In customs formalities, using the correct commodity code is essential. This code determines the amount of customs duty due, whether a tariff preference (reduced rate) applies and which formalities are required. For instance, an im- or export authorisation might be required or worse the goods are banned due to sanctions. However, determining the correct commodity code, is not always a simple task.
As an importer or exporter, you may have already encountered this issue. You file a declaration, and at some point, customs informs you that the commodity code you used was incorrect. You should have used a different code and to top it all off, a higher rate apply to this code. Alternatively, you may find that an anti-dumping duty suddenly applies, additional import conditions are required, or an export authorization was necessary. In short, unforeseen circumstances that you are not waiting for.
To prevent such issues, you can apply for binding tariff information (BTI), which guarantees the commodity code for a period of three years. More information about applying for a BTI is available here.
Separate from the fact that in the situations mentioned above, an incorrect declaration has been filed, you will often also receive an invitation to pay (ITP). In this case, you are liable for additional customs duties, which in most cases cannot be passed on to your customers. Further details about an invitation to pay can be found here.
1. Risk of a BTI
With a BTI, you have certainty about the commodity code for your goods. The risk of applying for a BTI is that customs may issue a BTI with a different commodity code than the one you requested. The issued commodity code might have a higher import duty rate than the code initially requested. This means that, in principle, you must declare the, in your view, incorrect commodity code for three years. In that case, you can lodge an objection and even file an appeal. More information about the objection and appeal procedures is available here.
2. Requesting a refund after issuing a BTI
Customs has issued a BTI, and it is based on the commodity code you requested. In the past, you declared the goods under a different commodity code, which led to higher import duties and potentially even anti-dumping duties. In this situation, you may request a refund for the overpaid duties. This request can be submitted up to three years after filing the declaration.
3. Utilizing the transition period after notification of BTI withdrawal
The European Commission may, in certain circumstances, withdraw a BTI. The Commission will publish this in the official journal of the European Union. However, you can make use of a transition period, allowing you to rely on the BTI for a few more months. Utilizing the transition period is only possible if you had already signed a purchase contract with the exporter. This to proof that at the time of signing, you were under the assumption that the BTI was applicable.
One of the reason the European Commission may withdraw a BTI is if the classification prescribed in a classification regulation does not align with the classification in the BTI.
