HTS — is it a “part” or an “accessory”?

A recent discussion thread on the Customs Specialists LinkedIn group page offers guidance on the age old question pertaining to the Harmonized Tariff Schedule (HTS):  what constitutes a “part” or an “accessory”?

Although the posts do not (of course) definitively answer the question, the discussion thread provides helpful points to consider when evaluating this issue.

For example, a couple of commenters suggest their own rules of thumb for this inquiry:

  • “…I have always applied the guide that for an item to be classified as a part, the item of which it is a part must not be capable of operating as intended without the presence of the ‘part’. Additionally, the ‘part’ must not be capable of classification as an item in its own right – i.e., as a non-part …. Of course, there are exceptions, but this rule of thumb holds good in most circumstances, and is reasonably easy for engineering departments to follow….”
  • “…1.) Has it been made especially for x machine? No: classify it as specific product, yes: go to 2. 2.) Is it excluded from being a ‘part of’ according to the [HTS] Notes (like screws, motors, etc)? Yes: classify it as specific product. No: check the comments on the chapters to be sure.”

Others cite case law on this topic.  For instance, one commenter references Honda of America Manufacturing v. United States, a case from 2009, in which the Court of International Trade held that a specialized “oil bolt”, designed for use in automobiles, was still classifiable as a run-of-the-mill bolt under Heading 7318, and was not a “part” or “accessory” of the automobile. ”

Still other commenters provide guidance from other countries.  In India, “the principle applied by the courts is that a ‘part’ is something that is necessary for the funcionting of the product; while an ‘accessory’ provides convenience in use or promotes better [utilization] of the product.”  Other citations include an memorandum on classification of parts and accessories from Canada Customs and a link to a Federal Court Judgment in an Australian case.  Finally, a commenter mentions a 2007 decision by the European Court of Justice, which held that an ink cartridge was not part of a printer, but rather “ink.”

Given the unsettled and often conflicting opinions on this topic, US importers and exporters should follow the advice of one commenter:  “Your best bet is to send to CBP [a request for] a binding ruling if you will be shipping these goods regularly.”

The Customs Specialists LinkedIn group page is available here (membership required).

ACE – FAQs on PSCs

US Customs has amended the Automated Commercial Environment’s Frequently Asked Questions document to include discussions about Post Summary Corrections (PSCs).

As discussed in our blog post of May 9, PSC functionality became available in June for entry ACE type 01 and 03 summaries filed in ACE.  One of the notable benefits of this new functionality is an importer’s ability to file electronic PSCs in ACE up to 270 days after the date of entry (currently 10 days if filing in ACS rather than ACE).

The new FAQs address issues such as who may file PSCs (either the same filer as the original entry summary filer or a different filer),  and the number of PSCs that may be filed for one entry summary (unlimited).

The updated FAQ document is available here.

New ISF capabilities for ACE launched

Yesterday, US Customs deployed the following new capabilities for the Automated Commercial Environment with respect to Importer Security Filings:

  • Importers now have access through ACE to the ISF progress reports that have to date only been available via email subscription.
  • These ISF progress reports, previously available only to importers, are now also available via ACE to ISF filers and sureties.
  • Importers who file 12 or fewer ISF transactions per year will now be able to file and track their ISF transactions directly via the ACE portal, without the need to file via the Electronic Data Interchange (EDI).

Specific guidance about using the new functionality is available here.

Also, CBP announced additional ACE functionality that will be available by the end of 2011:

  • Capability to query the status of an ISF transaction by transaction number and by bill of lading number, and
  • Capability for Customs-Trade Partnership Against Terrorism (C-TPAT) Tier 3 importers to query individual ISF transactions

The official notice is available here.

Be aware of risks in using an express courier for import compliance

A recent discussion thread on the Foreign Trade Association’s (FTA) LinkedIn group page outlined the pros and cons of using an express courier (DHL, FedEx, UPS, etc.) for importing goods into the US.

On the positive side, the former head of compliance for FedEx Trade Networks (FTN) outlined the advantages of using FTN as express courier, including:

  • Large staff
  • Nearly 100 individuals overseeing compliance process, doing internal audits and resolving issues
  • Worldwide coverage by one party
  • Visibility at all stages to handling/documentation/clearance

One commenter stated that FTN is a much better option than its competitors, and a couple of others suggested that using an express courier for small, routine shipments is appropriate.

On the negative side, however, the concerns of many commenters about using an express courier included:

  • Trading speed and cost for compliance
  • Improper classification of goods
  • Need to micromanage courier
  • No designated personnel assigned to importer’s account
  • Clearance of products under the name of the courier, rather than the importer’s, results in importer’s inability to access import documents
  • Importer still liable for courier’s non-compliance

The FTA’s LinkedIn group page is available here (membership required).