Change in tariff classification |
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Change in tariff classification (CTC) is one of the two main types of substantial transformation (the other being regional value content, RVC). It can be used alone or in conjunction with the RVC rule.
The CTC rule requires non-originating materials to have undergone a change in tariff classification on a required level in order to obtain originating status. The change in tariff classification can be required on a chapter, heading or subheading level HS Classification). It usually applies to all non-originating materials but can also apply to a specific type of material.
The CTC rule requires the exporter or producer to determine the classification of all non-originating inputs, materials and parts that are required to undergo a change in tariff classification. Only in that way will the exporter or producer be able to demonstrate that the change in classification has occurred
Under many agreements, tolerance can be used if a small amount of non-originating goods has not undergone a change in classification.
See also De minimis
Example:
A rule of origin requires non-originating materials to undergo a change in tariff classification from any other heading. As a result of the processing, the final good is classified under a heading which is different from the headings of all the non-originating materials used in the production process. A change in tariff classification on a heading level has occurred for all non-originating materials and the good is originating.
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