HS classification is the process of assigning numerical HS codes to products for import or export based on characteristics of the products. It lets Customs know what is being imported for trade statistics purposes as well as determines the duty rate to be paid on the imported value.
Importers and exporters are legally required to declare their products to Customs by means of HS codes. HS classification determines a product's rate of duty, its import and export admissibility, and whether or not it should be physically examined.
Each NAFTA country forgoes tariffs on imported goods originating in the other NAFTA countries. Rules of origin enable customs officials to decide which goods qualify for this treatment under NAFTA. The agreement sought to make the rules of origin very clear so as to provide certainty and predictability to producers, exporters, and importers. They also sought to ensure that NAFTA’s benefits are not extended to goods imported from non-NAFTA countries that have undergone only minimal processing in North America.
Depending on U.S. Customs’ assessment of the error, shipment delays or monetary penalties will be enforced for each violation. The importer of record is liable for errors in misclassification.
In the United States, the exporter is required to retain either the original or a copy of the Certificate for five years from the date of signature. The importer is required to retain the Certificate and all other relevant documentation for five years after the importation of the goods. Mexican exporters must maintain a copy of the Certificate for ten years. Canadian importers and exporters are required to keep the Certificate for six years from the time of the transaction for the importer and six years from the date of signing for the Canadian exporter.
A uniform Certificate of Origin is used in all three countries and is printed in English, French or Spanish. The Certificate should be completed in the language of the country of export or the language of the importing country, at the exporter’s discretion.
Customs laws and regulations are complicated and compliance with them is required if you are a company importing and exporting. Customs is the second largest collector of tax in the US to the IRS. If you are in business, you hire an accountant to ensure you are paying the least amount of taxes permissible under tax law right? If you are importing and exporting you really need to hire a Customs professional. They will help ensure you pay the least amount of tax under Customs law.