Binding Rulings

Let’s say you’re an importer and you’ve created something new, a really funky and creative way to assemble flooring. Or you’ve found something strange that you’re pretty sure is going to turn the market on its head. You can’t wait to get it into the country and test it out, right? But before you can enter it, you’ve got to get it through Customs. And to do that, you need to code it.

We’ve talked about HTS codes before and how the system works its way down the tree from an upper level category like “wood” (Chapter 44) down to something specific like Walnut faced plywood (4412.33.26.) But what do you do if it’s something new or you just aren’t sure where it should go?

Well, you could just guess. You can say “I think it’s sorta like this and I’ll stick it in here.” Or you can even try to be logical and say “it really is like this and should go in here.” But neither route is really advised because a lot of HTS code assignments don’t really match up with what the industry would consider common sense or put what we would consider similar items together. As an example look at bamboo flooring—“vertical solid” is one code and has a duty applied to it while “horizontal solid” is entered in another category duty free. In the industry, we’d really consider them the same (same species, size, use, etc.), but Customs doesn’t.

So let’s not guess or assume similarities are a guarantee that industry logic equals Customs’s logic. You’ll want a binding ruling.

You can do this yourself but depending on the product using a trade lawyer to help draft the request might not be a bad idea. Because the key word in this is “binding.” Once you have that rule, you’re stuck with it. (You can seek reconsideration of a ruling, but it’s usually a lengthy process, so of course it is best to get it right the first time.)

To start, you don’t want to just hand Customs your product and say “what it’s number?” You want to do some research and think about it and make an argument regarding where you think it should go and why. You want to describe the features that, in your mind, place the product in the category you feel is right. With wood products in particular, you will want to spend a lot of time and detail explaining the product’s construction and even the manufacturing process. Be specific about component dimensions too—as just one example, you’ll remember that the thickness of the face veneer can significantly change classification.

You may want to include a sample. Add some drawings for sure, if they are helpful to show why this product is different or (the same) as something else. And talk about how Customs is supposed to recognize that difference. It might be really significant to you that this is T&G wall panel, but it probably is going to look a lot like T&G flooring—how will Customs know the difference by looking at it?

Let’s consider plywood. The correct HTS code for plywood is most commonly established by the face veneer and different species have different duty rates. So what happens when, as is quite common, the plywood has a different species on each outer ply? Customs will determine the relevant face ply (and therefore the applicable duty rate) by which outer ply has the higher grade where many importers will pick what they would designate “the exposed face” or “used face.” The product might have a clear tropical “back” ply (one that won’t be exposed in use) and a knotty birch “top” outer ply—the importer will argue that it should be a Birch product (duty free) because he’s going to “use” the birch face. But since the tropical side is the higher grade, the product is classified as a tropical plywood. How it is used is not a factor in this particular determination.

You can obtain binding rulings electronically, at https://erulings.cbp.gov/home, or by writing to:

Director, NCSD
Regulations and Rulings
Customs and Border Protection
201 Varick St., Suite 501
New York, NY 10014

There’s also an informed compliance publication specifically discussing the binding rulings process. It can be found at https://www.cbp.gov/sites/default/files/documents/cbp_rulings_prog_3.pdf.

I actually have quite a bit of sympathy for Customs and I think I’ve talked in the past about why that’s so. Think about the tremendous volume of material moving in and out of the country every day. Think about the insane variety of it all. Think then about one non-wood professional who is supposed to understand the difference in those two bamboo floors, those different types of plywood—and then the difference between those two trucks, those two pieces of fruit, or shoes, or tables, or shirts, or… it’s an insane amount of things to learn about.

A binding ruling can be very helpful to end their confusion, at least for YOUR product. Let’s say you have the ruling…include it with your paperwork each entry you make and then you avoid having one customs officer calling it X this time and another officer thinking it must be Y the next. That rule is binding on them as well as on you.

Elizabeth Baldwin is Environmental Compliance Officer for Metropolitan Hardwood Floors. In her 25 plus year career in the wood industry has visited over 70 countries and hundreds of facilities of all sizes and types. She describes herself as a “jack of all wood trades.” Familiar with jungles of all sorts–having camped out along the Amazon and walked the halls of Congress–she blogs for the NWFA on both environmental and regulatory issues for educational and informational purposes only. Her blog is not intended and should not be construed as legal advice. Persons seeking legal advice on compliance with CARB, TSCA, the U.S. Lacey Act or any other law, regulation, or compliance requirement/claim should consult with the regulatory agency directly and/or a qualified legal professional.

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