Save Money and Reduce Costs with the Chapter 98

Save Money and Reduce Costs with the Chapter 98

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Trade Compliance is complicated and JD Group is here to help. Welcome to our series of trade compliance support articles specially designed to help you in managing trade compliance, avoiding surprises, reducing costs and achieving the best possible outcomes. We look forward to your questions and comments.

Save Money and Reduce Costs with the Chapter 98 Programs

There are a number of special programs available to importers to significantly reduce costs and save money. Duty-free or reduced duty treatment is available through programs such as the North American Free Trade Agreement (NAFTA) and use of so-called Chapter 98 Programs. There are several Chapter 98 options that an importer can use; this article will cover a brief description of the 5 most popular programs.

9801.00.1010 U.S. Packaging Material

Subheading 9801.00.1010, HTSUS covers the return of U.S. Packaging Material. On the southern border 9801 is commonly used for declaring the value of U.S. origin packaging materials that are exported to Mexico and used to package a finished product (the exported good).

Requirements

  • Imported Item has to be of U.S. Origin
  • Imported Item cannot be advanced in value or improved in condition while abroad

Supporting Documents

  • Manufacturer’s Affidavit
  • NAFTA Certificate of Origin
  • U.S. Importer Declaration (19 CFR10.103)

Duty Treatment

  • Duty Free
  • MPF Free

9801.00.10XX U.S. Goods Returned

Subheading 9801.00.10XX, HTSUS covers items of U.S. origin returned to the United States without any improvement in value or condition. On the southern border 9801 is commonly used to cover those U.S. origin parts, components and machinery, which are no longer needed in Mexico and are returned. Please remember to use the correct statistical classification (last 2 digits) which is based on the underlying HTS classification of the returned item.

Requirements

  • Imported Item has to be of U.S. Origin
  • Imported Item cannot be advanced in value or improved in condition while abroad

Supporting Documents

  • Manufacturer’s Affidavit
  • NAFTA Certificate of Origin
  • U.S. Importer Declaration (19 CFR10.103)

Duty Treatment

  • Duty Free
  • MPF Free

9801.00.2000 U.S. and Foreign Items Returned to the U.S.

Subheading 9801.00.2000, HTSUS covers articles of any origin, previously imported to the U.S., exported from the U.S. and returned back to the U.S. without having been advanced in value or improved in condition. Because this program also requires that the item be under a lease arrangement, it is widely used on returns from Maquilas/IMMEX companies which automatically qualify for the lease status.

Requirements

  • Previously imported into the US and duty paid
  • Imported Item cannot be advanced in value or improved in condition while abroad
  • Original Importer, original exporter and present importer must be the same party

Supporting Documents

  • CBP 7501 Entry Package
  • U.S. Importer Declaration (19 CFR10.103)
  • Electronic Export Information
  • CBP 7501 Entry Package

Duty Treatment

  • Duty Free
  • MPF Free

9802.00.5060 Repairs and Alterations

Subheading 9802.00.5060, HTSUS covers articles returned to the United States after having been exported for qualifying repairs or alterations. This program is commonly used on the southern border in support of repair, refurbishing, upgrading or other qualifying operations.

Requirements

  • Exported from the U.S.
  • Qualifying Repair or Alteration

Supporting Documents

  • Electronic Export Information (EEI)
  • Importer and Exporter Declarations (19 CFR 10.24)

Duty Treatment

  • Duty Free
  • MPF Free

Country

  • Mexico & Canada

9802.00.8068 U.S. Goods Assembled Abroad

Subheading 9802.00.8068 HTSUS covers article assembled abroad with U.S. origin parts or components. On the southern border this options is commonly used by Maquilas/IMMEX companies on those items that do not otherwise qualify for NAFTA. The value of all U.S. origin parts/components (ready for assembly) are eligible for zero duty.

Requirements

  • U.S. Origin parts and components
  • Condition Ready for Assembly
  • Components Assembled

Supporting Documents

  • Manufacturer’s Affidavit
  • NAFTA Certificate of Origin
  • Physical appearance, (photos, drawings, sketches)
    Commercial Invoice
  • Importer and Exporter Declarations (19 CFR 10.24)

Duty Treatment

  • Duty Free
    • General Duty Rate
  • MPF Free
    • .34%

Country

  • All countries: Value of exported goods
  • All countries: Value of Assembly plus Non-U.S. materials and U.S. materials not in a condition ready for assembly

The information in this article is general in nature and is not intended to constitute a legal or binding recommendation. Before engaging in any special program we strongly recommend that you consult with JD Group or another trade professional.