HTS Code: ISF Filing Terms & Definitions Explained

The Harmonized System (HS) or Harmonized Tariff Schedule (HTS) code is a system used globally to classify traded products for customs purposes. The HTS code determines the tariff classification for goods. It is a numerical code, which is divided into chapters, headings, and subheadings that are used to classify a product in international trade. This system is used by more than 200 countries as a basis for their customs tariffs and for the collection of international trade statistics. Over 98% of the merchandise in international trade is classified in terms of the HS.

Import Security Filing (ISF), often referred to as “10+2”, is a U.S. Customs and Border Protection (CBP) regulation that requires importers and vessel operating carriers to provide advance shipment information to CBP for security purposes. The ISF must be filed at least 24 hours before the cargo is loaded onto a vessel destined to the U.S. Failure to comply with the rule could ultimately result in monetary penalties, increased inspections and delay of cargo.

Understanding HTS Code

The Harmonized System is a standardized numerical method of classifying traded products. It is used by customs authorities around the world to identify products for the purpose of levying duties and taxes. The system is maintained by the World Customs Organization (WCO), and it is updated every five years. The current version of the HS was last updated in 2017.

The HTS code is a 10-digit code. The first six digits are an identification of the item in international trade and are the same for all countries that use the HS. The next two digits are a further breakdown, specific to the tariff and trade requirements of the United States. The final two digits are even more specific, relating to the duty rate and physical characteristics of the product.

Importance of HTS Code

The HTS code is crucial for international trade as it determines the tariffs, duties, and regulations that apply to the product. It is also used for statistical purposes, to monitor and control the import and export of goods. By using a standardized system, it simplifies the process and makes it easier for all parties involved in the trade.

Incorrect classification can lead to incorrect duty payments and fines, and can cause delays in the clearance process. Therefore, it is crucial for businesses to ensure that they are using the correct HTS codes for their products.

How to Find the Correct HTS Code

Finding the correct HTS code for a product can be a complex process. It involves understanding the product, its composition and its use. The HTS code is determined by the physical properties of the product, not by its intended use or other criteria. There are online tools and resources available to help with this process, but it is often advisable to seek professional help to ensure accuracy.

It is also important to keep up to date with changes to the HTS codes. The World Customs Organization updates the system every five years, and changes can also be made by individual countries. These changes can affect the duties and regulations that apply to a product.

Interrelation between HTS Code and ISF Filing

The HTS code and the ISF filing are closely related. The HTS code is one of the data elements required in the ISF filing. It identifies the product being imported and determines the duties and regulations that apply to it. The HTS code is crucial for the accurate and timely filing of the ISF.

Furthermore, the HTS code is used by CBP in its risk assessment and targeting. By identifying the product, CBP can assess the risk associated with the shipment and determine whether further inspection is required. Therefore, it is crucial to ensure that the correct HTS code is used in the ISF filing.


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