Classifying Parts of a Whole

Classifying Parts of a Whole

Written by Amy Lauziere, Manager of Consulting & Client Services, A.N. Deringer Inc.

In today’s tariff environment, the line between profit and loss often comes down to a few digits in the Harmonized Tariff Schedule. Every HTS number you assign drives not only duty rates, but also eligibility for preferential programs, exposure to Section 232 and 301 tariffs, and vulnerability to audits, prior disclosures, and even False Claims Act allegations.

Proper classification of parts is more important now than ever. With trade policy shifting, enforcement intensifying, and data analytics making inconsistencies easier for authorities to spot, companies can’t afford guesswork or “we’ve always done it this way” approaches to tariff classification.

Getting it right—every time—is not just a compliance requirement; it’s a strategic imperative for protecting your margins, managing tariff exposure, and demonstrating reasonable care.

Classifying parts can be complicated, as the distinction between “parts,” “accessories,” “components” and “finished goods” is often nuanced. An item your company considers a part may not be classified as such by U.S. Customs and Border Protection (CBP) under the Harmonized Tariff Schedule of the United States (HTSUS).

Proper classification depends on whether the item is:

1. A part of a specific article, equipment, machine, or
2. A part of general use, or
3. A complete finished article on its own.

Understand the Item

Here are some important considerations when looking to classify an item to determine if it may be a part.

• Gather specific physical and technical information on the item including drawings, material composition and functions.
• Determine how the item functions as part of the larger article, equipment, or machine.
• Assess whether it is designed solely or principally for the specific article, equipment, or machine or if it is interchangeable.
• Consider whether the larger article, equipment, or machine can function without the item.
• Identify the proper HTS classification of the complete article, equipment, or machine.

Understand the Definition of “Parts”

Under the HTSUS, a “part” is generally essential to the function of a finished good but is not considered a finished good. Parts differ from accessories, which enhance utility or appearance but are not essential to the finished product’s operation. Components are a combination of parts essential to the larger product, while a part is typically smaller and may or may not be essential to the functionality of the finished good.

Apply the General Rules of Interpretation (GRIs)

The GRIs are a set of six rules that guide the classification of goods under the HTSUS.

The first three GRIs are most relevant to parts, in summary:

• GRI 1: Classification is determined according to the terms of the headings and any relevant section or chapter notes.
• GRI 2(a): Incomplete/unfinished or unassembled articles are classified as finished articles if they have the essential character of the finished article.
• GRI 2(b): References in a heading to a material shall be taken to include combinations of that material or goods consisting wholly or partly of a material. If the good consists of more than one material (composite good) then classify according to GRI 3.
• GRI 3: If an item can be classified under two or more headings, the heading that provides the most specific description or essential character is preferred. When goods cannot be classified according to GRI 3(a) or (b), the item is then classified under GRI 3 (c) the heading which occurs “last in tariff” or numerical order of the HTS numbers under consideration.

 

The legal section and chapter notes may clarify whether a part is included or excluded from a heading. Some notes define “parts” as only those suitable for use solely or principally with a particular kind of machine or good. For example, Section XVI notes define “parts of general use” and provide rules for classifying parts for goods under that section.

Certain HTSUS headings and subheadings specifically designate parts of a particular product (e.g., “parts and accessories of motor vehicles”). Once you determine the HTS for the complete article, check if a specific provision exists for parts under that heading.

If a part could be used with multiple types of goods, or if the HTS of the larger good does not provide for parts, classify it based on its material composition or its “principal use” in the U.S. at the time of importation.

For example, an O-ring used in various machines would be classified according to its material composition such as HTSUS Chapter 39 (plastic) or Chapter 44 (rubber) and not as a machine part.

Consult Explanatory Notes and Customs Binding Rulings

U.S. Customs and Border Protection (CBP) binding rulings (searchable in CROSS) can clarify classification for specific parts. The World Customs Organization’s Explanatory Notes also provide guidance and examples for classification determinations.

Document the Classification Determination

Maintain records of your classification rationale, including references to relevant headings, notes, and rulings. This supports your decision in case of CBP inquiries, audits or disputes, demonstrating Reasonable Care.

If Customs determines that an item was misclassified, they can retroactively assess the correct duty rate for all product shipments for up to five years, charge interest and penalize an importer under the penalty statute 19 U.S.C. §1592.                                                           

Conclusion

Classifying parts under the HTSUS does require careful analysis of the tariff schedule chapter and section notes and adherence to the General Rules of Interpretation. When in doubt, consult customs professionals or request a binding ruling from CBP to ensure compliance.