Multiple Product Classification Codes

In most instances, GTM enables you to assign one product classification code per classification type to an item, trade transaction line, or customs declaration. There are exceptions to this, particularly around assigning Chapter 98 and Chapter 99 codes from the harmonized tariff. For example, companies can assign a secondary Harmonized Tariff Schedule (HTS) code to get a reduced or free duty rate on items of US origin that are coming back into the United States.

In other cases, there may be a duty adjustment based on legislation. When companies are classifying their items, the tariff may point them to a specific chapter in the tariff specific to legislation-based codes. In this instance, companies must assign the code that is used to classify the item plus the legislation-based code related to the duty adjustment. For example, the United States models 301 and 232 penalties and exemptions using codes from Chapter 98.

In the Harmonized Tariff Schedule, Chapters 98 and 99 are used for country-specific purposes. Most countries use these chapters to model special tariff programs as well as temporary duty suspensions or increases. In the United States, Chapter 98 covers certain import conditions such as American goods being returned, United States merchandise assembled abroad, and temporary importations, just to name a few. Chapter 99 applies to temporary legislation affecting duty rates and safeguard measures affecting agricultural products, etc.

Please refer to the Harmonized Tariff Schedule of the United States to see more information about Chapters 98 and 99.

Applying Chapter 98 or 99 product classification codes could bring:

• Additional Controls or Other Government Agency requirements
• Anti-Dumping (ADD) or Countervailing (CVD) Duty Indicators
• Quota Indicators
• Duty Rate Adjustments
• Other customs filing requirements or required data

Note: If the optional feature "MORE THAN ONE 98-99 HTS ITEM CLASSIFICATION" is enabled, multiple product classification codes from Chapters 98 and 99 can be assigned to an item, a transaction line, and a declaration line.

Let’s look at an example of both Chapter 98 and Chapter 99 product classification codes and how they are modeled in GTM.

Chapter 98 Example

In many instances, the use of Chapter 98 product classification codes can help your company to save money on duties. This is particularly important when it comes to goods that are of high value or subject to a high duty rate. Applying Chapter 98 codes is an optional process. Since Chapter 98 codes may change over time, they are more transactional in nature and are not usually applied to an item.

For example, you have a good of US origin that is being returned for repair. Since this is something unusual, you want GTM to flag all transactions which have a transaction type of Return Material Authorization (RMA). This enables you to look at each transaction that is a return to see if it is subject to Chapter 98. If it is, you can apply the appropriate Chapter 98 code, in addition to the regular classification code, to the transaction to take advantage of the reduction in duty.

Let’s take a look at this example in detail.

First, let’s look at the item as it appears in GTM Item. Navigate to GTM Items via:

• Classification > Items
• Master Data > Items

For example, the item is a guitar. The product classification code used for export was the HTS US code of 9202.90.4000. This code will need to be used on any documentation associated with the re-import of this good. You do not list the Chapter 98 code on the item because it is not a common occurrence. It will be used on the transaction related to the return of this guitar.

To flag your transactions that have a type code of Return Material Authorization, you need to create a compliance rule to place the transaction on hold. Depending on your business process, the information you may use to trigger a compliance rule and place a transaction on hold may vary. For example, you may want to look for a Transaction Type of RETURN MATERIAL AUTHORIZATION Or you may use a User-defined Code containing:

• Category of TRANSACTION CLASSIFICATION
• Type ID of BUSINESS TRANSACTION TYPE
• Type Code of RETURN MATERIAL AUTHORIZATION

Regardless of your business process or how you want to model it in GTM, the information needs to appear on both the trade transaction/trade transaction line and the compliance rule for the transaction to be placed on hold.  

The RMA flag is applied to the trade transaction line by executing your compliance rules or executing a policy. On the Control Screening Results grid, a Control Type and Control Code have been applied based on the RMA flag. This control puts the transaction into a status of TS_CONTROL_SCREENING_ON HOLD which holds the transaction until someone determines if it is subject to Chapter 98. Then, they can release it by specifying the Chapter 98 code for the re-import of the return.

In addition, you can add an Authorization of CHAP 98 APPLIED in the Control Screening Results grid. This authorization indicates that the control has been released and changes the status of the transaction from TS_CONTROL_SCREENING_ON HOLD to TS_CONTROL_SCREENING_PASSED. Also note that there is a Fixed check box in the product classification grid on the transaction line and shipment line. This ensures that, if the Look Up Product Classification action is run again, the results in the product classification grid will not be overwritten. In this example, you want to make sure that, if any changes are made to the product classification data, the Chapter 98 code stays on the transaction line.

Chapter 99 Example

Unlike Chapter 98, Chapter 99 is a mandatory secondary code assignment based on the tariff. When you classify an item with a Chapter 1 to 97 code, the tariff may direct you to corresponding headings in Chapter 99. You need to review the headings to assign the appropriate Chapter 99 code. In this case, you would assign this secondary code to an item in the item manager, if the item will be shipped multiple times over a period of time. The code on the item can then be copied over to trade transaction lines or declaration lines. If the item will only be shipped once, the Chapter 99 code can be assigned directly to the trade transaction line or declaration line. In some cases, the Chapter 99 code may expire annually. In this case, items will need to be reviewed yearly to see if the Chapter 99 code needs to be updated.

For example, you are importing bison using an HTS US code of 0201.20.8010. When you look at this code in the tariff, you can see that it refers you to certain headings within Chapter 99. You need to review these headings to see which Chapter 99 codes apply. If you plan to import bison on a regular basis, you can assign the secondary Chapter 99 code to your item. Otherwise, it can be assigned directly to your transaction line or declaration line.

First, let’s look at the item as it appears in Item Management. Navigate to GTM Items via:

• Classification > Items
• Master Data > Items

For example, the item is bison. The product classification code you want to use for import is the HTS US code of 0201.20.8010. When you click Product Classification Code to view the details, you can see additional information about this code including a description which includes note 1/ which states “See subheadings 9904.02.01-9904.02.37.”. This means you need to assign one of the codes within these subheadings. You can do the research and then assign the appropriate code to the item, transaction line or declaration line.

Now, let’s take a look at which secondary product classification code, within these subheadings, applies. To do that, you can use Product Classification Lookup.