Background on HTSUS Subheading 9801.00.10
Ever hear of U.S. goods returned and wondered what it really meant? The Harmonized Tariff Schedule of the United States (“HTSUS”) subheading 9801.00.10 is used for re-importing U.S. made products back into the United States, duty-free. Previously, this classification only covered merchandise originally made in the United States and now reentering the country (hence “US Goods Returned”). In order to qualify for classification under subheading 9801.00.10 and duty-free treatment, these products entering the United States had to be unimproved in condition or value. In other words, the products had to not be subject to further processing abroad. For example, subheading 9801.00.10 may be used when goods are being re-imported as returned product to the seller or for repair. Under subheading 9801.00.10, the importer has the burden to prove their claim for duty-free treatment.
CBP Issues Updated Guidance
On August 20, 2021, subheading 9801.00.10 was expanded to include products which originated from foreign countries. HTSUS subheading 9801.00.10 now states: “Products of the United States when returned after having been exported, or any other products when returned within 3 years after having been exported, without having been advanced in value or improved in condition by any process of manufacture or other means while abroad.” In other words, non-U.S. origin products that are returned to the United States will ALSO qualify for duty-free treatment under subheading 9801.00.10. However, the timing requirements for U.S.-origin and foreign-origin products are different. U.S.-origin products currently have no time limit to file a claim for duty-free treatment. However, claims for foreign-origin products must be filed within three years.
To prove you are eligible to rightfully claim duty free treatment under subheading 9801 the foreign shipper/importer must declare that the products reentering the United States were not advanced in value or improved in condition by any manufacturing process or other means while abroad. However, if the customs broker obliges themselves as the importer, the customs broker will now have the legal responsibility to provide the required documents to substantiate the subheading 9801.00.10 claim (p.s. – if you are a broker, think 50 times, maybe 100, before taking on this responsibility).
Specifically, the changes resulted in:
- For either U.S. manufactured goods or foreign origin goods:
- A declaration by Foreign Shipper should be included as it will indicate that the goods were not advanced in value or improved in condition while outside the United States.
- A certificate from the master of a vessel may be accepted with the Declaration by the Foreign Shipper if it states that the product have not been un-laden from the exporting vessel.
- Declaration by the owner, importer, consignee, or agent indicating that they have knowledge of the facts regarding the duty-free claim.
- For goods reentering the U.S. after three years and are valued over $2500, CBP may request additional documentations if the name and address of the U.S. manufacturer are not clearly stated. An example of the documentation is a statement from the U.S. manufacturer verifying that the articles were made in the United States.
- The documents which are sufficient to establish proof of export are Electronic Export Information (EEI)/the Automated Export System (AES) filing exemption, copy of the entry into the foreign country, or U.S. export invoice or bill of lading/airway bill.
- For aircrafts, aircraft parts and equipments reentering the U.S, a CBP Form 3311 or its equivalent as stated in 19 CFR 10.1 may be used. The entrants which should be included are:
- The name of the importing vessel or conveyance
- The date of its arrival
- A description of the articles
- The value of the articles, and
- That the articles are intended for use by the aircraft owner or operator in his own aircraft operations
- For U.S. origin goods reentering the U.S. that were originally exported under a Department of State license are required to be imported through formal entry and the value of the goods doesn’t matter.
- For U.S. manufactured aircraft reentering the U.S which were sold t0 a foreign government under the Foreign Military Sales program, formal entry is required if any maintenance is being performed on the aircraft while in the United States. Also, at the time of export of the aircraft, the EEI has to be filed for the maintenance of the aircraft.
- For U.S. manufactured aircraft reentering the U.S which were sold t0 a foreign government under the Foreign Military Sales program and modification or enhancement will occur, to be imported and exported formal entry is required and the EEI submission citing the Directorate of Defense Trade Controls export license (DSP-5) is required.
Below is your checklist of necessary documents when claiming 9801.00.100/duty-free treatment:
- Declaration by Foreign Shipper,
- Declaration by the Owner, importer, consignee or agent,
- Proof of export documentation, and
- A statement from the U.S. manufacturer verifying that the merchandise was made in the United States (for products valued over $2,500 USD).
What You Can Do
The HTSUS is the primary resource for determining tariff classifications and deciphering customs duties owed for goods imported into the United States. Experts use the HTS, in conjunction with explanatory notes, general notes, general rules of interpretation, and Customs Binding Rulings to help determine the correct HTS. Correct classification is a part of the importer of records “reasonable care” requirement. Penalties for non-compliance can be severe. 19 U.S.C. 1592 is the statute CBP references when issuing penalties for negligence, gross negligence or fraud – depending on the degree of culpability CBP believes you had at the time of your non-compliance.
Fortunately, there is a lot you can do to be proactive about your HTSUS classification:
- Obtain as much information about the product subject to classification PRIOR to importation (if you can, get a sample, if not, photographs of the item and its packaging (exactly as it will look when being imported) are essential).
- Refer to brochures, catalogs, product datasheets, or websites, etc., to truly understand the products intended use.
- Review HTSUS chapters and look for the most relevant chapter/heading (first four digits) that best describes your product (i.e., and apple is an apple).
- Review the Chapter and Section Notes to ensure the product is not kicked out of the HTS.
- Review the General Rules of Interpretations (GRI’s) in the order.
- Read the Explanatory Notes for the relevant headings.
- Check CBP CROSS Rulings for classification of items of the same class/kind.
- Consult Internal and/or external experts such as trade lawyers or engineers.
- Request a CBP Binding Ruling.
- Consult CBP Informed Compliance Publications
If you have questions or require assistance on U.S. And Foreign Goods Returned, contact Diaz Trade Law today at firstname.lastname@example.org or 305-456-3830.