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{{short description|Coding of traded products by the World Customs Organization}}
{{short description|Coding of traded products by the World Customs Organization}}
{{Use dmy dates|date=March 2021}}
{{Use dmy dates|date=March 2021}}
The '''Harmonized Commodity Description and Coding System''', also known as the '''Harmonized System''' ('''HS''') of [[tariff]] [[nomenclature]] is an internationally standardized system of names and numbers to classify traded products. It came into effect in 1988 and has since been developed and maintained by the [[World Customs Organization]] (WCO) (formerly the Customs Co-operation Council), an independent intergovernmental organization based in [[Brussels]], [[Belgium]].
The '''Harmonized Commodity Description and Coding System''', also known as the '''Harmonized System''' ('''HS''') of [[tariff]] [[nomenclature]] is an internationally standardized system of names and numbers to classify traded products. It came into effect in 1988 and has since been developed and maintained by the [[World Customs Organization]] (WCO) (formerly the Customs Co-operation Council), an independent intergovernmental organization based in [[Brussels]], [[Belgium]], with over 200 member countries.<ref>{{cite web|url=http://www.wcoomd.org/en/topics/nomenclature/overview/what-is-the-harmonized-system.aspx|title=What is the Harmonized System (HS)?|work=[[World Customs Organization]]}}</ref>

It is used by over 200 WCO member countries and economies as a basis for their Customs tariffs and for the collection of international trade statistics as well as many other purposes.<ref>{{cite web|url=http://www.wcoomd.org/en/topics/nomenclature/overview/what-is-the-harmonized-system.aspx|title=What is the Harmonized System (HS)?|work=[[World Customs Organization]]}}</ref>


==Structure==
==Structure==
The HS is organized logically by economic activity or component material. For example, animals and animal products are found in one section of the HS, while machinery and mechanical appliances are found in another. The HS is organized into 21 Sections, which are subdivided into 96 Chapters (Chapters 1 to 97 with Chapter 77 reserved for potential future use by the HS). The 96 HS Chapters are further subdivided into 1,228 headings and 5,612 subheadings in the current 2022 edition of the HS.
The HS is organized logically by economic activity or component material. For example, animals and animal products are found in one section of the HS, while machinery and mechanical appliances are found in another. The HS is organized into 21 sections, which are subdivided into 99 chapters. The 99 HS chapters are further subdivided into 1,244 headings and 5224 subheadings.


Section and Chapter titles describe broad categories of goods, while headings and subheadings describe products in more detail. Generally, HS Sections and Chapters are arranged in order of a product's degree of manufacture or in terms of its technological complexity. Natural commodities, such as live animals and vegetables, for example, are described in the early Sections of the HS, whereas more evolved goods such as machinery and precision instruments are described in later Sections. Chapters within the individual Sections are also usually organized in order of complexity or degree of manufacture. For example, within Section X (''Pulp of wood or of other fibrous cellulosic material; Recovered (waste and scrap) paper or paperboard; Paper and paperboard and articles thereof''), Chapter 47 provides for ''pulp of wood or of other fibrous cellulosic materials'', whereas Chapter 49 covers ''printed books, newspapers, and other printed matter''. Finally, the headings within individual Chapters follow a similar order. For example, the first heading in Chapter 50 (''Silk'') provides for ''silk worm cocoons'' while articles made of silk are covered by the Chapter's later headings.
Section and Chapter titles describe broad categories of goods, while headings and subheadings describe products in more detail. Generally, HS sections and chapters are arranged in order of a product's degree of manufacture or in terms of its technological complexity. Natural commodities, such as live animals and vegetables, for example, are described in the early sections of the HS, whereas more evolved goods such as machinery and precision instruments are described in later sections. Chapters within the individual sections are also usually organized in order of complexity or degree of manufacture. For example, within Section X (''Pulp of wood or of other fibrous cellulosic material; Recovered (waste and scrap) paper or paperboard; Paper and paperboard and articles thereof''), Chapter 47 provides for ''pulp of wood or of other fibrous cellulosic materials'', whereas Chapter 49 covers ''printed books, newspapers, and other printed matter''. Finally, the headings within individual Chapters follow a similar order. For example, the first heading in Chapter 50 (''Silk'') provides for ''silk worm cocoons'' while articles made of silk are covered by the chapter's later headings.


The HS code consists of 6-digits. The first two digits designate the Chapter wherein headings and subheadings appear. The second two digits designate the position of the heading in the Chapter. The last two digits designate the position of the subheading in the heading. HS code 1006.30, for example, indicates Chapter 10 (''Cereals''), heading 10.06 (''Rice''), and subheading 1006.30 (''Semi-milled or wholly milled rice, whether or not polished or glazed'').[[File:HS Hierarchy Structure Rice.jpg|left|framed|Example of the hierarchical structure of the Harmonized System]]
The HS code consists of 6-digits. The first two digits designate the HS Chapter. The second two digits designate the HS heading. The third two digits designate the HS subheading. HS code 1006.30, for example indicates Chapter 10 (''Cereals''), Heading 06 (''Rice''), and Subheading 30 (''Semi-milled or wholly milled rice, whether or not polished or glazed'').
[[File:HS Hierarchy Structure Rice.jpg|left|framed|Example of the hierarchical structure of the Harmonized System]]


{{clear}}
{{clear}}
In addition to the HS codes and commodity descriptions, each Section and Chapter of the HS is prefaced by Legal Notes, which are designed to clarify the proper classification of goods.
In addition to the HS codes and commodity descriptions, each Section and Chapter of the HS is prefaced by Legal Notes, which are designed to clarify the proper classification of goods.


To ensure harmonization, the Contracting [[Party (law)|Parties]] to the Convention on the Harmonized Commodity Description and Coding System, have agreed to base their national tariff schedules on the HS Nomenclature and Legal Notes. Parties are permitted to subdivide the HS Nomenclature beyond 6-digits and add their own Legal Notes according to their own tariff and statistical requirements. Parties often set their customs [[Duty (economics)|duties]] at the 8-digit "tariff code" level. Statistical suffixes are often added to the 8-digit tariff code for a total of 10 digits. If the number of digits are more than 6, additional digits are called as the national subdivision.
To ensure harmonization, the contracting [[Party (law)|parties]] to the Convention on the Harmonized Commodity Description and Coding System, have agreed to base their national tariff schedules on the HS nomenclature and Legal Notes. Parties are permitted to subdivide the HS nomenclature beyond 6-digits and add their own Legal Notes according to their own tariff and statistical requirements. Parties often set their customs [[Duty (economics)|duties]] at the 8-digit "tariff code" level. Statistical suffixes are often added to the 8-digit tariff code for a total of 10 digits. If the number of digits are more than 8, additional digits are called as the national subheading.


Chapter 77 is reserved for future use by the HS. Chapters 98 and 99 are reserved for domestic use for the Contracting Parties to the HS Convention.
HS Chapter 77 is reserved for common use by the parties internationally. Chapters 98 and 99 are reserved for national use. Chapter 98 comprises special classification provisions, and chapter 99 contains temporary modifications pursuant to a parties' national directive or legislation.


Since its creation, the HS has undergone several revisions to reflect changes in trade.  These revisions eliminate some headings and subheadings describing commodities with low volume of trade and create new headings and subheadings that address new needs, for example, to reflect technological advancements or monitor goods posing an environmental concerns. The current edition of the HS became effective on 1 January 2022.
Since its creation, the HS has undergone several revisions - ostensibly, to either eliminate headings and subheadings describing commodities that are no longer traded, or to create headings and subheadings that address technological advancements and environmental concerns. The current version of the HS became effective on 1 January 2017.


==Classification==
==Classification==
The process of assigning HS codes is known as "HS Classification". All [[Product (business)|products]] can be classified in the HS by using the ''[[General Rules for the Interpretation of the Harmonized System|General Rules for the Interpretation of the Harmonized System ("GRI")]]'' that must be applied in strict order. HS codes can be determined by a variety of factors including a product's composition, its form and its function. An example of a product classified according to its form would be whole [[Potato|potatoes]]. The classification will also change depending on whether the potatoes are fresh or [[Freezing|frozen]]. Fresh potatoes are classified, under heading 07.01 (''Potatoes, fresh or chilled''), more specifically under subheading 0701.90 (''Other''), while frozen potatoes are classified, under heading 07.10 (''Vegetables (uncooked or cooked by steaming or boiling in water), frozen''), more specifically under subheading 0710.10 (''Potatoes'').
The process of assigning HS codes is known as "HS Classification". All [[product (business)|products]] can be classified in the HS by using the [[General Rules for the Interpretation of the Harmonized System|''General Rules for the Interpretation of the Harmonized System'' ("GRI")]]. HS codes can be determined by a variety of factors including a product's composition, its form and its function. An example of a product classified according to its form would be whole [[potato|potatoes]]. The classification will also change depending on whether the potatoes are fresh or [[freezing|frozen]]. Fresh potatoes are classified in position 0701.90, under the Header ''Potatoes, fresh or chilled'', Sub header ''Other'', while frozen potatoes are classified in position 0710.10 under the Header ''Vegetables (uncooked or cooked by steaming or boiling in water), frozen'', Subheader ''Potatoes''. The Harmonized System has six general interpretative rules that must be analyzed in strict order.


An example of a product classified according its material composition is a [[picture frame]]. Picture frames made of tropical [[wood]] are classified under heading 44.14 (''Wooden frames for paintings, photographs, mirrors or similar objects'')'','' more specifically under subheading 4414.10 (''Of tropical wood''). Picture frames made of [[plastic]] are classified under heading 39.24 (''Tableware, kitchenware, other household articles and hygienic or toilet articles, of plastics'')'','' more specifically under subheading 3924.90 (''Other''). Picture frames made of [[glass]] are classified under heading 7020.00 (''Other articles of glass'')'','' the ‘.00’ at the end indicates the heading is not further subdivided. 
An example of a product classified according its material composition is a [[picture frame]]. Picture frames made of [[wood]] are classified under subheading 4414.00, which provides for ''Wooden frames for paintings, photographs, mirrors or similar objects''. Picture frames made of [[plastic]] are classified under subheading 3924.90, which provides for ''Tableware, kitchenware, other household articles and hygienic or toilet articles, of plastics. Other''. Picture frames made of [[glass]] are classified under subheading 7020.00, which provides for ''Other articles of glass''. And so on.


An example of a product classified according to its form is personal hygiene [[soap]]. When in the form of a bar, cake or moulded shape, such soap is classified under heading 34.01 (''Soap'', among others), then under 1-dash subheading 3401.1 (''Soap and organic surface-active products and preparations, in the form of bars, cakes, moulded pieces or shapes, and paper, wadding, felt and nonwovens, impregnated, coated or covered with soap or detergent'')'','' and under ''2-dash subheading 3401.11'' (''For toilet use (including medicated products)''). Conversely, [[liquid]] personal hygiene soap, depending on what is in the liquid, is classified under either subheading 3401.20 ( ''Soap in other forms''), or subheading 3401.30 (''Organic surface-active products and preparations for washing the skin, in the form of liquid or cream and put up for retail sale, whether or not containing soap'').
An example of a product classified according to its form is personal hygiene [[soap]]. When in the form of a bar, cake or moulded shape, such soap is classified under subheading 3401.11, which provides for ''Soap and organic surface-active products and preparations, in the form of bars, cakes, moulded pieces or shapes, and paper, wadding, felt and nonwovens, impregnated, coated or covered with soap or detergent: For toilet use (including medicated products)''. Conversely, [[liquid]] personal hygiene soap is classified under either 3401.20, which provides for ''Soap in other forms'', or 3401.30, which provides for ''Organic surface-active products and preparations for washing the skin, in the form of liquid or cream and put up for retail sale, whether or not containing soap''.


An example of a product classified according to its function is a [[carbon monoxide]] (CO) [[Carbon monoxide detector|detector]]. If the CO detector captures and displays [[gas]] measurements, then it is properly classified under subheading 9027.10 (''Gas or smoke analysis apparatus''), under heading 90.27 (''Instruments and apparatus for physical or chemical analysis (for example, polarimeters, refractometers, spectrometers, gas or smoke analysis apparatus; instruments and apparatus for measuring or checking viscosity, porosity, expansion, surface tension or the like; instruments and apparatus for measuring or checking quantities of heat, sound or light (including exposure meters); microtomes''. If the CO detector does not capture and display gas measurements, then it is properly classified under subheading 8531.10 (''Burglar or fire alarms and similar apparatus''), under heading 85.31 ( ''Electric sound or visual signaling apparatus (for example, bells, sirens, indicator panels, burglar or fire alarms), other than those of heading 85.12 or 85.30'')''.''
An example of a product classified according to its function is a [[carbon monoxide]] (CO) [[Carbon monoxide detector|detector]]. If the CO detector captures and displays [[gas]] measurements, then it is properly classified under subheading 9027.10, which provides for ''Instruments and apparatus for physical or chemical analysis (for example, polarimeters, refractometers, spectrometers, gas or smoke analysis apparatus; instruments and apparatus for measuring or checking viscosity, porosity, expansion, surface tension or the like; instruments and apparatus for measuring or checking quantities of heat, sound or light (including exposure meters); microtomes. Gas or smoke analysis apparatus''. If the CO detector does not capture and display gas measurements, then it is properly classified under subheading 8531.10, which provides for ''Electric sound or visual signaling apparatus (for example, bells, sirens, indicator panels, burglar or fire alarms), other than those of heading 85.12 or 85.30. Burglar or fire alarms and similar apparatus''.


Although every product and every part of every product is classifiable in the HS, very few are explicitly described in the HS Nomenclature. Any product for which there is no explicit description can be classified under a "residual" or "basket" heading or subheading, which provide for ''Other'' goods. Residual codes normally occur last in numerical order under their related headings and subheadings.
Although every product and every part of every product is classifiable in the HS, very few are explicitly described in the HS nomenclature. Any product for which there is no explicit description can be classified under a "residual" or "basket" heading or subheading, which provide for ''Other'' goods. Residual codes normally occur last in numerical order under their related headings and subheadings.


An example of a product classified under a residual heading is a live [[dog]], which must be classified under heading 01.06, which provides for ''Other live animals'' because dogs are not covered by headings 01.01 through 01.05, which explicitly provide for ''live [[Equinae|equine]]'', ''live [[Bovinae|bovine]]'', ''live [[Suidae|swine]]'', ''live [[Bovidae|sheep and goats]]'', and ''live [[Junglefowl|poultry]]'', respectively.
An example of a product classified under a residual heading is a live [[dog]], which must be classified under heading 01.06, which provides for ''Other live animals'' because dogs are not covered by headings 01.01 through 01.05, which explicitly provide for ''live [[equinae|equine]]'', ''live [[bovinae|bovine]]'', ''live [[suidae|swine]]'', ''live [[bovidae|sheep and goats]]'', and ''live [[poultry]]'', respectively.


==Applications==
==Applications==
As of 2022, there were more than 200 countries or economies applying the Harmonized System worldwide,<ref>{{cite web |title=List of Contracting Parties to the HS Convention and countries using the HS |url=https://www.wcoomd.org/en/topics/nomenclature/overview/list-of-contracting-parties-to-the-hs-convention-and-countries-using-the-hs.aspx |work=World Customs Organization}}</ref>
As of 2015, there were 180 countries or territories applying the Harmonized System worldwide,<ref>{{cite web|url=http://www.wcoomd.org/en/about-us/wco-members/membership.aspx|title=Membership|work=World Customs Organization}}</ref>

⚫
HS codes are used by Customs authorities, statistical agencies, and other government regulatory bodies, to monitor and control the import and export of commodities through:


⚫
HS code are used by Customs authorities, statistical agencies, and other government regulatory bodies, to monitor and control the import and export of commodities through:
* Customs tariffs
* Customs tariffs
* Collection of [[trade data]] ([[international trade]] statistics)
* Collection of [[trade data]] ([[international trade]] statistics)
* [[Rules of origin]]
* [[Rules of origin]]
* Collection of internal taxes
* Collection of internal taxes
* Trade negotiations (e.g., the schedules of [[tariff]] concessions of the [[World Trade Organization]])
* Trade negotiations (e.g., the [[World Trade Organization]] schedules of [[tariff]] concessions)
* Transport tariffs and statistics
* Transport tariffs and statistics
* Monitoring of controlled goods (e.g., wastes, [[Narcotic|narcotics]], [[Chemical weapon|chemical weapons]], [[ozone layer]] depleting substances, [[endangered species]], [[wildlife trade]]<ref>{{cite journal|url=https://www.science.org/doi/10.1126/science.aaa3141|title=Improve customs systems to monitor global wildlife trade|journal=[[Science (journal)|Science]]|year=2015 |doi=10.1126/science.aaa3141 |last1=Chan |first1=Hon-Ki |last2=Zhang |first2=Huarong |last3=Yang |first3=Feng |last4=Fischer |first4=Gunter |volume=348 |issue=6232 |pages=291–292 |pmid=25883346 |bibcode=2015Sci...348..291C |s2cid=206633776 }}</ref>)
* Monitoring of controlled goods (e.g., wastes, [[narcotic]]s, [[chemical weapon]]s, [[ozone layer]] depleting substances, [[endangered species]], [[wildlife trade]]<ref>{{cite journal|url=https://www.science.org/doi/10.1126/science.aaa3141|title=Improve customs systems to monitor global wildlife trade|journal=[[Science (journal)|Science]]|year=2015 |doi=10.1126/science.aaa3141 |last1=Chan |first1=Hon-Ki |last2=Zhang |first2=Huarong |last3=Yang |first3=Feng |last4=Fischer |first4=Gunter |volume=348 |issue=6232 |pages=291–292 |pmid=25883346 |bibcode=2015Sci...348..291C |s2cid=206633776 }}</ref>)
⚫
* Areas of Customs controls and procedures, including risk assessment, information technology and compliance.

⚫
* Other areas of Customs controls and procedures, including risk assessment, information technology and compliance.


Companies use HS codes to calculate the total landed cost of imported products and parts, and to identify selling and sourcing opportunities abroad.
Companies use HS codes to calculate the total landed cost of imported products and parts, and to identify selling and sourcing opportunities abroad.
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==Challenges in classification for companies==
==Challenges in classification for companies==


HS classification is not always straightforward. Many [[Automotive industry|automotive]] parts, for example, are not classified under heading 87.08, which provides for ''Parts and accessories of the [[Motor vehicle|motor vehicles]] of headings 87.01 to 87.05''. For example, [[Car seat|automotive seats]] are classified as articles of furniture under heading 94.01, which provides for ''Seats (other than those of heading 94.02), whether or not convertible into beds, and parts thereof'', and more specifically under subheading 9401.20, which provides for ''Seats of a kind used for motor vehicles''. 
HS classification is not always straightforward. Many [[Automotive industry|automotive]] parts, for example, are not classified under heading 87.08, which provides for ''Parts and accessories of the [[Motor vehicle|motor vehicles]] of headings 87.01 to 87.05''. [[Car seat|Automotive seats]] are classified as articles of furniture under heading 94.01, which provides for ''Seats (other than those of heading 94.02), whether or not convertible into beds, and parts thereof'', and more specifically under subheading 9401.20, which provides for ''Seats of a kind used for motor vehicles''.

⚫
In many jurisdictions, [[Merchant|traders]] alone bear the [[legal responsibility]] to accurately classify their goods. However, due to a lack of familiarity with the rules of HS classification traders may inadvertently determine erroneous HS codes for their commodities. Depending on the severity of the infraction, incorrect classification can result in the imposition of non-compliance penalties, border delays or seizures, or denial of import privileges.

There are multiple resources available to traders to assist in properly classifying their goods including the following.

'''Global'''

* The [https://www.wcoomdpublications.org/en/products/harmonized-system Official Explanatory Notes to the Harmonized System], published by the [[World Customs Organization]] (WCO) (Paid publication)
* The [https://www.wcotradetools.org/ WCO Trade Tools] (WCO online database for the HS, Valuation and Origin, containing both free and paid content, with the legal text of the Harmonized System freely available)

'''National or Regional'''

* The [https://uscensus.prod.3ceonline.com/ US Census "Classify your Commodity" engine]
* [https://www.census.gov/foreign-trade/data/video022.html Classify your Commodity video tutorial] by US Census
* [http://eur-lex.europa.eu/legal-content/EN/TXT/PDF/?uri=OJ:C:2015:076:FULL&from=EN Explanatory notes to the Combined Nomenclature of the European Union] by the European Commission
* [http://rulings.cbp.gov/ Customs Rulings Online Search System (CROSS)], by U.S. Customs and Border Protection
* [http://ec.europa.eu/taxation_customs/dds2/ebti/ebti_consultation.jsp?Lang=en Binding Tariff Information (BTI)], by the European Commission
* [http://www.cbp.gov/trade/rulings/informed-compliance-publications Informed compliance publications], by U.S. Customs and Border Protection
* [https://www.gov.uk/government/collections/classification-of-goods Classification Guides], by HM Revenue & Customs
* [https://hts.usitc.gov/ Harmonized Tariff Schedule] As the principal US page with updated info about Tariffs.
* [http://www.siicex-caaarem.org.mx/ Integral System of Trade Information (SIICEX)] by the Confederation of Associations of Custom Brokers of the Mexican Republic ([[CAAAREM]]). It provides updated information about tariffs and explanatory notes in order to import and export goods from/to Mexico. It compiles information of many national and international legal regulations.

Traders may sometimes resort to using HS code determination guides and other references to classify their traded commodities. These could include local databases published by authorities in other countries. However, such databases are not valid globally.


⚫
In many jurisdictions, [[merchant|traders]] alone bear the [[legal responsibility]] to accurately classify their goods. However, due to a lack of familiarity with the rules of HS Classification traders may inadvertently determine erroneous HS codes for their commodities. Depending on the severity of the infraction, incorrect classification can result in the imposition of non-compliance penalties, border delays or seizures, or denial of import privileges.
Many Customs authorities around the world allow traders to apply for an advanced HS classification ruling. Such rulings are legally binding in the countries they are issued in and give certainty to the trader.  Provided the information supplied in the request was truthful and valid, they may also provide legal protection to the trader following the ruling if there are future questions on the classification of the goods.


==See also==
==See also==
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* [http://wits.worldbank.org/product_concordance.html World Bank, Concordances from HS to other nomenclatures]
* [http://wits.worldbank.org/product_concordance.html World Bank, Concordances from HS to other nomenclatures]
* [http://ec.europa.eu/eurostat/ramon/search/index.cfm?TargetUrl=SRH_LABEL EU Combined Nomenclature Search Engine] by European Commission - Eurostat
* [http://ec.europa.eu/eurostat/ramon/search/index.cfm?TargetUrl=SRH_LABEL EU Combined Nomenclature Search Engine] by European Commission - Eurostat
* [https://unstats.un.org/unsd/tradekb/Knowledgebase/50018/Harmonized-Commodity-Description-and-Coding-Systems-HS United Nations Comtrade Wiki]
* [https://unstats.un.org/unsd/tradekb/Knowledgebase/50018/Harmonized-Commodity-Description-and-Coding-Systems-HS United Nations Harmonised System]


===Tariffs by region===
===Tariffs by region===
Line 104: Line 79:
* [http://ec.europa.eu/taxation_customs/dds2/taric/taric_consultation.jsp?Lang=en Integrated Tariff of the European Union - TARIC]
* [http://ec.europa.eu/taxation_customs/dds2/taric/taric_consultation.jsp?Lang=en Integrated Tariff of the European Union - TARIC]
* [http://www.cbec.gov.in/htdocs-cbec/excise/cxt2015-16/cxt-1516-idx Central Excise Tariff of India] by Department of Customs, Ministry of Revenue
* [http://www.cbec.gov.in/htdocs-cbec/excise/cxt2015-16/cxt-1516-idx Central Excise Tariff of India] by Department of Customs, Ministry of Revenue
* [http://tradehelpdesk.eachq.org/tf/html/index.htm East Africa Community Common External Tariff]
* [http://tradehelpdesk.eachq.org/tf/html/index.htm East Africa Community Common External Tariff] by Customs and Trade, East Africa Community, Governments of Burundi, Rwanda, Kenya, Uganda and the United Republic of Tanzania
* [http://www.kanzei.or.jp/english/ Japan Tariff Association – webpage refers to Japan Harmonised System Code Search]
* [http://www.kanzei.or.jp/english/ Japan Tariff Association – webpage refers to Japan Harmonised System Code Search]
* [http://www.siicex-caaarem.org.mx Mexico import-export codes (Harmonized Tariff Schedule)] by SIICEX and CAAAREM
* [http://www.siicex-caaarem.org.mx Mexico import-export codes (Harmonized Tariff Schedule)] by SIICEX and CAAAREM
* [https://www.gov.uk/guidance/tariffs-on-goods-imported-into-the-uk UK Tariffs]
* [http://data.gov.uk/dataset/uk-tariff-codes-2009-2010 UK Tariff Codes Datasets] by Data.Gov.UK
* [http://www.sars.gov.za/Legal/Primary-Legislation/Pages/Schedules-to-the-Customs-and-Excise-Act.aspx Official Tariff Book of South Africa (South African Revenue Service)]
* [http://www.sars.gov.za/Legal/Primary-Legislation/Pages/Schedules-to-the-Customs-and-Excise-Act.aspx Official Tariff Book of South Africa (South African Revenue Service)]
* United States of America
* United States of America

Revision as of 16:24, 23 February 2023

The Harmonized Commodity Description and Coding System, also known as the Harmonized System (HS) of tariff nomenclature is an internationally standardized system of names and numbers to classify traded products. It came into effect in 1988 and has since been developed and maintained by the World Customs Organization (WCO) (formerly the Customs Co-operation Council), an independent intergovernmental organization based in Brussels, Belgium, with over 200 member countries.[1]

Structure

The HS is organized logically by economic activity or component material. For example, animals and animal products are found in one section of the HS, while machinery and mechanical appliances are found in another. The HS is organized into 21 sections, which are subdivided into 99 chapters. The 99 HS chapters are further subdivided into 1,244 headings and 5224 subheadings.

Section and Chapter titles describe broad categories of goods, while headings and subheadings describe products in more detail. Generally, HS sections and chapters are arranged in order of a product's degree of manufacture or in terms of its technological complexity. Natural commodities, such as live animals and vegetables, for example, are described in the early sections of the HS, whereas more evolved goods such as machinery and precision instruments are described in later sections. Chapters within the individual sections are also usually organized in order of complexity or degree of manufacture. For example, within Section X (Pulp of wood or of other fibrous cellulosic material; Recovered (waste and scrap) paper or paperboard; Paper and paperboard and articles thereof), Chapter 47 provides for pulp of wood or of other fibrous cellulosic materials, whereas Chapter 49 covers printed books, newspapers, and other printed matter. Finally, the headings within individual Chapters follow a similar order. For example, the first heading in Chapter 50 (Silk) provides for silk worm cocoons while articles made of silk are covered by the chapter's later headings.

The HS code consists of 6-digits. The first two digits designate the HS Chapter. The second two digits designate the HS heading. The third two digits designate the HS subheading. HS code 1006.30, for example indicates Chapter 10 (Cereals), Heading 06 (Rice), and Subheading 30 (Semi-milled or wholly milled rice, whether or not polished or glazed).

Example of the hierarchical structure of the Harmonized System

In addition to the HS codes and commodity descriptions, each Section and Chapter of the HS is prefaced by Legal Notes, which are designed to clarify the proper classification of goods.

To ensure harmonization, the contracting parties to the Convention on the Harmonized Commodity Description and Coding System, have agreed to base their national tariff schedules on the HS nomenclature and Legal Notes. Parties are permitted to subdivide the HS nomenclature beyond 6-digits and add their own Legal Notes according to their own tariff and statistical requirements. Parties often set their customs duties at the 8-digit "tariff code" level. Statistical suffixes are often added to the 8-digit tariff code for a total of 10 digits. If the number of digits are more than 8, additional digits are called as the national subheading.

HS Chapter 77 is reserved for common use by the parties internationally. Chapters 98 and 99 are reserved for national use. Chapter 98 comprises special classification provisions, and chapter 99 contains temporary modifications pursuant to a parties' national directive or legislation.

Since its creation, the HS has undergone several revisions - ostensibly, to either eliminate headings and subheadings describing commodities that are no longer traded, or to create headings and subheadings that address technological advancements and environmental concerns. The current version of the HS became effective on 1 January 2017.

Classification

The process of assigning HS codes is known as "HS Classification". All products can be classified in the HS by using the General Rules for the Interpretation of the Harmonized System ("GRI"). HS codes can be determined by a variety of factors including a product's composition, its form and its function. An example of a product classified according to its form would be whole potatoes. The classification will also change depending on whether the potatoes are fresh or frozen. Fresh potatoes are classified in position 0701.90, under the Header Potatoes, fresh or chilled, Sub header Other, while frozen potatoes are classified in position 0710.10 under the Header Vegetables (uncooked or cooked by steaming or boiling in water), frozen, Subheader Potatoes. The Harmonized System has six general interpretative rules that must be analyzed in strict order.

An example of a product classified according its material composition is a picture frame. Picture frames made of wood are classified under subheading 4414.00, which provides for Wooden frames for paintings, photographs, mirrors or similar objects. Picture frames made of plastic are classified under subheading 3924.90, which provides for Tableware, kitchenware, other household articles and hygienic or toilet articles, of plastics. Other. Picture frames made of glass are classified under subheading 7020.00, which provides for Other articles of glass. And so on.

An example of a product classified according to its form is personal hygiene soap. When in the form of a bar, cake or moulded shape, such soap is classified under subheading 3401.11, which provides for Soap and organic surface-active products and preparations, in the form of bars, cakes, moulded pieces or shapes, and paper, wadding, felt and nonwovens, impregnated, coated or covered with soap or detergent: For toilet use (including medicated products). Conversely, liquid personal hygiene soap is classified under either 3401.20, which provides for Soap in other forms, or 3401.30, which provides for Organic surface-active products and preparations for washing the skin, in the form of liquid or cream and put up for retail sale, whether or not containing soap.

An example of a product classified according to its function is a carbon monoxide (CO) detector. If the CO detector captures and displays gas measurements, then it is properly classified under subheading 9027.10, which provides for Instruments and apparatus for physical or chemical analysis (for example, polarimeters, refractometers, spectrometers, gas or smoke analysis apparatus; instruments and apparatus for measuring or checking viscosity, porosity, expansion, surface tension or the like; instruments and apparatus for measuring or checking quantities of heat, sound or light (including exposure meters); microtomes. Gas or smoke analysis apparatus. If the CO detector does not capture and display gas measurements, then it is properly classified under subheading 8531.10, which provides for Electric sound or visual signaling apparatus (for example, bells, sirens, indicator panels, burglar or fire alarms), other than those of heading 85.12 or 85.30. Burglar or fire alarms and similar apparatus.

Although every product and every part of every product is classifiable in the HS, very few are explicitly described in the HS nomenclature. Any product for which there is no explicit description can be classified under a "residual" or "basket" heading or subheading, which provide for Other goods. Residual codes normally occur last in numerical order under their related headings and subheadings.

An example of a product classified under a residual heading is a live dog, which must be classified under heading 01.06, which provides for Other live animals because dogs are not covered by headings 01.01 through 01.05, which explicitly provide for live equine, live bovine, live swine, live sheep and goats, and live poultry, respectively.

Applications

As of 2015, there were 180 countries or territories applying the Harmonized System worldwide,[2]

HS code are used by Customs authorities, statistical agencies, and other government regulatory bodies, to monitor and control the import and export of commodities through:

Companies use HS codes to calculate the total landed cost of imported products and parts, and to identify selling and sourcing opportunities abroad.

Challenges in classification for companies

HS classification is not always straightforward. Many automotive parts, for example, are not classified under heading 87.08, which provides for Parts and accessories of the motor vehicles of headings 87.01 to 87.05. Automotive seats are classified as articles of furniture under heading 94.01, which provides for Seats (other than those of heading 94.02), whether or not convertible into beds, and parts thereof, and more specifically under subheading 9401.20, which provides for Seats of a kind used for motor vehicles.

In many jurisdictions, traders alone bear the legal responsibility to accurately classify their goods. However, due to a lack of familiarity with the rules of HS Classification traders may inadvertently determine erroneous HS codes for their commodities. Depending on the severity of the infraction, incorrect classification can result in the imposition of non-compliance penalties, border delays or seizures, or denial of import privileges.

See also

References

  1. ^ "What is the Harmonized System (HS)?". World Customs Organization.
  2. ^ "Membership". World Customs Organization.
  3. ^ Chan, Hon-Ki; Zhang, Huarong; Yang, Feng; Fischer, Gunter (2015). "Improve customs systems to monitor global wildlife trade". Science. 348 (6232): 291–292. Bibcode:2015Sci...348..291C. doi:10.1126/science.aaa3141. PMID 25883346. S2CID 206633776.

Tariffs by region

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