I just read an article about Customs Binding Rulings, the premise being that you always need one. Always. Regardless of circumstances.
Call me contrarian, but I don’t quite agree.
U.S. Customs and Border Protection (CBP) provides for importers, or their hired experts, to submit a request for Binding Ruling on HTS classification, valuation, country of origin, and other import matters, but they’re mostly done for classification. This can give importers a relative assurance of what they are getting into before they bring in a whole boatload of something. But it’s relative, because Binding Rulings are occasionally overturned.
The first problem I have with Binding Rulings is this. Shortcut the request, and CBP may issue a bad ruling with negative consequences, such as higher duty rates. As a consultant, I have worked to overturn bad rulings. It’s more trouble, and can take much longer, than getting a proper ruling in the first place.
Requesting a Binding Ruling properly requires providing technical documentation, doing considerable supporting research, including rulings previously issued to others in similar circumstances, and building a case for the end result sought. But I would argue that, having done all that, you have fulfilled your Reasonable Care requirement. Just file your work away, and pull it out if CBP should ever question things. If CBP disagrees with your work, only then, if it is worth pursuing, do you go for a Binding Ruling. In other words, it is a last resort, not a first.
The other problem I have with Binding Rulings are those issued specifically for HTS classification, which, as I said early, are the majority of them. CBP Regulation, 19 CFR 177.8(a)(2), requires that a HTS classification ruling be referenced on any and all customs entries of the subject merchandise. This can be a problem when new people at a customs brokerage company, or a completely different brokerage company, begins handling an importer’s business, and the existence of a ruling is not adequately conveyed.
In my work as a consultant, I have seen CBP nailing importers during a Focused Assessment (otherwise known as a Customs audit) for failing to mention a ruling on customs entries. And when I have worked managing customs brokerage operations, I always advised my staff, when taking on a new importer account, to search CBP’s Binding Rulings Database by that importer’s name to see what might be out there.
And that’s my ruling on Binding Rulings. If you have any questions on this, or other matters related to import or export compliance, I would love to hear from you, and you can reach me via my Contact page.