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What is an HS Code


HS stands for Harmonized System. it had been developed by the WCO (World Customs Organization) as a multipurpose international product nomenclature that describes the sort 
of excellent that's shipped. Today, customs officers must use the HS code to clear every commodity that enters or crosses any international borders.

What is HS Code

HS Code Structure
The HS code is often described as follows:

  • It is a six-digit identification code.
  • It has 5000 commodity groups.
  • Those groups have 99 chapters.
  • Those chapters have 21 sections.
  • It’s arranged during a legal and logical structure.
  • Well-defined rules support it to understand uniform classification worldwide.
The code follows from the Kyoto Convention of 1974 and facilitates the simplification and harmonization of Customs procedures. The Kyoto Convention details the appliance of efficient procedures, also as new and obligatory rules for his or her implementation. As of January 2017, this convention has about 106 Contracting Signatories/Parties.

Today, HS codes are used extensively in electronic messages just like the EDIFACT. This has made it easier for the system to become a worldwide standard for describing honest across various platforms. Its nearly universal usage allows authorities like Port and Customs departments to spot the products.

HS Code Usage

The HS system is employed by over 200 countries and other economies around the world for the gathering of international trade statistics and as a basis for customs tariffs. Over 98% of the products involved in international trade are classified in terms of the HS Code.

In addition to governments, the code is additionally employed by private-sector firms and international organizations. it's utilized to watch, update, and optimize controlled goods, internal taxes, rules of origin, trade policies, transport statistics, freight tariffs, compilation of national accounts, quota controls, price monitoring, traffic statistics, and economic research also as analysis.

Thus, the HS code is considered an important tool for international trade, universal economic language, and coding for commodities.

Maintenance and Classification of HS Code
The Harmonized System is governed by The International Convention on the Harmonized Commodity Description and writing. The official interpretation of the HS is given within the Explanatory Notes published by the WCO (World Customs Organization).

The WCO prioritizes the upkeep of the HS code. This includes some measures to secure uniform interpretation of the HS code also as its periodic updates in light of developments in technology and fluctuations in trade patterns.

The WCO manages the whole process through the Harmonized System Committee that represents the Contracting Signatories/Parties to the HS Convention. The committee takes decisions on classification questions, examines policy matters, settles disputes, and prepares amendments to the Explanatory Notes. This committee also prepares bills that update the HS System every 5-6 years.

HS Classification is that the process by which HS codes are assigned. All commodities are classified within the HS by using GRI (General Rules of the Interpretation of the Harmonized System).

According to Wikipedia, HS applications involve 6 General Rules that have got to be completed in consecutive order. They include:
  • GRI 1 prescribes the way to classify products at the four-digit Heading level, supported the wording of the headings and therefore the relative HS Section and Chapter Notes.
  • GRI 2 prescribes the way to classify both incomplete and unassembled goods and mixtures, also as combinations of products.
  • GRI 3 prescribes the way to classify products that are, clear, classifiable under two different HS headings.
  • GRI 4 prescribes the way to classify products that can't be classified consistent with GRI’s 1, 2, and 3.
  • GRI 5 prescribes the way to classify packaging.
  • GRI 6 prescribes the way to classify products at the six-digit subheading level supported the wording of the subheadings and therefore the relative HS Section and Chapter Notes.
Challenges within the Classification of Companies
The acceptance and flexibility of the HS code is a universal economic language and code for goods have made it an important tool for international trade, incorporated into many customs clearance systems around the world.

Using the right HS code and therefore the right interpretation is of utmost importance for an importer, as usage of incorrect code could also be considered by customs as non-compliance, misleading or misdeclaration – each of which comes with its associated penalties.

Using the right HS code are often quite tricky in specific instances, as an interpretation of the codes may vary between countries and customs authorities. Improper usage of the HS code could end in an improper tariff being applied by customs, which may increase the value of imports to the customer exponentially.

If you’re unsure about the right HS codes to use, it’s prudent to consult customs directly or ask experts in customs clearance companies for advice.

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