN is an alpha-numeric, five-character classification number used for exporting products and goods from the U.S. This specialized system is administered by the U.S. International Trade Commission (ITC), and this agency determines what products require additional attention and/or exceptions based on a number of factors.

The bottom line is that if you are exporting anything for your business to another country from the U.S., then you need to pay special attention to the ECCN numbers associated with your products and goods.

Many companies fall into regulatory issues by not adhering to the strict requirements outlined and managed by the ITC, and you can easily come under financial and legal issues if you do not comply with these strict guidelines.

What Exactly Is The HTS Classification Number?

The HTS is a 10-digit code used by U.S. Customs to determine tariffs on commodities coming into the U.S. There are over 17,000 possible HTS classifications, so it can get confusing to find the right classification code for your specific goods and products. The U.S. government has a searchable HTS tool that you can use to find the HTS code that applies to your needs.

Even with the HTS search tool, you may be confused about what code applies to the commodities that you are importing. It’s important to find the right HTS code because it provides different information to agencies like:

  • Determining the duty rate applied to imported commodities.
  • Helps U.S. Customs streamline the process to examine, document, and request information about a shipment.
  • Identify specific regulations and other rules applied to imported goods and products.
  • Determine if goods and products are subject to duty exemption under specific trade agreements.
  • Allow U.S. agencies to collect import and export statistics.
  • Determine if different trade laws apply to imported products.

It’s important to pay special attention to HTS codes because tariffs vary greatly between different codes of imported products. Customs spends a lot of time and resources to audit documents and data from importers once their products have been cleared for entry to the U.S.

This process is where common mistakes with HTS classification are found, and you could receive a bill months after your product is sold if you do not classify commodities properly.

Penalties For Incorrect HTS Classifications

If you import anything into the United States, then you should talk with a customs broker or customs consultant to determine the correct HTS classification for your products. It’s critical that you classify your products accurately because it is ultimately your responsibility as the importer to get the HTS classification right.

As an importer, you are at risk for numerous penalties if you do not declare the correct HTS classification of your products. Most penalties originate from improper classification, value, country of origin, or the products and goods that are invoices.

Companies have come under hefty financial and legal penalties for inaccurate classification, and Customs has even liquidated damages if importers don’t follow proper procedures.

Each time an importer is penalized for HTS classification issues, they are placed in a compliance database that is maintained by Customs. This record designates the importer as a higher risk, and this can lead to more frequent Customs inspections or delayed processing time.

Knowing The HTS or Schedule B Code For Your Product Is Critical

We are classification experts. That means our team has spent thousands of hours classifying tens of thousands of various items for our clients over the years. At first glance, the Harmonized Tariff Schedule (HTS) can seem overwhelming and indecipherable. Let us help you navigate the complexities by assigning the correct codes to your products, the first time.

Whether you export one or 100,000 products per year, we know how to locate the right chapter, heading and sub-heading to determine your item’s classification. We also rely on the appropriate General Rules of Interpretation (GRIs), as well as Customs rulings, to arrive at the most accurate classification for your item.

And perhaps best of all, we work fast and cheap to get this info in your hands!

    • We have worked on one-time “batch” classifications for clients, or ongoing (outsourced) classification projects that can last months or years.
    • We can assign the correct ECCN or USML Category, as well as the HTS and Schedule B for all of your items
    • We provide rationale for each classification, to show due diligence and provide an audit trail
    • We can provide the results to you via spreadsheet, or upload them directly into your company’s ERP or trade compliance software system
    • Our team is fast and accurate!

Work With A Trade Consultant Today!

Customs looks to you and your business leaders to exercise due diligence with all of your import transactions. There are a number of variables that you have to consider when you import any product into the U.S., and due to these complexities, you are encouraged to be proactive when reviewing your import transactions and HTS classifications.

Our expert import consultants can help you classify your commodities and guide your business through the process to ensure you avoid costly penalties when importing commodities into the U.S. HTS classification errors are the most common error made by most importers, so having HTS Compliance experts on your side can help ensure the accuracy of your HTS classifications.

Feel free to talk with our team today to learn how we can help you today!