The importation of parts and components, Rule 2(a) and tariff classification. Technical or infringement dispute?

1. Introit

The tariff classification of goods subject to an international transaction is essential because, based on their location in the tariff nomenclature, the tax and intervention regime required for the cargo to enter a customs territory can be determined.

This is a technical issue, as it is necessary to understand its composition, functionality, and other issues inherent to its use and purpose in order to determine the tariff position that must be indicated in the customs destination.

The issue is complex in the case of finished products, and even more so in the case of the entry of parts and pieces or split or phased shipments subject to special regimes. This is because in these cases, not only the specifications of the goods must be considered, but also their relationship with the other parts or shipments and the composition of the whole as a functional unit.

This is determined by Rule 2(a) of the Harmonized System, which states that incomplete, unfinished or disassembled goods must be classified according to the tariff classification of the complete or finished article when, even when separated, they have the essential characteristics of the complete article.

In these cases, then, it will be necessary to assign to these parts the tariff position of the finished product and consequently, the payment of the tariff established for the complete product is imposed, as well as the restriction regime that may apply to it.

Therefore, the importer of parts who, with the contribution of local goods and labor, will later transform them into a new product must determine before their arrival whether they already meet the essential characteristics of the finished product; and then determine whether, as a result, it is necessary to classify the acquired parts as a complete product and not separately, as they were purchased.

In both cases, the goods will be presented for clearance, either documenting one item per part or a single item as a single functional unit. Regardless of the choice, the commercial documentation relating to the transaction under which the cargo was shipped must be provided; that is, the purchase of the separate parts. What differs is the tariff classification and, consequently, the tax assessment and, if applicable, the restriction regime.

It is clear that there may be some technical discrepancies between the importer and the customs administration when determining the classification of this merchandise. Ultimately, it is a subjective matter; that is, determining whether the parts meet the essence and functionality of the finished product. Determining this circumstance is not always easy. 

It is therefore legitimate to ask how far the importer's obligation to document the entry of this cargo extends. This is especially true if we consider that, although it is the declarant who proposes a position for clearance, in accordance with legal mandate, it is the customs service who classifies the cargo(1). 

Asking about the scope of the importer's liability is not a trivial matter, as it is clear that the determination of the importer's obligations compromises the scope of its responsibilities, and failure to comply with these obligations may result in financial penalties if they are understood to constitute the offense of inaccurate declaration.

In the past, we have addressed the classification issue and the infringement of inaccurate declaration on several occasions(2). Recently, the Supreme Court of Justice addressed the issue in the case "SIMSA Aire Acondicionado SRL(3)" and we thought it appropriate to return to this issue, which continues to generate debate.

2. The SIMSA Aire Acondicionado SRL case

According to the investigation, SIMSA documented the import of 587 Luxaire evaporator units in one container and, on the other hand, documented the entry of 587 condenser units in three containers. The evaporator units were imported permanently, and the condenser units were documented as being in transit.

The intervening inspector noted that the total of both shipments, which were in the primary zone at the same time, amounted to 587 split-type air conditioners. Therefore, he detained both shipments and requested the intervention of the Tariff Classification Division for a technical classification opinion.

According to the first-instance ruling, the Tariff Classification Division considered that the shipment should have been documented based on the tariff classification of the finished product, given that the parts constituted a classification unit and were located in the primary zone at the same time. According to the account of the facts, this Division invoked General Resolution 2212 of the AFIP (National Tax Administration) in this regard, which regulates the staggered shipment regime and the application of Rule 2(a) of the Interpretative Rules of the Harmonized System.

In this regard, a contentious investigation was initiated, and the importer and its acting freight forwarder were charged with committing the inaccurate declaration offense provided for in Article 954 of the Civil Code. This was due to the fact that the declaration made for both destinations was deemed inaccurate and that there was fiscal damage, considering the difference in tariffs between the parties' position and the finished product.

The Customs administrator of the jurisdiction validated the complaint and, after conducting the investigation, convicted both the importer and the dispatcher involved for the inaccurate declaration violation. 

Both parties filed a contentious complaint before the federal court in Córdoba. These appeals were consolidated, and the case was heard before Federal Court No. 3.

A first-instance judgment acquitted both defendants. The judgment held that the defendants could not be sanctioned for failing to classify the goods as a classification unit, given that the administrative resolution regulating such imposition expressly states that such regulation is optional and not mandatory (I clarify that it is not relevant to analyze other aspects of the ruling, such as the tax issue and the scope of liability of the acting freight forwarder, as they are not relevant to the issue at hand).

Without prejudice to the acquittal granted, the court ordered the imposition of the taxes corresponding to the import of the finished product. Ultimately, it determined that this was a technical/tax dispute, but considered that neither the importer nor the shipping agent should be sanctioned under the terms of the repressive type of inaccurate declaration.

The first-instance ruling was appealed, and the Federal Court of Córdoba, Chamber B, intervened. It overturned the ruling of the competent judge and upheld the customs resolution that had ordered the importer and the shipping agent to be convicted of the inaccurate declaration violation, in addition to demanding payment of the corresponding taxes on the finished product.

In the Court's opinion, following the reform introduced by Law 25.986, which repealed Article 957 of the Harmonized System of Customs, the obligation to declare accurately entails the correct declaration of the tariff position. It understands that, regardless of the discretionary nature of the staggered shipment resolution, given that this involves a classification unit that was located in the primary zone at the same time, the importer should have requested joint clearance, as required by Rule 2(a) of the Harmonized System.

The case reached the Supreme Court through extraordinary proceedings, as there is sufficient federal jurisdiction. The Attorney General's Office issued its opinion first. It upheld the federal jurisdiction and ruled that the Federal Court's ruling should be upheld.

Subsequently, in a ruling dated June 25, 2025, the Superior Court ruled, declaring the extraordinary appeal admissible and reversing the appealed Court ruling. The ruling was not without dissent, and in light of this circumstance, two associate judges acted.

Thus, the Superior Court's doctrine, in a split ruling, upheld the first-instance judgment, which had acquitted both the importer and the shipping agent involved, although it had ordered the payment of higher taxes, considering the imported good as a functional unit. 

That is, the ruling prevailed, considering the case a technical/tax dispute, ordering the payment of higher tariffs, but separating this technical circumstance from the inaccurate declaration violation.

3. Reflections on the classification issue and the violation of inaccurate declaration

It is true that declarations submitted to Customs are increasingly simplified. Detailed manual declarations have been abandoned (not without nostalgia, we recall the old manual declaration form where the declarant made a full declaration of the cargo) and simplified computerized declarations have become more common. Thus, the tariff item indicated at the destination is essential. The specifications of the goods are no longer declared, but rather their tariff item is indicated (with a few additional details). 

The existence of a Universal Codifier and General Rules of Interpretation are very important, given that the tariff classification of a merchandise not only determines the taxes that correspond to its import or export for consumption, but also indicates whether the merchandise is permitted for import or export and, if applicable, whether there are prior certifications, quotas or restrictive measures. 

Now, while it is true that the Harmonized System has been a major step toward the unification and simplification of tariff procedures, sometimes the classification of goods remains complex and essentially technical. An importer may fully comply with his obligations and provide his best knowledge in the declaration and still record a position that later turns out to be inadequate.

It is therefore legitimate to ask whether in all these cases such a technical valuation error should be severely sanctioned or whether, on the contrary, not all classification errors should necessarily lead to sanctions in the terms defined by the inaccurate declaration violation provided for in Article 954 of the Customs Code. This is especially true if we consider that, although it is the declarant who proposes a position in the dispatch, in accordance with the law, it is the customs service who classifies (4).

We anticipate that we believe that potential technical incompetence should not always be penalized, given that, in many cases, the classification of goods can be a complex and difficult task, especially considering that the legal mandate ultimately places the classification task on the customs service. The penalty should be adjusted to the degree of reprehension merited by the declarant's conduct, and the conduct displayed does not always merit reprehension, as sometimes the error is excusable, given the technical complexity of the classification task.

The Tax Court's doctrine has been consistent on this matter, favoring the non-application of sanctions to the declarant, as long as the latter has fulfilled his or her duties, proposing a reasonable and appropriate tariff position for the destination, in accordance with the technical guidelines considered before dispatch.

Chamber E of the National Tax Court has considered that the declarant who has erroneously formulated a declaration through the María Computer System, acting with maximum diligence and taking extreme caution in entering the data in order to determine its location in the Nomenclature (5), is not punishable.

Chamber F, for its part, also ruled in favor of the acquittal of the declarant, although recognizing that the issue was complex and always considering that due diligence was required in the choice of position 6).

Likewise, Chamber G is inclined to consider that the exculpatory cause is limited to reasonably inaccurate tariff classification; that is, to the classification of the documenting party that, although it ultimately turns out to be incorrect or inaccurate, could have been determined or chosen as a result of an understandable and admissible error or of an objective and completely difficult classification, so that the error would be reasonably justified (7).

This doctrine has also been shared by the National Chamber of Appeals in Federal Administrative Litigation (8). In short, both doctrine and jurisprudence have validated the full application of the exculpation of error in the indication of tariff position, in cases of reasonably inaccurate classification and also reasonable proof of due diligence by the declarant. 

Of course, the issue is not simple given that the jurisprudence discussed predates the repeal of Article 957 of the Customs Code provided for by Law 25.986, as even the Federal Court of Córdoba has pointed out in the ruling commented here, when revoking the acquittal ordered by the trial judge. 

Let us recall that the aforementioned legal provision expressly established that inaccurate tariff classification was not punishable. Thus, after the repeal of this legal provision, which expressly stipulated that errors in tariff classification were not punishable, it began to be considered that this error was always punishable.

That is to say, it began to be considered - perhaps due to opposition - that the repeal of the cause of non-punishment transformed the classification error into a punishable one without further ado, that is, without analyzing the scope of the error and the general circumstances of the operation and the actions of the administered party. 

With the repeal of Article 957 of the Customs Code, the declarant's conduct and the scope of the error were no longer analyzed in the context of the facts and circumstances that were considered when classifying (despite the fact that the Customs Code expressly establishes that it is the customs service that classifies), and the technical error that involves choosing a different position in the nomenclature began to be sanctioned without further ado.

We understand that the Supreme Court ruling we are discussing here calls into question the widespread belief that, without stating it, since the repeal of Article 957 of the Customs Code, the slightest classification error, even when justified and objectively reasonable, justifies a sanction under the terms of the infraction of inaccurate declaration.

By reversing the Court's ruling and thus upholding the lower court ruling that had acquitted the declarants and imposed payment of the corresponding taxes on the finished product, the acceptance of the classification error is encouraged; that is, the imposition of tariffs without penalties for the technical error.

We understand that the doctrine clearly supports the subjective liability criterion that prevails in customs infringement law, which assumes that the judge must analyze the declarant's conduct and not just verify its objective adequacy to the type.

Therefore, we understand that the customs service, when classifying the merchandise, as mandated by the Customs Code, must consider the position proposed by the declarant, as well as the characteristics of the cargo, its functionality, and, in the case of staggered shipments, consider the overall view of the imported parts to determine whether they individually meet the characteristics of the finished goods. 

Only then, in those cases where it is considered that the proposed position was inappropriate, should the magnitude of the technical classification error be assessed, based on the circumstances of the operation, and then determine whether the error merits a violation.

That said, we clarify that we do not agree with the trial judge's opinion, who considered that the declarant should not be sanctioned, given that the regulation of staggered shipments is an optional regime for the declarant. This is so, given that Rule 2(a) of the Rules of Interpretation of the Harmonized System imposes on the declarant the choice of the tariff classification of the finished product, as long as the requirements indicated therein are met for imported parts. Therefore, the text of the administrative provision that regulated staggered shipments does not preclude such an obligation.

4. The most recent doctrine of the Tax Court

It is important to keep in mind that the ruling discussed here adheres—without stating so—to sound doctrine from the Honorable National Tax Tribunal, issued after the repeal of Article 957 of the Civil Code, which considers the acquittal of the declarant to be appropriate when the proper tariff classification of the goods required a scientific task of a certain degree of complexity. 

In this regard, it has been pointed out that if, in order to ensure a correct classification, it was necessary to carry out a scientific activity that exceeded the scope of the responsibilities of both the exporting firm and the customs service assistant, the exercise of the administrative sanctioning power could not be justified. I find that there is a misunderstanding of the meaning of the infraction when an attempt is made to apply a sanction with an automaticity inappropriate for the work of legal operators without taking into account the particular circumstances of the case. It is fallacious that any inaccuracy in a declaration is likely to lead to the application of a sanction. (9)

We agree with this position, because otherwise, if the sanction is imposed without further ado in all classification disputes, the mere indication by the declarant of a position in the Nomenclature that is not the one that the customs service considers appropriate in the case will be considered an infraction of inaccurate declaration, applying a penalty whose severity was conceived taking into account only the cases of inaccurate declaration of the facts, but not for the error, often committed in good faith, that can be committed in the interpretation and application of the applicable classification rules. 

Therefore, if this criterion were followed, it would simply punish lack of technical knowledge, or in the case of parts and pieces, an error in determining whether they meet the conditions of the finished product (the determination of which could be subjective and complex).

5. In closing 

We believe the doctrine of the "SIMSA Aire Acondicionado SRL" case deserves special attention. Not all classification disputes merit a charge of infringement, even after the entry into force of Law 25.986, which repealed Article 957 of the Civil Code, which expressly established that no sanctions were applicable for classification errors. The repeal of this legal provision does not automatically condemn such technical errors. 

In all cases of classification disputes, whether related to parts and components or finished products, an analysis of the circumstances of the case and the complexity of the tariff classification is essential to determine the obligations of the taxpayer, their scope of responsibilities, and the complexity of the task at hand. Only in this way can the proper fulfillment of their obligations be assessed and whether their conduct merits rebuke determined, and, if so, the degree of rebuke appropriate.

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1.Conf. art. 241 of the CA for the final destination of imports and art. 339 of the CA for the final destination of exports.

2. "Some Considerations on Classification Disputes and the Inaccurate Declaration Offense," published on August 04, 2023, in the Aduana News Digital Magazine; "Classification Disputes," Magazine of the Customs Clearing Center, November/December 2010, No. 862, pp. 42/43; "The Inaccurate Declaration Offense and Classification Issues," in AAVV Estudios de Derecho Aduanero (Customs Law Studies Association). Tribute to Dr. Juan Patricio Cotter Moine, Lexis Nexis, 2007, Buenos Aires, pp. 319/348; among other publications.

3. CS, 25/06/2025, “SIMSA Air Conditioning SRL”, Rulings 348:563.

4.Conf. art. 241 of the Civil Code for the final destination of imports for consumption and art. 339 of the Civil Code for the final destination of exports for consumption.

5.TFN, Room E, 24/02/99, «Disporteko SA», 14/06/02 «Professional Security Alliance» and 30/03/06 «Guardiola», the latter published in ED 218:103.

6. TFN. Room F, 05/03/02 "Tejica SA", 24/02/04 "Gana Import"; 27/12/06 "Rioplatense Graphic Arts".

7.TFN. Room G, 21/12/01 “Aluplata”; 20/07/01 “Amilcar Ignacio”

8.CNCA., Room I, 03/09/02, "Disporteko"; Room III, 18/04/06, "Tejica"; Room III, 08/08/01, "Aluar Aluminio Argentino"; Room V, 01/10/03, "Amilcar, Ignacio"; among many others.

9.TFN, Room G, 27/02/23, “Burgos, Jerónimo Ariel”.