Virginia Conferenceon World Trade

Williamsburg, VirginiaOctober 6-8, 2004

Section II: ImportProduct ClassificationGeneral Introduction

Leonard L. FleisigTroutman Sanders LLP

Washington, D.C. leonard.fleisig@troutmansanders.com

202.274.2863

Customs Compliance

• Why does it matter?

• What is at stake?

• What do you need to do to protect yourself and your company?

Why Does it Matter?

• It is the law

• Non-compliance has commercial and security implications

• Mistakes cost money

• Fixing mistakes takes time away from focus on core business

What Do You Need to Do

• Informed compliance & Shared Responsibility– Mutual obligation of CBP and stakeholders

• Reasonable care– Standard by which your actions are judged

Reasonable Care

• CBP responsible for:– Providing you with sufficient information and

tools to make informed and appropriate decisions with regard to your import transactions

• You are responsible for: – Utilizing that information and those tools to make

informed and appropriate decisions with regard to your import transactions

Reasonable Care - 2

• If you use reasonable care you will– Lessen the number of mistake and– Your mistakes will be less costly

• Mistakes will happen but– If you can show that you used reasonable care the

‘cost’ of those mistakes should be significantly lower or eliminated

General Tips

• Don’t under-utilize your Customs House Broker– Are they just pushing paper for you or:

• Do they assist with classification, marking, valuation issues?

• Do you tell them your classifications or do you seek their feedback?

• Do you ask them about recent rulings or other issues relating to your products?

General Tips - 2

• Don’t rely solely on your Customs House Broker– Keep yourself informed

• Keep a copy of the regs; [19 CFR] – free and available on-line

• Keep and use a copy of the Harmonized Tariffs Schedules of the US

• Go on line and check for rulings about your products

General Tips - 3

• Why?– The more you can show reliance on a professional

and that you provided a professional with the means to provide you with informed advice – the more reasonable care you will have shown

– The more you can show that you are also acting independently to stay informed – the more reasonable care you will have shown

Three Key Areas

• Country of Origin Marking

• Valuation

• Classification

Country of Origin Marking

• Where do your goods come from?• Are they marked with the country of origin?• Any marking rulings on your product or

similar products?• What will happen to the goods once they

arrive?– Are you the end user?– If not, what will you do, if anything, to change or

modify the goods once they get here?

Valuation

• Fair market value– Are you and the supplier related parties?– Does commercial invoice represent total invoice

price?

Classification-1

• Its not a simple world anymore

• Products more complex

• Supply chain and assembly regimes– have created shipments of parts, components, etc.

• Multiple possible classifications for any given product

Classification

• Have you checked – the HTSUS?– Rulings?

• Formal/informal classification requests

– CHB?

Conclusion

• Remember:– In the event of a dispute you will not always be

wrong and Customs won’t always be right.– You know your product better than most.– But, if you are wrong the more you have done to

get it right will limit your potential exposure