How to Classify a Composite Good - Key Chain Case Study

I was admiring key chains recently that were sold separately from their corresponding designer handbags.  Noting that the ring was of metal but the decorative part was of leather, I found myself wondering if it was considered a composite good under the tariff, i.e., the Harmonized Tariff Schedule of the U.S. (HTSUS).

A “composite good” is one composed of more than one material which can be either a mixture of materials in one (1) article, an article made up of different components (as in the case of this key chain), or even goods put up in a set for retail sale (which is a term of art by the way in customs-ease and may not mean what you might think it does – so ask someone if that question arises).

Since the key chain is a composite good, we look at the HTSUS’ General Rules of Interpretation (GRI) for guidance on how to classify it.  GRI 3(b) states that when goods are prima facie (i.e., appear to be) classifiable under two (2) or more tariff headings, classification shall be determined as if they consisted of the material or component that gives them their “essential character,” insofar as this criterion is applicable.

Endnote (IX) to GRI 3(b) explains that “a composite good made up of different components shall be taken to mean not only those in which the components are attached to each other to form a practically inseparable whole, but also those with separable components, provided these components are adapted to one another, are mutually complementary, and that together they form a whole which would not normally be offered for sale in separate parts.”

Customs has consistently held that, when a key chain has both a functional and non-functional component, it is the functional component which provides the article’s essential character.  (HRL 950636) Therefore, the ring component makes up the utilitarian part of the key chain with the leather portion deemed as being merely decorative.

Provided the metal key ring was of steel, the whole key chain would therefore be classifiable under HTSUS heading 7326.

Questions/comments?  Post below or email me at clark.deanna@gmail.com

Navigating the Importation Process - Tips for the New Importer

I remember one of my best friends telling me in college that she thought it would be fun to have an import business where of course, she got to do the traveling to find all of the wonderful treasures that she would sell in her shop.

I know that back then, we never could have imagined that there would be so many obscure rules, such as that articles made of wood might require a declaration from the USDA, or that beaded jewelry made of seeds from exotic forests might be subject to FDA regulations.

After all, how does an importing entrepreneur even know where to begin in terms of compliance with the law when most have little idea about the complexities of importing?

Nowadays, thanks to search engines like Google – which did not exist when we were in college (zoiks!) – getting information about importing is a much simpler endeavor. This of course, is both good and bad.

It is good in that basic importing information may be found online, but of course, not all information out there is equally correct.

The down side however, is that there is a presumption that a responsible importer would have been able to seek out information that pertained to their type of import and therefore ought to have dotted all of their proverbial “I’s” and crossed their “T’s.”

A failure to do so can lead to an accusation of negligence in the event of an importing “hiccup” or even worse, an allegation of fraudulent activity.

So where does a new importer begin?

Like people entering the country, the border is the front line of imported merchandise, and US Customs and Border Protection has jurisdiction over what is permitted to enter – and remain – in the country.

A few helpful links include the web pages on US Customs’ website (www.cbp.gov) under the “Trade” tab. Within this section is a link called "Basic Importing and Exporting" which further leads to information on US Customs import requirements as well as other federal agency requirements.

There is also a rather lengthy US Customs guide entitled “Importing into the United States – A Guide for Commercial Importers” as well as numerous “Informed Compliance” publications which offer both general importing information such as on the “Entry” of merchandise, and Tariff Classification, as well as more import specific information, such as on Eyewear, Textile and Apparel Rules of Origin, and Footwear.

More tips for new importers and exporters can be found here.

Questions/comments? Post below or email me at clark.deanna@gmail.com