Updated: Dec 29, 2020
The basic rule of tariff classification under the Harmonized Tariff Schedules (HTS) is that each article imported must be separately and individually classified at the time of entry.
There are, of course, exceptions to this rule. For example, if you have machinery that consists of combination of machines or apparatuses intended to contribute together to a clearly defined function covered by one of the headings in chapters 84, 85 or 90, then the whole is to be classified in the heading appropriate to that function. See Section XVI, Notes 3 and 4, and Section XVIII, Chapter 90, Note 3. For articles that fall outside chapters 84, 85 or 90, we need to consider the application of General Rules of Interpretation (GRI) 3(b).
How Does Customs Define a Set /Kit /Bundle Products?
Customs defines Sets/ Kits as the classification of mixtures, composite goods of different materials or made up of different components, and goods put up in a set for retail sale. The set is defined by the item that makes up the essential character of the article, and this will determine the Harmonized Tariff Schedule (HTS) code. Within the set, Customs requires that importers declare the individual parts of the set for reporting purposes.
Sets and Kits: Reporting for Duty
Customs requires the set and the individual components of the set to be reported at the time of Customs entry. What exactly is Customs looking for?
Customs uses the main HTS for the set to assess the duty and taxes on the group.
The other parts of the set are used for reporting quantities to assess any antidumping or countervailing duty, or any quotas or other partner government agency regulations. While Customs doesn’t collect duties or taxes on the parts of the set, it does need to know the unit count, unit weight, and net weight.
Lets Take an example of a product which is a bolt comes together with rubber o-ring. Here the Bolt plays an essential character as the o-ring only provides a supporting function. So the we can use the Bolt as the main component and use the HTS for the Bolt.
Similarly whenever we face KIT/ Set with mixture of multiple components. We need to identify the component which is most essential in the list, that can identified by considering the quantity, function, composition, weight of the mixture.
The Classification of Sets, Kits and Bundle Products can be tricky at first, Sometimes it may lead us to finding improper HTS codes which can make us to pay lot of additional duties. So In this case for smooth clearance and to avoid any duty fines or excess duty payments, Contact our team at Qwantome !!.