In a previous blog post, we discussed the situation that an importer of goods outside the European Union receives a payment notification following a post-clearance inspection, because the correct commodity code (HS code / CN code / TARIC code) was not used when importing the goods into the European Union. In many cases, this will mean that, in Customs' opinion, due to the use of an incorrect commodity code, not enough import duty have been paid. This is called a ‘classification dispute’. Read the previous blog post to gain more insight into, for example, the possibility to object to and appeal against a payment notification imposed by Customs.

Apply for a binding tariff information decision

As an importer of goods, you will often find out for yourself (possibly with the help of a customs lawyer, for example) which commodity code should be applied. As an importer, in order to prevent Customs from determining afterwards that an incorrect commodity code has been used, an importer can apply to Customs for a so-called 'Binding Tariff Information Decision' (hereinafter: BTI). In the Netherlands, an importer can apply a BTI online at Customs Breda, at the Binding Tariff Information Team. The application is submitted online via the EU Customs Trader Portal. In order to log in, the applicant must have e-Recognition at reliability level EH3.

If a BTI is issued by Customs, it is valid for three years. Three years after the date of issue, the BTI will automatically become invalid.

Conditions for applying for a BTI

An application for a BTI must meet the following conditions to be accepted:

- the applicant holds an EORI number;

- the application must be related to an intended use of the BTI or an intended use of a customs procedure

- the application contains all specific (product) information (brochures, leaflets, samples, physical description of goods, function, composition and features) necessary to classify the goods in the nomenclatures and to describe them clearly;

Revocation / invalidation of a BTI (risks)

Although a BTI can provide an importer of goods with the desired certainty about the classification of the goods, applying for and obtaining a BTI is not without risks. A number of risks are discussed below.

The applicant for a BTI must initially indicate under which commodity code he thinks the goods should be classified. However, Customs will ultimately determine the final commodity code itself. An importer therefore runs the risk of Customs establishing a different commodity code with a higher import tariff. In that case, an importer can indeed submit an objection to Customs' decision within six weeks, but on the other hand, submitting an objection does not have a suspensive effect and the importer is obliged to use the BTI pending the objection. And if the objection is not granted, the only option is to go to court or to accept the commodity code with the higher import tariff.

Another risk that an importer runs is that a BTI is only applicable to exactly the same goods as the goods that are described in the BTI. Therefore, if the goods are (slightly) different, the BTI cannot be invoked when importing the goods. Also, only the actual holder of the BTI can successfully avail of a BTI, other importers cannot.

Furthermore, an importer runs the risk of the BTI being declared invalid by Customs after it has been issued. For example, a BTI may be invalidated if it no longer complies with applicable customs law (for example by a published Commission classification regulation, or by other international measures such as amendments to explanatory notes as regards the commodity codeentries in the classification headings).

It can also happen that the Combined Nomenclature is amended or that the European Court of Justice notes a verdict that conflicts with the issued BTI. This also applies to a ruling by the national customs chamber in the Netherlands. In such cases, Customs will declare the BTI invalid.

Even the cancellation of the previously given decision (the BTI) based on “new insight” is possible. Thus, there is no certainty about the validity of the BTI after it has been issued.

Need advice?

Do you have questions about (applying for) a BTI? Or do you disagree with a BTI issued by Customs? Please feel free to contact one of our customs lawyers, such as John Wolfs or Lars Kroese.

 

This blog was posted on August 16, 2021