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[US Duty Exemption System]
■ Overview
There are many ways to save on duties, one of which is the use of the duty exemption system.
The United States, like other countries, operates a system to reduce or exempt customs duties on certain items or when certain conditions are met. Usually, the duty exemption system is one of the various measures to achieve the purpose of the policy, such as international practice, industrial activation, and promotion of transactions with specific countries.
Though we may be able to receive duty exemption if we look closely at the regulations, we commonly miss these benefits or lose time in fact.
Therefore, those importing goods into the United States should pay close attention to the duty exemption system.
■ Relevant Statutory Provisions
ㅇ US Federal Regulations 19 Part 10 Item on conditional exemption and reduction
(CFR part10—articles conditionally free, subject to a reduced rate, etc.)
ㅇ US HS System (HTSUS) Type 98, Type 99
■ Structure of Duty Exemption
The US has special classification as type 98th and type 99th in the HTSUS and also has duty exemption and provisional regulations, etc. separately.
22 categories for duty exemption are set in type 98th and detailed HS code, exemption subject, exemption condition are specified underneath it. The most frequent reasons for the exemption are re-import exemption (HS 9801, 9802) and temporary import exemption (HS 9813).
☉ Notes
There are detailed notes on each category of type 98th about duty exemption. You should read these exception and conditions very carefully.
☉ Column 1 General
The duty rates here apply to all countries and all persons not covered by column 1 Special.
☉ Column 1 Special
The duty rates and conditions here apply only to the countries listed or the conditions listed. Usually, there is a special column in some of the conditions for exemption in the column 1 special and the special column serves to eliminate or alleviate the conditions of the general column.
If there is more than one exemption duty rate for goods imported from the country that corresponds to this, or if the exemption of general column is favorable, the most favorable exemption rate can be applied.
☉ Column 2
This column applies only to items imported from North Korea and Cuba.
☉ The Meaning of Sign in the column 1 Special
A,A* or A+ | Generalized System of Preferences | A:Applies to all developing countries A* : Applies to specific HTS and specific countries A+ : Applicable to least developed countries |
AU | United States-Australia Free Trade Agreement | |
B | Automotive Products Trade Act | |
BH | United States-Bahrain Free Trade Agreement Implementation Act | |
C | Agreement on Trade in Civil Aircraft | |
CA | North American Free Trade Agreement, Goods of Canada | |
CL | United States-Chile Free Trade Agreement | |
CO | United States-Colombia Trade Promotion Agreement Implementation Act | |
D | African Growth and Opportunity Act | |
E or E* | Caribbean Basin Economic Recovery Act | |
IL | United States-Israel Free Trade Area | |
J,J* or J+ | Andean Trade Preference Act or Andean Trade Promotion and Drug Eradication Act | |
JO | United States-Jordan Free Trade Area Implementation Act | |
K | Agreement on Trade in Pharmaceutical Products | |
KR | United States-Korea Free Trade Agreement | |
L | Uruguay Round Concessions on Intermediate Chemicals for Dyes | |
MA | United States-Morocco Free Trade Agreement Implementation Act | |
MX | North American Free Trade Agreement, Goods of Mexico | |
OM | United States-Oman Free Trade Agreement Implementation Act | |
P or P+ | Dominican Republic-Central America-United States Free Trade Agreement Implementation Act | |
PA | United States-Panama Trade Promotion Agreement Implementation Act | |
PE | United States-Peru Trade Promotion Agreement Implementation Act | |
R | United States-Caribbean Basin Trade Partnership Act | |
SG | United States-Singapore Free Trade Agreement | |
■ Procedure of Duty Exemption
1. Make sure that the item or trade type you are importing belongs to category of 98th classification (or that it meets the special provisions of 99th classification )
2. You need to closely check the the notes in this category and items and conditions of subcodes
3. If there is a possibility that it falls under the reason for the exemption, prepare the evidence for each reason.
4. Submit proof of import declaration to customs (normally processed by customs)
■ Time to Apply for Duty Exemption
In other countries, it is usually not possible to apply for duty exemption afterward if exemption is not applied from the import declaration of the item. However, the opportunity to receive duty exemption is relatively wide open in US because applying for duty exemption after the import declaration possible in system of US.
However, even if the imported goods fall under the reason for the duty exemption, it is necessary to comply with the deadline for submission of the exemption application.
1) Before Liquidation of Duty
ㅇ You have to apply for exemption within 270 days from the entry date and 20 days before the liquidation.
ㅇ At this time, if you use the ACE system, you can electronically apply the post exemption application (PSC - Post Summary Correction). If not, you must directly submit a PEA (Post Entry Amendment) to the Customs.
2) After Liquidation of Duty
Even if all the duties have been cleared, you can receive duty exemption benefits after 180 days from the clearing date through the Duty Protest.
■ Notice
1. In practice, it is easy to miss duty exemption, so do not rely on others (including experts) as much as possible, and it is important that importers themselves take care of it. The reasons are as follows.
① The importer may best know use of the imported goods, purpose and situation
② The importer also knows better about the professional standard and technical specifications of the goods,
③ The importer is in the best position to meet the exemption requirements through communication with exporters,
④ It is difficult for a related expert to find the reason for exemption by actively putting the time as long as you do not pay consulting fee separately.
2. This solution contains relatively frequent HTSUS type 98th exemption, but did not include the provisional exemption or provisional annuity tax prescribed in type 99th. type 99th contains specific events, specific companies, and temporary measures that apply only during a specific period.
3. Link
If you need notes or other details about the exemption in type 98th, type 99th, please click the link below.
