In daily trade practice it happens very often: an importer of goods from outside the European Union receives an 'invitation to pay' (In Dutch: “uitnodiging tot betaling”, abbreviated to UTB) after a post-clearance inspection (CNI inspection), because the correct commodity code (HS code / CN code / TARIC code) was not used when importing the goods. This will often mean that, in Customs' view, too little import duty has been paid due to the use of an incorrect commodity code. In practice, this is called a classification dispute. Read the previous blog post to gain more insight into, for example, the possibility of objecting and appealing against an invitation to pay imposed by Customs.
Apply for binding tariff information
As an importer of goods, you (possibly with the help of, for example, a customs lawyer) often find out for yourself which goods code should be applied. As an importer, to prevent Customs from subsequently determining that an incorrect commodity code has been used, an importer can apply for a so-called 'binding tariff classification decision' (hereinafter: 'BTI') from Customs. In the Netherlands, the BTI is applied for online at Customs Breda, Binding Tariff Information Team. The application is submitted online via the EU Customs Trader Portal. To log in, however, the applicant must possess 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 automatically becomes invalid.
Conditions for application for BTI
An application for a BTI must meet the following conditions in order 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 properties) necessary to classify the goods in the nomenclatures and to describe them clearly;
Revoking / invalidating a BTI (risks)
While a BTI can provide an importer of goods with the desired certainty about the classification of the goods, applying for and having access to a BTI is not without risks. A number of risks are discussed below.
In the first instance, the applicant for a BTI has to indicate under which commodity code he thinks the goods should be classified. However, Customs itself will ultimately determine the final commodity code. An importer therefore runs the risk that Customs may determine a different commodity code with a higher import tariff. Although an importer can object to this decision by Customs within six weeks, on the other hand, filing 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 upheld, either court proceedings or accepting the commodity code with the higher import tariff remain.
Another risk faced by an importer lies in the fact that a BTI applies only to exactly the same goods as those circumscribed in the BTI. Thus, if the goods are (slightly) different, the BTI cannot be invoked when importing the goods. Incidentally, only the holder of the BTI can also successfully invoke a BTI, so other importers cannot.
Furthermore, an importer runs the risk of having the BTI declared invalid by Customs after issuance. For example, a BTI may be declared invalid if it no longer complies with the applicable customs law (e.g. due to a published classification regulation by the Commission or other international measures such as changes to classification item notes).
It may also happen that the Combined Nomenclature is changed or the European Court of Justice issues a ruling that conflicts with the BTI issued. This also applies to a ruling by the National Customs Chamber in the Netherlands. In such cases, Customs will declare the BTI invalid.
And even progressive insight at Customs may mean that Customs decides to revoke the BTI after all. In short, 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? Then feel free to contact one of our customs law lawyers, such as John Wolfs or Lars Kroese.