September 8, 2021 | Kevin Koch Senior Manager, Product Development
In today’s complex and volatile supply chain, it’s imperative shippers are as accurate as possible when determining their landed costs, since this may make or break their profitability. Factoring in the fees associated with moving cargo from shipper to the ultimate consignee, we know that landed cost calculations can become a difficult exercise. Depending on a product’s classification and its country of origin, its customs’ duties and fees can become a significant cost driver towards total landed costs.
One way of gaining clarity for your products’ customs landed costs is by obtaining a binding ruling. U.S. Customs & Border Protection (CBP) lists binding rulings as one way of demonstrating “reasonable care.”
Remember that, under Section 484 of the Tariff Act, the importer of record is responsible for using “reasonable care” to enter, classify, and determine the value of imported merchandise. In addition, the importer must provide any other information necessary to enable CBP to properly assess duties, collect accurate statistics, and determine whether other applicable legal requirements have been met. An importer’s failure to exercise reasonable care could delay release of the merchandise. In some cases, this could result in the imposition of penalties or the referral for criminal enforcement.
Here’s a sampling of questions that CBP expects you to be able to answer regarding your trade compliance program:
An importer may wish to obtain a ruling under CBP Regulations (19 C.F.R. Part 177) or obtain advice from an expert who specializes in customs matters since there are many complicated factors that can affect customs issues. The binding ruling program enables importers and other interested parties to get binding, pre-entry classification decisions prior to importing a product and filing their entries with CBP. The decision can also be used to get binding guidance about other CBP regulations, such as marking and country of origin requirements.
Advance rulings provide the international trade community a transparent means of understanding how CBP will treat a prospective import transaction. A ruling letter may address the tariff classification or appraised value of merchandise, the liquidation of an entry, or the merchandise’s exclusion from entry. Ruling letters facilitate trade and enable companies to make business decisions based on how their goods will be treated upon import.
Companies are still adapting their supply chains and manufacturing processes when it comes to Section 301 tariffs. When a company looks to move its manufacturing and/or assembly processes in hopes of averting Section 301 tariffs, C.H. Robinson’s trade policy team recommends the submission of a binding ruling to definitively confirm the last country where the substantial transformation of goods occurs.
Our team continues to stay very busy with these ruling services as it pertains to the changes under the rules of origin and related Section 301 tariff applicability. If you’re interested in learning more about binding rulings and how they can support your trade compliance program, connect with one of our trade policy experts to learn more.